The Story of Clerestory

Clerestory was founded in early 2007 by co-founders and Principals Joanne Douvas and Thomas Brown with the goal of taking collective experiences and best practices to create a premier real estate investment organization. Both are proven and respected leaders in the real estate field, with considerable experience in structuring complex and successful real estate investments (both directly and indirectly), profitable joint ventures, co-investments, secondary interests and real estate funds.

Putting capital to work in the right real estate funds and investments is Clerestory's main focus. Through an integrated, proactive team approach to investing centered on fundamental research and market knowledge, Clerestory's highly-skilled investment professionals identify, evaluate, structure and execute investments.

Key elements of Clerestory's investment process include the following:

• A management team with extensive experience managing private investments and separate accounts.
• Internally- and externally-generated sources of investment opportunities.
• Early access to investment opportunities and the potential to influence the structure, terms, and economics of underlying funds.
• A disciplined investment process to identify, underwrite and oversee investments.
• Streamlined oversight and reporting of investments.
• Access to Clerestory's Advisory Board, which includes leading industry professionals.

Exceptional Positioning

Through strong and successful relationships with existing fund managers and private placement agents, Clerestory is ideally positioned to evaluate opportunities in the real estate funds space. Clerestory's research on capital flows for opportunistic real estate funds enables the team to assess properly a full universe of new fund opportunities.

To maximize return potential, it is imperative for the General Partner to maintain close, ongoing scrutiny of underlying fund investments and effective management oversight and partnership. Clerestory's policy to qualify, whenever possible, for advisory board seats in the underlying fund investments underscores a strong commitment to building longstanding and successful relationships - and fiduciary responsibility for investors' capital.

Full Alignment

Real estate fund investing can be a complex business. Accordingly, Clerestory focuses on appropriate alignment through its governance, business model and fee framework. The firm is a strong advocate of fairness and believes that all institutional investors, regardless of size, should receive the same terms in a fund (with only an exception on fee breaks for larger investors).

Appropriate alignment of interests is also vital to value creation. As an investor, the firm prefers to be up-front in its process to influence structure and economics, such that they are aligned with not just Clerestory's but all fund participants' investment objectives.

With rare exception, Clerestory invests with those managers who put their own capital at risk and who participate in incentive fees only after investor capital has been returned, along with an appropriate return on that capital. Clerestory does not support acquisition, transaction or financing fees as independent profit centers for managers, but rather maintains that any such fees should accrue to the benefit of the fund.

Deep Commitment

Clerestory brings a high degree of rigor to the due diligence and investment management process. From strategic design through manager selection to performance monitoring over the life of the partnership, Clerestory professionals are intimately involved in all phases of the investment decision-making process. They thoroughly vet each manager's business model, organizational capability and risk management controls.

Once an investment is made, the Clerestory approach is one of proactive partnership with underlying fund managers. The firm's in-depth reporting systems are designed to provide frequent feedback regarding each manager's performance versus its original goals.

Unwavering Focus

When evaluating fund investments, Clerestory is singularly focused on fund managers that meet a basic litmus test: Do they have a fiduciary mindset? Do they have the money-making DNA? And for opportunistic strategies, do they have a broad skill set?

While Clerestory recognizes that there are many other criteria when evaluating managers - do they have a durable competitive advantage? - the initial questions always revolve around manager integrity and the ability to deliver performance to investors.