AMENDED AND RESTATED ADVISORY AGREEMENT (2021) among BLACK CREEK DIVERSIFIED PROPERTY FUND INC., BLACK CREEK DIVERSIFIED PROPERTY OPERATING PARTNERSHIP LP and BLACK CREEK DIVERSIFIED PROPERTY ADVISORS LLC
Exhibit 3.1
AMENDED AND RESTATED ADVISORY AGREEMENT (2021)
among
BLACK CREEK DIVERSIFIED PROPERTY FUND INC.,
BLACK CREEK DIVERSIFIED PROPERTY OPERATING PARTNERSHIP LP
and
BLACK CREEK DIVERSIFIED PROPERTY ADVISORS LLC
TABLE OF CONTENTS
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AMENDED AND RESTATED ADVISORY AGREEMENT (2021)
THIS AMENDED AND RESTATED ADVISORY AGREEMENT (2021) (this “Agreement”), dated and effective as of May 1, 2021, is among Black Creek Diversified Property Fund Inc., a Maryland corporation (the “Company”), Black Creek Diversified Property Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”), and Black Creek Diversified Property Advisors LLC, a Delaware limited liability company (the “Advisor”).
W I T N E S S E T H
WHEREAS, the Company has qualified as a REIT (as defined below), and invests its funds in investments permitted by the terms of Sections 856 through 860 of the Code (as defined below);
WHEREAS, the Company is the general partner of the Operating Partnership and conducts all its business and makes all investments in Real Properties, Real Estate Related Securities, and Debt Investments through the Operating Partnership;
WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience, sources of information, advice, assistance and certain facilities of the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision, of the Board of Directors of the Company all as provided herein;
WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth; and
WHEREAS, the parties hereto are party to that certain Amended and Restated Advisory Agreement (2020), dated as of May 1, 2020, which is amended and restated in its entirety hereby.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
Acquisition Expenses. Any and all expenses, exclusive of Acquisition Fees, incurred by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection with the selection, acquisition or development of any Real Property, Real Estate Related Security or Debt Investment, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums, and the costs of performing due diligence.
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Acquisition Fees. Any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to any Affiliate of the Company, the Operating Partnership or the Advisor) in connection with making or investing in Debt Investments or the purchase, development or construction of a Real Property, including real estate commissions, selection fees, development fees, construction fees, nonrecurring management fees, loan fees, points or any other fees of a similar nature. Excluded shall be development fees and construction fees paid to any Person not affiliated with the Sponsor in connection with the actual development and construction of a project.
Advisor. Black Creek Diversified Property Advisors LLC, a Delaware limited liability company, any successor advisor to the Company, the Operating Partnership or any person or entity to which Black Creek Diversified Property Advisors LLC or any successor advisor subcontracts substantially all of its functions. Notwithstanding the forgoing, a Person hired or retained by Black Creek Diversified Property Advisors LLC to perform property and securities management and related services for the Company or the Operating Partnership that is not hired or retained to perform substantially all of the functions of Black Creek Diversified Property Advisors LLC with respect to the Company or the Operating Partnership as a whole shall not be deemed to be an Advisor.
Advisory Fee. The fee payable to the Advisor pursuant to Section 9(b).
Affiliate or Affiliated. With respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.
Annual Total Return Amount. The overall investment return, expressed as a dollar amount per OP Unit, which shall be equal to the sum of (1) the Weighted-Average Distributions per OP Unit over the applicable period, and (2) the Ending VPU, adjusted to remove the negative impact on the overall investment return from the payment or the obligation to pay, or distribute, as applicable, the Performance Component and Class-Specific Fees, less the Beginning VPU.
Articles of Incorporation. The Articles of Incorporation of the Company, as amended from time to time.
Average Invested Assets. For a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Real Estate Related Securities, Debt Investments and Real Properties, before deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of such values at the end of each month during such period.
Beginning VPU. The VPU determined as of the end of the most recent month prior to the commencement of the applicable period.
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Board of Directors or Board. The persons holding such office, as of any particular time, under the Articles of Incorporation of the Company, whether they be the Directors named therein or additional or successor Directors.
Bylaws. The bylaws of the Company, as the same are in effect from time to time.
Cause. With respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by the Advisor, or an uncured material breach of this Agreement by the Advisor.
Class E Unit. An OP Unit entitling the holder thereof to the rights of a holder of Class E Units as provided in the Operating Partnership Agreement.
Class-Specific Fees. Any Distribution Fee expenses accrued or allocated directly or indirectly to a particular class of OP Units or Shares.
Code. Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
Commercial Real Property. A Real Property other than a Multifamily Real Property.
Company. Company shall have the meaning set forth in the preamble of this Agreement.
Company Property. Any and all property, real, personal or otherwise, tangible or intangible, which is transferred or conveyed to the Company (including all rents, income, profits and gains therefrom), and which is owned or held by, or for the account of, the Company.
Debt Investments. The debt related investments, or such investments the Board of Directors and the Advisor mutually designate as debt related investments, which are owned from time to time by the Company or the Operating Partnership; such debt related investments include, but are not limited to, mortgage loans, B-notes, mezzanine debt, participating debt (including with equity-like features), non-traded preferred equity, convertible debt, hybrid instruments, equity instruments and other related investments.
Director. A member of the Board of Directors of the Company.
Disposition Expenses. Any and all expenses incurred by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection with the disposition of any Real Property, Real Estate Related Security or Debt Investment, whether or not finally sold, including, without limitation, legal fees and expenses, travel and communications expenses and accounting fees and expenses.
Distribution Fees. Any ongoing distribution fees, dealer manager fees or similar fees (as distinguished from up-front or one-time selling commissions and dealer manager fees) payable pursuant to the then-current dealer manager agreement between the Company and Black Creek Capital Markets, LLC.
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Distributions. Any distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.
DST Properties. Real properties that meet the following criteria: (i) tenancy-in-common or Delaware statutory trust beneficial interests in such properties have been sold by the Company or any Affiliate to third party investors and (ii) such properties are being leased by the Company or any Affiliate from the tenancy-in-common or Delaware statutory trust third party investors.
DST Property Consideration. The consideration received by the Company or any Affiliate for selling tenancy-in-common or Delaware statutory trust beneficial interests in DST Properties to third party investors, net of DST Up Front Fees.
DST Up Front Fees. Up front fees and expense reimbursements payable out of gross sale proceeds from the sale of tenancy-in-common or Delaware statutory trust beneficial interests in DST Properties, including but not limited to sales commissions, dealer manager fees and non-accountable expense allowances.
Ending VPU. The VPU as of the end of the last month in the applicable period.
Equity Shares. Transferable shares of beneficial interest of the Company of any class or series, including common shares or preferred shares.
Excess Amount. Excess Amount has the meaning set forth in Section 12.
Expense Year. Expense Year has the meaning set forth in Section 12.
Fixed Component. The non-variable component of the Advisory Fee as described in Section 9.
GAAP. Generally accepted accounting principles as in effect in the United States of America from time to time.
Good Reason. With respect to the termination of this Agreement, (i) any failure to obtain a satisfactory agreement from any successor to the Company and/or the Operating Partnership to assume and agree to perform the Company's and/or the Operating Partnership's obligations under this Agreement; or (ii) any uncured material breach of this Agreement of any nature whatsoever by the Company and/or the Operating Partnership.
Gross Proceeds. The aggregate purchase price of all Shares sold for the account of the Company through all Offerings, without deduction for Organizational and Offering Expenses.
Hurdle Amount. For the applicable period, an amount that when annualized would equal 5.0% of the Beginning VPU.
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Independent Director. Independent Director shall have the meaning set forth in the Articles of Incorporation.
Independent Expert. A person or entity with no material current or prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company.
Independent Valuation Advisor. A firm that is (i) engaged to a substantial degree in the business of conducting valuations on commercial real estate properties, (ii) not affiliated with the Advisor and (iii) engaged by the Company with the approval of the Board to appraise the Real Properties or other assets or liabilities pursuant to the Valuation Procedures.
Joint Ventures. The joint venture or partnership arrangements (other than with Black Creek Diversified Property Operating Partnership LP) in which the Company or any of its subsidiaries is a co-venturer or general partner which are established to acquire Real Properties.
Listing. The listing of the Shares on a national securities exchange or the receipt by the Company's stockholders of securities that are listed on a national securities exchange in exchange for the Company's common stock. Upon such Listing, the Shares shall be deemed Listed.
Loss Carryforward Amount. Loss Carryforward Amount equaled zero as of September 1, 2017 and cumulatively increases from then by the absolute value of any negative Annual Total Return Amount and decrease by any positive Annual Total Return Amount, provided that the Loss Carryforward Amount shall at no time be less than zero. The effect of the Loss Carryforward Amount is that the recoupment of past Annual Total Return Amount losses will offset the positive Annual Total Return Amount for purposes of the calculation of the Performance Component.
Multifamily Real Property. A property that primarily includes residential apartment units for rent. Such properties may include commercial spaces and tenants. However, the majority of the revenue generated by the property is derived from residential rental income.
NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association on May 7, 2007, as may be amended from time to time.
NAV. Net asset value, calculated pursuant to the Valuation Procedures.
NAV Calculations. The calculations used to determine the NAV of the Company, the Shares, the Operating Partnership and the OP Units, all as provided in the Valuation Procedures.
Net Income. For any period, the Company's total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Company's assets.
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Offering. A public offering of Shares pursuant to a Prospectus.
Operating Partnership. Operating Partnership has the meaning set forth in the preamble of this Agreement.
Operating Partnership Agreement. The Operating Partnership’s limited partnership agreement among the Company, the Advisor, and Black Creek Diversified Property Advisors Group LLC.
Operating Partnership NAV. The NAV of the Operating Partnership, calculated pursuant to the Valuation Procedures.
OP Unit. A unit of limited partnership interest in the Operating Partnership, other than Special Partnership Units.
Organizational and Offering Expenses. Any and all cumulative costs and expenses incurred by and to be paid from the assets of the Company, including amounts reimbursable to the Advisor and its Affiliates pursuant and subject to Section 10(a)(i) hereof, in connection with the formation, qualification and registration of all of the Company’s Offerings and the subsequent marketing and distribution of Shares, including, without limitation, the following: total underwriting and brokerage discounts and commissions (including fees of the underwriters' attorneys), any expense allowance granted by the Company to the underwriter (which may include a dealer manager) or any reimbursement of expenses of the underwriter by the Company, expenses for printing, engraving, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders, depositories, experts, fees, expenses and taxes related to the filing, registration and qualification of the sale of the Shares under federal and state laws, including accountants' and attorneys' fees.
Performance Component. The variable component of the Advisory Fee as described in Section 9.
Person. An individual, corporation, partnership, trust, joint venture, limited liability company or other entity.
Private Organizational and Offering Expenses. Any and all cumulative costs and expenses incurred by and to be paid from the assets of the Company or any of its subsidiaries, including amounts reimbursable to the Advisor and its Affiliates pursuant and subject to Section 10(a)(ii) hereof, in connection with the formation and qualification of any private offerings of any securities conducted by the Company or any of its subsidiaries and the subsequent marketing and distribution of such securities, including, without limitation, the following: total underwriting and brokerage discounts and commissions (including fees of the underwriters' attorneys), any expense allowance granted by the Company or its subsidiaries to the underwriter (which may include a dealer manager) or any reimbursement of expenses of the underwriter by the Company or its subsidiaries, expenses for printing, engraving, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders,
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depositories, experts, fees, expenses and taxes related to the qualification of the sale of the securities under federal and state laws, including accountants' and attorneys' fees.
Product Specialist. Persons that have specialized expertise and dedicated resources in specific areas of real property, real estate related securities or debt investments, that perform services that the Advisor has committed to provide pursuant to Section 3 of this Agreement or with whom the Company has entered into a product specialist agreement, and that assist the Advisor in connection with one or more of the following: identifying, evaluating and/or recommending potential investments, performing due diligence, negotiating purchases and/or managing the Company's assets on a day-to-day basis, as described in the Company's Prospectus.
Property Accounting Services. Services related to accounting for Real Property operations and considered “property accounting” in the real estate industry. Such services generally include the maintenance of the Real Property’s books and records in accordance with GAAP and Corporation’s policies, procedures, and internal controls, in a timely manner, and the processing of Real Property-related cash receipts and disbursements. Examples include, but are not limited to, lease administration, monthly tenant billing and collections, rental revenue accounting, accounting for doubtful accounts, preparing rental expense recovery estimates and reconciliations, recording rental expenses, processing rental expense invoices and tenant reimbursement payments, accounting and budgeting for capital improvement projects, preparing and reviewing operating budgets, assisting in reporting and cash management for loan compliance purposes, and preparing account reconciliations and operating reports. Property accounting services do not include corporate-level accounting services such as, for example, consolidation, accounting and reporting analysis, and quality control reviews of accounting and reporting of third-party property accountants to ensure the accuracy, timeliness, and consistency of property accounting results.
Prospectus. “Prospectus” has the meaning set forth in Section 2(10) of the Securities Act, including a preliminary Prospectus, an offering circular as described in Rule 256 of the General Rules and Regulations under the Securities Act or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities to the public.
Real Estate Related Securities. The real estate related securities investments, or such investments the Board of Directors and the Advisor mutually designate as Real Estate Related Securities to the extent such investments could be classified as either Real Estate Related Securities or Real Property, which are owned from time to time by the Company or the Operating Partnership.
Real Property. (i) Land, including the buildings located thereon, or (ii) land only, or (iii) the buildings only, which are owned from time to time by the Company or the Operating Partnership, either directly or through subsidiaries, joint venture arrangements or other partnerships, or (iv) such investments the Board of Directors and the Advisor mutually designate as Real Property to the extent such investments could be classified as either Real Property, Real Estate Related Securities, or Debt Investments. DST Properties shall also be deemed Real Property for the purposes of this definition.
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REIT. A “real estate investment trust” under Sections 856 through 860 of the Code or as may be amended.
Sale or Sales. Any transaction or series of transactions whereby: (A) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property or portion thereof, including the lease of any Real Property consisting of a building only, and including any event with respect to any Real Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Corporation or the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture directly or indirectly (except as described in other subsections of this definition) in which the Company or the Operating Partnership as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property or portion thereof, including any event with respect to any Real Property which gives rise to insurance claims or condemnation awards; or (D) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any mortgage or portion thereof (including with respect to any mortgage, all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments) of amounts owed pursuant to such mortgage and any event which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other asset not previously described in this definition or any portion thereof.
Securities. Any Equity Shares, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.
Securities Act. The Securities Act of 1933, as amended.
Shares. The shares of all classes of the common stock of the Company.
Special OP Unitholders. The holders of Special Partnership Units (as defined in the Operating Partnership Agreement) in the Operating Partnership.
Special Partnership Units. Units of limited partnership interest in the Operating Partnership designated as Special Partnership Units in the in the Operating Partnership Agreement.
Sponsor. Any Person which (i) is directly or indirectly instrumental in organizing, wholly or in part, the Company, (ii) will control, manage or participate in the management of the Company, and any Affiliate of any such Person, (iii) takes the initiative, directly or indirectly, in
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founding or organizing the Company, either alone or in conjunction with one or more other Persons, (iv) receives a material participation in the Company in connection with the founding or organizing of the business of the Company, in consideration of services or property, or both services and property, (v) has a substantial number of relationships and contacts with the Company, (vi) possesses significant rights to control Real Properties, (vii) receives fees for providing services to the Company which are paid on a basis that is not customary in the industry, or (viii) provides goods or services to the Company on a basis which was not negotiated at arm's-length with the Company. “Sponsor” does not include wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.
Stockholders. The registered holders of the Company's Shares.
Termination Date. The date of termination of this Agreement, including by non-renewal.
Termination Event. The termination or nonrenewal of this Agreement (i) in connection with a merger, sale of assets or transaction involving the Company pursuant to which a majority of the Directors then in office are replaced or removed, (ii) by the Advisor for Good Reason or (iii) by the Company and the Operating Partnership other than for Cause.
Total Operating Expenses. All costs and expenses paid or incurred by the Company, as determined under GAAP, that are in any way related to the operation of the Company or to corporate business, including the Advisory Fee, but excluding (i) the expenses of raising capital such as Organizational and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines; (vi) Acquisition Fees and Acquisition Expenses, (vii) real estate commissions on the Sale of Real Property, and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property). The definition of “Total Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as Total Operating Expenses under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as part of Total Operating Expenses for purposes hereof.
2%/25% Guidelines. For any year in which the Company qualifies as a REIT, the requirement pursuant to the NASAA REIT Guidelines that, in any period of four consecutive fiscal quarters, Total Operating Expenses not exceed the greater of 2% of the Company's Average Invested Assets during such 12-month period or 25% of the Company's Net Income over the same 12-month period.
Unitholders. The holders of OP Units.
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Valuation Procedures. The valuation procedures adopted by the Board, as amended from time to time.
VPU. Average value per unit, which on any given date shall be equal to (i) the Operating Partnership NAV on such date, divided by (ii) the aggregate number of OP Units of all classes outstanding on such date.
Weighted-Average Distributions per OP Unit. For a particular period of time, an amount equal to the ratio of (i) the aggregate distributions paid or accrued in respect of all OP Units during the applicable period, divided by (ii) the weighted-average number of OP Units of all classes outstanding during the applicable period, calculated in accordance with GAAP applied on a consistent basis.
| (a) | Fee-related Services. |
| (1) | participate in formulating an investment strategy and asset allocation framework consistent with achieving our investment objectives; |
| (2) | monitor the operating performance of the investments of the Company and/or the Operating Partnership; |
| (3) | oversee the leasing activities of the Company’s portfolio including but not limited to negotiations with prospective and existing tenants and leasing arrangements with Affiliated and non-Affiliated leasing brokers; |
| (4) | oversee Affiliated and non-Affiliated property managers who perform property management services for the Company or the |
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| Operating Partnership; and |
| (5) | oversee and negotiate service contracts for the Company’s Real Properties. |
| (b) | Non Fee-Related Services. The following services shall be provided by the Advisor or one of its Affiliates without consideration in the form of a separate fee, subject to reimbursement for expenses as provided in Section 10 and Section 12, or as otherwise provided under this Agreement: |
| (i) | Organizational and Offering Services. |
| (2) | assist the Company in complying with all federal, state and local regulatory requirements applicable to the Company and its subsidiaries in respect of any private placements of any securities, including but not limited to tenancy-in-common or Delaware statutory trust beneficial interests in DST Properties, including preparing or causing to be prepared private placement memoranda and all supplements thereto; provided, however, that in all private placement memoranda, supplements thereto and any other offering materials, the statements therein shall be made by solely the Company and not by the Advisor or any of its other Affiliates. |
| (ii) | Acquisition and Disposition Services. |
| (1) | present to the Company and the Operating Partnership potential investment opportunities; |
| (2) | serve as the Company's and the Operating Partnership's investment and financial advisor and, as reasonably appropriate under the circumstances, provide research and economic and statistical data in connection with the Company's assets and investment policies; |
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| (3) | subject to any required Board or Board committee approval, (i) locate, analyze and select potential investments, (ii) structure and negotiate the terms and conditions of transactions pursuant to which investments will be made; (iii) oversee and coordinate the making of investments by the Company and the Operating Partnership in compliance with the investment objectives and policies of the Company; and (iv) arrange, oversee and coordinate the financing and refinancing and the making of other changes in the asset or capital structure of investments; |
| (4) | perform due diligence on prospective investments; |
| (5) | upon request provide the Directors with periodic reports regarding prospective investments; |
| (6) | obtain the prior approval of the Board, any particular Directors specified by the Board or any committee of the Board, as the case may be, for any and all investments in Real Properties; |
| (8) | oversee and coordinate the disposition of Real Properties, Real Estate Related Securities or Debt Investments within the discretionary limits and authority as granted by the Board, or if no such discretionary limits have been established, with the prior approval of the Board, any particular Directors specified by the Board or any committee of the Board, as the case may be; and |
| (9) | negotiate with and engage selling brokers as necessary to dispose of Real Properties. |
| (iii) | Financing Services. |
| (2) | negotiate on behalf of the Company and the Operating Partnership with banks or lenders for loans to be made to the Company and the Operating Partnership, and negotiate on behalf of the Company |
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| and the Operating Partnership with investment banking firms and broker-dealers or negotiate private sales of Shares and other Securities or obtain loans for the Company and the Operating Partnership, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company or the Operating Partnership. |
| (iv) | Accounting and Administrative Services. |
| (2) | provide the Company and the Operating Partnership with, or arrange for the provision to the Company and the Operating Partnership of, all necessary cash management services; |
| (3) | consult with the Company’s officers and the Board and assist the Board in evaluating and obtaining adequate insurance coverage based upon risk management determinations; |
| (4) | implement and coordinate the processes with respect to the NAV Calculations, and in connection therewith, obtain appraisals performed by an Independent Valuation Advisor concerning the value of the Real Properties; |
| (5) | supervise one or more Independent Valuation Advisors and, if and when necessary, recommend to the Board its replacement; and |
| (6) | deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the investments in Real Properties and all valuations of Real Estate Related Securities or Debt Investments as may be required to be obtained by the Board; |
| (7) | in consultation with legal counsel, advise the Company regarding the maintenance of the Company’s exemption from the Investment Company Act of 1940, as amended, and monitor compliance with the requirements for maintaining an exemption from such act; |
| (8) | in consultation with legal counsel and other tax advisers, advise the Company regarding the maintenance of the Company’s status as a REIT and monitor compliance with the various REIT qualification tests and other rules set out in the Code and the regulations promulgated thereunder; |
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| (9) | in consultation with legal counsel and other tax advisers, take all necessary actions to enable the Company and the Operating Partnership to make required tax filings and reports, including soliciting Stockholders for required information to the extent provided by the REIT provisions of the Code; and |
| (10) | oversee and resolve all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company and the Operating Partnership may be involved or to which the Company and the Operating Partnership may be subject, arising out of the Company’s or the Operating Partnership’s day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board. |
| (v) | Stockholder Services. |
| (1) | in consultation with legal counsel, communicate on the Company’s or the Operating Partnership’s behalf with the respective holders of any of the Company’s or the Operating Partnership’s securities as required to satisfy the reporting and other requirements of any regulatory bodies or agencies and to maintain effective relations with such holders; and |
| (2) | oversee the performance of the transfer agent and registrar. |
| (vi) | Property Accounting Services. |
| (1) | provide Property Accounting Services with respect to Commercial Real Properties owned by the Company. |
| (vii) | Other Services. |
| (1) | oversee the development, construction and improvement, including tenant improvements, of Real Properties (including DST Properties) by third parties on behalf of the Company; |
| (3) | oversee and coordinate the making of any private placement of OP Units, tenancy-in-common or other interests in Real Properties as may be approved by the Board; |
| (4) | provide internal legal services, either directly to the Company or as oversight of the Company’s outside counsel, which internal legal |
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| services shall be deemed separate and not included in any of the services set forth in Section 3(a) above; |
| (5) | investigate, select, and, on behalf of the Company and the Operating Partnership, oversee and coordinate the engagement of and business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder (whether for a fee or not), including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, real estate management companies, real estate operating companies, securities investment advisors, mortgagors, and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including but not limited to entering into contracts in the name of the Company and the Operating Partnership with any of the foregoing; |
| (7) | do all other things reasonably necessary to assure its ability to render the services described in this Agreement. |
Notwithstanding the foregoing, the Advisor may delegate any of the foregoing duties to any Person so long as the Advisor or any Affiliate remains responsible for the performance of the duties set forth in this Section 3.
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| the Board, any particular Directors specified by the Board or any committee of the Board, as the case may be. |
The prior approval of a majority of the Independent Directors not otherwise interested in the transaction and a majority of the Directors not otherwise interested in the transaction will be required for each transaction to which the Advisor or its Affiliates is a party. The Directors may, at any time upon the giving of written notice to the Advisor, modify or revoke the authority set forth in this Section 4. If and to the extent the Directors so modify or revoke the authority contained herein, the Advisor shall henceforth submit to the Directors for prior approval such proposed transactions involving investments in Real Property, Real Estate Related Securities, or Debt Investments as thereafter require prior approval, provided however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of receipt by the Advisor of such notification.
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directors, officers, employees and stockholders, and stockholders, directors and officers of the Advisor's Affiliates for any act or omission by the Advisor, its directors, officers or employees, or stockholders, directors or officers of the Advisor's Affiliates taken or omitted to be taken in the performance of their duties under this Agreement to the extent permitted under the Company’s Articles of Incorporation and under Section 18 hereof.
| (b) | Advisory Fee. The Advisor shall receive the Advisory Fee as compensation for asset management services rendered pursuant to Section 3(a)(i) hereof as follows. |
| (i) | The Advisory Fee will be comprised of two separate components: (1) a fixed component in an amount equal to, for each month during the term of this Agreement, 1/12th of 1.10% of the sum of (a) the product of (x) the applicable monthly Operating Partnership NAV per OP Unit, before giving effect to any monthly accruals for the Advisory Fee, Distribution Fees or any distributions accrued in respect of OP Units during the applicable month, and (y) the weighted average number of OP Units outstanding during the applicable month; and (b) aggregate DST Property Consideration for all DST Properties (the “Fixed Component”); and (2) a performance component (the “Performance Component”) that is calculated as described in Section 9(b)(ii) below. Provided that this Agreement has not been terminated, the Performance Component shall be |
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| paid to the Special OP Unitholders as a performance participation interest with respect to the Special Partnership Units in the form of an allocation and distribution from the Operating Partnership pursuant to the Operating Partnership Agreement. At the election of the Special OP Unitholders, with respect to each calendar year, all or a portion of the Performance Component shall be paid instead to the Advisor as a fee as set forth in this Paragraph 9(b). If the Special OP Unitholders do not elect on or before the first day of a calendar year to have all or a portion of the Performance Component paid as a fee in cash to the Advisor, then the Performance Component with respect to such calendar year shall be paid as a distribution on the performance participation interest to the Special OP Unitholders, as the holder of the Special Partnership Units. |
| (ii) | The Special OP Unitholders or the Advisor, as applicable, will earn a Performance Component with respect to each calendar year (or partial calendar year) in which this Agreement is in effect in an amount equal to: |
| (A) | The lesser of (1) the amount equal to 12.5% of (a) the Annual Total Return Amount less (b) the Loss Carryforward Amount, and (2) the amount equal to (x) the Annual Total Return Amount, less (y) the Loss Carryforward Amount, less (z) the Hurdle Amount; |
multiplied by:
| (B) | The weighted-average number of OP Units outstanding during the applicable year, calculated in accordance with GAAP as applied on a consistent basis, |
| (C) | Provided that the Performance Component shall at no time be less than zero. |
Except as described in the definition of Loss Carryforward Amount in this Agreement, any amount by which the Annual Total Return Amount falls below the Hurdle Amount will not be carried forward to subsequent periods. If the Performance Component is payable or distributable pursuant to this Section 9(b)(ii), the Special OP Unitholders or the Advisor, as applicable, will be entitled to such payment or distribution, as applicable, even in the event that the total percentage return to Unitholders over any longer or shorter period, or the total percentage return to any particular Unitholder over the same, longer or shorter period, has been less than the Annual Total Return Amount used to calculate the Hurdle Amount. The Special OP Unitholders or the Advisor, as applicable, shall not be obligated to return any portion of any Advisory Fee paid based on the Company’s or the Operating Partnership’s subsequent performance.
| (iii) | The Advisory Fee will generally accrue and be payable monthly. The |
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| (iv) | Notwithstanding anything to the contrary in this Section 9(b), upon the triggering of a Pro-Rata Period as defined in the Company’s Second Amended and Restated Share Redemption Program, effective as of December 10, 2018 (as it may be amended from time to time, the “SRP”), payment or distribution of the Performance Component shall be deferred until all share redemption requests under the SRP are satisfied. |
| (v) | In the event the Operating Partnership commences a liquidation of its Investments during any calendar year, the Special OP Unitholders or the Advisor, as applicable, will be paid the Advisory Fee from the proceeds of the liquidation and the Performance Component will be calculated at the end of the liquidation period prior to the distribution of the liquidation proceeds to the Unitholders. The calculation of the Performance Component for any partial year shall be calculated consistent with the applicable provisions of Section 9(b)(iii) above. |
| (vi) | The measurement of the change in VPU for the purpose of calculating the Annual Total Return Amount is subject to adjustment by the Board to account for any dividend, split, recapitalization or any other similar change in the Operating Partnership’s capital structure or any distributions that the Board deems to be a return of capital if such changes are not already reflected in the Operating Partnership’s net assets. |
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| (g) | Payment in Shares or OP Units. The fees due under this Section 9 shall be paid in cash; provided, however, that in lieu of cash, the Advisor may elect to receive the payment of the fees due under this Section 9 in any class of Shares or OP Units. Any such Shares or OP Units will be valued at the NAV per share applicable to such Shares or OP Units on the issue date. Such shares shall not be subject to any early redemption deduction under the Company’s share redemption program. |
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| (h) | Fee Waiver. If as of the end of the last month of the applicable period the NAV of a Class E Series 1 Unit is less than $10.00 per unit, the Advisor will waive its fees earned under this Agreement in an amount equal to the product of (a) the Performance Component for the applicable period, and (b) the weighted-average Class E Series 1 Units outstanding over the applicable period divided by the weighted-average OP Units outstanding over the same period. In this manner, the holders of each class of OP Units will benefit from this waiver pro rata in accordance with their particular class’s portion of Operating Partnership NAV. |
| (i) | Organizational and Offering Expenses paid or incurred by the Advisor or any of its Affiliates; provided that after an Offering terminates, the Advisor shall reimburse the Company to the extent the Organizational and Offering Expenses with respect to such Offering that are borne by the Company exceed 15.0% of the Gross Proceeds raised in the completed Offering; the Advisor shall be responsible for the payment of all the Company's Organizational and Offering Expenses in excess of the maximum amount permitted; |
| (ii) | Private Organizational and Offering Expenses paid or incurred by the Advisor or any of its Affiliates, except to the extent the Advisor or its Affiliates have agreed to receive a fee in lieu of reimbursement of such expenses therewith; |
| (iii) | Acquisition Expenses incurred in connection with the selection and acquisition of Real Properties; |
| (iv) | Disposition Expenses incurred in connection with the disposition of Real Properties, Real Estate Related Securities and Debt Investments; |
| (v) | the actual cost of goods and services used by the Company and obtained from Persons not affiliated with the Advisor, other than Acquisition Expenses, including brokerage fees paid in connection with the purchase and sale of Real Estate Related Securities or Debt Investments; |
| (vi) | interest and other costs for borrowed money, including discounts, points and other similar fees; |
| (vii) | taxes and assessments on income of the Company or Real Properties; |
| (viii) | costs associated with insurance required in connection with the business of |
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| the Company or by the Directors; |
| (ix) | expenses incurred in connection with financing transactions, including the financing or refinancing of Company properties; |
| (x) | expenses of managing and operating Real Properties owned by the Company, including but not limited to Property Accounting Services provided by the Advisor with respect to each Commercial Real Property owned by the Company (Property Accounting Services with respect to each Multifamily Property owned by the Company will be provided by a third-party, the expenses of which shall be paid by the direct or indirect subsidiary of the Company which owns the Multifamily Real Property); |
| (xi) | all expenses in connection with payments to the Directors and meetings of the Directors and Stockholders; |
| (xii) | personnel (and related employment) costs and overhead (including, but not limited to, allocated rent paid to both third parties and an affiliate of the Advisor, equipment, utilities, insurance, travel and entertainment, and other costs) incurred by the Advisor or its Affiliates in performing the services described in Section 3 hereof, including but not limited to compensation, benefits and other overhead of all employees involved in the performance of such services, provided that no reimbursement shall be made for such costs in connection with the services under Section 3(a), for services provided by an Affiliate of the Adviser for which the Company pays a separate fee pursuant to a separate agreement, or for compensation of the Company’s named executive officers unless the named executive officer provides services as described in Section 3(b)(v); |
| (xiii) | expenses associated with a Listing, if applicable, or with the issuance and distribution of Securities, such as selling commissions and fees, advertising expenses, taxes, legal and accounting fees, listing and registration fees; |
| (xiv) | expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders; |
| (xv) | expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Articles of Incorporation or the Bylaws; |
| (xvi) | expenses of maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities; |
| (xvii) | internal and external audit, accounting and legal fees and other fees for professional services relating to the operations of the Company and all |
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| such fees incurred at the request, or on behalf of, the Board, the Independent Directors or any committee of the Board; |
| (xviii) | all other costs incurred by the Advisor or its Affiliates in performing its duties hereunder. |
| (c) | In lieu of cash, the Advisor may elect to receive the reimbursement of any of its expenses in any class of Shares. Any such Shares will be valued at the NAV per share applicable to such Shares on the issue date and will not be eligible for redemption by the Advisor until six months from the issue date. |
| (d) | In the event the Advisor enters into strategic alliances with Product Specialists with respect to investments in Real Properties, Real Estate Related Securities or Debt Investments on behalf of the Company or the Operating Partnership as provided for in the Company's prospectus, and the Product Specialists perform services that entitle them to expense reimbursements, any such expense reimbursements will be deemed to be expenses incurred by the Advisor for purposes of this Agreement, and reimbursable to the extent permitted under this Agreement as if they were incurred by the Advisor directly. |
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reimbursed to the Advisor in one or more of such years, provided that Total Operating Expenses in any Expense Year, including any Excess Amount to be paid to the Advisor, shall not exceed the 2%/25% Guidelines or (ii) the Excess Amount may be paid in the Expense Year and within 60 days after the end of such Expense Year there shall be sent to the stockholders a written disclosure of such fact, together with an explanation of the factors the Independent Directors considered in determining that such excess expenses were justified. Such determination shall be reflected in the minutes of the meetings of the Board of Directors. The Company will not reimburse the Advisor or its Affiliates for its personnel (and related employment) costs and overhead (including rent, insurance and other costs) incurred in connection with the services under Section 3(a) or services provided by an Affiliate of the Adviser for which the Company pays a separate fee pursuant to a separate agreement. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis.
| 13. | OTHER ACTIVITIES OF THE ADVISOR. |
| (a) | Nothing herein contained shall prevent the Advisor or any of its Affiliates from engaging in or earning fees from other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any member, manager, director, officer, employee, or stockholder of the Advisor or its Affiliates to engage in or earn fees from any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association and earn fees for rendering such services. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein, and earn fees for rendering such advice and service. Specifically, it is contemplated that the Company may enter into joint ventures or other similar co-investment arrangements with certain Persons, and pursuant to the agreements governing such joint ventures or arrangements, the Advisor may be engaged (directly or indirectly) to provide advice and service to such Persons, in which case the Advisor will earn fees for rendering such advice and service. The parties to this Agreement hereby acknowledge that the Advisor may provide advice and render services to Persons that will compete with the Company for investments. |
| (b) | The Advisor shall report to the Directors the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other partnership, corporation, limited liability company, firm, individual, trust or association. The Advisor or its Affiliates shall promptly disclose to the Directors knowledge of such condition or circumstance. If the Advisor, its members, managers, directors, employees or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, it shall be the duty of the Directors (including the Independent Directors) to ensure that the Advisor and its Affiliates follow an |
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| allocation method that is reasonable and fairly applied. The Advisor shall provide the information necessary for the Directors to make this determination. |
| (c) | The Advisor shall be required to use commercially reasonable efforts to present a continuing and suitable investment program to the Company which is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of a character that, if presented to the Company, could be taken by the Company. In the event an investment opportunity is located, the allocation procedure set forth in the Prospectus (as such procedures may be amended from time to time) shall govern the allocation of the opportunity among the Company and Affiliates of the Advisor. |
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| accordance with the provisions of Section 12, the Advisor shall be entitled to receive any Excess Amount (as defined in Section 12) for which the Independent Directors determined (before or after the Termination Date) that there was justification based on unusual and nonrecurring factors. |
| (b) | The Advisor shall promptly upon termination: |
| (i) | pay over to the Company and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled; |
| (ii) | deliver to the Directors a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Directors; |
| (iii) | deliver to the Directors all assets, including Real Properties, Real Estate Related Securities and Debt Investments, and documents of the Company and the Operating Partnership then in the custody of the Advisor; and |
| (iv) | cooperate with the Company and the Operating Partnership to provide an orderly management transition. |
| (a) | The Advisor has determined, in good faith, that the course of conduct which caused the loss or liability was in the best interest of the Company and the Operating Partnership; |
| (b) | The Advisor was acting on behalf of or performing services for the Company and the Operating Partnership; |
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| (c) | Such liability or loss was not the result of negligence or misconduct by the Advisor; and |
| (d) | Such indemnification or agreement to hold harmless is recoverable only out of the Company's net assets and not from Stockholders. |
Notwithstanding the foregoing, the Advisor and its Affiliates, including their respective officers, directors, partners and employees, shall not be indemnified by the Company and the Operating Partnership for any losses, liabilities or expenses arising from or out of an alleged violation of federal or state securities laws by the Advisor and its Affiliates, including their respective officers, directors, partners and employees, unless one or more of the following conditions are met:
| (e) | There has been a successful adjudication on the merits of each count involving alleged securities law violations as to the Advisor; |
| (f) | Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Advisor; or |
In addition, the advancement of the Company's or the Operating Partnership's funds to the Advisor and its Affiliates, including their respective officers, directors, partners and employees, for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought is permissible only if all of the following conditions are satisfied:
| (h) | The legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company or the Operating Partnership; |
| (i) | The legal action is initiated by a third party who is not a shareholder or the legal action is initiated by a shareholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and |
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reason of the Advisor's bad faith, fraud, willful misfeasance, gross misconduct, gross negligence or reckless disregard of its duties, but the Advisor shall not be held responsible for any action of the Board of Directors in following or declining to follow any advice or recommendation given by the Advisor.
To the Directors and to the Company:
Black Creek Diversified Property Fund Inc.
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To the Operating Partnership:
Black Creek Diversified Property Operating Partnership LP
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To the Advisor:
Black Creek Diversified Property Advisors LLC
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Any party may at any time give notice in writing to the other parties of a change in its address for the purposes of this Section 20.
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supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Advisory Agreement (2021) as of May 1, 2021.