Transactions with Related Parties

12 Months Ended

Dec. 31, 2019

22. Transactions with Related Parties

Effective September 10, 2019, Greystone acquired all the issued and outstanding partnership interests of AFCA 2 from Burlington Capital LLC and an affiliate, at which time Burlington Capital LLC and its affiliates (collectively, “Burlington”) ceased to be related parties of the Partnership.

The Partnership is managed by AFCA 2, which is controlled by AFCA 2’s general partner, Greystone Manager. The Board of Managers of Greystone Manager act as managers (and effectively as the directors) of the Partnership and certain employees of Greystone Manager are executive officers of the Partnership. Certain services are provided to the Partnership by employees of Greystone Manager and the Partnership reimburses Greystone Manager for its allocated share of these salaries and benefits. The Partnership also reimburses Greystone Manager for its share of general and administrative expenses. These reimbursed costs represent a substantial portion of the Partnership’s general and administrative expenses.

The amounts in the following table represent amounts reimbursable to AFCA 2, the general partner of AFCA 2, or an affiliate for the years ended December 31, 2019 and 2018:

	2019		2018
Reimbursable salaries and benefits	$	4,702,754	$	3,993,067
Other expenses		19,622		13,121
Office expenses		17,630		-
Insurance		243,773		215,867
Professional fees and expenses		82,962		154,653
	$	5,066,741	$	4,376,708

The Partnership incurs costs for services and makes contractual payments to AFCA 2, AFCA 2’s general partner, and their affiliates. The costs are reported either as expenses or capitalized costs depending on the nature of each item. The following table summarizes transactions with related parties that are reflected in the Partnership’s consolidated financial statements for the years ended December 31, 2019 and 2018:

	For the Years Ended December 31,
	2019		2018
Partnership administrative fees paid to AFCA 2 ⁽¹⁾	$	3,620,000	$	3,721,000
Property management fees paid to an affiliate ⁽²⁾		101,000		190,000
Reimbursable franchise margin taxes incurred on behalf of unconsolidated entities ⁽³⁾		131,000		77,000

(1)

AFCA 2 is entitled to receive an administrative fee from the Partnership equal to 0.45% per annum of the outstanding principal balance of any of its MRBs, property loans collateralized by real property, and other investments for which the owner of the financed property or other third party is not obligated to pay such administrative fee directly to AFCA 2. The disclosed amounts represent administrative fees paid or accrued during the periods specified and are reported within “General and administrative expenses” on the Partnership’s consolidated statements of operations.

(2)

A former affiliate of AFCA 2, Burlington Capital Properties, LLC (“Properties Management”), provides property management, administrative and marketing services for the MF Properties (excluding Suites on Paseo). The property management fees are reported within “Real estate operating expenses” on the Partnership’s consolidated statements of operations.

(3)

The Partnership pays franchise margin taxes on revenues in Texas related to its investments in unconsolidated entities. Such taxes are paid by the Partnership as the unconsolidated entities are required by tax regulations to be included in the Partnership’s group tax return. Since the Partnership is reimbursed for the franchise margin taxes paid on behalf of the unconsolidated entities, these taxes are not reported on the Partnership’s consolidated statements of operations.

AFCA 2 received fees from the borrowers of the Partnership’s MRBs for services provided to the borrower and based on the occurrence of certain investment transactions. These fees were paid by the borrowers and are not reported on the Partnership’s consolidated financial statements. The following table summarizes transactions between borrowers of the Partnership’s MRBs and affiliates for the years ended December 31, 2019 and 2018:

	For the Years Ended December 31,
	2019		2018
Non-Partnership property administrative fees received by AFCA 2 ⁽¹⁾	$	36,000	$	69,000
Investment/mortgage placement fees received by AFCA 2 ⁽²⁾		1,362,000		2,873,000
MRB redemption administrative fee received by AFCA 2 ⁽³⁾		-		283,000

(1)

AFCA 2 received administrative fees directly from the owners of certain properties financed by certain MRBs held by the Partnership. These administrative fees equal 0.45% per annum of the outstanding principal balance of the MRBs. The disclosed amounts represent administrative fees received by AFCA 2 during the periods specified.

(2)	AFCA 2 received placement fees in connection with the acquisition of certain MRBs and investments in unconsolidated entities.

(3)	AFCA 2 received one-time administrative fees related to early redemptions of the Lake Forest MRB in September 2018 and the Vantage at Judson MRBs in December 2018.

Properties Management provides services to seven of the properties collateralizing MRBs of the Partnership. In addition, Properties Management provides services to one of our investments in unconsolidated entities. These property management fees are paid out of the revenues generated by the respective property prior to the payment of debt service on the Partnership's MRBs and property loans, as applicable, and the construction loan for the unconsolidated entity.

The Partnership reported receivables due from unconsolidated entities of approximately $116,000 and $77,000 as of December 31, 2019 and 2018, respectively. These amounts are reported within “Other assets” on the Partnership’s consolidated balance sheets. The Partnership had outstanding liabilities due to related parties totaling approximately $301,000 and $330,000 as of December 31, 2019 and 2018, respectively. These amounts are reported within “Accounts payable, accrued expenses and other liabilities” on the Partnership’s consolidated balance sheets.