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RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2014
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

 

NOTE 9—RELATED PARTY TRANSACTIONS

        At December 31, 2014 and 2013, Gould Investors L.P. ("Gould"), a related party, owned 1,704,765 and 1,597,304 shares of the outstanding common stock of the Company, or approximately 10.5% and 10.2%, respectively. During 2014, Gould purchased 106,761 shares of the Company's stock through the Company's dividend reinvestment plan and 700 shares of the Company's stock in the open market. 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.

        Pursuant to the compensation and services agreement the Company entered into in 2007 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, the Company pays an annual fee to Majestic and Majestic provides the Company with the services of all affiliated executive, administrative, legal, accounting and clerical personnel, as well as property acquisition, sale and lease consulting and brokerage services, consulting services with respect to mortgage financings and construction supervisory services. 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, pursuant to the compensation and services agreement, paid Majestic a fee of $2,669,000 in 2014 and $2,725,000 in each of 2013 and 2012. (Effective July 1, 2014, certain employees of affiliated companies performing services pursuant to the compensation and services agreement are paid directly by the Company for services performed on the Company's behalf. Accordingly, the fees were reduced by $445,000 to give effect to this adjustment.) In 2014, $850,000, and in each of 2013 and 2012, $600,000, of property management costs included in these fees was allocated to real estate expenses. Majestic credits against the fees due to it under the compensation and services 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 compensation and services agreement also provides for an additional payment to Majestic of $186,000 in 2014 and $175,000 in each of 2013 and 2012 for the Company's share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. The fee the Company pays Majestic is negotiated for each year by the Company and Majestic, and is approved by the Company's audit committee and 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 10). 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 $1,045,000, $867,000 and $743,000 in 2014, 2013, and 2012, respectively.

        In addition to its share of rent included in the payment to Majestic of $186,000 in 2014 and $175,000 in each of 2013 and 2012, the Company leased additional space in the same building, and paid a subsidiary of Gould, an annual rent of $42,000 in 2014, and $41,000 in each of 2013 and 2012.

        The Company also paid fees of $250,000 and $100,000 in each of 2014, 2013 and 2012 to the Company's chairman and vice-chairman, respectively.

        Except for $850,000 in 2014 and $600,000 in each of 2013 and 2012 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 the Company's consolidated statements of income for the years ended December 31, 2014, 2013 and 2012.

        The Company obtains its property insurance in conjunction with Gould and reimburses Gould for the Company's share of the insurance cost. Insurance reimbursed to Gould was $400,000, $359,000, and $305,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and is included in real estate expenses in the Company's consolidated statements of income.