PERE CFO MARKET PULSE

A compensation survey conducted by BCGI

Presented by Robert Baron and Neil Golub

SURVEY POPULATION

• REAL ESTATE INVESTMENT MANAGERS

• NORTH AMERICAN

• DIVERSIFIED STRATEGIES

• 55 PARTICIPANTS CONSISTING OF:

o CFOs

o COOs

o MANAGING PARTNERS

o INVESTOR RELATIONS

SURVEY POPULATION - GEOGRAPHY

Major Cities

15% - New York

11% - Boston

7% - San Francisco

7% - Washington DC

6% - Dallas

2%

9%

13%

20%

4%

48%

4%

SURVEY POPULATION - AUM

0%

5%

10%

15%

20%

25%

30%

35%

< $500 million $500 million - $1 billion $1 billion - $5 billion > $5 billion

12

16

19

8

TOTAL ASSETS UNDER MANAGEMENT

SURVEY POPULATION - FUNDRAISING

0%

10%

20%

30%

40%

50%

< $250 million $250 million - $500million

$500-$1billion > $1 billion

27

13

10

5

MOST RECENT FUND SIZE

SURVEY POPULATION – SIZE & TYPE

0%

20%

40%

60%

80%

100%

< 25 25-50 50-100 100-250 > 250

24

11 11

5 4

# OF PROFESSIONAL EMPLOYEES

0%

20%

40%

60%

80%

100%

Verticallyintegrated

Allocator Fund offunds

38

12

5

FUND MODEL

HEADCOUNT ALLOCATION

0% 5% 10% 15% 20% 25% 30% 35%

More than half

1:1

2:5

1:4

8

18

15

14

RATIOFINANCE : INVESTMENT

% of respondents

FEES

MANAGEMENT FEES

0%

10%

20%

30%

40%

50%

60%

< 50 50 - 100 100 - 150 150 -200 > 200

2

7

31

14

1

MANAGEMENT FEE OF MOST RECENT FUND

Basis Points

MANAGEMENT FEES – AUM

0%

10%

20%

30%

40%

50%

60%

70%

80%

< $500MM $500MM - $1B $1B - $5B > $5B

MANAGEMENT FEES ACCORDING TO AUM

< 50 50 - 100 100 - 150 150 -200 > 200

Basis Points

AUM

FEES

ACQUISITION FEES

Yes

No

ACQUISITION FEE IN LATEST FUND

85% of firms charging acquisition fees

are vertically integrated

74%

26%

PARTICIPATION

Yes

No

CFO IS ON THE INVESTMENT COMMITTEE

69%

31%

COMPENSATION

COMPENSATION - CFO

0%

5%

10%

15%

20%

25%

30%

Less than$100K

$100K -$150K

$150K -$200K

$200K -$250K

$250K -$300K

$300K -$350K

More than$400K

45

7

15

8

11

5

CFO’s BASE SALARY IN 2013

55 respondents

CARRIED INTEREST

Yes

No

THE CFO RECEIVES CARRIED INTEREST

24%

76%

COMPENSATION - CFO

0%

5%

10%

15%

20%

25%

30%

$100K -$250K

$250K -$350K

$350K -$450K

$450K -$600K

$600K -$750K

More than$750K

14

10

8

4

7

12

CFO’s TOTAL COMPENSATION (including LTIP) IN 2013

55 respondents

COMPENSATION - CFO

0%

10%

20%

30%

40%

50%

60%

70%

< $500MM $500MM - $1B $1B - $5B > $5B

TOTAL CFO COMPENSATION BY AUM

$100K - $250K $250K - $350K $350K - $450K $450K - $600K $600K - $750K More than $750K

AUM

COMPENSATION - CONTROLLER

0%

10%

20%

30%

40%

50%

60%

Less than$100K

$100K -$150K

$150K -$200K

$200K -$250K

More than$250K

12

26

64

1

CONTROLLER’s BASE SALARY IN 2013

49 respondents

COMPENSATION - CONTROLLER

0%

5%

10%

15%

20%

25%

30%

35%

Less than$100K

$100K -$150K

$150K -$200K

$200K -$250K

$250K -$300K

$300K -$350K

More than$350K

6

17

11

5

3 34

CONTROLLER’s TOTAL COMPENSATION IN 2013

49 respondents

COMPENSATION - COO

0%

5%

10%

15%

20%

25%

30%

35%

$100K -$250K

$250K -$350K

$350K -$450K

$450K -$550K

$550K -$650K

$650K -$750K

More than$750K

I'm alsothe CFO

5

9

6

4

1

8

14

COO’s TOTAL COMPENSATION (including LTIP) IN 2013

46 respondents

COMPENSATION – HEAD OF ASSET MANAGEMENT

0%

5%

10%

15%

20%

25%

Less than $100K $100K - $200K $200K - $300K $300K - $400K $400K - $500K More than$500K

3

10 10

6 6

10

45 respondents

HEAD OF ASSET MANAGEMENT’s TOTAL COMPENSATION (including LTIP) IN 2013

COMPENSATION – HEAD OF TRANSACTIONS

0%

5%

10%

15%

20%

25%

30%

Less than$100K

$100K -$250K

$250K -$350K

$350K -$450K

$450K -$550K

$550K -$650K

$650K -$750K

More than$750K

4

8

4 4 4

3

4

11

42 respondents

HEAD OF TRANSACTIONS’ TOTAL COMPENSATION (including LTIP) IN 2013

COMPENSATION – HEAD OF IR

40 respondents

0%

5%

10%

15%

20%

25%

30%

< $100K $100K - $200K $200K - $300K $300K - $400K $400K - $500K > $500K

7

11

7

4

1

10

HEAD OF INVESTOR RELATIONS’ TOTAL COMPENSATION (including LTIP) IN 2013

COMPLIANCE

Yes

No

FIRM HAS A CHIEF COMPLIANCE OFFICER

67%

33%

COMPLIANCE

0% 10% 20% 30% 40% 50% 60%

Other

Managing Partners

COO

We're all staying late

General Counsel

CFO

5

2

3

6

6

18

COMPLIANCE OTHER THAN CCO

Others include:• Director of Finance

• Parent Company

• Vice President of Accounting

• 3RD Party Service Provider% of respondents

EXPENSES

0% 10% 20% 30% 40% 50% 60%

Other (please specify)

Real Estate (Occupancy)

Marketing

Technology

Payroll

Investor Relations/Reporting

Legal/Compliance

Benefits

1

6

7

9

10

13

27

29

UNANTICIPATED EXPENSE INCREASES

% of respondents

BACK OFFICE

No, it's all in-houseConsidering it

Yes, we keep it lean

BACK-OFFICE OUTSOURCING ?

65%

28%

7%

SENTIMENT

0% 10% 20% 30% 40% 50%

Partners at home?

Partners at work

Partners on deals

Tax reform

Rising costs

Reporting

Deploying capital

Fund performance

Fundraising

Regulation

1

2

6

6

8

17

21

22

25

25

ISSUES KEEPING CFOs UP AT NIGHT

% of respondents

SUCCESSION

No

Yes

SUCCESSION PLANNING

24%

Hmmm, that’s probably

worth discussing

63% 13%

RECRUITING

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Legal

Administrative

Investor Relations

Risk

Operations

Asset Management

Compliance

Executive Management

Accounting

Capital Raising

Acquisitions

2

3

3

4

5

5

5

6

14

20

23

THE MOST DIFFICULT AREAS TO RECRUIT

% of respondents

EXPANSION

No

Yes

ADDING HEADCOUNT DURING 2014

80%

20%

EXPANSION

0% 10% 20% 30% 40% 50% 60%

Risk

Legal

Compliance

Investor Relations

Executive Management

Administrative

Operations

Capital Raising

Asset Management

Acquisitions

Accounting

1

2

3

5

6

7

14

15

20

23

24

AREAS OF EXPANSION

% of respondents

SURVEY SAYS...

69% of CFOs sit on the

investment committee

57% of Controllers

earned $100K - $200K

Benefits and Compliance

are the rising cost centers

Recruiting challenge

Acquisitions & Capital Raisers

80% of firms

plan to hire

25% of CFOs earned < $250K 30% act as both CFO & COO

22% of CFOs earned > $750K

CLOSING...

When an actor comes to me and wants to discuss his

character, I say, 'It's in the script.'

If he says, 'But what's my motivation?, ' I say, 'Your salary.’

- Alfred Hitchcock

PERE CFO MARKET PULSE

A compensation survey conducted by BCGI

Presented by Robert Baron and Neil Golub

New York

535 Fifth Ave

4th Floor

New York, NY 10017

212-706-0750

Toronto

141 Adelaide Street West

Suite 1006

Toronto, ON M5H 3L5

416-979-2404