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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2012
RELATED PARTY TRANSACTIONS |
RELATED PARTY TRANSACTIONS | NOTE 6. RELATED PARTY TRANSACTIONS AND FEES The Advisory agreement provides for Pillar or a related party 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 Pillar 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. Prime served as the Company’s contractual Advisor and Cash Manager from July 1, 2009 through April 30, 2011. The fees and cost reimbursements paid to Pillar, Prime, TCI and related parties are detailed below (dollars in thousands):
Fees: |  |  | 2012 |  |  | 2011 |  |  | 2010 |
| Advisory fee |  |  | 815 |  |  |  | 850 |  |  | $ | 866 |
| Net income fee |  |  | 180 |  |  |  | 54 |  |  |  | 99 |
| Construction managmeent fee |  |  | - |  |  |  | - |  |  |  | 2 |
| Tax sharing agreement |  |  | 839 |  |  |  | 647 |  |  |  | - |
|  |  | $ | 1,834 |  |  | $ | 1,551 |  |  | $ | 967 |
Other Expense: |  |  |  |  |  |  |  |  |  |  |  |
| Cost reimbursements |  |  | 155 |  |  |  | 206 |  |  |  | 178 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
| Rental revenue |  |  | - |  |  |  | - |  |  |  | 313 |
| Interest received |  | $ | 2,695 |  |  | $ | 1,756 |  |  | $ | 1,755 |
|  |  |  | 2,695 |  |  |  | 1,756 |  |  |  | 2,068 |
As of December 31, 2012, IOT has notes and interest receivable of $27.0 million due from Unified Housing Foundation, Inc. and recognized interest income of $2.5 million related to these notes receivable. Unified Housing also paid in full a $3.0 million note receivable during the twelve months ended December 31, 2012. See details in Part 2, Item 8. “Note 3. Notes and Interest Receivable”. The following table reconciles the beginning and ending balances of amounts receivable from related parties as of December 31, 2012 dollars in thousands):
|  | TCI |  |  | Pillar |  |  | Total |
Balance, December 31, 2011 |  | $ | 52,160 |  |  | $ | - |  |  | $ | 52,160 |
Cash transfers |  |  | - |  |  |  | 3,578 |  |  |  | 3,578 |
Advisory fees |  |  | - |  |  |  | (815 | ) |  |  | (815 | )
Net income fee |  |  | - |  |  |  | (180 | ) |  |  | (180 | )
POA fees |  |  | - |  |  |  | (61 | ) |  |  | (61 | )
Cost reimbursements |  |  | - |  |  |  | (155 | ) |  |  | (155 | )
Expenses paid by advisor |  |  | - |  |  |  | 257 |  |  |  | 257 |
Financing (mortgage payments) |  |  | - |  |  |  | (1,364 | ) |  |  | (1,364 | )
Proceeds from note receivable |  |  | - |  |  |  | 3,258 |  |  |  | 3,258 |
Interest income |  |  | 1,118 |  |  |  | 1,577 |  |  |  | 2,695 |
Tax Sharing Expense |  |  | (839 | ) |  |  | - |  |  |  | (839 | )
Purchase of obligation |  |  | 6,095 |  |  |  | (6,095 | ) |  |  | - |
Balance, December 31, 2012 |  | $ | 58,534 |  |  | $ | - |  |  | $ | 58,534 |
IOT is part of a tax sharing and compensating agreement with respect to federal income taxes between ARL, TCI and IOT and their subsidiaries that was entered into in July of 2009. That agreement continued until August 31, 2012 at which time a new tax sharing and compensating agreement was entered into by TCI, ARL, IOT and RAMI for the remainder of 2012. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory tax rate of 35%. IOT paid TCI $839,000 in 2012 and $647,000 in 2011 for the tax sharing agreement.

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- Definition The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 3A -Section 04 -Paragraph b Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 57 -Paragraph 1-4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 4 -Section 08 -Paragraph k Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 + Details
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