Campus Advantage invests exclusively in properties that serve students of major universities nationwide. Opportunities are targeted that offer the potential for value enhancement through operational improvements and/or capital investment to enhance the physical asset offering and provide strong, risk-adjusted returns.

Due to private market investment regulations, investments in the Fund are limited to accredited investors (as defined by the SEC). There is limited liquidity in comparison to public market investments, such as stocks, bonds, and mutual funds, so investors should consult their financial professionals to determine the suitability of the investment to their circumstances.

A five percent (5%) deposit is required at Fund commitment. The Fund contemplates making capital calls only at such time that money is needed for an investment. All investor funds will be held in a dedicated account, in accordance with the partnership documents. All contributions from investors to the Fund will be required to be made electronically through an ACH transmittal. Similarly, distributions from the Fund to investors will be made electronically through an ACH transmittal.

Investors will have 24-hour access to a secure, online investor portal containing details of their investments. Investment and Fund performance will be updated quarterly.

A General Partner (GP) is the managing member of a joint venture between two or more parties and is responsible for managing the day-to-day business of the joint venture. Within the real estate industry, GPs, often referred to as Sponsors, are usually real estate operating companies with experience in a given real estate niche – office, retail, apartments, industrial, or in the case of Campus Advantage, student housing. GPs provide a platform by which outside co-investors (LPs) effectuate their real estate strategies.

A GP has the authority to act on behalf of the business without the knowledge or permission of the other partners in accordance with the governing rights of the joint venture. Unlike LPs, the GP typically takes on the operational risk of the investment, whereas the LPs only take on the investment risk. GPs may be required to take on loan guarantees and other liabilities of the business.

A Promoted Interest is a type of incentive-sharing compensation paid to a GP by an LP. It is given in exchange for creating value or bearing a disproportionate share of the downside risk, which may be done in various ways that usually include one or more of the following:

• Locating a profitable investment opportunity
• Bringing useful relationships, expertise, experience, or knowledge to the opportunity
• Providing asset management, construction management, or development management services
• Providing loan guaranties or indemnifications (which may not only involve a greater share of risk, but may also encourage a lender to provide cheaper debt that makes the partnership more profitable)
• Taking responsibility for construction cost overruns

A Promoted Interest generally takes the form of extra distributions made to the GP over and above the distributions attributable to its capital contributions to the partnership. A typical Promoted Interest structure is illustrated below:

• First:
  • 90% to the LP and 10% to the GP until an 8% internal rate of return (IRR) is achieved
• Second:
  • 80% to the LP and 20% to the GP until the LP achieves an 11% IRR
• Third:
  • 70% to the LP and 30% to the GP until the LP achieves a 14% IRR
• Thereafter:
  • 60% to the LP and 40% to the GP

A blind pool is an investment vehicle whereby individuals invest with a company under an overarching strategy without discretion of the underlying investments that will be acquired. In a blind pool, money is raised from investors, usually based on the track record and experience of the party raising the fund. They are usually managed by a GP who has broad discretion to make investments as generally described in the investment offering materials, or Private Placement Memorandum (PPM). A blind pool typically has a stated investment strategy as to the types of investments it will make and the potential returns.

In the case of Campus Advantage Student Housing Fund I, the investment vehicle will be a semi-blind pool with the Fund already having acquired two assets before taking outside commitments from investors like you.

The Fund will be charged an Investment Management fee by Campus Advantage equal to one percent (1%) annualized, paid quarterly in arrears, based on the total capital contributions reduced by any return of capital. In addition to the Investment Management fee, actual out-of-pocket expenses related to administering the Fund can be charged to the Fund, which we anticipate being less than one percent (1%) of the Fund’s commitment annually each year. At the project level, Campus Advantage charges market-rate fees for property management and asset management as approved by joint venture LPs and lenders. A full fee disclosure will be included in the final PPM, which is required to be acknowledged before investing.

Leverage is at the project level and not at the Fund level. Project-level debt is available from both Freddie Mac and Fannie Mae, as well as large and small commercial banks. We do not anticipate crossing either debt or equity at the project level.

There is a defined investment period (defined as the Commitment Period) that the Fund can call capital to make investments. The Commitment Period expires on December 31, 2022.

All operating cash flows will be paid out to investors on a prorated basis to their called capital investment on a quarterly bases, based on available cash and projected cash needs, unless otherwise prohibited by a project-level joint venture with a Co-Investor/LP. Operating cash flows will not be used to fund new investments.

As properties are sold, net proceeds from sales would be distributed back to Fund investors through the distribution parameters of both the joint venture documents of the underlying investments and the limited partnership agreement of the Fund. The Fund will not recycle capital into new investments.

Commitments are allowed on a rolling basis through December 31, 2020.