Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

We engage in certain services and business transactions with related parties, including but not limited to, the rent of office space, leasing services, asset management, administrative services, and the acquisition and dispositions of real estate. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to, or in our best interest.

Pillar and Regis are wholly owned by a subsidiary of May Realty Holdings, Inc. ("MRHI"), which owns approximately 90.8% of the Company. Pillar is compensated for advisory services in accordance with an advisory agreement and is compensated for development and construction services in accordance with project specific development agreements. Regis receives property management fees and leasing commissions in accordance with the terms of its property-level management agreements. In addition, Regis is entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement.

Rental income includes $158 and $231 for the three months ended June 30, 2024 and 2023, respectively, and $336 and $499 for the six months ended June 30, 2024 and 2023, respectively, for office space leased to Pillar and Regis.

Property operating expense includes $86 and $99 for the three months ended June 30, 2024 and 2023, respectively, and $166 and $199 for the six months ended June 30, 2024 and 2023, respectively, for management fees on commercial properties payable to Regis.

General and administrative expense includes $915 and $700 for the three months ended June 30, 2024 and 2023, respectively, and $1,849 and $2,239 for the six months ended June 30, 2024 and 2023, respectively, for employee compensation and other reimbursable costs payable to Pillar.

Advisory fees paid to Pillar were $1,737 and $2,183 for the three months ended June 30, 2024 and 2023, respectively, and $3,939 and $4,588 for the six months ended June 30, 2024 and 2023, respectively. Development fees paid to Pillar were $587 and $112 for the three months ended June 30, 2024 and 2023, respectively, and $1,625 and $112 for the six months ended June 30, 2024 and 2023, respectively.

Notes receivable include amounts held by UHF (See Note 9 – Notes Receivable). UHF is deemed to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. In addition, we have a related party receivable from Pillar ("Pillar Receivable"), which represents amounts advanced to Pillar net of unreimbursed fees, expenses and costs as provided above. The Pillar Receivable bears interest in accordance with a cash management agreement. On January 1, 2024, an amendment to the cash management agreement changed the interest rate on the Pillar Receivable from prime plus one percent to SOFR. Interest income on the UHF notes and the Pillar Receivable was $2,275 and $4,708 for the three months ended June 30, 2024 and 2023, respectively, and $4,573 and $9,311 for the six months ended June 30, 2024 and 2023, respectively.