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RELATED PARTY TRANSACTIONS AND FEES
 12 Months Ended
Dec. 31, 2011
RELATED PARTY TRANSACTIONS AND FEES  
RELATED PARTY TRANSACTIONS AND FEES

NOTE 6.   RELATED PARTY TRANSACTIONS AND FEES

 

The Advisory agreement provides for Pillar or an affiliate of Pillar to receive fees and cost reimbursements as defined in Part III, Item 10. “Directors, Executive Officers and Corporate Governance – The Advisor”.  Cost reimbursements are allocated based on the relative market values of the Company’s assets. The Company and SWI entered into an Advisory Agreement and Cash Management Agreement to further define the administration of the Company’s day-to-day investment operations, relationship contacts, flow of funds and deposit and borrowing of funds. Effective July 1, 2009, the Advisory Agreement and Cash Management Agreement with SWI was terminated. IOT engaged Prime as Cash Manager under the substantially same terms as under the SWI agreement until the agreement with Prime was terminated effective April 30, 2011, at which time IOT engaged Pillar as Cash Manager under substantially the same terms as under the Prime agreement.  The fees and cost reimbursements paid to Pillar, Prime, SWI   , TCI and affiliates are detailed below (dollars in thousands):

 

 

Fees:

 

 

2011

 

 

2010

 

 

2009

 

 

Advisory fee

 

 

850

 

 

$

866

 

 

$

881

 

 

Incentive fee

 

 

-

 

 

 

-

 

 

 

-

 

 

Net income fee

 

 

54

 

 

 

99

 

 

 

115

 

 

Commission on property sale

 

 

-

 

 

 

-

 

 

 

-

 

 

Mortgage brokerage and equity refinancing

 

 

-

 

 

 

-

 

 

 

20

 

 

Property & construction mgt. and leasing commission

 

 

-

 

 

 

2

 

 

 

51

 

 

 

 

$

904

 

 

$

967

 

 

$

1,067

 

Cost reimbursements

 

 

206

 

 

 

178

 

 

 

117

 

Rental revenue

 

 

0

 

 

 

313

 

 

 

431

 

Interest received

 

$

(647

)

 

$

(995

)

 

$

(973

)

 

As of December 31, 2011, IOT has notes and interest receivable of $31.6 million due from related parties.  See discussion in Part 2, Item 8. “Note 3. Notes and Interest Receivable”.

 

The following table reconciles the beginning and ending balances of amounts receivable from affiliates as of December 31, 2010 dollars in thousands):

 

 

 

 

TCI

 

 

Prime

 

 

Pillar

 

 

Total

 

  Balance, December 31, 2010

 

$

48,598

 

 

$

-

 

 

$

-

 

 

$

48,598

 

 

Cash transfers

 

 

-

 

 

 

2,409

 

 

 

(219

)

 

 

2,190

 

 

Advisory fees

 

 

-

 

 

 

(293

)

 

 

(557

)

 

 

(850

)

 

Net income fee

 

 

 

 

 

 

-

 

 

 

(54

)

 

 

(54

)

 

POA fees

 

 

-

 

 

 

(2

)

 

 

(8

)

 

 

(10

)

 

Cost reimbursements

 

 

-

 

 

 

(116

)

 

 

(90

)

 

 

(206

)

 

Expenses paid by advisor

 

 

-

 

 

 

73

 

 

 

44

 

 

 

117

 

 

Financing (mortgage payments)

 

 

-

 

 

 

718

 

 

 

(658

)

 

 

60

 

 

Sales/Purchase transactions

 

 

-

 

 

 

-

 

 

 

1,205

 

 

 

1,205

 

 

Interest income

 

 

760

 

 

 

640

 

 

 

356

 

 

 

1,756

 

 

Tax Sharing Expense

 

 

(647

)

 

 

-

 

 

 

-

 

 

 

(647

)

 

Purchase of obligation

 

 

3,449

 

 

 

(3,429

)

 

 

(20

)

 

 

-

 

 

Property transfers

 

 

-

 

 

 

-

 

 

 

1

 

 

 

1

 

  Balance, December 31, 2011

 

$

52,160

 

 

$

-

 

 

$

-

 

 

$

52,160