NOTE 14 – RELATED PARTY TRANSACTIONS

Property Management Fee

During the three months ended March 31, 2018 and 2017, we paid property management fees to GOLDMARK Property Management in an amount equal to 5% of rents of the properties managed by GOLDMARK. GOLDMARK Property Management is owned in part by Kenneth Regan and James Wieland. For the three months ended March 31, 2018 and 2017, we paid management fees of $3,054 and $2,769, respectively, to GOLDMARK Property Management. In addition, during the three months ended March 31, 2018 and 2017, we paid repair and maintenance related payroll and payroll related expenses to GOLDMARK Property Management totaling $1,360 and $1,247, respectively.

Board of Trustee Fees

We incurred Trustee fees of $20 and $13 during the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, and December 31, 2017, we owed our Trustees $44 and $23 for unpaid board of trustee fees, respectively. There is no cash retainer paid to Trustees. Instead, we pay Trustees specific amounts for meetings attended.

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 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 29, 2018, effective January 1, 2018.

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. The finance fee shall be capped at $38 per loan, refinance, 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 three months ended March 31, 2018 and 2017, we incurred advisory management fees of $718 and $696 with Sterling Management, LLC, our Advisor. As of March 31, 2018, and December 31, 2017, we owed our Advisor $240 and $238, respectively, for unpaid advisory management fees. These fees cover the office facilities, equipment, supplies, and staff required to manage our day-to-day operations. During the three months ended March 31, 2018 and 2017, we did not reimburse the Advisor for any operating costs.

Acquisition Fees

During the three months ended March 31, 2018 and 2017, we incurred acquisition fees of $114 and $220, respectively, with our Advisor. There were no acquisition fees owed to our Advisor as of March 31, 2018 or December 31, 2017.

Financing Fees

During the three months ended March 31, 2018, there were no financing fees incurred with our Advisor. During the three months ended March 31, 2017, we incurred financing fees of $33 with our Advisor for loan financing and refinancing activities. There were no financing fees owed to our Advisor as of March 31, 2018 or December 31, 2017.

Disposition Fees

During the three months ended March 31, 2018 and 2017, there were no disposition fees incurred with our Advisor. See Note 16. There were no disposition fees owed to our Advisor as of March 31, 2018 and December 31, 2017.

Development Fees

During the three months ended March 31, 2018, there were no development fees incurred with our Advisor. During the three months ended March 31, 2017, we incurred $233 in development fees incurred with our Advisor. As of both March 31, 2018, and December 31, 2017, we owed our Advisor a total of $104 for unpaid development fees, of which the entire amount was for unpaid development fees as part of a 10% hold back, respectively.

Operating Partnership Units Issued in Connection with Acquisitions

During the three months ended March 31, 2018, we issued directly or indirectly, 42,000 operating partnership units to an entity affiliated with Messr. Regan, one of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $773.

During the three months ended March 31, 2017, we issued directly or indirectly, 50,000 operating partnership units to entities affiliated with Messrs. Regan and Wieland, two of our trustees, and Messr. Swenson, a former officer, in connection with the acquisition of various properties. The aggregate value of these units was $808.

Commissions

During the three months ended March 31, 2018, there were no real estate commissions incurred that were owed to GOLDMARK Commercial Real Estate Services, Inc. (f/k/a GOLDMARK SCHLOSSMAN Commercial Real Estate Services, Inc.) which is controlled by Messrs. Regan and Wieland. During the three months ended March 31, 2017, we incurred real estate commissions of $264, owed to GOLDMARK Commercial Real Estate Services, Inc. There were no outstanding commissions owed as of March 31, 2018 and December 31, 2017.

Rental Income

During the three months ended March 31, 2018 and 2017, we received rental income of $57 and $54, respectively, under an operating lease agreement with GOLDMARK Property Management.

During the three months ended March 31, 2018 and 2017, we received rental income of $14 and $13, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate Services, Inc.

During the three months ended March 31, 2018 and 2017, we received rental income of $12 and $11, respectively, under operating lease agreements with our Advisor.

Construction Costs

There were no constructions costs incurred during the three months ended March 31, 2018 to GOLDMARK Development, which is controlled by Messrs. Regan and Wieland. As of December 31, 2017, since Phase II of the Bismarck, North Dakota development project’s inception through its completion in August 2017, we incurred total costs of $8,997 related to the construction of a clubhouse and six 6-plex two-story townhomes to GOLDMARK Development. There was no retainage or unpaid construction fees owed to GOLDMARK Development as of December 31, 2017.