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Transactions with Related Parties (Tables)
 6 Months Ended
Jun. 30, 2012
Transactions with Related Parties [Abstract]  
Summary of Related Parties Transactions
                                                                         
                For the six months ended     Unpaid amounts as of  
                June 30,
2012		           June 30,
2011		           June 30,
2012		           December 31,
2011		  

General and administrative:

                                                                        

General and administrative reimbursement

     (a )    $         5,481       $         4,138       $         3,018       $         2,734    

Loan servicing

     (b )              147                 293                 0                 0    

Investment advisor fee

     (c )              867                 781                 143                 135    
                   

 

 

            

 

 

            

 

 

            

 

 

  

Total general and administrative to related parties

           $         6,495       $         5,212       $         3,161       $         2,869    
                   

 

 

            

 

 

            

 

 

            

 

 

  

Property management fees

     (d )              14,514                 15,779                 24                 (178)    

Business management fee

     (e )              19,993                 20,000                 9,993                 10,000    

Loan placement fees

     (f )    $         938       $         636       $         0       $         0    

 

(a) The Business Manager and its related parties are entitled to reimbursement for general and administrative expenses of the Business Manager and its related parties relating to the Company’s administration. Unpaid amounts as of June 30, 2012 and December 31, 2011 are included in accounts payable and accrued expenses on the consolidated balance sheets.

 

(b) A related party of the Business Manager provides loan servicing to the Company.

 

(c) The Company pays a related party of the Business Manager to purchase and monitor its investment in marketable securities.

 

(d) For the six months ended June 30, 2012, the property managers, entities owned principally by individuals who were related parties of the Business Manager, are entitled to receive property management fees up to 4.5% of gross operating income (as defined), for management and leasing services; however, (1) for triple-net lease properties, the property managers were entitled to monthly fees equal to 2.9% of the gross income generated by the applicable property each month and (2) for bank branches, the property managers were entitled to monthly fees equal to 2.5% of the gross income generated by the applicable property each month in operating companies purchased by the Company. The property managers were entitled to receive an oversight fee of 1% of gross operating income (as defined). These rates became effective January 1, 2012 when the Company entered into an extension agreement with the property managers which extended the term through June 30, 2012. On July 1, 2012, the Company entered into new master agreements with its property managers and extended the term until December 31, 2013 which the term will automatically be renewed until June 30, 2015 unless either party to the agreement provides written notice of cancellation before June 30, 2013. See Note 15 for further detail on property management agreement terms.

In addition to these fees, the property managers receive reimbursements of payroll costs for property level employees. The Company reimbursed the property managers and other affiliates $7,126 and $7,731 for the six months ended June 30, 2012 and 2011, respectively. Unpaid amounts as of June 30, 2012 and December 31, 2011 are included in other liabilities on the consolidated balance sheets.

 

(e) After the Company’s stockholders have received a non-cumulative, non-compounded return of 5% per annum on their “invested capital,” the Company pays its Business Manager an annual business management fee of up to 1% of the “average invested assets,” payable quarterly in an amount equal to 0.25% of the average invested assets as of the last day of the immediately preceding quarter. For the six months ended June 30, 2012 and 2011, average invested assets were $11,489,578 and $11,328,374. The Company incurred a business management fee of $20,000 and $20,000, which is equal to .1740%, and .1765% of average invested assets for the six months ended June 30, 2012 and 2011, respectively. Pursuant to the letter agreement dated May 4, 2012, the business management fee shall be reduced in each particular quarter for investigation costs exclusive of legal fees incurred in conjunction with the SEC matter. During the three months ended June 30, 2012, the Company incurred $7 of investigation costs, resulting in a business management fee expense of $19,993 for the six months ended June 30, 2012. In addition, effective July 30, 2012, the Company extended our agreement with the Business Manager through July 30, 2013. The terms of the Business Manager Agreement remains unchanged.

 

(f) The Company pays a related party of the Business Manager 0.2% of the principal amount of each loan placed for the Company. Such costs are capitalized as loan fees and amortized over the respective loan term.