RCLCOFundAdvisorsCTR057208ContractAPP.pdf

SCOPE OF WORK

Contract No.: CTR057208 Description: Investment Consulting Services: Real Estate

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A. ALL SERVICES

1. Contractor shall provide consulting and advisory services for the ASRS Investment Program in accordance with the provisions and requirements as stated in the Scope of Work.

2. Services rendered under this Contract shall comply with the ASRS Strategic Plan, the ASRS Board Governance Policy Handbook, SIP006, Strategic Asset Allocation Policy (SAAP) and the ASRS Investment Policy Statement.

B. REAL ESTATE INVESTMENT CONSULTING

Contractor shall provide the following services relating to the Investment Program, including but not limited to:

1. Designate a senior real estate investment consultant with a minimum of ten (10) years real estate investment related experience to work extensively on the ASRS account. The designated senior real estate investment consultant will be expected to quickly become thoroughly knowledgeable and up-to-date with ASRS’s real estate portfolio, and to attend specified meetings. Consultant must be able to commit a sufficient amount of their available time to provide quality work while meeting all objectives and timelines established by ASRS staff.

2. Portfolio Strategic Advice

2.1. Provide continuing advice on strategic and tactical matters related to investments and portfolio construction.

2.2. Provide advice and assistance on identification and assessment of tactical and opportunistic themes for investment implementation.

2.3. Provide assistance in designing a framework for ongoing execution of the Investment Program, including but not limited to criteria fund selection, methods of diligence, performance measurement and monitoring systems.

2.4. Annually prepare and present an implementation plan that tracks progress in implementing the Investment Program, estimates future values and cash flows for the Investment Program, reviews the status of the real estate market, and makes recommendations for near term acquisitions or dispositions.

2.5. Assist in future updates of formal strategic plans.

2.6. Other tasks related to strategy as requested by the ASRS.

3. Investment Advice and Due Diligence

3.1. All investment memoranda required in this Section shall be in a format acceptable to the ASRS.

3.2. Separate Accounts

3.2.1. Conduct searches for separate account managers.

3.2.2. Perform diligence on separate account managers in accordance with SIP006.

3.2.3. Assist in negotiation of terms for separate accounts.

3.2.4. Assist in devising investment strategy for the separate accounts.

3.2.5. Present the results of the search in an investment memorandum for decision by the Combined Asset Class Committee.

Description: Investment Consulting Services: Real Estate

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3.3. Commingled Investments

3.3.1. Identify prospective commingled fund investments.

3.3.2. Perform diligence on commingled fund investments in accordance with SIP006.

3.3.3. Present the results in an investment memorandum for decision by the Combined Asset Class Committee.

3.4. Opportunistic Investments

3.4.1. Recommend tactical strategies in real estate related assets that may not meet the constraints of the Strategic Plan, but which nevertheless offer attractive risk adjusted returns.

3.4.2. Perform diligence on such investments in accordance with SIP006.

3.4.3. Present the results of the diligence in an investment memorandum for decision by the Combined Asset Class Committee.

3.5. Support the negotiation of legal documents for any investments approved by the ASRS.

3.6. Perform other investment related activities as requested by the ASRS.

4. Monitoring, Compliance and Risk Management

4.1. All required reports in this Section shall be in a format acceptable to the ASRS.

4.2. Separate Account Investment Criteria Compliance Reviews

4.2.1. Review every proposed acquisition in a separate account to ascertain if it is in compliance with the investment criteria for the account.

4.2.2. Provide independent review of underwriting of rents, expenses and the capital structure to determine if it complies with relevant requirements and if projected returns can reasonably be expected to meet the investment criteria.

4.2.3. Prepare a financial projection in a standardized format for each project including cash flow, income statement, balance sheet, analysis of evolution of returns over at least a 10 (ten) year hold period before and after waterfall calculations customized to the separate account.

4.2.4. Prepare a narrative Certification Report of findings for each investment confirming compliance with applicable criteria.

4.2.5. Perform other work on separate account investments as requested by the ASRS.

4.3. Separate Account Monthly Report

4.3.1. Prepare a monthly report for delivery to the Combined Asset Class Committee for separate accounts that includes the following elements:

4.3.1.1. Commitment summary

4.3.1.2. Risk summary

4.3.1.3. Occupancy reports for each asset as of end of prior month

4.3.1.4. Acquisition pipeline

Description: Investment Consulting Services: Real Estate

4.3.1.5. Existing holding report

4.3.1.6. Sold assets

4.3.1.7. Construction status for each asset under construction

4.3.1.8. Monthly sales report on for-sale assets

4.3.1.9. Other items requested by the ASRS

4.4. Direct Asset Ownership Services

4.4.1. Oversee the contractors, vendors, and suppliers to ensure appropriate lperformance relating to the leasing, management and operations of ASRS wholly-owned properties

4.4.2. Oversight of financial and performance reporting, finance operations

4.4.3. Oversight of capital expenditure programs and construction oversight

4.4.4. Transaction management and oversight

4.4.5. Implement all approved recommendations and action as approved in the asset business plans

4.5. Separate Account Quarterly Activities

4.5.1. Collaboratively with ASRS, review outside managers’ quarterly financial report for compliance with ASRS real estate reporting standards.

4.5.2. Prepare comments (if any) to outside manager’s quarterly financial report.

4.5.3. Institute and maintain quarterly monitoring templates for each property in a consistent format across all accounts in a form approved by the ASRS.

4.5.4. Conduct a quarterly call with the outside manager and the ASRS.

4.6. Quarterly Risk Management Report

4.6.1. Prepare a quarterly report for the Combined Asset Class Committee outlining the compliance of the ASRS portfolio with the risk management requirements of the Strategic Plan including, but not limited to:

4.6.1.1. Regional concentration

4.6.1.2. Property type concentration

4.6.1.3. Manager concentration

4.6.1.4. Leverage

4.6.2. For separate accounts, the risk management reports will be dynamic, projecting forward at least five (5) years based on the project pro formas prepared initially in connection with asset underwriting and annually updated as part of the annual asset review.

4.6.3. For commingled investments, the risk analysis will be static based on the last reporting period.

4.6.4. The total portfolio will be presented as a consolidation of the separate account and commingled fund reports.

Description: Investment Consulting Services: Real Estate

4.7. Separate Account Semi-Annual Report

Prepare a semi-annual report reviewing the status of the real estate separate accounts for presentation to the Combined Asset Class Committee.

4.8. Separate Account Annual Activities

4.8.1. Annual Compliance Review

4.8.1.1. Review financial statements to ensure valuation is properly calculated based on hypothetical liquidation of book (fair) value considering the waterfall mechanics of the partnership agreement.

4.8.1.2. Review valuation policy to determine if an appropriate policy is in place.

4.8.1.3. Review expense policies to ensure expenses allocated to the account are appropriate and permitted under the partnership agreement.

4.8.1.4. Review fee calculations to ensure they are calculated correctly in accordance with the partnership agreement including, when applicable, deduction of appropriate reserves for repair and maintenance.

4.8.1.5. Prepare a report with the results of this compliance review.

4.8.2. Annual Asset Review

4.8.2.1. For each asset, annually review its performance to determine if adjustments in strategy are warranted.

4.8.2.2. Compare the performance to original underwriting to provide feedback for improvements in the underwriting process for both the outside manager and the consultant.

4.8.2.3. Review the most recent appraisal and interim valuation to determine if appropriate.

4.8.2.4. Review reserve studies for the asset to determine the condition of the property and reasonableness of projection in the project cash flow for maintenance capital expenditures.

4.8.2.5. Prepare an update to the pro forma model for the project in the same format as required for the acquisition pro forma.

4.8.2.6. Prepare a report to the ASRS and the outside manager with the results of the findings of this work.

4.8.2.7. On a rotating basis, physically visit assets in conjunction with the services provided.

4.8.3. Annual Plans and Budgets

4.8.3.1. Attend the annual meetings of each separate account partnership.

4.8.3.2. Review and, as delegated by the ASRS, approve budgets and business plans.

4.9. Capital Call Processing Services

Description: Investment Consulting Services: Real Estate

For the separate accounts and any other accounts requested by the ASRS, review and approve capital calls after confirming they are authentic and permitted under the partnership agreement and approve in custodial bank cash flow module.

4.10. Document Storage

4.10.1. Through a secure on-line portal acceptable to the ASRS, maintain a database of documents related to the real estate separate account program and any work done under this engagement including, but not limited to:

4.10.1.1. Legal documents

4.10.1.2. Underwriting reports and diligence documents

4.10.1.3. Financial models and certification reports

4.10.1.4. Financial reports including quarterly monitoring templates

4.10.1.5. Business plans and budgets

4.10.1.6. Pipeline information and information about considered but rejected properties

4.10.1.7. Any reports issued to the Combined Asset Class Committee including annual, semi-annual and monthly reports

4.10.1.8. Documents generated in connection with annual compliance reviews, annual asset reviews and annual appraisal reviews

4.11. Other monitoring, compliance or reporting work for the Investment Program and real estate related opportunistic investments as requested by the ASRS.

5. Valuation Services

5.1. Provide valuation reports on any of the following types of assets:

5.1.1. Fee interest in property

5.1.2. Equity interest in property

5.1.3. Partnership interests

5.1.4. Shares in entities operating or owning property

5.1.5. Other types of property as requested by the ASRS

5.2. Valuation Policy

5.2.1. Assist ASRS in developing valuation policies.

5.2.2. Review the valuation policies of outside managers of ASRS assets.

5.3. Provide other valuation services as requested by the ASRS.

6. Contractor shall provide any other real estate investment consulting services as requested by ASRS.

All terms not defined herein shall have the meaning given to them in the Uniform Terms and Conditions.

BEST AND FINAL OFFER

ATTACHMENT C: Pricing Schedule ARIZONA STATE

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page of

The ASRS, at its discretion, may award contracts for all or any portion of the services for which an Offeror has provided a response.

Offeror must complete the Items tab in APP by entering $1 in the Unit Price field.

State pricing below for the services described in the Scope of Work. Pricing may be provided as an hourly billable rate in Section 1 and/or by task/project/retainer in Section 2.

1. PRICING BY HOURLY RATE

In addition to Offeror's key personnel assigned under a Contract, ASRS assumes a complement of Offeror staff may also be assigned to and work on a task or service requested by ASRS. Offeror should categorize staff by general titles/classifications and then provide the maximum (highest) hourly rate within that category that Offeror is proposing to invoice the ASRS. While Offeror may bill ASRS less than the max rate in any category of staff, it may not bill more than the rate listed on this Pricing Schedule.

All pricing must be inclusive of travel.

Example:

Indicate “N/A” below if not bidding on a particular Scope of Work Service.

Service Max Hourly

Rate Year 1 Rate

Max Hourly Rate

3 Year Rate Guarantee

Max Hourly Rate

5 Year Rate Guarantee

Illiquid Credit & Public Markets Investment Project Consulting Services

Rate 1 (title or classification): Partner $300 $300 $300

Rate 2 ( title or classification ): Associate $250 $250 $250

Service Hourly Rate Year 1 Rate

Hourly Rate 3 Year Rate Guarantee

Hourly Rate 5 Year Rate Guarantee

Illiquid Credit & Public Markets Investment Project Consulting Services

Rate 1 (title or classification):______________ N/A N/A N/A

Rate 2 ( title or classification ):_____________ N/A N/A N/A

Rate 3 ( title or classification ):_____________ N/A N/A N/A

Rate 4 ( title or classification ):_____________ N/A N/A N/A

Private Equity Investment Consulting Services

Rate 1 (title or classification):______________ N/A N/A N/A

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page

Additional Comments:

Fees relating to the oversight of ASRS’ SMAs are billed directly to the SMAs thereby ASRS’ managers also effectively share in the cost of Real Estate Investment Consulting Services based on the provisions in each

SMA operating agreement.

Rate 2 ( title or classification ):_____________ N/A N/A N/A

Rate 3 ( title or classification ):_____________ N/A N/A N/A

Rate 4 ( title or classification ):_____________ N/A N/A N/A

Real Estate Investment Consulting Services

Rate 1 (title or classification): Chairman $900 $950 $1,000

Rate 2 ( title or classification ): CEO $800 $850 $900

Rate 2 ( title or classification ): Sr. Managing Director $700 $740 $780

Rate 3 ( title or classification ): Managing Director 2 $650 $690 $730

Rate 4 ( title or classification ): Managing Director 1 $550 $580 $620

Rate 5 ( title or classification ): Principal 3 $450 $470 $500

Rate 6 ( title or classification ): Principal 2 $400 $420 $450

Rate 7 ( title or classification ): Principal 1 $350 $370 $390

Rate 8 ( title or classification ): Vice President 3 $325 $340 $360

Rate 9 ( title or classification ): Vice President 2 $300 $320 $340

Rate 10 ( title or classification ): Vice President 1 $275 $290 $310

Rate 11 ( title or classification ): Senior Associate 3 $230 $240 $260

Rate 12 ( title or classification ): Senior Associate 2 $210 $220 $240

Rate 13 ( title or classification ): Senior Associate 1 $190 $200 $220

Rate 14 ( title or classification ): Associate 3 $170 $180 $190

Rate 15 ( title or classification ): Associate 2 $160 $170 $180

Rate 16 ( title or classification ): Associate 1 $150 $160 $170

Rate 17 ( title or classification ): Analyst 2 $140 $150 $160

Rate 18 ( title or classification ): Analyst 1 $130 $140 $150

Rate 19 ( title or classification ): Intern 2 $110 $120 $130

Rate 20 ( title or classification ): Intern 1 $75 $80 $85

Rate 21 ( title or classification ): Accounting/Admin Staff $100 $110 $120

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page

Fees related to oversight of Operating Company investments are generally billed directly to the companies either based on a fixed rate of $500,000 per year or on an hourly basis (not to exceed $500,000).

Hourly rates are all inclusive to cover travel and other costs incurred by RCLCO Fund Advisors for the scope of work being performed.

2. PRICING BY TASK/PROJECT OR FLAT FEE

If the firm’s pricing structure is organized by task/project or any other fixed fee method it should be included in this section. If the task or project is billed based on hourly rates, provide those rates below a shown in Section 1 of this Pricing Schedule. If the hourly rates are the same as in Section 1, indicate as such in lieu of duplicating the rates below. ASRS reserves the right to award a contract based on any pricing structure submitted as part of the offer.

The tables below provides the pricing by task/project on a not to exceed basis where the time for work being performed will be based on the hourly rates of the staff as detailed in Section 1.

Not to Exceed Budget Amounts

Real Estate Investment Consulting Services: Billed to

ASRS

Year 1 Rate

3 Year Rate

Guarantee

5 Year Rate

Guarantee

S tr at eg ic

A n al y si s Annual Implementation Plan (per year) $180,000 $190,000 $200,000

Additional Strategic or Tactical Analysis (if requested under a specific Task Order detailing scope of work)

$100,000 $105,000 $110,000

S o u rc in g a n d U n d er w ri ti g

General Sourcing $420,000 $440,000 $460,000

Commingled Fund Underwriting (per fund) $55,000 $57,750 $60,000

Co-Investments/Sidecars (per investment) $55,000 $57,750 $60,000

Separate Account/Joint Venture Manager Search

Preliminary Evaluations (per manager) $2,500 $2,750 $3,000

Separate Account/Joint Venture Manager

Underwriting & Term Sheet Negotiations (per finalist manager candidate)

$171,000 $181,000 $191,000

Operating Company Underwriting, Term Sheet and

Operating Agreement Negotiations (per investment) $1,200,000 $1,250,000 $1,300,000

Direct Investments Underwriting - Transferred from

SMA/JVs (per real estate asset) $60,000 $62,500 $65,000

Separate Account/Joint Venture Commitment

Increases $100,000 $105,000 $110,000

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page

S M

A A ss et

M an ag em en t

C o n su lt in

General Consulting, Standards and Process

Refinement $1,100,000 $1,200,000 $1,300,000

Portfolio Monitoring, Analytics & Reporting

(includes Private Markets Report, ASRS RE

Monthly Reports, Performance Reporting, etc.)

$1,150,000 $1,210,000 $1,270,000

Separate Account/Joint Venture Level

Recapitalizations/Restructuring

Actual

Time

Billed

Actual

Time

Billed

Actual

Time

Billed

Property Operations Monitoring (if requested, per

SMA)

$30,000 $32,500 $35,000

Leverage Monitoring and Strategy (if requested, per

SMA)

$50,000 $52,500 $55,000

Operating Company Monitoring and Reporting $500,000 $500,000 $500,000

Capital Calls (per capital call) $500 $500 $500

D ir ec t

A ss et M an ag em en t C o n su lt in

Property Management Oversight (per property) $40,000 $42,500 $45,000

Leasing Oversight & Coordination (per property) $35,000 $37,500 $40,000

Finance Operations Performance Reporting, Valuation Management (per property) $165,000 $175,000 $185,000

CapEx Management (per project) $20,000 $21,500 $23,000

Construction Management (ground up or large project with cost exceeding 1/3 of book value, billed per project)

$80,000 $85,000 $90,000

Sales Transaction & Closing Management (per sale) $100,000 $105,000 $110,000

C o m m in g le d

F u n d s

M o n it o ri

Commingled Fund Monitoring & Reporting (per fund) $9,000 $9,500 $10,000

Commingled Fund Dispositions (per sale transaction/tranche) $25,000 $26,250 $27,500

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page

Not to Exceed Budget Amounts

Real Estate Investment Consulting Services:

Billed to SMAs

Year 1 Rate

3 Year Rate

Guarantee

5 Year Rate

Guarantee

Organization $45,000 $47,250 $55,000

Investment Certification (non-contributed & without entitlement risk $45,000 $42,500 $45,000

Investment Certification (contributed & with entitlement risk $60,000 $62,500 $65,000

Investment Certification (non-contributed & with without entitlement risk $70,000 $73,500 $76,500

Investment Certification (contributed & without entitlement risk $75,000 $72,500 $75,000

SMA Manager Oversight, Venture and Asset

Monitoring, Compliance Certifications & Pipeline $137,500 $145,000 $152,250

SMA Manager Oversight, Venture and Asset

Monitoring, Compliance Certifications & Pipeline

(SMAs with entitlement risk and significant development investments)

$187,500 $195,000 $205,000

Pipeline $14,000 $14,750 $15,500

Valuation Analysis/Appraisal Review (per tranche/sub-portfolio) $50,000 $52,500 $55,000

Annual Asset Review & Re-Underwriting (per asset) $25,000 $26,500 $28,000

Property & Site Visits (per asset) $15,000 $15,750 $16,500

Disposition Analysis $25,000 $26,500 $28,000

The not to exceed budget amounts for tasks being billed to the SMAs will require the consent and agreement of

ASRS’ SMA Managers (i.e., joint venture partners) prior to implementation in accordance with the provisions of the various Operating Agreements governing the ventures.

3. OPTIONAL/ALTERNATIVE PRICING

The Offeror may propose alternative pricing structures, including multi-year pricing, or fees organized in a different way that has been requested above provided that pricing in Section 1 or 2 above has been provided.

The Offeror has full discretion in what it may propose, however, the ASRS is under no obligation to accept such proposals.

RFA would like to propose an alternate pricing structure based on Assets Under Advisement (or Assets Under

Management, whichever is applicable) as part of the ASRS contract. The fee payment would be allocated to SMAs

(Real Estate GAV per Financial Statements of the immediately preceding quarter) and ASRS (based on Total AUA of immediately preceding quarter) according to the following schedule:

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services

Solicitation Code: BPM003473

Page

Fee Rate Fee Basis Paying Party

0.08% SMA Real Estate Gross Asset Value (per Financial Statements from the most recent quarter) SMAs

0.04%

Total Assets Under Administration (SMA GAV + NAV for all other vehicles except OpCo, per Financial Statements from the most recent quarter)

ASRS

Assets Under Advisement values used in the calculation would be updated each quarter once all financial statements including ASRS’ statement of partner’s capital have been received and booked by the custodian bank and subject to

ASRS review for accuracy before being used to calculate the next quarterly fee. We would recommend one annual true-up completed in the second quarter following the calendar year-end of each year.

In addition, oversight of Operating Company investments would continue to be billed at either a flat fee of $500,000 per year or on an hourly basis (not to exceed $500,000), which will generally be billed directly to the operating company.

4. OTHER FEES

Provide pricing for any and all other fees that are not included in the rates above. The Offeror should also disclose any additional fees associated with subcontractor arrangements that involve the services provided to ASRS and are not included in attachments.

The fees outlined above are all-inclusive; no other fees would be charged to ASRS.

5. PAYMENT DISCOUNT OPTIONS

For the services specified herein, the following discounts apply:

For the services specified herein, the following apply:

If payment is made within 30 calendar days after receipt of RCLCO Fund Advisors’ invoices, the billing amount due based on above quoted fees and the not to exceed budgets shall be discounted by 5% based on total amount billed on each invoice.

SPECIAL TERMS AND CONDITIONS

Description: Investment Consulting Services: Real Estate

The Special Terms and Conditions modify the Uniform Terms and Conditions. It can modify them by replacing, deleting, appending to, or revising the text of an existing provision or by inserting a new paragraph into an existing article. No other document modifies or adds to the Uniform Terms and Conditions, except as may subsequently be otherwise and expressly agreed and incorporated by Contract Amendment.

1. DEFINITION OF TERMS

All other terms not defined herein shall have the meaning given to them in the Uniform Terms and Conditions.

1.1. “Acceptance of Offer” means the Attachment labeled “Offer and Acceptance” bearing the State contract number once the Procurement Officer has signed it to signify the (1) formal acceptance of the Offer and (2) the formation of the Contract. For clarity of intent, the foregoing is not to be confused with the term ‘acceptance’ used throughout the Contract in the context of delivery, inspection, etc., with respect to Materials or Services.

1.2. “Order” means the instrument by which ASRS authorizes Contractor to perform some or all of the Work. Whether the Contract will have one Order or many Orders depends on the scope of the Contract and how the ASRS will use it. Any of the following is to be construed as being an “Order”:

1.2.1. A purchase order;

1.2.2. A task order or service order;

1.2.3. Written correspondence or instruction.

1.3. “Subcontractor” has the meaning given in A.R.S. § 41-2503(38), which, for convenience of reference only, is “… a person who contracts to perform work or render service to … [C]ontractor or to another [S]ubcontractor as a part of a contract with a state governmental unit. . . .” The Contract is to be construed as “a contract with a state governmental unit” for purposes of the definition. For clarity of intent, a person carrying out any element of the Work is a Subcontractor from the moment they first carry out that element of the Work regardless of whether or not a Subcontract exists then or subsequently.

1.4. “Work” means the totality of the materials and the Services and all the acts of administration, creation, production, and performance necessary to fulfill and incidental to fulfilling all of Contractor's obligations and duties under the Contract in conformance with the Contract and applicable laws.

2. CONTRACT INTERPRETATION

2.1. Usage. Where the Contract:

2.1.1. assigns obligations to Contractor, any reference to “Contractor” is to be construed to be a reference to Contractor and all Subcontractors, whether they are first-tier subcontractors, sub-subcontractors, suppliers, sub-suppliers, consultants, or sub-consultants, as well as all of Contractor’s and the Subcontractors’ respective agents, representatives, and employees in every instance unless the context plainly requires that it is be a reference only to Contractor as apart from Subcontractors;

2.1.2. uses the permissive “may” with respect to a party’s actions, determinations, etc., the term is to be interpreted as in A.A.C. R2-7-101(31) [Definitions]. For clarity of intent, any right given to ASRS using “ASRS may” or a like construction denotes discretion and freedom to act so far as any regulatory or operative constraints permit in the relevant circumstances, provided that: (a) where written “may, at its discretion,” the discretion extends to whatever is most advantageous to ASRS; and (b) where written only as “may,” the discretion is constrained by what is fair, reasonable, and as accommodating of the respective best interests of both parties as practicable under the circumstances;

2.1.3. uses the imperative “shall” with respect to a party’s actions, duties, etc., the term is to be interpreted as in A.A.C. R2-7-101(43) [Definitions]. Conversely, the phrase “shall not” is to be interpreted as an imperative prohibition.

Description: Investment Consulting Services: Real Estate

2.1.4. uses the term “must” with respect to a requirement, criterion, etc., the term is to be interpreted as conveying compulsion or strict necessity, and is to be read as though written “must, if [the subject] is to be entitled to have [the object] considered or credited as being compliant with, conforming to, or satisfying [the requirement, criterion, constraint, etc.], otherwise, [the object] will be considered or debited as being non-compliant, non-conforming, or unsatisfactory for its Contract-related purposes” in every instance;

2.1.5. uses the term “might” with respect to an event, outcome, action, etc., the term is to be interpreted as conveying contingency or non-discretionary conditionality; and

2.1.6. uses the term “will” or the phrases “is to be” or “are to be” with respect to an event, outcome, action, etc., the term or phrase is to be interpreted as conveying such certainty or imperativeness that “shall” is either unnecessary or irrelevant in that instance.

2.2. Independent Contractor. Contractor is an independent contractor and shall act in an independent capacity in performance under the Contract. Neither party is or is to be construed as being to be the employee or agent of the other party, and no action, inaction, event, or circumstance will be grounds for deeming it to be so.

2.3. Complete Integration. The Contract, including any documents incorporated into the Contract by reference, is intended by the parties as a final and complete expression of their agreement. There are no prior, contemporaneous, or additional agreements, either oral or in writing, pertaining to the Contract.

3. CONTRACT ADMINISTRATION AND OPERATION

3.1. Authority to Contract. This Contract activity is issued under the authority of the State Procurement Administrator, through the Arizona State Retirement System (“ASRS”). No alteration of any portion of the Contract, any services awarded, or any other agreement that is based upon this Contract may be made without express written approval of the ASRS Chief Procurement Officer or other personnel delegated authority in the form of an official Contract Amendment. Any such action is subject to the legal and contractual remedies available to the State inclusive of, but not limited to, Contract termination, cancellation, suspension, and/or debarment of the Contractor.

3.2. Contract Applicability. Any Contract resulting from this Solicitation shall be for the exclusive use of the ASRS.

3.3. Term of Contract. The term of the Contract shall commence on the effective date indicated in the “Acceptance of Offer” and shall remain in effect for a period of twelve (12) months thereafter unless terminated, canceled or extended as otherwise provided herein.

3.4. Contract Usage. Contractor shall understand and agree that no quantity of service is guaranteed under the Contract and that ASRS does not guarantee that Contractor’s services will be utilized to any degree. ASRS reserves the right to contract for the services as a whole, or any of the various parts/scenarios listed separately.

3.5. Contract Extensions. The Contract shall not bind nor purport to bind the ASRS for any contractual commitment in excess of the original Contract term. The ASRS shall have the right, as its sole option, to extend the Contract for one or more months, provided that the maximum aggregate term of the Contract including extensions cannot exceed five (5) years. If the ASRS exercises such rights, all terms, conditions, and provisions of the original Contract shall remain the same and apply during an extension period.

3.5.1. The Contractor shall provide the ASRS with notice of any requests for program/operation changes or modifications of any type, including those on price, at least ninety (90) days prior to the effective date for each extension period. Any such request shall be accompanied by supporting documentation.

3.6. Notices. All notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (collectively, “Notices”):

3.6.1. If intended for the ASRS, shall be hand-delivered, emailed to ASRSProcurement@azasrs.gov or sent by registered or certified United States mail, return receipt requested, postage prepaid, and addressed to the mailto:ASRSProcurement@azasrs.gov

Description: Investment Consulting Services: Real Estate

ASRS as indicated on the Offer and Acceptance document of this Contract or to such other address as may from time be furnished in writing to the Contractor.

3.6.2. If intended for the Contractor, such Notice shall be given to the person named in the Offer and Acceptance document of this Contract or to such other person as the Contractor may from time to time furnish in writing to the ASRS.

3.6.3. Any Notice so given shall be deemed to have been given as of the date such Notice is received as shown on the return receipt or on the date such Notice is personally delivered to the other party.

3.7. Key Personnel. It is essential that the Contractor provide an adequate staff of experienced personnel capable of and devoted to the successful accomplishment of work to be performed under this Contract. The Contractor must assign specific individuals. Once key personnel are assigned to work under the Contract, the ASRS shall have the opportunity to review the qualifications and approve the assignment of additional or replacement key personnel.

3.8. Intellectual Property

3.8.1. Ownership of lntellectual Property. Any and all intellectual property, including but not limited to copyright, invention, trademark, trade name, service mark, or trade secrets created or conceived solely pursuant to or as a result of this Contract and any related subcontract (collectively, the "Intellectual Property"), shall be work made for hire and the ASRS shall be the owner of such Intellectual Property. The ASRS shall own (for and on behalf of the State) the entire right, title and interest to the Intellectual Property throughout the world.

Software and other Materials developed or otherwise obtained by or for Contractor or its affiliates independently of this Contract ("Independent Materials") do not constitute Intellectual Property. If Contractor creates derivative works of Independent Materials, then the elements of such derivative works created pursuant to this Contract shall constitute Intellectual Property owned by the ASRS. Contractor shall notify the ASRS, within thirty (30) days, of the creation of any Intellectual Property by it or its subcontractor(s).

Contractor, on behalf of itself and any subcontractor(s), agrees to execute any and all document(s) necessary to assure ownership of the Intellectual Property vests in the ASRS and shall take no affirmat ive actions that might have the effect of vesting all or part of the Intellectual Property in any entity other than the ASRS. The Intellectual Property shall not be disclosed by Contractor or its subcontractor(s) to any entity not the ASRS without the express written authorization of the ASRS.

Notwithstanding the foregoing, if the ASRS elects, in its sole and absolute discretion, to relinquish its ownership interest in any or all of the Intellectual Property, the ASRS shall have the rights to use, modify, reproduce, release, perform, display, sublicense or disclose such Intellectual Property within State government and operations without restriction for any activity in which the ASRS is a party (collectively, "Government Purpose Rights").

3.8.2. Pre-Existing Material. All pre-existing software and other materials developed or otherwise obtained by or for Contractor or its affiliates independently of the Contract or applicable Purchase Orders are not part of the work product to which rights are granted State under subparagraph 3.9.1 above, and will remain the exclusive property of Contractor, provided that:

3.8.2.1. any derivative works of such pre-existing material or elements thereof that are created pursuant to the Contract are part of that work product;

3.8.2.2. any elements of derivative work of such pre-existing material that was not created pursuant to the Contract are not part of that work product; and

3.8.2.3. except as expressly stated otherwise, nothing in the Contract is to be construed to interfere or diminish Contractor’s or its affiliates’ ownership of such pre-existing materials.

3.9. Warranty

Unless otherwise modified elsewhere in the terms and conditions, the Contractor warrants that, for one year after acceptance by the ASRS, the Materials shall be fully compatible with the ASRS's computer hardware and software environment. Contractor represents and warrants to the ASRS that Contractor has the skill and knowledge possessed by members of its trade or profession and Contractor will apply that skill and knowledge with care and

Description: Investment Consulting Services: Real Estate diligence so Contactor and Contractor's employees and any authorized subcontractors shall perform the Services described in this Contract in accordance with the Statement of Work.

Contractor represents and warrants that the Materials provided through this Contract and Statement of Work shall be free of viruses, backdoors, worms, spyware, malware and other malicious code that will hamper performance of the Materials, collect unlawful personally identifiable information on users or prevent the Materials from performing as required under the terms and conditions of this Contract.

3.10. Offers of Employment

The Contractor shall comply with A.R.S. § 41-2517, as it relates to a person, firm or lobbyist making an offer of employment to an employee having a significant procurement role, as defined in A.R.S. § 41-741 and A.R.S. § 41- 2503.

3.11. Performance in Public Health Emergency. The Contractor warrants that it will:

3.11.1. Have in effect promptly after commencement a plan for continuing performance in the event of a declared public health emergency that addresses, at a minimum: (a) identification of response personnel by name;

(b) key succession and performance responses in the event of sudden and significant decrease in workforce; and (c) alternative avenues to keep sufficient product on hand or in the supply chain; and

3.11.2. Provide a copy of its current plan to the ASRS within three (3) business days after the ASRS’s written request. If Contractor claims relief under paragraph 6.4 (Force Majeure) of the Uniform Terms and Conditions for an occurrence of force majeure that is a declared public health emergency, then that relief will be conditioned on Contractor having first implemented its plan and exhausted all reasonable opportunity for that plan implementation to overcome the effects of that occurrence, or mitigate those effects to the extent that overcoming entirely is not practicable.

For clarification of intent, being obliged to implement the plan is not of itself an occurrence of force majeure, and Contractor will not be entitled to any additional compensation or extension of time by virtue of having to implement it. Furthermore, failure to have or implement an appropriate plan will be a material breach of contract.

4. PRICING AND PAYMENTS

4.1. Most Favored Client Pricing. Contractor represents and warrants that its fee structure under this Contract is, and at all times during the term of this Contract and any extension will remain, the equal of or less than any fee structure offered for similar services to any other of its customers. Within thirty (30) days of offering a more advantageous fee structure to any other customer, Contractor shall offer the ASRS for immediate implementation at least the same fee structure.

4.2. Price Adjustments

4.2.1. The Contractor shall agree that the prices stated in the original Contract shall not be increased unless otherwise negotiated.

4.2.2. A price increase adjustment shall only be considered at the time of a contract extension and shall be a factor in the extension review process. The ASRS shall determine whether the requested price increase or an alternate option is in the best interest of the ASRS.

4.2.3. Price reduction may be offered at any time during the term of the Contract and shall become effective upon acceptance by the ASRS.

4.2.4. The Contractor understands and agrees the needs of the ASRS may change during the life of the Contract and the ASRS may propose changes to any part of this Contract with a commensurate, fair, and equitable adjustment in price. Any such changes shall be made in accordance with Article 5.1 (Amendments) of the Uniform Terms and Conditions of this Contract.

Description: Investment Consulting Services: Real Estate

4.3. Billing

4.3.1. All billing notices should be identified by Contractor’s name, list the Contract number, and clearly identify the line item, if applicable. Billing notices or invoices must be submitted by email to: asrsap@azasrs.gov.

4.3.2. Without prejudice to its other rights under the Contract or further obligation to Contractor, the ASRS may, at its discretion, reject any material defective invoice if it is determined that the invoice is materially defective.

4.3.3. If ASRS determines that an over-payment has been made to Contractor on any prior invoice, ASRS may deduct the over-paid amount from amounts then or thereafter due to Contractor.

4.4. Travel. In accordance the Pricing Schedule, travel must be inclusive of all fee. ASRS will not reimburse travel expenses unless ASRS requests travel not related to services contemplated within the Contract. In the case of ASRS approved travel expense reimbursement, Contractor may be reimbursed travel expenses in accordance with the published rates specified in the State of Arizona Travel Policy, located at https://gao.az.gov/travel/welcome-gao-travel, and incorporated herein.

4.5. Discounts. Contractor will apply discounts in accordance with the Pricing Schedule or subsequent Contract Amendment. Payment discount periods shall be computed from the date of receipt of services or correct invoice, whichever is later, to the date the ASRS makes payment. Unless charges are itemized, any discount provided shall be taken on full amount of the invoice. The ASRS shall be entitled to take advantage of any payment discount offered by Contractor provided payment is made within the discount period.

5. CONTRACT CHANGES

5.1. Contract Amendments. The Contract may be modified only through a Contract Amendment within the scope of the Contract. Changes to the Contract, including the addition of Work or Materials, the revision of payment terms, or the substitution of Work or Materials, directed by a person who is not specifically authorized by the Procurement Officer in writing or made unilaterally by Contractor are violations of the Contract and of applicable law. Such changes, including unauthorized written Contract Amendments shall be void and without effect, and Contractor shall not be entitled to any claim under this Contract based on those changes.

5.1.1. Signing of Contract Amendments. Both ASRS and Contractor signatures are required to give effect to a Contract Amendment, except that Contractor’s countersignature – or “approval” in the Arizona Procurement Portal (APP) – is not required to give effect if the Contract Amendment only covers either:

5.1.1.1. extension of the term of the Contract within the maximum aggregate term; or

5.1.1.2. modifications of a clerical nature that have no effect on terms, conditions, price, scope, or other material aspect of the Contract.

5.2. Contract Assignment. Contractor may not assign, transfer or convey any of its rights or obligations under this Contract without the written permission of the ASRS.

6. CONTRACT TERMINATION

6.1. Termination for Default

6.1.1. The ASRS reserves the right to terminate the whole or any part of this Contract due to failure of Contractor to carry out any obligation, term, or condition of the Contract, subject to sections 6.2 and 6.3 below.

6.1.1.1. The ASRS will issue a written ten (10) day notice of default to the Contractor for acting or failing to act, including in doing the following:

6.1.1.2. The Contractor fails to adequately perform the services set forth in the Scope of Work of the Contract;

https://gao.az.gov/travel/welcome-gao-travel

Description: Investment Consulting Services: Real Estate

6.1.1.3. The Contractor fails to complete the work required within the time stipulated in the Contract;

6.1.1.4. The Contractor attempts to impose on the ASRS, personnel which are of an unacceptable quality;

6.1.1.5. The Contractor fails to make progress in the performance of the Contract and/or gives the ASRS reason to believe the Contractor will not or cannot perform to the requirements of the Contract.

6.1.2. If the Contractor does not correct the above problem(s) within ten (10) days after receiving the notice of default, the ASRS may terminate the Contract. If the ASRS terminates the Contract pursuant to this clause, the ASRS reserves all rights or claims to damage for breach of contract.

6.1.3. The ASRS may recover reasonable excess costs from the Contractor by:

6.1.3.1. Deduction from an unpaid balance;

6.1.3.2. Collection against the offer and/or performance bond; or

6.1.3.3. Any combination of the above or any other remedies as provided by law.

6.2. Termination for Convenience. The Contract is for the convenience of the ASRS and as such may be terminated without default by the ASRS when in the best interest of the ASRS by providing a written thirty (30) day notice of termination to Contractor.

6.3. Performance of Contract Following Termination or Expiration

6.4. In the event the Contract expires or is terminated for any reason or cause, Contractor agrees to continue performance of its duties, if so requested by the ASRS, as though no expiration or termination had occurred for a period not to exceed six (6) months from the first day of the month following termination. Contractor shall cooperate fully with a replacement service contractor (“Replacement Contractor”) who assumes the Services under the Contract. In such event, Contractor shall continue to receive compensation set forth in the Contract unless modified by Contract Amendment to address unforeseen transition costs.

6.5. Data Relating to Contract

6.5.1. In the event of the expiration, termination or non-renewal of the Contract, Contractor, at its own expense, is obligated to return all data and records relating to the acquisition and performance of the Contract (“Data”) to the ASRS and to provide such Data to the Replacement Contractor in a format acceptable to the Replacement Contractor and that will ensure no loss of crucial data is incurred and no Services are interrupted.

6.5.2. The ASRS does not expect the Contractor to release any proprietary or trade secret information to the Replacement Contractor.

7. RISK AND LIABILITY

7.1. Risk of Loss. Contractor shall bear all risk of loss to Materials while in pre-production, production, storage, transit, staging, assembly, installation, testing, and commissioning, if and as those duties are within the scope of the Work, until they have been accepted as conforming by State in the particular location and situation specified in the Order, or as specified generally elsewhere in the Contract if the Order does not provide particulars, provided that, risk of loss for nonconforming Materials will remain with Contractor notwithstanding acceptance to the extent the loss stems from the nonconformance.

7.2. Indemnification Clause

To the fullest extent permitted by law, Contractor shall defend, indemnify, and hold harmless the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees

Description: Investment Consulting Services: Real Estate

(hereinafter referred to as “Indemnitee”) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorneys’ fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (including death), or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of Contractor or any of its owners, officers, directors, agents, employees or subcontractors. This indemnity includes any claim or amount arising out of, or recovered under, the Workers’ Compensation Law or arising out of the failure of such Contractor to conform to any federal, state, or local law, statute, ordinance, rule, regulation, or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by Contractor from and against any and all claims. It is agreed that Contractor will be responsible for primary loss investigation, defense, and judgment costs where this indemnification is applicable. In consideration of the award of this contract, the Contractor agrees to waive all rights of subrogation against the State of Arizona, its officers, officials, agents, and employees for losses arising from the work performed by the Contractor for the State of Arizona. This indemnity shall not apply if the contractor or sub-contractor(s) is/are an agency, board, commission or university of the State of Arizona.

7.3. Limitation of Liability

First Party Limitation of Liability Contractor's liability for first party damages to the ASRS arising from this Contract shall be limited to three time(s) the maximum-not-to-exceed amount of this Contract. The foregoing limitation of liability shall not apply to: (i) liability, including indemnification obligations, for third party claims, including but not limited to, infringement of third party intellectual property rights; (ii) claims covered by any specific provision of the Contract calling for liquidated damages or other amounts, including but not limited to, performance requirements; or (iii) costs or attorneys' fees that the ASRS is entitled to recover as a prevailing party in any action.

7.4. Contractor Insurance

7.4.1. In the event of the expiration, termination or non-renewal of the Contract by either party, Contractor, at its own expense, is obligated to return all data and records…