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RELATED PARTY TRANSACTIONS AND FEES

12 Months Ended

Dec. 31, 2017

NOTE 5.

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. The advisory fees and cost reimbursements paid to Pillar, TCI and related parties are detailed below (dollars in thousands):

Fees:	2017		2016		2015
Advisory		660		639		704
Net income		250		257		187
	$	910	$	896	$	891

Other Expense:
Cost reimbursements		234		213		240

Revenue:
Interest received	$	1,903	$	1,484	$	1,636
		1,903		1,484		1,636

As of December 31, 2017, IOR has notes and interest receivable of $14.0 million due from Unified Housing Foundation, Inc. and recognized interest income of $2.3 million related to these notes receivable. (See details in Part 2, Item 8, above, 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, 2017 (dollars in thousands):

	TCI			Total
Balance, December 31, 2016	$	37,768		$	37,768
Cash transfers		12,736			12,736
Advisory fees		(660	)		(660	)
Net income fee		(251	)		(251	)
Cost reimbursements		(234	)		(234	)
Interest income		1,903			1,903
Income tax expense		(1,631	)		(1,631	)
Balance, December 31, 2017	$	49,631		$	49,631

IOR has a tax sharing and compensating agreement with respect to federal income taxes between ARL, TCI and IOR and their subsidiaries. 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 21%. There were no payments under this agreement in 2017.