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RELATED-PARTY TRANSACTIONS | 9 Months Ended
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Sep. 30, 2020
Related Party Transactions [Abstract] |
RELATED-PARTY TRANSACTIONS | 13. RELATED-PARTY TRANSACTIONS Asset Management and Other Fees to Related Parties In December 2015, CIM Urban and CIM Capital, LLC (formerly CIM Investment Advisors, LLC), an affiliate of CIM REIT and CIM Group (“CIM Capital”), entered into an investment management agreement, pursuant to which CIM Urban engaged CIM Capital to provide certain services to CIM Urban (the “Investment Management Agreement”). On January 1, 2019, CIM Capital assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager. The “Operator” refers to CIM Investment Advisors, LLC from December 10, 2015 to December 31, 2018 and to CIM Capital and its four wholly-owned subsidiaries on and after January 1, 2019. CIM Urban pays asset management fees to the Operator on a quarterly basis in arrears. The fee is calculated as a percentage of the daily average adjusted fair value of CIM Urban’s assets:
Daily Average Adjusted Fair Value of CIM Urban’s Assets |  |
Quarterly Fee Percentage
From Greater of |  | To and Including |
(in thousands) |  |
$ | — |  |  | $ | 500,000 |  |  | 0.2500%
$ | 500,000 |  |  | $ | 1,000,000 |  |  | 0.2375%
$ | 1,000,000 |  |  | $ | 1,500,000 |  |  | 0.2250%
$ | 1,500,000 |  |  | $ | 4,000,000 |  |  | 0.2125%
$ | 4,000,000 |  |  | $ | 20,000,000 |  |  | 0.1000%
The Operator earned asset management fees of $2,387,000 and $2,424,000 for the three months ended September 30, 2020 and 2019, respectively, and $7,126,000 and $9,669,000 for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020 and December 31, 2019, asset management fees of $2,382,000 and $2,356,000, respectively, were due to the Operator. On April 10, 2020, in lieu of cash payment of the asset management fee for the first quarter of 2020, the Company issued to the Operator 203,349 shares of our Common Stock, representing approximately 1.4% of the outstanding shares of our Common Stock prior to such issuance. On July 8, 2020, in lieu of cash payment of the asset management fee for the second quarter of 202 0, the Company issued to the Operator 95,245 shares of our Series A Preferred Stock, representing approximately 1.8% of the outstanding shares of our Series A Preferred Stock prior to such issuanc e. For the third quarter and fourth quarter of 2020, we will, subject to applicable laws and regulations under Nasdaq and the TASE and the agreement of the Operator, pay all of the asset management fees in respect of such quarters in shares of Series A Preferred Stock. Furthermore, it is likely that we will seek to pay some or part of the asset management fees for part of 2021 in shares of Series A Preferred Stock. CIM Management, Inc. and certain of its affiliates (collectively, the “CIM Management Entities”), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and development services to CIM Urban. The CIM Management Entities earned property management fees, which are included in rental and other property operating expenses, totaling $461,000 and $494,000 for the three months ended September 30, 2020 and 2019, respectively, and $1,258,000 and $2,106,000 for the nine months ended September 30, 2020 and 2019, respectively. CIM Urban incurred $867,000 and $837,000 for the three months ended September 30, 2020 and 2019, respectively, and $2,451,000 and $3,873,000 for the nine months ended September 30, 2020 and 2019, respectively, reimbursable to CIM Management Entities for onsite management costs incurred on behalf of CIM Urban, which are included in rental and other property operating expenses. The CIM Management Entities earned leasing commissions of $18,000 and $32,000 for the three months ended September 30, 2020 and 2019, respectively, and $101,000 and $610,000 for the nine months ended September 30, 2020 and 2019, respectively, which were capitalized to deferred charges. In addition, the CIM Management Entities earned construction management fees of $32,000 and $160,000 for the three months ended September 30, 2020 and 2019, respectively, and $309,000 and $329,000 for the nine months ended September 30, 2020 and 2019, respectively, which were capitalized to investments in real estate. As of September 30, 2020 and December 31, 2019, fees payable and expense reimbursements due to the CIM Management Entities of $1,532,000 and $4,107,000, respectively, are included in due to related parties. Also included in due to related parties as of September 30, 2020 and December 31, 2019, were $301,000 and $97,000, respectively, due to the CIM Management Entities and certain of its affiliates. On March 11, 2014, CIM Commercial and its subsidiaries entered into a master services agreement (the “Master Services Agreement”) with CIM Service Provider, LLC (the “Administrator”), an affiliate of CIM Group, pursuant to which the Administrator provides, or arranges for other service providers to provide, management and administration services to CIM Commercial and its subsidiaries. Pursuant to the Master Services Agreement, we appointed an affiliate of CIM Group as the administrator of Urban Partners GP, LLC. Under the Master Services Agreement, CIM Commercial paid a base service fee (the “Base Service Fee”) to the Administrator initially set at $1,000,000 per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears. On May 11, 2020, the Master Services Agreement was amended to replace the Base Service Fee with an incentive fee (the “Incentive Fee”) pursuant to which the Administrator will receive, on a quarterly basis, 15.00% of CIM Commercial’s quarterly core funds from operations in excess of a quarterly threshold equal to 1.75% (i.e., 7.00% on an annualized basis) of CIM Commercial’s average adjusted common stockholders’ equity (i.e., common stockholders’ equity plus accumulated depreciation an d amortization) for such quarter. The amendment is effective as of April 1, 2020. The Administrator earned a Base Service Fee of $0 and $275,000 for the three months ended September 30, 2020 and 2019, respectively, and $282,000 and $827,000 for the nine months ended September 30, 2020 and 2019, respectively. The Administrator did not earn an Incentive Fee for the three months ended September 30, 2020. On July 8, 2020, the Company issued to the Administrator 11,273 shares of our Series A Preferred Stock, representing approximately 0.2% of the outstanding shares of our Series A Preferred Stock prior to such issuance, in lieu of cash as payment of the Base Service Fee for the first quarter of 2020. In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered by the Base Service Fee or the Incentive Fee, as the case may be. During the nine months ended September 30, 2020 and 2019, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, and operational and on-going support in connection with the Company’s offering of Preferred Stock. The Administrator’s compensation is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of CIM Commercial and its subsidiaries). We expensed $639,000 and $630,000 for the three months ended September 30, 2020 and 2019, respectively, and $2,066,000 and $1,819,000 for the nine months ended September 30, 2020 and 2019, respectively, for such services which are included in expense reimbursements to related parties—corporate. As of September 30, 2020 and December 31, 2019, $739,000 and $1,673,000 was due to the Administrator, respectively, for such services. On January 1, 2015, we entered into a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC (“CIM SBA”), an affiliate of CIM Group, and our subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to us and that we will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. For the three months ended September 30, 2020 and 2019, we incurred expenses related to services subject to reimbursement by us under the agreement of $901,000 and $652,000, respectively, for lending costs which are included in expense reimbursements to related parties—lending segment. For the nine months ended September 30, 2020 and 2019, we incurred expenses related to such services of $2,581,000 and $1,840,000, respectively, for costs that are included in expense reimbursements to related parties—lending segment. In addition, we deferred personnel costs of $81,000 and $38,000 for the three months ended September 30, 2020 and 2019, respectively, and $118,000 and $82,000 for the nine months ended September 30, 2020 and 2019, respectively, associated with services provided for originating loans. As of September 30, 2020 and December 31, 2019, $2,274,000 and $1,029,000, respectively, was due to CIM SBA for costs and expenses of providing such personnel and resources. On May 10, 2018, the Company entered into the wholesaling agreement (the “Wholesaling Agreement”) with International Assets Advisors, LLC (“IAA”) and CCO Capital, LLC (“CCO Capital”). CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator. IAA was the exclusive dealer manager for the Company’s public offering of Series A Preferred Units until May 31, 2019. Under the Wholesaling Agreement, among other things, CCO Capital, in its capacity as the wholesaler for the offering, assisted IAA with the sale of Series A Preferred Units. In exchange for such services, IAA paid CCO Capital a fee equal to 2.75% of the selling price of each Series A Preferred Unit for which a sale was completed, reduced by any applicable fee reallowances payable to soliciting dealers pursuant to separate soliciting dealer agreements between IAA and soliciting dealers. The foregoing fee was reduced, and may have been exceeded, by a fixed monthly payment by CCO Capital to IAA for IAA’s services in connection with periodic closings and settlements for the offering. On May 31, 2019, the Company, IAA and CCO Capital entered into an Amendment, Assignment and Assumption Agreement (the “Assignment Agreement”), pursuant to which CCO Capital assumed all of the rights and obligations of IAA under the dealer manager agreement, dated as of June 28, 2016, as amended, by and between the Company and IAA. As a result of the Assignment Agreement, CCO Capital became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Units effective as of May 31, 2019. In connection with the execution of the Assignment Agreement, the Company terminated the Wholesaling Agreement effective as of May 31, 2019. On January 28, 2020, the Company entered into the Second Amended and Restated Dealer Manager Agreement, pursuant to which CCO Capital acts as the exclusive dealer manager for the Company’s public offering of its Series A Preferred Stock and Series D Preferred Stock. Thereunder, the Company agreed to pay CCO Capital, as the dealer manager for the offering, (1) an upfront dealer manager fee of up to 1.25% of the selling price of each share of Preferred Stock sold, (2) selling commissions of up to 5.50% of the selling price of each share of Series A Preferred Stock sold (with no selling commissions payable in respect of shares of Series D Preferred Stock sold) and (3) a trailing dealer manager fee that accrues daily in an amount equal to 1/365 th of 0.25% per annum of the selling price of each share of Preferred Stock sold. CCO Capital, in its sole discretion, may reallow to another broker-dealer authorized by it to sell shares in the offering a portion of the upfront dealer manager fee earned by it in respect of shares sold by such broker-dealer. On April 9, 2020, the Company entered into Amendment No. 1 to the Second Amended and Restated Dealer Manager Agreement, pursuant to which the selling commissions were increased from up to 5.50% to up to 7.00% of the selling price of each share of Series A Preferred Stock sold thereafter. The Company has been informed that CCO Capital generally reallows 100% of the selling commissions on sales of Series A Preferred Stock and generally reallows substantially all of the upfront dealer manager fee on sales of Series A Preferred Stock and Series D Preferred Stock, to participating broker-dealers. In connection with the offering of the Series A Preferred Stock and Series D Preferred Stock, as of September 30, 2020 and December 31, 2019, $1,271,000 and $621,000, respectively, was included in deferred costs as reimbursable expenses incurred pursuant to the Master Services Agreement and the then applicable dealer manager agreement with CCO Capital, of which $444,000 and $169,000, respectively, was included in due to related parties. These non-issuance specific costs are allocated against the gross proceeds from the sale of the Series A Preferred Stock and the Series D Preferred Stock on a prorata basis for each issuance as a percentage of the total offering. CCO Capital incurred non-issuance specific costs of $27,000 and $12,000 for the three months ended September 30, 2020 and 2019, respectively, and $72,000 and $19,000 for the nine months ended September 30, 2020 and 2019, respectively, which were allocated to the Series A Preferred Stock. As of September 30, 2020 and December 31, 2019, upfront dealer manager and trailing dealer manager fees of $391,000 and $0, respectively, were included in due to related parties. CCO Capital earned upfront dealer manager and trailing dealer manager fees of $305,000 and $337,000 for the three months ended September 30, 2020 and 2019, respectively, and $890,000 and $860,000 for the nine months ended September 30, 2020 and 2019, respectively, which were allocated to the Series A Preferred Stock. CCO Capital earned upfront dealer manager and trailing dealer manager fees of $8,000 for the three months ended September 30, 2020, and $12,000 for the nine months ended September 30, 2020, which were allocated to the Series D Preferred Stock. Other Our President, Jan F. Salit, retired effective as of September 16, 2020. We had an employment agreement with Mr. Salit which, under certain circumstances, provided for severance payment equal to the annual base salary paid to Mr Salit. In connection with his retirement, the Company entered into an agreement with Mr. Salit pursuant to which, among other things, Mr. Salit received a $450,000 payment, representing one year of his base salary, upon the satisfaction of certain conditions specified therein, including the execution of an agreement with the Company that contains, among other things, mutual release and non-disparagement provisions. Related to this payment, $287,000 was borne by the Company based on the time that Mr. Salit devoted to the Company relative to other matters relating to CIM Group. As of September 30, 2020, $287,000 was due to CIM Group for the Company’s portion of the payment. On October 1, 2015, an affiliate of CIM Group entered into a five-year lease renewal with respect to a property owned by the Company, which lease was amended to a month-to-month term in February 2019, and was terminated in October 2020. We recorded rental and other property income related to this tenant of $29,000 and $28,000 for the three months ended September 30, 2020 and 2019, respectively, and $87,000 and $83,000 for the nine months ended September 30, 2020 and 2019, respectively. On May 15, 2019, CIM Group entered into an approximately 11-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company. The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet. For the three months ended September 30, 2020 and 2019, we recorded rental and other property income related to this tenant of $370,000 and $356,000, respectively, and $1,110,000 and $562,000 for the nine months ended September 30, 2020 and 2019, respectively.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -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 + Details
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