Management Commitment
In the past, the Managing Member
has
purchased interests in the Fund
in a minimum amount of 1% of the
total capitalization in the
Fund, such
investments have been structured
either by the Managing Member
investing in the Fund as a Nonmanaging Member (defined
below) or by the principals of
the Managing Member investing in
the Fund as individual
Nonmanaging Members. Top
Investor Returns
The goals of past Funds have been to
return all capital plus an
internal rate of return ("IRR")
of 15% on that capital by the
time the Fund is liquidated. As
an added feature, the members of
past funds, other than the Managing
Member, (the "Nonmanaging
Members") have been entitled to a
preferred return on capital
contributions made to the Fund
of 8% compounded annually for
the amount of time such capital
contributions are outstanding
(the "Preferred Return"). This
amount has been earned by all Nonmanaging Members on each
investment of the Fund before
any distribution to the Managing
Member with respect to that
investment. In addition, upon
liquidation of the Funds, there
has been a "look back"
calculation of the Preferred
Return on all contributed
capital for the amount of time
such capital contributions are
outstanding. Top
Market
Knowledge and Experience
Mr. DeNardo and Mr. Yerrall are
quite familiar with the markets
of the Investment Territory. The
Operating Principals have
acquired, managed, underwritten,
developed or provided capital
with respect to over 20 million
square feet of real estate in
the Investment Territory. Top
Investor Access
Private investors, due to
factors such as a scarcity of
time, personal capital,
experience or expertise, seldom
find opportunities to invest in
sizeable real estate
transactions alongside
professional real estate
investment managers who have
personal capital at risk. Unlike
large institutional funds that
require investment minimums of
approximately $10 million, the
Funds have provided access to a
professionally managed real
estate investment vehicle for
individuals and institutions with all parties'
interests being aligned. Top
Differentiation The Funds have focused on real
estate investments that maximize
capital appreciation. These
investments are unlike Real
Estate Investment Trusts ("REITs"),
which emphasize an income
approach to a capital-intensive
business. REITs (i) are subject
to risks of the securities
markets adding an element beyond
the fundamentals of basic real
estate risk and (ii) bear the
burden of securities
registration, public reporting
and the costs associated with
being a publicly traded company.
The Funds have also differed from
an opportunity fund. Besides the
lack of access for most
investors, opportunity funds can
be
high-risk ventures, in which
tremendous stress is placed on
transactions in the pursuit of
extremely high rates of return.
Time is an important factor in
the calculation of the
applicable IRR for these
ventures. While the Fund's have respected the
importance of the overall return
to its Nonmanaging Members, they
have remained focused on managing
real estate fundamentals using a
balanced approach to risk and
return. Top
Fees Paid To Managing
Member
Other than the compensation and
benefits by the Managing Member
to the Operating Principals and
other employees of the Managing
Member derived from asset
management fees and the
incentive promote payable to the
Managing Member as set forth in
the LLC Agreement, no other
management fees, organization
fees, acquisition fees,
disposition fees, or any other
fees will be charged to the
investors by the Managing Member
or its affiliates. The total
remuneration for the Operating
Principals and such other
employees will be derived from
such compensation and benefits
(which are subject to Advisory
Board review), and from their
share (through ownership
interests in the Managing
Member) of the aforementioned
incentive promote. Any fees
earned from the operation of the
business will be included in the
revenue of the Fund. The Fund,
however, will be responsible for
payment of its own organization,
tax and auditing expenses and
will reimburse the Managing
Member for any expenses advanced
on its behalf. Top
Fees Paid to Third Parties Notwithstanding anything to
the contrary, the Fund has paid
fees to third parties for the
referral of investors who became Nonmanaging Members. Top
Alignment of Interests Nonmanaging Members are
investing with managers whose
interests are aligned with
theirs:
The Managing Member
has
(through an investment as a Nonmanaging Member)
made
substantial investments of
its own capital into prior
Funds, such capital has been
returned on a pari-passu
basis with the other
Nonmanaging Members.
There have been
no separate fee
revenue of any kind to the Managing
Member.
The Managing Member's
incentives have been dependent
upon the return of capital
plus the Preferred Return
with respect to each
investment to the Nonmanaging Members before
any distribution has been made to
the Managing Member on an
incentive basis.
The Managing Member
has not been
entitled to any "catch-up"
provisions that are common
to many other real estate
funds.
