EFTA00237405.pdf

UBS Memorandum No.: AlphaKeys European Real Estate Opportunities Fund II, L.L.C. ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001774 EFTA00237405  UBS Memorandum No.: AlphaKeys European Real Estate Opportunities Fund II, L.L.C. Important Information This Confidential Offering Memorandum and any amendments and supplements thereto (for the avoidance of doubt, excluding any appendices attached hereto, this "Memorandum") is being furnished to selected qualified investors on a confidential basis for their consideration in connection with the private offering of limited liability company interests (the "interests") in AlphaKeys European Real Estate Opportunities Fund II, L.L.C. (the "AlphaKevs Fund"). Prospective investors should read this Memorandum carefully before deciding whether to purchase Interests and should pay particular attention to the information set forth in "Section III. Risk Factors and Other Considerations" and "Section IV. Conflicts of Interest." The AlphaKeys Fund will invest substantially all of its capital in limited partner interests in Blackstone Real Estate Partners Europe V L.P., a Cayman Islands exempted limited partnership (the "Underlying Fund"). For a more detailed description of the Underlying Fund, see the Confidential Private Placement Memorandum of the Underlying Fund attached hereto as Appendix A (as amended, restated or supplemented from time to time, each as provided by Blackstone, collectively, the "Underlying Fund Memorandum"). Notwithstanding the foregoing or anything to the contrary herein, investors in the AlphaKeys Fund will not be limited partners in the Underlying Fund and an investment in the Interests is not an investment in the Underlying Fund. By its acceptance hereof, each recipient agrees that this Memorandum may not be reproduced or distributed to others (except to the recipient's professional advisors) without the prior written consent of the AlphaKeys Fund, and that the recipient and his or her professional advisors will keep permanently confidential all information contained in this Memorandum not already in the public domain and will use this Memorandum for the sole purpose of evaluating a possible investment in the AlphaKeys Fund. No person has been authorized to make any statement concerning the AlphaKeys Fund or the offering being made by this Memorandum, other than as set forth herein, and any such statements, if made, may not be relied upon. The AlphaKeys Fund is member-managed. UBS Fund Advisor, L.L.C., a Delaware limited liability company (the "Administrator") has been appointed as Administrator to the AlphaKeys Fund. Further, under the LLC Agreement (as defined below), the Members of the AlphaKeys Fund appoint UBS Fund Advisor, L.L.C. ("UBSFA") as Member Designee (as defined in the LLC Agreement). The Administrator is a direct, wholly owned subsidiary of UBS Americas, which, in turn, is a direct, wholly owned subsidiary of UBS AG (together with its affiliates, "UBS"). Prospective investors should not construe the contents of this Memorandum as legal, investment, tax or other advice. Prospective investors should conduct their own investigation and evaluation of the investment offered hereby. Each prospective investor should consult and rely on his or her own attorneys, business and tax advisors as to legal, business, tax and related matters concerning this offering and its suitability for such prospective investor. Each investor will be required to stipulate in his, her or its Investor Application (as defined below) relating to its investment in the AlphaKeys Fund that he, she, or it has not relied upon the AlphaKeys Fund, UBS Financial Services Inc., the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their affiliates, for tax or legal advice and that the investor has relied only on his, her or its own advisor for tax and legal advice. My losses by the AlphaKeys Fund will be borne solely by the Members (as defined below) and not by the Administrator, or its affiliates; therefore, UBSFA's and its affiliates' or subsidiaries' losses in the AlphaKeys Fund will be limited to losses attributable to the Interests in the AlphaKeys Fund held by UBSFA and its affiliates or subsidiaries in their capacity as members in the AlphaKeys Fund. An investment in the AlphaKeys Fund is speculative and involves significant risks and conflicts of interest. cc 'S,E.ction Ir. is: t 7Ctcr< zit Other Considerations" and "Section IV. Conflicts of Interest" below. Both CONFIDENTIAL UBSTERRAMAR00001775 EFTA00237406  the AlphaKeys Fund and the Underlying Fund are intended for long-term investors who can accept the significant risks associated with investing in illiquid assets. Accordingly, an investment in the AlphaKeys Fund should only be considered by persons who can afford a loss of their entire investment and Members should maintain sufficient liquid assets to meet capital call obligations and manage short-term and long- term cash needs. No assurance can be given that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved. Investors should understand the risks associated with an investment in the AlphaKeys Fund and have the financial ability and willingness to accept such risks for an indefinite period of time. Tax-exempt investors may recognize a significant amount of unrelated-business taxable income ("UBTI") as defined in Section 512 of the Internal Revenue Code of 1986, as amended (the "Code") as a result of an investment in the AlphaKeys Fund and, accordingly, are strongly urged to consult their own tax advisors regarding the advisability of an investment in the AlphaKeys Fund. See "Section V. Certain Material U.S. Federal Income Tax Considerations" below. The information contained in this Memorandum has been prepared by the AlphaKeys Fund. None of the Underlying Fund, the Underlying Fund General Partner or the Underlying Fund Adviser (each as defined in the "Introduction" below), or The Blackstone Group L.P. and/or its affiliates ("Blackstone") or their respective affiliates (i) has participated in the offering of interests of the AlphaKeys Fund or (ii) is responsible for such offering of interests of the AlphaKeys Fund, the operation of the AlphaKeys Fund or the contents of this Memorandum, the AlphaKeys Fund's governing documents, the AlphaKeys Fund's Investor Application (as defined below), related agreements and instruments or any accompanying sales documentation, each as amended or supplemented. Purchasers of the interests offered hereby will not be limited partners of the Underlying Fund, will have no voting rights or direct interest in the Underlying Fund and will have no standing or recourse against the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, their respective affiliates or any of their respective general partners, investment advisers, officers, directors, employees, partners or members. Purchasers of the interests will not be parties to the operating documents of the Underlying Fund (as amended, restated or supplemented from time to time, the "Underlying Fund Operating Document") and, will not have any rights thereunder and may not bring a direct action on their own behalf against the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, any of their respective affiliates or any of their respective general partners, investment advisors, officers, directors, employees, partners or members for any breach thereof. The interests offered hereby are interests in the AlphaKeys Fund, not the Underlying Fund, and the offering of interests in the AlphaKeys Fund does not constitute, and should not be considered, a direct or indirect offering of interests in the Underlying Fund. Although the AlphaKeys Fund is being established to invest in the Underlying Fund, it is not an affiliate of the Underlying Fund and will be administered solely by the Administrator or its affiliates. Potential purchasers of interests should note that none of the AlphaKeys Fund, the Administrator, UBS or any of their respective affiliates have the power to legally bind or commit the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, or their respective affiliates. All statements in this Memorandum regarding the Underlying Fund and its terms, the Underlying Fund General Partner or the Underlying Fund Adviser are qualified in their entirety by reference to the Underlying Fund Memorandum, which is subject to change. The terms of the Underlying Fund may be subject to continuing negotiation with prospective investors who invest directly in the Underlying Fund and may be different from those summarized herein or provided in the materials referenced herein. A prospective investor should not invest unless it is able to sustain the loss of all or a significant portion of its investment. Offers of interests will be made only pursuant to this Memorandum. Offering literature in any form whatsoever employed in connection with the offering and sale of interests is subject to, and is superseded by, this Memorandum and, to the extent applicable with respect to any terms applicable to the Underlying ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001776 EFTA00237407  Fund, the Underlying Fund Operating Document. In the event of any conflict between this Memorandum or the Underlying Fund Operating Document, on the one hand, and any other offering literature, on the other hand, this Memorandum (or with respect to any terms applicable to the Underlying Fund, the Underlying Fund Operating Document) shall control. No person has been authorized to give any information or to make any representation other than those contained in this Memorandum, and, if given or made, such information should not be relied upon as having been authorized by the AlphaKeys Fund, the Member Designee, the Administrator, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates. The information regarding the AlphaKeys Fund and the Underlying Fund contained herein is provided on a confidential basis and by accepting delivery of this Memorandum and the Underlying Fund Memorandum attached hereto, the recipient agrees to keep such information confidential and to use it solely for the purpose of evaluating an investment in the AlphaKeys Fund. Notwithstanding anything else in this Memorandum to the contrary, the Members may disclose to any and all persons, without limitation of any kind, information regarding the tax treatment, tax structure and tax strategies of the AlphaKeys Fund, the offering of its interests and its transactions all within the meaning of U.S. Treasury Regulation § 1.6011- 4(b)(3). For the avoidance of doubt, this authorization is not intended to permit disclosure of the names of, or other identifying information regarding, the participants in this offering, or of any information or the portion of any materials not relevant to the tax treatment, tax structure or tax strategies of the offering. Certain information contained in this Memorandum relating to Blackstone, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser and their affiliates has been derived by UBS Financial Services Inc. from materials furnished on behalf of the Underlying Fund. Such information (a) has not been independently verified by the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates and (b) does not necessarily reflect the views or opinions of UBS. Moreover, none of the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates has the right to participate in the control, management or operations of the Underlying Fund, nor has any discretion over the management of the Underlying Fund. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates make any representation or warranty (whether express or implied) regarding, and expressly disclaims any liability or responsibility for the fairness, correctness, accuracy, reasonableness or completeness of any of the information set forth herein other than with respect to the Underlying Fund Memorandum. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates are responsible for the formation or operation of the AlphaKeys Fund. None of Blackstone, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund's investment advisor, agents or affiliates nor any of their respective officers, directors, employees, partners or members are affiliates of the AlphaKeys Fund, the Member Designee or the Administrator or have endorsed or make any recommendations of the AlphaKeys Fund. Descriptions of any rights, benefits and effects described in the Underlying Fund Memorandum will inure to the benefit of, and/or apply to, the AlphaKeys Fund as a whole and not to the Members in the AlphaKeys Fund. Actual realized returns on unrealized investments will depend on, among other factors, future operating results, the value of the assets, and market conditions at the time of disposition, legal and contractual restrictions, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which the valuations used in the prior performance data contained in the Underlying Fund Memorandum are based. Accordingly, the actual realized returns on these unrealized investments may differ materially from the returns CONFIDENTIAL UBSTERRAMAR00001777 EFTA00237408  indicated therein. In considering any performance information contained therein, prospective investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that the Underlying Fund or the AlphaKeys Fund will achieve comparable results or that the Underlying Fund will be able to implement its investment strategy, achieve its investment objectives or avoid substantial losses. This Memorandum and the Underlying Fund Memorandum contain forward-looking statements. Forward- looking statements are statements that are not historical facts, including statements about beliefs and expectations. Any statement in this Memorandum or the Underlying Fund Memorandum that contains intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These assumptions are based on plans, estimates, and projections, as they are currently available. Forward-looking statements therefore speak only as of the date they are made, and none of the Underlying Fund, the Underlying Fund General Partner, Blackstone, the Underlying Fund Adviser, the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates undertakes to update any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could therefore cause actual results of the AlphaKeys Fund or the Underlying Fund to differ materially from those contained in any forward-looking statement. See "Section III. Risk Factors and Other Considerations" and "Section IV. Conflicts of Interest." As used in this Memorandum, an "affiliate" of any person or entity will include any person controlling, controlled by or under common control with such person. The Underlying Fund Memorandum includes a variety of performance information relating to the Underlying Fund and other investment vehicles managed by the Underlying Fund General Partner and/or the Underlying Fund Adviser. Information presented about other funds or selected investments made by the Underlying Fund General Partner and/or the Underlying Fund Adviser, while informative regarding the experience of the Underlying Fund General Partner and/or the Underlying Fund Adviser, are not indicative of, and in some cases may be irrelevant to, an assessment of the potential performance or investments of the AlphaKeys Fund (in connection with its investment in the Underlying Fund). While reviewing the performance information set forth in the Appendix to the Underlying Fund Memorandum, investors should pay particular attention to the net return information provided in the endnotes to such Appendix. PERFORMANCE SHOWN IN THE UNDERLYING FUND MEMORANDUM IS NOT THAT OF THE ALPHAKEYS FUND. THE PERFORMANCE SHOWN IS NOT NET OF ADDITIONAL FEES THAT WILL BE CHARGED AT THE ALPHAKEYS FUND LEVEL. The returns of the AlphaKeys Fund will be lower, and may be materially lower than the returns at the Underlying Fund level. Performance shown in the Underlying Fund Memorandum does not include AlphaKeys Fund-level Fees and Expenses or the Placement Fee (if charged), as each is defined below. Such fees will reduce returns. Returns for the AlphaKeys Fund may also differ from the returns of the Underlying Fund as a result of funds invested in Temporary Investments (as defined below) by the AlphaKeys Fund and delayed distributions by the AlphaKeys Fund to its investors. No representation or warranty is being made herein as to the past or future investment performance of the AlphaKeys Fund or the Underlying Fund. Only those particular representations and warranties that may be made by the AlphaKeys Fund in a definitive investor application ("Investor Application") relating to the purchase of Interests, when and if one is executed, and subject to such limitations and restrictions as may be specified in such Investor Application, will have any legal effect. Interests are being offered exclusively to investors who meet the qualification standards set forth in this Memorandum, with a minimum Capital Commitment (as defined below) of $250,000, CONFIDENTIAL UBSTERRAMAR00001778 EFTA00237409  subject to the discretion of the Member Designee to accept lesser amounts or raise the minimum Capital Commitment, as described herein. Except where otherwise indicated, the information contained in this Memorandum has been compiled as of the date set forth in this Memorandum, and information regarding the Underlying Fund is as of the date set forth in the Underlying Fund Memorandum. None of the AlphaKeys Fund, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, the Member Designee, the Administrator or any of their respective affiliates has any obligation to update any portion of this Memorandum. Under no circumstances should the delivery of this Memorandum, irrespective of when it is made, create any implication that there has been no change in the affairs of the AlphaKeys Fund, the Underlying Fund, the Member Designee, the Administrator or any of their respective affiliates since such date. This Memorandum is not an offer to sell or a solicitation of an offer to buy an Interest, nor will any Interest be offered or sold, to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Accordingly, the Interests may not be offered or sold, directly or indirectly, and this Memorandum may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable to such jurisdiction. The AlphaKeys Fund reserves the right to modify any of the terms of the offering and the Interests described herein. This Memorandum will remain the property of the AlphaKeys Fund. The AlphaKeys Fund reserves the right to require the return of this Memorandum at any time from prospective investors who do not purchase Interests in the AlphaKeys Fund. This Memorandum is intended for investors who are U.S. Persons within the meaning of Section 7701(aX30) of the Code (as described below). IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ALPHAKEYS FUND AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY U.S. FEDERAL OR STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY AND NONE OF THE FOREGOING AUTHORITIES HAVE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NONE OF THE ALPHAKEYS FUND, THE MEMBER DESIGNEE, THE ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES MAKES ANY ENDORSEMENT OR RECOMMENDATION OF THE UNDERLYING FUND AND THE ESTABLISHMENT OF THE ALPHAKEYS FUND TO INVEST IN THE UNDERLYING FUND DOES NOT CONSTITUTE SUCH ENDORSEMENT OR RECOMMENDATION. IT IS ANTICIPATED THAT THE OFFERING AND SALE OF THE INTERESTS OFFERED HEREBY WILL BE EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE VARIOUS STATE SECURITIES LAWS, AND THAT THE ALPHAKEYS FUND WILL NOT BE REQUIRED TO REGISTER UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE INTERESTS OFFERED HEREBY HAVE NOT AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES LAWS, AND WILL BE OFFERED AND SOLD FOR INVESTMENT ONLY TO QUALIFYING RECIPIENTS OF THIS MEMORANDUM PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY SECTION 4(A)(2) THEREOF AND IN COMPLIANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS. THE INTERESTS MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE OR OTHER SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. IN ADDITION, SUCH INTERESTS MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED, IN WHOLE OR IN PART, EXCEPT AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS Eyktinnis alisItyffiliffECERIOD OF TIME. THERE WILL BE NO PUBLIC MARKET FOR THE CONFIDENTIAL UBSTERRAMAR00001779 EFTA00237410  INTERESTS, AND THERE IS NO OBLIGATION ON THE PART OF ANY PERSON TO REGISTER THE INTERESTS UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW. REQUIRED SECURITIES ACT DISCLOSURE. PURSUANT TO RECENT AMENDMENTS TO RULE 506 OF REGULATION D UNDER THE SECURITIES ACT (THE "RULE"), THE ALPHAKEYS FUND IS REQUIRED, AMONG OTHER THINGS, TO DISCLOSE CERTAIN DISCIPLINARY EVENTS, IN RESPECT OF VARIOUS ENTITIES AND/OR INDIVIDUALS, THAT OCCURRED PRIOR TO THE RULE'S EFFECTIVE DATE OF SEPTEMBER 23, 2013, AND SUCH DISCLOSURE IS ANNEXED HERETO AS APPENDIX C. INTERESTS ARE NOT DEPOSITS IN, OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE MEMBER DESIGNEE, THE ADMINISTRATOR OR ANY OF THEIR AFFILIATES, ANY U.S. OR NON-U.S. DEPOSITORY INSTITUTION, ARE NOT INSURED BY THE FEDERAL RESERVE BOARD OR ANY OTHER U.S. OR NON-U.S. GOVERNMENTAL AGENCY. INTERESTS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, AND ARE NOT DEPOSITS, OBLIGATIONS OF, OR ENDORSED OR GUARANTEED IN ANY WAY, BY ANY BANKING ENTITY. INTERESTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE ENTIRE AMOUNT INVESTED. THE ADMINISTRATOR IS REGISTERED AS A "COMMODITY POOL OPERATOR" WITH THE COMMODITY FUTURES TRADING COMMISSION ("MC") AND IS A MEMBER OF THE NATIONAL FUTURES ASSOCIATION ("NFA") IN SUCH CAPACITY UNDER THE U.S. COMMODITY EXCHANGE ACT, AS AMENDED. WITH RESPECT TO THE ALPHAKEYS FUND, THE ADMINISTRATOR HAS CLAIMED AN EXEMPTION PURSUANT TO CFTC RULE 4.13(A)(3) AS A "COMMODITY POOL OPERATOR" BASED ON THE ALPHAKEYS FUND'S LIMITED TRADING IN COMMODITY INTERESTS, AND WILL OPERATE THE ALPHAKEYS FUND AS IF THE ADMINISTRATOR WERE EXEMPT FROM REGISTRATION WITH THE CFTC AS A REGISTERED "COMMODITY POOL OPERATOR." PURSUANT TO THE EXEMPTION UNDER CFTC RULE 4.13(A)(3), THE ADMINISTRATOR IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT OR A CERTIFIED ANNUAL REPORT TO INVESTORS. * * * JANUARY 2016 ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001780 EFTA00237411  TABLE OF CONTENTS I. INTRODUCTION 1 II. SUMMARY OF PRINCIPAL TERMS OF THE ALPHAKEYS FUND 3 III. RISK FACTORS AND OTHER CONSIDERATIONS 23 IV. CONFLICTS OF INTEREST 32 V. CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS 36 VI. REGULATORY CONSIDERATIONS 49 APPENDIX A: CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, AND SUPPLEMENTS THERETO, OF BLACKSTONE REAL ESTATE PARTNERS EUROPE V S A-1 APPENDIX B: LIMITED LIABILITY COMPANY AGREEMENT OF ALPHAKEYS EUROPEAN REAL ESTATE OPPORTUNITIES FUND II, L.L.0 B-1 APPENDIX C: REQUIRED SECURITIES ACT DISCLOSURE OF ALPHAKEYS EUROPEAN REAL ESTATE OPPORTUNITIES FUND II, L.L.0 C-1 ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001781 EFTA00237412  I. INTRODUCTION AlphaKeys European Real Estate Opportunities Fund II, L.L.C. (the "AlphaKeys Fund") a newly formed Delaware limited liability company, is a private investment fund established by UBS Fund Advisor, L.L.C., the AlphaKeys Fund's member designee (the "Member Designee") to invest substantially all of its capital in limited partnership interests in Blackstone Real Estate Partners Europe V M. (the "Underlying Fund"). Blackstone Real Estate Associates Europe V M. serves as the Underlying Fund's general partner (the "Underlying Fund General Partner") and Blackstone Real Estate Advisors M, has been appointed to provide advisory and management services to the Underlying Fund (the "Underlying Fund Adviser"). The AlphaKeys Fund will invest in the Underlying Fund. There can be no assurance that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved, that such funds will be able to implement their respective investment strategies, or avoid substantial losses. For a more detailed description of Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser, see the Confidential Private Placement Memorandum of the Underlying Fund, attached hereto as Appendix A (as the same has been amended, restated or supplemented from time to time, each as provided by Blackstone, collectively, the "Underlying Fund Memorandum"). None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone and their respective affiliates are responsible for the formation or operation of the AlphaKeys Fund. The offering of interests in the AlphaKeys Fund should not be considered an offering of interests in the Underlying Fund. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone or any of their respective affiliates, officers, directors, employees, partners or members have endorsed or make any recommendations of the AlphaKeys Fund. None of the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates makes any endorsement or recommendation of the Underlying Fund and the establishment of the AlphaKeys Fund to invest in the Underlying Fund does not constitute such endorsement or recommendation. Each investor admitted to the AlphaKeys Fund (each a "Member") at a closing (a "Closing") will be required to make an initial payment on or prior to the Initial Closing or upon a Subsequent Closing or as otherwise determined by the Member Designee equal to a percentage of its capital commitment to the AlphaKeys Fund (a "Capital Commitment") as specified by the Member Designee as will enable the AlphaKeys Fund to fund its initial capital contribution and other obligations with respect to the Underlying Fund and to pay organizational expenses and other fees and expenses incurred by the AlphaKeys Fund. Thereafter, the Member Designee may make calls for the remaining portion of the Capital Commitment of each Member and capital calls with respect to Excess Contributions (as defined below) on not less than five (5) calendar days' prior notice, provided however, to the extent the Underlying Fund calls for a contribution to the Underlying Fund on less than five (5) calendar days notice, the AlphaKeys Fund may call capital from its investors on less than five (5) calendar days notice to satisfy its obligations to the Underlying Fund. Capital Commitments and calls for Excess Contributions (as defined below) will be denominated in U.S. dollars. A Member may be required to make capital contributions to the AlphaKeys Fund ("Capital Contributions") in an amount in excess of its Capital Commitment (a) in the event the AlphaKeys Fund has to make capital contributions or other payments to the Underlying Fund in excess of the AlphaKeys Fund's capital commitment to the Underlying Fund, (b) for any AlphaKeys Fund-level fees and expenses applicable to such Member at the AlphaKeys Fund level, including, without limitation, the administrative fee paid to UBSFA as described under "Administrative Fee" below) and other Fund Expenses (as defined under "Other Fees and Expenses" below) (collectively, the "AlphaKeys Fund-level Fees and Expenses") or (c) any tax payments made by the AlphaKeys Fund on behalf of such Member (or interest or penalties associated therewith). In addition, it is expected that each Member will be ER305378-MAXWELL -1- CONFIDENTIAL UBSTERRAMAR00001782 EFTA00237413  required to make contributions to the AlphaKeys Fund in excess of its Capital Commitment to pay the management fee charged by the Underlying Fund as set forth in the Underlying Fund Memorandum (the "Underlying Fund Management Fee") and certain Underlying Fund organizational expenses, as set forth in the Underlying Fund Memorandum. The excess Capital Contributions described above are referred to herein as "Excess Contributions." The AlphaKeys Fund may invest all Capital Commitments in the Underlying Fund. As a result, the extent to which a Member will be required to make certain Excess Contributions will depend on the percentage of aggregate capital commitments called by the Underlying Fund (for example, if the Underlying Fund calls 100% of commitments, each Member's share, if any, of applicable AlphaKeys Fund-level Fees and Expenses and the Underlying Fund Management Fee and Underlying Fund organizational expenses would be in addition to such Member's Capital Commitment). In addition, a Member may also be required to pay a Placement Fee (as defined below), as discussed in further detail below. Pending investment in the Underlying Fund or as the Member Designee otherwise determines is necessary or prudent in its sole discretion, including for payment of fees and expenses (as described herein), the AlphaKeys Fund may invest in Temporary Investments (as defined below). Investor Applications The offering made hereby of limited liability company interests (the " nterests") in the AlphaKeys Fund is made only to the person to whom this Memorandum has been delivered provided such person is a UBS client and an Eligible Purchaser (as defined below). Each Member ordinarily will be required to make a Capital Commitment of not less than $250,000 to the AlphaKeys Fund, subject to the discretion of the AlphaKeys Fund to accept Capital Commitments of a lesser amount or raise the minimum Capital Commitment. The AlphaKeys Fund may vary the investment minimums from time to time. The AlphaKeys Fund reserves the right to accept or reject any investor application ("investor Molicatiork") for Interests or the application of any Member wishing to increase its existing Capital Commitment. Charitable remainder trusts will not be admitted to the AlphaKeys Fund and generally, the AlphaKeys Fund will not accept Capital Commitments from any Individual Retirement Accounts. An "Eligible Purchaser" must be: (i) a qualified purchaser under the Investment Company Act (as defined below), (ii) an accredited investor under the Securities Act (as defined below), and (iii) a U.S. Person within the meaning of Section 7701(a)(30) of the Code (as described below), unless otherwise permitted by law. Members will be charged by the Placement Agent (as defined below) a Placement Fee (as defined below) of two percent (2%) of the Members' respective Capital Commitments, subject to waiver by the Placement Agent in limited circumstances. The Placement Agent may reallocate all or a portion of such Placement Fee to a Member's financial advisor or other securities dealers participating in the placement of Interests. The Placement Fee will be in addition to any Capital Contributions a Member is required to make to the AlphaKeys Fund and will not reduce its Capital Commitment, including for the purposes of determining such Member's Sharing Percentage (as defined below). Notwithstanding anything to the contrary contained herein, any Member who is a client of UBS Financial Services Inc. ("UBSFS") and invests in the AlphaKeys Fund through an Advisory Program (as defined below) will be issued Advisory Class limited liability company interests and will not be charged a Placement Fee or an Administrative Fee (as defined below). Each Member (including permitted transferees) will be obligated to agree to be bound by all of the terms of the LLC Agreement. Each potential investor also will be obligated to represent and warrant in the Investor Application, among other things, that such investor is purchasing an Interest for its own account, and not with a view to the distribution, assignment, transfer or other disposition of such Interest. ER305378-MAXWELL -2- CONFIDENTIAL UBSTERRAMAR00001783 EFTA00237414  II. SUMMARY OF PRINCIPAL TERMS OF THE ALPHAKEYS FUND The following is a summary of the principal terms of AlphaKeys European Real Estate Opportunities Fund ll, C.L.C. (the "AlohaKevs Fund"). This summary is qualified in its entirety by reference to the Limited Liability Company Agreement of the AlphaKeys Fund (as amended from time to time, the "L(C Agreement") and the investor application (the "Investor Application"), both of which should be reviewed carefully prior to making an investment decision. The offer made hereby is subject to modification, prior sale and withdrawal. Certain information contained in this Memorandum relating to Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser has been derived by UBS Financial Services Inc. from materials furnished on behalf of the Underlying Fund. For a more detailed description of Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser, see the Confidential Private Placement Memorandum of the Underlying Fund and any supplements thereto, attached hereto as Appendix A (collectively, the "Underlying FundMemorandum). The AlphaKeys AlphaKeys European Real Estate Opportunities Fund II, L.L.C., a Delaware limited Fund liability company (the "AlphaKeys Fund") a newly created entity. Investment The AlphaKeys Fund has been organized to invest substantially all of its capital in Objective and limited partner interests in Blackstone Real Estate Partners Europe V M, a Operations Cayman Islands exempted limited partnership (the "Underlying Fund"). For a more detailed description of the Underlying Fund, see the Underlying Fund Memorandum. The Underlying Fund may offer multiple classes of interests. The AlphaKeys Fund may allocate to any dass of interests in the Underlying Fund in the sole discretion of the Administrator without prior notice or consent. The Underlying Fund may, in its sole discretion, require the AlphaKeys Fund to hold its interest in the Underlying Fund through a separate alternative investment vehicle, parallel fund or feeder fund that would have substantially similar terms as the Underlying Fund, as further described in the Underlying Fund Memorandum attached hereto as Appendix A. The AlphaKeys Fund will invest in the Underlying Fund. As more fully described in the Underlying Fund Memorandum, the principal investment objective of the Underlying Fund is to make control-oriented "opportunistic" real estate investments, primarily in Europe, by investing in equity, debt or other interests in, or relating to, real estate assets of any type or real estate companies and real- estate related companies. There can be no assurance that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved, that such funds will be able to implement their respective investment strategies or avoid substantial losses. The Underlying Fund Memorandum should be read carefully by all prospective investors. Classes of The AlphaKeys Fund currently offers two classes of limited liability company Interests interests; the Brokerage Class and the Advisory Class. Members that invest through the UBS "Institutional Consulting Program" or another UBS investment advisory program that is approved for investment into the AlphaKeys Fund by UBSFA (an "Advisory Program"), and pursuant to which UBS or its affiliates will receive a fee directly from such investor for the investment in the AlphaKeys Fund, will be Members of the Advisory Class. All other Members will be admitted into the Brokerage Class. Unless otherwise specified herein, references to "Members" shall indude Members of both the Brokerage Class and the ER305378-MAXWELL -3- CONFIDENTIAL UBSTERRAMAR00001784 EFTA00237415  Advisory Class. The AlphaKeys Fund may, in its sole discretion and from time to time, establish additional dasses of interests that may differ in terms of, among other things, the timing and amount of fees charged, distribution rights and other terms. In particular, the AlphaKeys Fund may establish an additional class of preferred equity interests (which may be held by the Member Designee (as defined below) or an affiliate thereof) that may differ in terms of, among other things, a priority with respect to distributions and in dissolution, the right to a preferred return, the right to receive certain cash proceeds, different voting rights, the timing and amount of fees charged and withdrawal rights. Administrator The AlphaKeys Fund is member-managed for purposes of Delaware law. and Member Pursuant to the LLC Agreement, the investors have appointed UBS Fund Advisor, Designee L.L.C., a Delaware limited liability company, to act as "Member Designee" (in such capacity, the "Member Designee") and, accordingly, have delegated all of their rights, powers, duties and obligations to manage and control the business and affairs of the AlphaKeys Fund to the Member Designee; provided, that the investors have not delegated (i) their rights to vote on amendments to the LLC Agreement, to the extent applicable, (ii) their right under the LLC Agreement to call a meeting of the investors; or (iii) their rights under the LLC Agreement to vote to terminate the Administrative Services Agreement and/or to revoke the delegation of rights and powers to the Member Designee (as further described herein). In addition, UBS Fund Advisor, L.L.C. has been appointed by the investors to provide certain administrative and support services to the AlphaKeys Fund (in such capacity, the "Administrator") pursuant to an administrative services agreement with the AlphaKeys Fund (the "Administrative Services Agreement"). One or more affiliates of the Administrator and the Placement Agent (as defined below) and third parties will be engaged to provide certain services to the AlphaKeys Fund at the expense of the AlphaKeys Fund. The Administrator and its affiliates provide certain administrative and investment advisory services to registered and unregistered investment funds and individual accounts. The Administrator or an affiliate may hold a nominal Interest in, and may be an investor of, the AlphaKeys Fund. The Administrator is a direct, wholly owned subsidiary of UBS Americas, Inc. ("UBS Americas") which, in turn, is a wholly owned subsidiary of UBS AG, a Swiss bank. The Placement Agent, a wholly owned subsidiary of UBS Americas, is registered as a broker-dealer under the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member of the New York Stock Exchange, Inc. and other principal securities exchanges. The offices of the Administrator are located at 1285 Avenue of the Americas, New York, New York 10019, and its telephone number is (800) 486-2608. The Administrator may, directly or indirectly, assign all or any part of its rights and duties under the Administrative Services Agreement to any individual or entity, with the prior approval of the AlphaKeys Fund. In the event of an assignment of the Administrative Services Agreement, the Member Designee of the AlphaKeys Fund is authorized to grant consent on behalf of the AlphaKeys Fund. The Member Designee will provide written notice to the Members in the event that it grants consent to an assignment. Because the Member Designee and the Administrator are currently the same entity, it is unlikely that the Member Designee will withhold consent to an assignment proposed by the ER305378-MAXWELL -4- CONFIDENTIAL UBSTERRAMAR00001785 EFTA00237416  Administrator. In addition, the Administrator may resign as Member Designee of the AlphaKeys Fund and cause another individual or entity to be appointed as the replacement member designee of the AlphaKeys Fund with (i) the prior consent of the AlphaKeys Fund, or (ii) prior notice to the AlphaKeys Fund and, to the extent consistent with applicable law, without the prior consent of the AlphaKeys Fund. The Administrator may be removed as the Member Designee of the AlphaKeys Fund and/or the Administrative Services Agreement may be terminated upon the vote of at least a majority-in-interest of Members who are not affiliates of the Administrator ("Unaffiliated Members") at a meeting of the Members called for such purpose as further described in the LLC Agreement; provided, however, that the Members must first arrange to delegate such rights and powers to manage the AlphaKeys Fund to a Qualified Replacement (as defined in the LLC Agreement) approved by the Administrator. A substitute member designee and/or administrator may be appointed upon the vote of at least a majority-in- interest of the Unaffiliated Members. In certain circumstances, the LLC Agreement permits the Administrator to reduce a Member's voting or approval rights. Administrative Pursuant to the Administrative Services Agreement, the Administrator will receive Fee an annual fee (the "Administrative Fee") commencing on the initial closing date