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Related Party Transactions and Investments in Non-Consolidated Entities | 6 Months Ended
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Jun. 30, 2019
Related Party Transactions and Investments in Non-Consolidated Entities | 2.  Related Party Transactions and Investments in Non-Consolidated Entities ​ Investment in Sponsored REITs: ​ At June 30, 2019 and December 31, 2018, the Company held a common stock interest in two and three Sponsored REITs, respectively. The Company previously held a non-controlling preferred stock investment in two Sponsored REITs, FSP 303 East Wacker Drive Corp. (“East Wacker”) and FSP Grand Boulevard Corp. (“Grand Boulevard”), which were liquidated during the three months ended September 30, 2018. ​ In December 2007, the Company purchased 965.75 preferred shares or 43.7% of the outstanding preferred shares of one of its Sponsored REITs, East Wacker. On September 24, 2018, the property owned by East Wacker was sold and, thereafter, East Wacker declared and issued a liquidating distribution for its preferred shareholders, from which the Company was entitled to $70 million. On September 27, 2018, the Company received $69 million in an initial cash distribution, and on April 3, 2019, the Company received a $1 million distribution. As a result of the sale, the Company recognized a gain on liquidation of $7.1 million. ​ In May 2009, the Company purchased 175.5 preferred shares or 27.0% of the outstanding preferred shares of one of its Sponsored REITs, Grand Boulevard. On July 19, 2018, the property owned by Grand Boulevard was sold and, thereafter, Grand Boulevard declared and issued a liquidating distribution for its preferred shareholders, from which the Company was entitled to $6.2 million. On August 17, 2018, the Company received $5.9 million in an initial cash distribution. As a result of the sale, the Company recognized a loss on liquidation of $0.1 million. As of June 30, 2019, the Company held a beneficial interest in the Grand Boulevard liquidating trust in the amount of $0.1 million, which is included in other assets in the accompanying consolidated balance sheet. ​ Equity in income (loss) of investments in non-consolidated REITs is derived from the Company’s share of income or loss in the operations of those entities and includes gain or loss on liquidation. The Company exercised influence over, but did not control these entities, and investments are accounted for using the equity method. ​ Equity in income (loss) of investments in non-consolidated REITs: ​ The following table includes equity in loss of investments in non-consolidated REITs: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Six Months Ended June 30, |
(in thousands) |  | 2019 |  | 2018 |
​ | ​ | ​ | ​ | ​ | ​ | ​ |
Equity in loss of East Wacker | ​ | $ | — | ​ | $ | 26 | ​
Equity in loss of Grand Boulevard | ​ | ​ | — | ​ | ​ | 52 | ​
Impairment charge | ​ |  | — | ​ |  | 309 | ​
Total | ​ | $ | — | ​ | $ | 387 | ​
​ The Company received distributions of $710,000 from non-consolidated REITs during the six months ended June 30, 2018. ​ Management fees and interest income from loans: ​ Asset management fees range from 1% to 5% of collected rents and the applicable contracts are cancelable with 30 days notice. Asset management fee income from non-consolidated entities amounted to approximately $118,000 and $271,000 for the six months ended June 30, 2019 and 2018, respectively. ​ From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes. The Company reviews Sponsored REIT loans for impairment each reporting period. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts recorded on the balance sheet. The Company applies normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. None of the Sponsored REIT loans have been impaired. ​ The Company anticipates that each Sponsored REIT Loan will be repaid at maturity or earlier from refinancing, long term financings of the underlying properties, cash flows from the underlying properties or some other capital event. Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years. The mortgage loan bears interest at a fixed rate and advances under the secured revolving line of credit bear interest at a rate equal to the 30-day LIBOR rate plus an agreed upon amount of basis points and also require a 50 basis point draw fee. ​ The following is a summary of the Sponsored REIT Loans outstanding as of June 30, 2019: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  |  |  |  |  | Maximum |  | Amount |  | ​ |  |  |  |  | Interest |
(dollars in thousands, except footnotes) |  | ​ | ​ | Maturity | ​ | Amount | ​ | Drawn at | ​ | Interest | ​ | Draw | ​ | Rate at |
Sponsored REIT |  | Location | ​ | Date | ​ | of Loan | ​ | 30-Jun-19 | ​ | Rate (1) | ​ | Fee (2) | ​ | 30-Jun-19 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Secured revolving line of credit | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FSP Satellite Place Corp. |  | Duluth, GA |  | 31-Dec-19 | ​ | $ | 5,500 | ​ | $ | 530 |  | L+ | 4.4 | % | 0.5 | % | 6.83 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Mortgage loan secured by property | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FSP Monument Circle LLC (3) | ​ | Indianapolis, IN | ​ | 6-Dec-20 | ​ | ​ | 21,000 | ​ | ​ | 21,000 | ​ | ​ | 7.19 | % | n/a | ​ | 7.19 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | $ | 26,500 | ​ | $ | 21,530 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
(1) | The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate.
(2) | The draw fee is a percentage of each new advance, and is paid at the time of each new draw.
(3) | This mortgage loan includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower.
​ The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $2,553,000 and $2,262,000 for the six months ended June 30, 2019 and 2018, respectively. ​ Non-consolidated REITs: ​ The balance sheet data below for 2019 and 2018 includes the two Sponsored REITs the Company held an interest in as of June 30, 2019 and three Sponsored REITs the Company held an interest in as of December 31, 2018. The operating data below for 2019 and 2018 include the operations of the three and six Sponsored REITs in which the Company held an interest in during the six months ended June 30, 2019 and 2018, respectively. ​ Summarized financial information for these Sponsored REITs is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, |  | December 31, |
(in thousands) | ​ | 2019 | ​ | 2018 |
​ | ​ | ​ | ​ | ​ | ​ | ​ |
Balance Sheet Data (unaudited): | ​ | ​ | ​ | ​ | ​ | ​ | ​
Real estate, net | ​ | $ | 44,781 | ​ | $ | 97,034 | ​
Other assets | ​ |  | 9,850 | ​ |  | 18,532 | ​
Total liabilities | ​ |  | (22,775) | ​ |  | (75,382) | ​
Shareholders’ equity | ​ | $ | 31,856 | ​ | $ | 40,184 | ​
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Six Months Ended |
​ | ​ | June 30, |
(in thousands) |  | 2019 |  | 2018 |
​ | ​ | ​ | ​ | ​ | ​ | ​ |
Operating Data (unaudited): | ​ | ​ | ​ | ​ | ​ | ​ | ​
Rental revenues | ​ | $ | 7,152 | ​ | $ | 25,755 | ​
Other revenues | ​ |  | — | ​ |  | 1 | ​
Operating and maintenance expenses | ​ |  | (3,561) | ​ |  | (13,175) | ​
Depreciation and amortization | ​ |  | (2,664) | ​ |  | (8,606) | ​
Interest expense | ​ |  | (2,538) | ​ |  | (4,030) | ​
Gain (loss) on sale | ​ |  | — | ​ |  | 9,393 | ​
Net income (loss) | ​ | $ | (1,611) | ​ | $ | 9,338 | ​
​

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- Definition The entire disclosure related to investments in banking or services activity. + References No definition available. + Details
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