Fees to affiliates and conflicts of interest

Section 9.5 of the limited partnership agreement bars any fee tied to the partnership's net asset value. That prohibition closes off a compensation structure that rewards asset growth rather than the cash outcome limited partners actually realize. The same section blocks every affiliate of the promoter, other than the advisor, from receiving fees from the partnership at all. This article covers the Canadian limited partnership only; the parallel vehicles in the United States, Spain, and Mexico use different governing instruments, not described here.

The prohibition on net-asset-value fees

The partnership is prohibited from paying any person a fee, reward, or inducement of any kind or nature calculated by reference to the net asset value, or a change in the net asset value, of the assets it owns, in whole or in part. The prohibition reaches any such payment, regardless of who receives it — the rule is not limited to the general partner, the advisor, or the promoter's affiliates.

A fee tied to net-asset-value growth pays a manager for a number that moves before an investor sees any cash. Net asset value can rise on an appraisal, a valuation assumption, or unrealized gain, none of which a limited partner can spend. Section 9.5 keeps compensation flowing from the partnership disconnected from that figure, so no one is paid to make the balance sheet look better rather than to generate distributable cash.

The closed list of permitted charges

Article 9 of the limited partnership agreement enumerates, item by item, who may charge the partnership and for what. The promoter receives 1% of gross proceeds from each offering, as partial reimbursement of its own offering costs. The general partner recovers its reasonable out-of-pocket costs and expenses of acting as general partner, at cost, with no fee or profit margin built in. The advisor is paid the fees set out in the advisory services agreement, plus its approved third-party costs. Each Titleco separately caps its retained property manager's fee at 6% of the gross income the managed buildings generate. The advisory relationship and that cap are covered in full in the partnership's structure article.

Read together, these four provisions are a closed list, not a starting point. Nothing in Article 9 authorizes a charge to the partnership that is not named in it.

No other affiliate may bill the partnership

Section 9.5's second rule works directly against that closed list: other than the fees the advisor is paid under Section 9.3, no subsidiary or affiliate of the promoter is entitled to receive fees from the partnership. The promoter, its parent, and its other subsidiaries cannot open a second, parallel billing relationship with the partnership alongside the advisor's.

This closes the channel a conflict of interest would otherwise use. A promoter's corporate family can include many related entities; without this rule, fees could migrate from one disclosed, capped arrangement into an undisclosed one carrying different terms. Section 9.5 leaves exactly one route for compensation to reach an entity related to the promoter — the advisor's agreement, itself subject to the market-rate and cost-reimbursement terms in Section 9.3.

What this protects the investor from

Together, the two halves of Section 9.5 close two distinct routes by which a related party could extract value from the partnership outside what limited partners can see and evaluate. The net-asset-value prohibition removes the incentive to inflate a valuation metric investors cannot directly realize. The affiliate-fee restriction removes the ability to spread compensation across a promoter's corporate family through channels other than the one advisory relationship the agreement already discloses and caps. A limited partner reviewing the partnership's cost structure has one advisory relationship to evaluate, not an open-ended set of related-party arrangements.

What this is not

This article covers only the fee-based restrictions in Section 9.5 and the closed list of charges in Article 9 of the Canadian limited partnership agreement. It is not a complete description of every conflict-of-interest mechanism the agreement may contain elsewhere, and it does not disclose the dollar amount of any fee actually paid in a given period — that information belongs in the partnership's financial statements and continuous-disclosure filings. It is not a description of fee or affiliate-transaction rules in the United States, Spain, or Mexico vehicles, which are governed by separate instruments. It is not legal advice; a limited partner should consult the limited partnership agreement and qualified counsel for the terms applicable to its own units.

See also

• Professional Centres Canada LP — Direct-Hold Solution Structure — the advisory relationship and the property manager's fee cap this article assumes
• Tripartite Management Structure — the functional separation between development, compliance, and capital management
• Material Contracts — where the advisory services agreement and other material contracts are disclosed
• Four-Jurisdiction Framework — the parallel vehicles governed by different instruments