Agreements and Transactions with Related Parties

9 Months Ended

Sep. 30, 2012

Agreements and Transactions with Related Parties

Related Party Transactions Disclosure

Note 3.Agreements and Transactions with Related Parties

Transactions with the Advisor

We have an advisory agreement with the advisor whereby the advisor performs certain services for us under a fee arrangement. On September 28, 2012, following the merger between our advisor and our affiliate, Corporate Property Associates 15 Incorporated (“CPA®:15”), we entered into an amended and restated advisory agreement, which is scheduled to renew annually. The advisory agreement provides for the allocation of the advisor's personnel expenses on the basis of our revenues and those of the other publicly-owned, non-listed REITs which are managed by our advisor under Corporate Property Associates brand name (the “CPA® REITs”) rather than on an allocation of time charges incurred by the advisor's personnel on our behalf. The fee structure related to asset management fees, initial acquisition fees, subordinated acquisition fees, and subordinated disposition fees remains unchanged. Additionally, the advisor remains entitled to 10% of our available cash (the “Available Cash Distribution”), which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and lump-sum or “balloon” payments.In addition, we reimburse the advisor for organization and offering costs incurred in connection with our offering andfor certain administrative duties performed on our behalf. We also have certain agreements with affiliates regarding joint investments. The following tables present a summary of fees we paid and expenses we reimbursed to the advisor in accordance with the advisory agreement(in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Amounts included in the statements of income:
Asset management fees (a)	$	4,906	$	3,344	$	14,224	$	9,274
Performance fees (a)
Distribution of available cash (b)		3,667		1,981		10,225		5,769
Personnel reimbursements (c)		1,181		699		3,322		1,515
Office rent reimbursements (c)		214		135		561		277
	$	9,968	$	6,159	$	28,332	$	16,835
Transaction fees incurred:
Current acquisition fees (d)	$	4,272	$	11,669	$	9,853	$	22,245
Deferred acquisition fees (d) (e)		3,360		8,216		7,711		16,085
	$	7,632	$	19,885	$	17,564	$	38,330
					September 30, 2012		December 31, 2011
Unpaid transaction fees:
Deferred acquisition fees					$	18,576	$	22,748
Subordinated disposition fees (f)						202		202
					$	18,778	$	22,950

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• Asset management fees are included in Property expenses in the consolidated financial statements.For both 2012 and 2011, the advisor elected to receive its asset management fees in shares of our common stock. At September 30, 2012, the advisor owned 3,446,307 shares,or 1.3% of our outstanding common stock.
• We also pay the advisor up to 10% of the Available Cash, as defined in the limited partnership agreementof the operating partnership, which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and lump-sum payments.
• Personnel and office rent reimbursements are included in General and administrative expenses in the consolidated financial statements. Based on gross revenues throughSeptember 30, 2012, our current share of future annual minimum lease paymentsunder our agreement would be $0.8 million annually through 2016; however, we anticipate that our share of future annual minimum lease payments will increase as we continue to invest the proceeds of our offerings.
• Current and deferred acquisition fees for real estate asset acquisitions werecapitalized and included in the cost basis of the assets acquired and for business combinations were expensed and included in General and administrative expenses.
• We made payments of deferred acquisition fees to the advisor totaling $11.9 million and $11.1million during the nine months ended September 30, 2012and 2011, respectively.
• These fees, which are subordinated to the performance criterion and certain other provisions included in the advisory agreement, are deferred and are payable to the advisor only in connection with a liquidity event for our stockholders.

The total costs paid by the advisor and its affiliates in connection with the organization and offering of our securities were $19.1 million from inception through September 30, 2012, of which $18.3 million had been reimbursed as of September 30, 2012.

Jointly-Owned Investments and Other Transactions with Affiliates

We own interests in entities ranging from 12% to 85%, as well as jointly-controlled tenancy-in-common interests in properties, with the remaining interests generally held by affiliates. We consolidate certain of these investments and account for the remainder under the equity method of accounting.

During May 2011, we purchased equity interests in three investments: the Hellweg Die Profi-Baumarkte GmbH & Co. KG (“Hellweg 2”) investment, the U-Haul Moving Partners, Inc. and Mercury Partners, LP investment and the Dick's Sporting Goods, Inc. investment, from one of our affiliates, Corporate Property Associates 14 Incorporated (“CPA®:14”), in connection with the merger of CPA®:14 with andinto a subsidiary ofanother affiliate, Corporate Property Associates 16 – Global Incorporated (the “CPA®:14/16 Merger”) (Note 6).