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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2016
RELATED PARTY TRANSACTIONS |
RELATED PARTY TRANSACTIONS | NOTE 11—RELATED PARTY TRANSACTIONS Compensation and Services Agreement In 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 receive compensation. Pursuant to the agreement, the Company pays fees to Majestic and Majestic provides the Company with the services of all affiliated executive, administrative, legal, accounting, clerical and property management personnel, as well as property acquisition, sale and lease consulting and brokerage services, consulting services in respect to mortgage financings and construction supervisory services. The fee the Company pays Majestic is negotiated each year by the Company and Majestic in consultation with the Compensation and Audit Committees, and is approved by such committees and the independent directors. In consideration for the services described above, the Company paid Majestic $2,504,000 in 2016, $2,339,000 in 2015 and $2,669,000 in 2014. Included in these fees are $1,057,000 in 2016, $892,500 in 2015, and $850,000 in 2014, of property management costs. Effective January 1, 2016, the property management fee portion of the compensation and services agreement is paid based on 1.5% and 2.0% of the rental payments (including tenant reimbursements) actually received by the Company from net lease tenants and operating lease tenants, respectively. In 2017, the Company agreed to pay Majestic $1,519,000 plus the property management fees. The Company does not pay Majestic property management fees with respect to properties managed by third parties. The compensation and services agreement also provides for an additional payment to Majestic of $216,000 in 2017, $196,000 in each of 2016 and 2015 and $186,000 in 2014 for the Company's share of all direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. The Company does not pay any fees or expenses to Majestic for such services except for the fees described in this paragraph. Executive officers and others providing services under the compensation and services agreement were awarded shares of restricted stock and restricted stock units under the Company's stock incentive plans (described in Note 12). 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 $1,480,000, $1,245,000 and $1,045,000 in 2016, 2015 and 2014, respectively. The fees paid under the compensation and services agreement (except for the property management fees which are included in Real estate expenses) and the costs of the stock incentive plans are included in General and administrative expense on the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. Joint Venture Partners and Affiliates During the years ended December 31, 2016, 2015 and 2014, the Company paid an aggregate of $185,000, $198,000 and $262,000, respectively, to its joint venture partners or their affiliates (none of whom are officers, directors, or employees of the Company) for property management and acquisition fees, of which $117,000 (of the amounts paid in 2014) is included in Land and building on the consolidated balance sheets and the balance is included in Real estate expenses and Real estate acquisition costs on the consolidated statements of income. Additionally, during the year ended December 31, 2016, unconsolidated joint ventures of the Company paid fees of $176,000 to the other partner of the ventures, which reduced Equity in earnings of unconsolidated joint ventures on the consolidated statement of income by $88,000. During the year ended December 31, 2015, the Company received a $131,000 financing fee for obtaining the mortgage debt for the unconsolidated joint venture that acquired the Manahawkin, New Jersey property (see Note 7). Fifty percent of this income is included in Other income on the consolidated statement of income and the balance is recorded as a reduction to Investment in unconsolidated joint ventures on the consolidated balance sheet. The joint venture also paid fees aggregating $409,000 to the other partners of the venture, of which $205,000 reduced Equity in earnings of unconsolidated joint ventures on the consolidated statement of income for the year ended December 31, 2015. See Note 6 for information regarding the Company's purchase in October 2016, of MCB's 5% interest in a consolidated joint venture that owned a property in Deptford, New Jersey. Other The Company paid fees of $262,500 and $105,000 in each of 2016 and 2015, and $250,000 and $100,000 in 2014, to the Company's chairman and vice-chairman, respectively. These fees are included in General and administrative expense on the consolidated statements of income for the years ended December 31, 2016, 2015 and 2014. The Company agreed to pay $276,000 and $110,000 in 2017 to the Company's chairman and vice-chairman, respectively. At December 31, 2016 and 2015, Gould Investors owned 1,785,976 shares of the outstanding common stock of the Company, or approximately 9.8% and 10.6%, respectively. During 2015 and 2014, Gould Investors purchased 81,211 and 106,761 shares, respectively, of the Company's stock through the Company's dividend reinvestment plan. Gould Investors did not purchase any shares of the Company's stock through the Company's dividend reinvestment plan during 2016. The Company obtains its property insurance in conjunction with Gould Investors and reimburses Gould Investors annually for the Company's insurance cost related to its properties. Amounts reimbursed to Gould Investors were $699,000, $520,000 and $400,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Included in Real estate expenses in the Company's consolidated statements of income is insurance expense of $645,000, $339,000 and $250,000 for the years ended December 31, 2016, 2015 and 2014, respectively. The balance of the amounts reimbursed to Gould Investors represents prepaid insurance and is included in Other assets on the consolidated balance sheets. In addition to its share of rent included in the payment to Majestic of $196,000 in 2015 and $186,000 in 2014 (discussed above), the Company leased additional space in the same building and paid rent to a subsidiary of Gould Investors. Annual rent of $7,000 and $42,000 is included in General and administrative expense on the consolidated statements of income for the years ended December 31, 2015 and 2014, respectively. In February 2015, the Gould Investors subsidiary sold this building to an unrelated party and all subsequent lease payments have been made to the new landlord.

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