Sample Real Estate Investment Management Agreement

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Real Estate Investment Management Agreement
Sample Outline
I.
Appointment of Investment Manager
Discuss general role of Investment Manager, other governance docs (e.g. investment
guidelines, etc.)
Assets of the account – allocation of funds to Investment Manager
II.
Representations and Warranties of Investment Manager
Fiduciary definition (reference ERISA definition if appropriate)
Registrations & good standing (e.g. Advisers Act of 1940)
Statement of business qualification (advises institutional investors, experienced personnel,
etc.)
Notification requirements regarding change in above
Notification of change in control of Investment Manager
Key man provisions, if applicable
III.
Powers and Duties of Investment Manager
Level of authority/discretion over the following:
Portfolio allocation
Selection of investments
Acquisitions
Dispositions
Day-to-day operations
Financing
Engagement of legal counsel
Selection of contractors and consultants (property management services, etc.)
Initiation of legal action
Execution of documents
Use of cash flow and proceeds (e.g. required distributions, reinvestment), notice
requirements
Responsibility for the following:
Assigning qualified personnel (dedicated team, if applicable)
Utilization of investment committee, appropriate authority within Investment
Manager’s firm
Insurance, as set forth in exhibits
Internal and external valuations (include frequency and policy)
Accounting policy (Fair Value GAAP)
Maintenance of records
Filing tax returns
Real Estate Investment Management Agreement
Sample Outline
I.
Appointment of Investment Manager
Discuss general role of Investment Manager, other governance docs (e.g. investment
guidelines, etc.)
Assets of the account – allocation of funds to Investment Manager
II.
Representations and Warranties of Investment Manager
Fiduciary definition (reference ERISA definition if appropriate)
Registrations & good standing (e.g. Advisers Act of 1940)
Statement of business qualification (advises institutional investors, experienced personnel,
etc.)
Notification requirements regarding change in above
Notification of change in control of Investment Manager
Key man provisions, if applicable
III.
Powers and Duties of Investment Manager
Level of authority/discretion over the following:
Portfolio allocation
Selection of investments
Acquisitions
Dispositions
Day-to-day operations
Financing
Engagement of legal counsel
Selection of contractors and consultants (property management services, etc.)
Initiation of legal action
Execution of documents
Use of cash flow and proceeds (e.g. required distributions, reinvestment), notice
requirements
Responsibility for the following:
Assigning qualified personnel (dedicated team, if applicable)
Utilization of investment committee, appropriate authority within Investment
Manager’s firm
Insurance, as set forth in exhibits
Internal and external valuations (include frequency and policy)
Accounting policy (Fair Value GAAP)
Maintenance of records
Filing tax returns
Establish tax-exempt investment vehicles
Reporting (frequency and content as set forth in exhibit)
Investor Meetings
Financial statements (include audit frequency)
Communication with custodian, investor consultant, etc.
Requirement/Process for Investor Approval
Designated reps for Investor
Form of Requests, minimum approval period
Investor response timeframe
Determination based on lack of response (automatic approval or disapproval)
Interim governance if disapproval (e.g. for budgets)
Circumstances for Board or other levels of Investor approval
Investor Oversight
Audit rights
Review process for affiliate activities, etc.
Prohibited Actions
IV.
Compensation of Investment Manager
Fee Schedule established as exhibit
Use of affiliates for additional services, including compensation structure (cost vs. market),
investor approval provisions, exclusions if applicable
Reimbursables and included/excluded costs
Restrictions, if any, on outsourcing duties and/or treatment of costs
V.
Standard of Care and Indemnification
Fidelity bond, errors & omissions insurance requirements
Compliance with laws
Prudent person standard
Act solely in the interests of Investor
Responsibility limited to account assets
Investment Manager liability – gross or simple negligence, misconduct, etc.
Limitation on liability for contractor/consultant/appraiser/auditor acts or omissions unless,
not engaged with reasonable care, situation not remediated, etc.
Investment Manager indemnification of Investor
Investor indemnification of Investment Manager and other parties (employees, directors, etc.)
VI.
Effective Date, Term, Termination & Renewal
Effective Date
Initial term of contract
Automatic renewal provisions (not valid in some circumstances)
NCREIF Portfolio Management Committee
Page 2
February 19,2004
Investment Manager’s right to terminate:
Basis
Notice provision
Required transition services & fees
Investor’s right to terminate:
Notice provision & transition process for cause
Insolvency of Investment Manager
Material breach of contract, fiduciary duty
Sale, change in control of Investment Manager w/o Investor consent
Notice provision & transition process w/o cause
Treatment of unpaid fees in the event of termination
VII. Other Activities of Investment Manager
Acknowledgement of non-exclusivity of relationship
Requirement for rotation policy
Disclosure of conflicts of interest
Limitation on self-dealing (or trading among investor accounts)
VIII. ERISA/Tax Matters
ERISA provisions, if applicable
UBTI provisions
REOC status, if applicable
IX.
Applicable Law, Dispute Resolution
State of jurisdiction
Arbitration process, if applicable
X.
No Assignment
No assignment of agreement or duties
XI.
Miscellaneous
Notices – legal addresses, acceptable forms and delivery options (e.g. facsimile, certified
mail, courier)
Counterparts
Severability
Submission of ADV form
Negotiated agreement
Non-waiver of rights
Contractor policy
Equal opportunity, minority contractor requirements
NCREIF Portfolio Management Committee
Page 3
February 19,2004
XII. List of Exhibits
A - Investment Guidelines
B - Reporting Requirements
C - Fee Schedule
D - Accounting Policy
E - Valuation Policy
F - Insurance Requirements
G - Contractor Policy (may require minority business provisions or responsible contractor
policy, bid procedures, contractor insurance requirements, etc.)
NCREIF Portfolio Management Committee
Page 4
February 19,2004
Exhibit A – Investment Guidelines
Permissible Investments
Public vs. private
Debt vs. Equity
Property Types
Geographical regions, markets
Forward commitments/Guaranties
Risk Profile (Investment Style)
o Occupancy/Leasing Risk
o Lifecycle
o Quality
Permissible Investment Vehicles
LLC’s, partnerships, types of corporations
Joint ventures, co-investment
Leverage
Permitted leverage ratio, asset and investment level
Limitations on terms (prepayment, assignment, maturity date, etc.)
Return Objectives
Diversification Requirements
Target Hold Period
Other
Investor specific requirements (e.g. % of investments in constituent area, union provisions for
Taft-Hartley plans)
NCREIF Portfolio Management Committee
Page 5
February 19,2004

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