13. RELATED PARTY EXPENSE

Economic Dependency—Prior to the completion of the PELP transaction, we were dependent on Phillips Edison NTR LLC (“PE-NTR”), Phillips Edison & Company Ltd. (the “Property Manager”), and their respective affiliates for certain services that were essential to us, including asset acquisition and disposition decisions, asset management, operating and leasing of our properties, and other general and administrative responsibilities. Upon closing of the transaction in October 2017, our management structure became internalized and our relationship with PE-NTR and the Property Manager was acquired. As a result, we no longer pay the fees listed below and had no outstanding unpaid amounts related to those fees as of September 30, 2018 or December 31, 2017.

Advisory Agreement—PE-NTR and a previous advisor were entitled to specified fees and expenditure reimbursements for certain services, including managing our day-to-day activities and implementing our investment strategy under advisory agreements, as follows:


•	Asset management and subordinated participation fee paid out monthly in cash and/or Class B units;


•	Acquisition fee based on the cost of investments acquired/originated;


•	Acquisition expenses reimbursed related to selecting, evaluating, and acquiring assets; and


•	Disposition fee paid for substantial assistance in connection with the sale of a property.

Summarized below are the fees earned by and the expenses reimbursable for the three and nine months ended September 30, 2017 (in thousands):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Acquisition fees⁽¹⁾	$	294	$	1,344
Due diligence fees⁽¹⁾	370		583
Asset management fees⁽²⁾	5,071		15,388
OP unit distributions⁽³⁾	448		1,373
Class B unit distributions⁽⁴⁾	482		1,393
Disposition fees	—		19
Total	$	6,665	$	20,100


⁽¹⁾	The majority of acquisition and due diligence fees are capitalized and allocated to the related investment in real estate assets on the consolidated balance sheets based on the acquisition-date fair values of the respective assets and liabilities acquired.


⁽²⁾	Asset management fees are presented in General and Administrative on the consolidated statements of operations.


⁽³⁾	Distributions are presented as Distributions to Noncontrolling Interests on the consolidated statements of equity.


⁽⁴⁾	The distributions paid to holders of unvested Class B units are presented in General and Administrative on the consolidated statements of operations.

Property Management Agreement—Prior to the completion of the PELP transaction in October 2017, all of our real properties were managed and leased by the Property Manager, which was wholly-owned by PELP. The Property Manager was entitled to the following specified fees and expenditure reimbursements:


•	Property management fee based on monthly gross cash receipts from the properties managed;


•	Leasing commissions paid for leasing services rendered with respect to a particular property;


•	Construction management costs paid for construction management services rendered with respect to a particular property; and


•	Other expenses and reimbursement incurred by the Property Manager on our behalf.

Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three and nine months ended September 30, 2017 (in thousands):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Property management fees⁽¹⁾	$	2,717	$	7,986
Leasing commissions⁽²⁾	1,677		6,077
Construction management fees⁽²⁾	683		1,367
Other fees and reimbursements⁽³⁾	2,409		6,030
Total	$	7,486	$	21,460


⁽¹⁾	The property management fees are included in Property Operating on the consolidated statements of operations.


⁽²⁾	Leasing commissions paid for leases with terms less than one year were expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year, and construction management fees, were capitalized and amortized over the life of the related leases or assets.


⁽³⁾	Other fees and reimbursements are included in Property Operating and General and Administrative on the consolidated statements of operations based on the nature of the expense.

Other Related Party Matters—Under the terms of the advisory agreement, we have incurred organizational and offering costs related to PECO III. A portion of those costs were incurred by Griffin Capital Corporation (“Griffin sponsor”), a co-sponsor of PECO III. The Griffin sponsor owns a 25% interest and we own a 75% interest in PECO III’s advisor. As such, $1.0 million of the receivable we have from PECO III is reimbursable to the Griffin sponsor and is recorded in Accounts Payable - Affiliates on the consolidated balance sheets.

Upon completion of the PELP transaction, we assumed PELP’s obligation as the limited guarantor for up to $200 million, capped at $50 million in most instances, of NRP’s debt. Our guarantee is limited to being the non-recourse carveout guarantor and the environmental indemnitor.