Fund III Fees Explained
The fee clock doesn’t start when you commit; it starts when the fund “closes.” Ironically, “closing” in the finance industry means the fund is open for business.
Origin Fund III successful closed on June 30, 2017 by raising $151 million from 450 investors.
(This article was updated July 12, 2017)
So let’s say you’ve committed $100,000.
You will be charged a one-time 3 percent fee, or $3,000. If you committed more than $500,000, you will be charged a one-time 1.5 percent fee. These fees are used to cover everything, including accounting, legal, marketing, travel, personnel and technology. And we don’t charge acquisition fees, disposition fees, refinancing fees, etc.
From there, the terms are the same for everyone.
1. A 1.5 percent annual management fee on the amount committed. So if you committed $100,000, you would be charged $1,500 per year until the fund’s assets were liquidated.
2. Any profits that come from the real estate, that could be from a regular stream of dividends or from a property’s sale or refinancing, are split 80/20, meaning 80 percent goes to investors and 20 percent to Origin. But – and this is a really important but – this split occurs only after all of the money you invested is returned to you, meaning you’re made whole, and the first 9 percent of profits are paid to you. In other words, our investors come first, and we come second.
These fees are slightly less than the private equity industry standard, which is a 2 percent annual management fee and 20 percent of the profits.
We disclose our fees openly because we believe they are fair.
If this information is too hard to find on competitors’ sites, we suggest you look elsewhere.