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RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2013
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

 

NOTE 8—RELATED PARTY TRANSACTIONS

        At December 31, 2013 and 2012, Gould Investors L.P. ("Gould"), a related party, owned 1,597,304 and 1,524,009 shares of the outstanding common stock of the Company or approximately 10.2% in each year. During 2013, Gould purchased 69,595 shares of the Company's stock through the Company's dividend reinvestment plan and 3,700 shares of the Company's stock in the open market. During 2012, Gould purchased 73,038 shares of the Company's stock through the Company's dividend reinvestment plan and 301 shares of the Company's stock in the open market.

        Effective as of January 1, 2007, the Company entered into a compensation and services agreement with Majestic Property Management Corp. ("Majestic"), a company wholly-owned by the Company's Vice Chairman and in which certain of the Company's executive officers are officers and from which they receive compensation. Under the agreement, Majestic assumed the Company's obligations to make payments to Gould (and other affiliated entities) under a shared services agreement and agreed to provide to the Company the services of all affiliated executive, administrative, legal, accounting and clerical personnel that the Company had used prior to 2007 on an as needed, part time basis and for which the Company had reimbursed an allocated portion of the payroll expenses of such personnel in accordance with the shared services agreement. Commencing January 1, 2007, the Company no longer incurs any allocated expenses. Under the compensation and services agreement, Majestic (or its affiliates) continues to provide to the Company certain property management services (including construction supervisory services), property acquisition, sales and leasing services and mortgage brokerage services that it has provided to the Company prior to 2007, some of which were capitalized, deferred or reduced net sales proceeds in prior years. The Company does not incur any fees or expenses for such services except for the annual fees described below.

        In consideration for providing to the Company the services described above, the Company paid Majestic an annual fee of $2,725,000 in each of 2013, 2012 and 2011, in equal monthly installments, of which $600,000 of property management costs is allocated annually to real estate expenses. Majestic credits against the fees due to it under the agreement any management or other fees received by it from any joint venture in which the Company is a joint venture partner (exclusive of fees that were paid by our joint venture partner on a property located in Los Angeles, California until its sale in May 2013). The agreement also provides for an additional payment to Majestic of $175,000 in 2013, 2012 and 2011 for the Company's share of all direct office expenses, such as rent, telephone, postage, computer services and internet usage, previously allocated to the Company under the shared services agreement. The annual payment the Company makes to Majestic is negotiated each year by the Company and Majestic, and is approved by the Company's independent directors.

        Executive officers and others providing services under the compensation and services agreement also receive awards of shares of restricted stock and restricted stock units under the Company's stock incentive plans (described in Note 9). The costs of the plans charged to the Company's operations applicable to the executive officers and others providing services under the compensation and services agreement amounted to $867,000, $743,000 and $603,000 in 2013, 2012, and 2011, respectively.

        In addition to its share of rent included in the $175,000 payment to Majestic, the Company leased additional space in the same building, and paid a subsidiary of Gould, an annual rent of $41,000 in each of 2013 and 2012, and $47,000 in 2011.

        The Company also pays a fee of $250,000 and $100,000 per annum to the Company's chairman and vice-chairman, respectively.

        Except for the $600,000 of real estate expenses described above, the fees paid under the compensation and services agreement, the chairman and vice-chairman fees and the rent expense are included in general and administrative expense in 2013, 2012 and 2011.