NOTE 16 – RELATED PARTY TRANSACTIONS

Property Management Fee

During the years ended December 31, 2015 and 2014, we paid property management fees to GOLDMARK Property Management in an amount equal to 5% of rents of the properties managed. GOLDMARK Property Management is owned in part by Kenneth Regan and James Wieland. For the years ended December 31, 2015 and 2014, we paid management fees of $9,304 and $6,439, respectively, to GOLDMARK Property Management.

Board of Trustee Fees

We incurred Trustee fees of $51 and $56 during the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, and 2014 we owed our Trustees $27 and $32 for unpaid board of trustee fees, respectively. There is no cash retainer paid to Trustees. Instead, we pay Trustees specific amounts for meetings attended. In March 2014, our Board revised the Trustee Compensation Plan effective January 1, 2014.

The plan provides:



Board Chairman – Board Meeting			105 shares/meeting
Trustee – Board Meeting			75 shares/meeting
Committee Chair – Committee Meeting			30 shares/meeting
Trustee – Committee Meeting			30 shares/meeting

Common shares earned in accordance with the plan are calculated on an annual basis. Shares earned pursuant to the Trustee Compensation Plan are issued on or about July 15 for Trustees’ prior year of service. Non-independent Trustees are not be compensated for their service on the Board or Committees.

Advisory Agreement

We are an externally managed trust and as such, although we have a Board of Trustees and executive officers responsible for our management, we have no paid employees. The following is a brief description of the current fees and compensation that may be received by the Advisor under the Advisory Agreement, which must be renewed on an annual basis and approved by a majority of the independent trustees. The Advisory Agreement was approved by the Board of Trustees (including all the independent Trustees) on March 27, 2015, effective January 1, 2015.

Management Fee: 0.35% of our total assets (before depreciation and amortization), annually. Total assets are our gross assets (before depreciation and amortization) as reflected on our consolidated financial statements, taken as of the end of the fiscal quarter last preceding the date of computation. The management fee will be payable monthly in cash or our common shares, at the option of the Advisor, not to exceed one-twelfth of 0.35% of the total assets as of the last day of the immediately preceding month. The management fee calculation is subject to quarterly and annual reconciliations. The management fee may be deferred at the option of the Advisor, without interest.

Acquisition Fee: For its services in investigating and negotiating acquisitions of investments for us, the Advisor receives an acquisition fee of 2.5% of the purchase price of each property acquired, capped at $375 per acquisition. The total of all acquisition fees and acquisition expenses cannot exceed 6% of the purchase price of the investment, unless approved by a majority of the trustees, including a majority of the independent trustees, if they determine the transaction to be commercially competitive, fair and reasonable to us.

Disposition Fee: For its services in the effort to sell any investment for us, the Advisor receives a disposition fee of 2.5% of the sales price of each property disposition, capped at $375 per disposition.

Financing Fee: 0.25% of all amounts made available to us pursuant to any loan, refinance (excluding rate and/or term modifications of an existing loan with the same lender), line of credit or other credit facility.

Development Fee: Based on regressive sliding scale (starting at 5% and declining to 3%) of total project costs, excluding cost of land, for development services requested by us.


Total Cost	Fee		Range of Fee	Formula
0 – 10M	5.0	%	0 –.5M	0M – 5.0% x (TC – 0M)
10M - 20M	4.5	%	.5 M – .95M	.50M – 4.5% x (TC – 10M)
20M – 30M	4.0	%	.95 M – 1.35M	.95M – 4.0% x (TC – 20M)
30M – 40M	3.5	%	1.35 M – 1.70M	1.35M – 3.5% x (TC – 30M)
40M – 50M	3.0	%	1.70 M – 2.00M	1.70M – 3.0% x (TC – 40M)

TC = Total Project Cost

Management Fees

During the years ended December 31, 2015 and 2014, we incurred advisory management fees of $2,401 and $1,855 with Sterling Management, LLC, our Advisor. As of December 31, 2015 and 2014, we owed our Advisor $214 and $342, respectively, for unpaid advisory management fees. These fees cover the office facilities, equipment, supplies, and staff required to manage our day-to-day operations.

Acquisition Fees

During the years ended December 31, 2015 and 2014, we incurred acquisition fees of $1,128 and $2,628, respectively, with our Advisor. There were no acquisition fees owed to our Advisor as of December 31, 2015. As of December 31, 2014, we owed our Advisor $1,875 for unpaid acquisition fees.

Financing Fees

During the years ended December 31, 2015 and 2014, we incurred financing fees of $270 and $269 with our Advisor for loan financing and refinancing activities. As of December 31, 2015 and 2014, we owed our Advisor $23 and $214 for unpaid financing fees, respectively.

Disposition Fees

During the years ended December 31, 2015 and 2014, we incurred disposition fees of $36 and $16 with our Advisor. See Note 19. There were no disposition fees owed to our Advisor as of December 31, 2015 and 2014, respectively.

Development Fees

During the years ended December 31, 2015 and 2014, we incurred $336 and $358 in development fees with our Advisor. As of December 31, 2015 and 2014, we owed our Advisor $69 and $36 for unpaid development fees as part of a 10% hold back, respectively.

Operating Partnership Units Issued in Connection with Acquisitions

During the year ended December 31, 2015, we issued directly or indirectly, 242,000 operating partnership (OP) units to entities affiliated with Messrs. Regan, Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $3,754.

During the year ended December 31, 2014, we issued directly or indirectly, 644,000 operating partnership (OP) units to entities affiliated with Messrs. Regan, Wieland, Furness, three of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $9,118.

Commissions

During the years ended December 31, 2015 and 2014, we incurred real estate commissions of $1,033 and $1,408, respectively, owed to GOLDMARK SCHLOSSMAN Commercial Real Estate Services, Inc., which is controlled by Messrs. Regan and Wieland. There were no outstanding commissions owed as of December 31, 2015. As of December 31, 2014, we owed commissions of $750.

During the year ended December 31, 2015, we incurred brokerage fees of $931 to a broker-dealer benefiting Dale Lian, a shareholder of Sterling and a member of our Advisor. Brokerage fees were based on 7% of the purchase price of Sterling common shares sold. There were no outstanding brokerage fees owed to Dale Lian or entities benefiting Dale Lian as of December 31, 2015. We did not incur any brokerage fees to Dale Lian or entities benefiting Dale Lian in 2014.

During the year ended December 31, 2015, we incurred brokerage fees of $348 to a broker-dealer benefiting James Echtenkamp, a shareholder of Sterling and a member of our Advisor. Brokerage fees were based on 7% of the purchase price of Sterling common shares sold. There were no outstanding brokerage fees owed to James Echtenkamp or entities benefiting James Echtenkamp as of December 31, 2015. We did not incur any brokerage fees to James Echtenkamp or entities benefiting James Echtenkamp in 2014.

Rental Income

During the years ended December 31, 2015 and 2014, we received rental income of $215 and $179, respectively, under an operating lease agreement with GOLDMARK Property Management.

During the years ended December 31, 2015 and 2014, we received rental income of $51 and $50, respectively, under an operating lease agreement with GOLDMARK SCHLOSSMAN Commercial Real Estate Services, Inc.

During the years ended December 31, 2015 and 2014, we received rental income of $43 and $42, respectively, under operating lease agreements with our Advisor.

Construction Costs

As of December 31, 2015, since the project’s inception, we incurred costs related to the construction of a 156 unit apartment community (Phase I) in Bismarck, North Dakota of $14,147 to GOLDMARK Development. There was no retainage owed to GOLDMARK Development as of December 31, 2015. As of December 31, 2014, we owed GOLDMARK Development $555 for retainage. In addition, there were no unpaid construction fees owed to GOLDMARK Development as of December 31, 2015. As of December 31, 2014 we owed GOLDMARK Development $477 for unpaid construction fees.

As of December 31, 2015, we incurred costs of $117 related to the construction of Phase II of the Bismarck, North Dakota development project which consists of a clubhouse and six 6-plex two-story townhomes to GOLDMARK Development. As of December 31, 2015, we owed GOLDMARK Development $107 for construction fees and $6 for retainage.