Fees, Carries & Distributions

August 2, 2016

Fees matter. The financial services industry is the midst of a fee revolution that began with trading platforms like E*trade and grew to scale with firms like Vanguard and, more recently, Robinhood. What started in the stock market has been slow to move into real estate and alternatives where the barriers to entry have historically been far higher. EquityMultiple is working to help change that, using technology and transparency to improve the bottom line to investors.

Fees that work for you

EquityMultiple offers a range of investment options so investors can better meet their investment goals and achieve diversification in their portfolios. We vary fees by product because it helps keep investor fees low and better aligns them to the work that we do on your behalf. 

Such as:

  • Ongoing asset management 
  • Project-level performance reporting
  • Distributions and payments
  • Accounting and tax preparation
  • Technology platform maintenance and new features 
  • Customer service and investor relations

Here are how fees break down across our investment product types:

Alternative to Savingsshort term notes that offer compelling yield versus CDs

Our alternative to savings offering is fee free to investors. 

Direct Investments – investments into distinct properties

Typical annual fees on direct investments are 1% or less and, in some cases, are fee free to investors (more on that below). 

  • Lending investments* –  Typically a 1% annual asset management fee.
  • Equity investments – Typically a 1% annual asset management fee or a flat annual service fee of $250, depending on the particular structure of the investment. In some cases, this investor fee is paid by the project and is therefore fee free to investors. 

Fund Investments – investments into diversified fund vehicles

Fund investments typically have similar fee structures to equity investments.

Why we don’t charge carried interest to investors

Historically, many real estate funds operated on the “2 and 20” model, a 2% annual asset management fee and 20% of investor profits. With our typical annual fee already half or less of the old model, we decided to approach carried interest more radically:  zero carried interest to investors across most of our investment offerings. Instead, we flip the model and ask that the real estate operators we work bear more of the cost.

Fees we charge to Sponsors

We are able to keep fees to investors low in part by requiring the real estate operators to pay fees, typically from the proceeds of each investment as a transaction expense or paid from fees or carried interest otherwise due to the operator. These fees compensate EquityMultiple for the work involved with sourcing, screening and structuring investments, as well as helping to manage them in some cases.

For fees related to a particular investment, please review the offering documents. Should you have any questions regarding the fees associated with any given EquityMultiple offering as you are reviewing investor documents, please don’t hesitate to reach out via the chat window at the bottom right-hand corner of your browser, or at ir@equitymultiplestaging.com.

*This includes senior debt, mezzanine debt, participation interests and preferred equity investments.

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