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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2013
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: |  |  | 2013 |  |  | 2012 |  |  | 2011 |
| Advisory |  |  | 830 |  |  |  | 815 |  |  |  | 850 |
| Net income |  |  | 695 |  |  |  | 180 |  |  |  | 54 |
| Construction managmeent |  |  | - |  |  |  | - |  |  |  | - |
| Tax sharing agreement |  |  | 3,055 |  |  |  | 839 |  |  |  | 647 |
|  |  | $ | 4,580 |  |  | $ | 1,834 |  |  | $ | 1,551 |
Other Expense: |  |  |  |  |  |  |  |  |  |  |  |
| Cost reimbursements |  |  | 234 |  |  |  | 155 |  |  |  | 206 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
| Rental revenue |  |  | - |  |  |  | - |  |  |  | - |
| Interest received |  | $ | 2,364 |  |  | $ | 2,695 |  |  | $ | 1,756 |
|  |  |  | 2,364 |  |  |  | 2,695 |  |  |  | 1,756 |
As of December 31, 2013, IOT has notes and interest receivable of $30.7 million due from Unified Housing Foundation, Inc. and recognized interest income of $4.8 million related to these notes receivable. See details in Part 2, Item 8. “Note 3. Notes and Interest Receivable From Related Parties.” The following table reconciles the beginning and ending balances of amounts receivable from related parties as of December 31, 2013 (dollars in thousands):
|  | TCI |  |  | Pillar |  |  | Total |
Balance, December 31, 2012 |  | $ | 53,407 |  |  | $ | - |  |  | $ | 53,407 |
Cash transfers |  |  | - |  |  |  | (1,506 | ) |  |  | (1,506 | )
Advisory fees |  |  | - |  |  |  | (830 | ) |  |  | (830 | )
Net income fee |  |  | - |  |  |  | (695 | ) |  |  | (695 | )
Cost reimbursements |  |  | - |  |  |  | (234 | ) |  |  | (234 | )
Expenses paid by advisor |  |  | - |  |  |  | (25 | ) |  |  | (25 | )
Financing (mortgage payments) |  |  | - |  |  |  | (1,154 | ) |  |  | (1,154 | )
Financing (Mercer/Travelers land) |  |  | - |  |  |  | (9,065 | ) |  |  | (9,065 | )
Interest income |  |  | 2,364 |  |  |  | - |  |  |  | 2,364 |
Tax Sharing Expense |  |  | (3,055 | ) |  |  | - |  |  |  | (3,055 | )
Purchase of obligation |  |  | (13,509 | ) |  |  | 13,509 |  |  |  | - |
Balance, December 31, 2013 |  | $ | 39,207 |  |  | $ | - |  |  | $ | 39,207 |
Sales to our parent, TCI, have previously been reflected at the fair value sales price. Upon discussion with the SEC and in review of the guidance pursuant to ASC 250-10-45-22 to 24, we have adjusted those asset sales, in the prior year, to reflect a sales price equal to the cost basis in the asset at the time of the sale. The related party payables from TCI were reduced for the lower asset price. On December 30, 2013, RAI, a related party, obtained a $20 million mortgage to First NBC Bank on the Company’s behalf, secured by Mercer/Travelers land owned by the Company and 100.05 acres of land owned by its parent TCI. The Company and TCI have executed a promissory note to RAI for the same terms as the First NBC loan with a maturity of December 30, 2016 and a variable interest rate of prime plus 1.5% with an interest rate floor of 6%. Based on the land valuation, $7.6 million of this loan is held on the books of TCI. 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 and all of 2013. 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 $3.1 million in 2013 for the tax sharing agreement.

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- Definition The entire disclosure for related party transactions. 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 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 2: 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 3: 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 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph b -Article 3A Reference 5: 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 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 7: 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 8: 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 9: 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. + Details
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