NOTE 7: Equity Compensation Plans

Long Term Incentive Plan

On April 5, 2011, our board of directors approved and adopted the Long Term Incentive Plan, or the incentive plan, and the Independent Directors Compensation Plan, or the director plan. Our incentive plan provides for the grants of awards to our directors, officers and full-time employees (in the event we ever have employees), full-time employees of our advisor and its affiliates, full-time employees of entities that provide services to our advisor, directors of our advisor or of entities that provide services to it, certain of our consultants and certain consultants to our advisor and its affiliates or to entities that provide services to our advisor. The incentive plan authorizes the grant of restricted or unrestricted shares of our common stock, non-qualified and incentive stock options, restricted stock units, stock appreciation rights, dividend equivalents and other stock- or cash-based awards. On July 29, 2013, our board of directors and stockholders approved the amendment and restatement of our incentive plan to reduce the number of shares of common stock issuable thereunder to 800,000 shares.

Under the director plan, which operates as a sub-plan of our incentive plan, each of our independent directors will receive 3,000 shares of common stock annually. In addition, our independent directors may elect to receive their annual cash fee in the form of our common shares or a combination of common shares and cash. On May 14, 2015, our compensation committee made a stock grant under the director plan so that our independent directors received 12,000 shares of our common stock, in the aggregate valued at $107 using our closing stock price of $8.89. These awards vested immediately. On May 14, 2014, our compensation committee made a stock grant under the director plan so that our independent directors received 9,000 shares of our common stock, in the aggregate valued at $81 using our closing stock price of $8.95. These awards vested immediately.

On February 12, 2016, our compensation committee awarded 210,000 restricted stock awards, valued at $6.22 per share, or $1,306 in the aggregate. The awards vest over a three-year period.

On February 18, 2015, our compensation committee awarded 100,000 shares of restricted common stock, valued at $935 using IRT’s closing stock price of $9.35, and awarded 300,000 stock appreciation rights, or SARs, valued at $219 based on the Black-Scholes option pricing model at the date of grant, to persons affiliated with our advisor, including our executive officers. These awards generally vest over three-year periods. The SARs may be exercised between the date of vesting and February 18, 2020, the expiration date of the SARs.

On January 31, 2014, our compensation committee awarded 40,000 shares of restricted common stock, valued at $328 using our closing stock price of $8.20, and awarded 80,000 SARs, valued at $49 based on a Black-Scholes option pricing model at the date of grant, to persons affiliated with our advisor, including our executive officers. These awards generally vest over three-year periods. The SARs may be exercised between the date of vesting and January 31, 2019, the expiration date of the SARs.

A summary of the SARs activity of the Long Term Incentive Plan is presented below.

	2015					2014
	SARs			Weighted Average Exercise Price		SARs			Weighted Average Exercise Price
Outstanding, January 1,		72,000		$	8.20		-		$	-
Granted		300,000			9.35		80,000			8.20
Expired		-			-		-			-
Exercised		(2,000	)		8.20		-			-
Forfeited		(19,000	)		9.11		(8,000	)		-
Outstanding, December 31,		351,000		$	9.13		72,000		$	8.20
SARs exercisable at December 31,		22,000					-

As of December 31, 2015, our closing common stock price was $7.51, which does not exceed the exercise prices of the SARs. The total intrinsic value of SARs outstanding and exercisable at December 31, 2015 was $0.

The following table summarizes information about the SARs outstanding and exercisable as of December 31, 2015:

SARs Outstanding

SARs Exercisable

Exercise Price

Number

Outstanding

Weighted Average Remaining

Contractual

Life

Number

Exercisable

Weighted

Average

Remaining

Contractual

Life

$8.20 - 9.35

351,000

3.9

22,000

3.1

As of December 31, 2015, the unearned compensation cost relating to unvested SAR awards was $121.

Our assumptions used in computing the fair value of the SARs issued during the years ended December 31, 2015 and 2014, using the Black-Scholes Option Pricing Model, were as follows:

	As of December 31
	2015			2014
Stock Price	$	7.51		$	9.31
Strike Price	$ 8.20-9.35			$	8.20
Risk-free interest rate	1.1 - 1.2%				1.1	%
Dividend yield		9.6	%		7.7	%
Volatility		34	%		21	%
Expected term	1.7 - 2.5 years			2.5 years

A summary of the restricted common share awards as of December 31, 2015 and 2014 of the Incentive Award Plan is presented below.

	2015					2014
	Number of Shares			Weighted Average Grant Date Fair Value Per Share		Number of Shares			Weighted Average Grant Date Fair Value Per Share
Balance, January 1,		36,000		$	8.20		-		$	-
Granted		112,000			9.30		49,000			8.34
Vested		(24,000	)		8.55		(13,000	)		8.72
Forfeited		(7,000	)		9.02		-			-
Balance, December 31,		117,000		$	9.13		36,000		$	8.20

As of December 31, 2015, the unearned compensation cost relating to unvested restricted common share awards was $558. The estimated fair value of restricted common share awards vested during 2015 was $221.

For the years ended December 31, 2015 and December 31, 2014 we recognized $495 and $206 of stock compensation expense, respectively.