Syndication Fund - Fee Structure

[Colton Fairchild]

I am looking for some clarity on the fund management fee for syndication funds. Would love some insight from anyone who has reviewed multiple PPM's. 

- What is the fee most commonly based on? (i.e. called capital, assets under management, or income related)

- What is a typical % for the fund management fee and is it always annual?

- Does the fee stay the same throughout the life of the fund or does it decrease as initial capital is returned?

[Brian Burke]

It always seems that the fee is 1%. But 1% of WHAT is the real question.  

Some groups charge 1% of income.  Some, it’s of committed capital.  Others it’s contributed capital.  Others is property value, which is regularly marked to market, often with opaque formulas.  And yet others base it off of total debt and equity.  

Which method is used really matters. 1% of income and 1% of debt and equity are both 1% but they are miles apart when measured in dollars.

The only way to know is to read the operating agreement.