NOTE 13 – RELATED PARTY TRANSACTIONS

Property Management Fee

During the three months ended March 31, 2020 and 2019, we paid property management and administrative fees to GOLDMARK Property Management, Inc. GOLDMARK Property Management, Inc. is owned in part by Kenneth Regan, James Wieland and Joel Thomsen. For the three months ended March 31, 2020 and 2019, we paid management fees, on-site staff costs and other miscellaneous fees required to run the property of $3,312 and $3,123, respectively, to GOLDMARK Property Management, Inc. Management fees paid during the three months ended March 31, 2020 and 2019 approximated 5% of net collected rents. In addition, during the three months ended March 31, 2020 and 2019, we paid repair and maintenance related payroll and payroll related expenses to GOLDMARK Property Management, Inc. totaling $1,627 and $1,474, respectively.

Board of Trustee Fees

We incurred Trustee fees of $20 and $16 during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, and December 31, 2019 we owed our Trustees $49 and $29 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 and was 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 26, 2020, effective until March 31, 2021.

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.

During the three months ended March 31, 2020 and 2019, we incurred advisory management fees of $765 and $749 with Sterling Management, LLC, our Advisor. As of March 31, 2020, and December 31, 2019, we owed our Advisor $256 and $503, 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, 2020, we reimbursed our Advisor for $5 in operating costs. During the three months ended March 31, 2019, we did not reimburse the Advisor for any operating costs. As of March 31, 2020, we owed our Advisor $5 for unpaid operating costs. As of December 31, 2019, there were no operating costs owed to our Advisor.

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.

During the three months ended March 31, 2020, we incurred $302 in acquisition fees with our advisor. During the three months ended March 31, 2019, there were no acquisition fees incurred with our Advisor. There were no acquisition fees owed to our Advisor as of March 31, 2020 or December 31, 2019.

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.

During the three months ended March 31, 2020, we incurred disposition fees of $92 with our Advisor. During the three months ended March 31, 2019, there were no disposition fees incurred with our Advisor. See Note 15. There were no disposition fees owed to our Advisor as of March 31, 2020 or December 31, 2019.

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.

During the three months ended March 31, 2020, we incurred financing fees of $25 with our Advisor. During the three months ended March 31, 2019, there were no financing fees incurred with our Advisor. There were no financing fees owed to our Advisor as of March 31, 2020 or December 31, 2019.

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

During the three months ended March 31, 2020 and 2019, there were no development fees incurred with our Advisor. During the three months ended March 31, 2020, our Advisor decided to forgo the $104 portion of the held back development fee related to the Stonefield development project which was recognized as a reduction in building and improvements. There were no development fees owed to our Advisor as of March 31, 2020 and December 31, 2019.

Project Management Fee: 6% of all completed capital improvement projects on real estate investments owned by the Trust are paid to the Advisor.

Our Advisor began completing our capital improvement projects in September 2019. These projects were previously performed by our property managers. During the three months ended March 31, 2020, there were $17 in project management fees incurred with our Advisor for capital improvement projects. There were no project management fees owed to our Advisor as of March 31, 2020. As of December 31, 2019, we owed our Advisor $67 for project management fees.

Operating Partnership Units Issued in Connection with Acquisitions

During the three months ended March 31, 2020, we issued directly or indirectly, 176,000 operating partnership units to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $3,373.

During the three months ended March 31, 2019, there were no operating partnership units issued directly or indirectly, to affiliated entities.

Commissions

During the three months ended March 31, 2020, we incurred real estate commissions of $324, to GOLDMARK Commercial Real Estate Services, Inc., which is controlled by Messrs. Regan and Wieland. During the three months ended March 31, 2019, there were no commissions incurred. There were no outstanding commissions owed as of March 31, 2020 or December 31, 2019.

Rental Income

During the three months ended March 31, 2020 and 2019, we received rental income of $66 and $57, respectively, under an operating lease agreement with GOLDMARK Property Management, Inc..

During the three months ended March 31, 2020 and 2019, we received rental income of $14 and $14, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate, Inc.

During the three months ended March 31, 2020 and 2019, we received rental income of $21 and $13, respectively, under operating lease agreements with our Advisor.