We have an advisory agreement with the advisor to perform certain services for us, including managing the offering and our overall business, identification, evaluation, negotiation, purchase and disposition of lodging related properties and the performance of certain administrative duties. The agreement that is currently in effect was recently renewed for an additional year pursuant to its terms effective September 30, 2013. The advisor has entered into a subadvisory agreement with the subadvisor, whereby the subadvisor provides certain personnel services to us and the advisor pays 20% of its fees earned under the advisory agreement to the subadvisor.

The following tables present a summary of fees we paid and expenses we reimbursed to the advisor, subadvisor and other affiliates in accordance with the terms of those agreements (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Amounts Included in the Consolidated Statements of Operations:
Acquisition fees	$	4,072	$	634	$	12,427	$	1,505
Asset management fees		833		171		1,783		358
Loan refinancing fee		-		-		-		37
Personnel reimbursements		342		175		974		563
	$	5,247	$	980	$	15,184	$	2,463

Other Transaction Fees Incurred:
Selling commissions and dealer manager fees	$	20,139	$	2,397	$	40,444	$	5,753
Offering costs		2,080		517		6,247		1,236
	$	22,219	$	2,914	$	46,691	$	6,989

					September 30, 2013		December 31, 2012
Amounts Due to Affiliates:
Organization and offering costs due to the advisor					$	220	$	473
Excess operating expense advances due back to the advisor						386		-
Other amounts due to the advisor						800		280
Due to joint venture partners						667		-
Other						-		94
					$	2,073	$	847

Amounts Due from Affiliates:
Due from joint venture partners					$	-	$	368
Other						9		30
					$	9	$	398

The advisor receives acquisition fees of 2.5% of the total investment cost of the properties acquired, including on our proportionate share of equity method investments, and loans originated by us, not to exceed 6% of the aggregate contract purchase price of all investments and loans. We expense acquisition-related costs and fees on acquisitions deemed to be business combinations and capitalize those costs on acquisitions deemed to be equity investments.

We pay the advisor an annual asset management fee equal to 0.5% of the aggregate average invested value of our investments. The advisor is also entitled to receive disposition fees of up to 1.5% of the contract sales price of a property, and a loan refinancing fee of up to 1% of a refinanced loan, if certain conditions described in the advisory agreement are met. We paid all asset management fees for the three and nine months ended September 30, 2013 and 2012 in shares of our common stock, rather than in cash, at the election of the advisor. At September 30, 2013, the advisor owned 231,245 shares (0.39%) of our outstanding common stock.

Pursuant to the subadvisory agreement, we reimburse the advisor, who subsequently reimburses the subadvisor, for personnel costs and other charges. We have also granted restricted stock units (“RSUs”) to employees of the subadvisor pursuant to our 2010 Equity Incentive Plan. The subadvisor provides us with the services of Michael G. Medzigian, our chief executive officer, during the term of the subadvisory agreement, subject to the approval of our Board of Directors. Such personnel reimbursements are included in Management expenses and Corporate general and administrative expenses in our consolidated financial statements.

We had a dealer manager agreement with Carey Financial in connection with the initial public offering, whereby Carey Financial received a selling commission of $0.70 per share sold and a dealer manager fee of $0.30 per share sold, a portion of which was re-allowed to selected broker dealers. These amounts are recorded in Additional paid-in capital in the consolidated balance sheets and consolidated statements of equity.

Pursuant to the advisory agreement, we are obligated to reimburse the advisor for all organization and offering costs incurred in connection with our initial public offering, up to a maximum amount (excluding selling commissions and the dealer manager fee described above) of 2% of the gross proceeds of our offering and the DRIP. From inception through the termination of our initial public offering on September 15, 2013, the advisor has incurred organization and offering costs on our behalf of approximately $9.4 million, all of which we are obligated to reimburse. At September 30, 2013, $0.2 million was included in Due to affiliates on our consolidated balance sheet for these costs.

Pursuant to the advisory agreement (with quoted variables defined in the advisory agreement), the advisor is obligated to reimburse us for “operating expenses” to the extent that these expenses exceed the greater of 2% of “average invested assets” or 25% of our “adjusted net income.” Repayment of this reimbursement is subject to approval by our Board of Directors. At September 30, 2013, we had a payable of $0.4 million recorded in our consolidated balance sheet, which represented the amount incurred by the advisor for operating expenses that exceeded the 2% threshold for the 12-month period ended December 31, 2012 as we currently expect our 2013 operating expenses to be sufficiently below the 2%/25% threshold for us to repay the advisor with regard to this amount, upon approval by our Board of Directors. For the 12-month period ended September 30, 2013, our operating expenses were below the 2%/25% threshold.

Carey Watermark Holdings' special general partner interest in the Operating Partnership entitles it to receive distributions of 10% of Available Cash, as defined in the agreement of limited partnership of the Operating Partnership, generated by the Operating Partnership, subject to certain limitations. In addition, in the event of the dissolution of the Operating Partnership, Carey Watermark Holdings will be entitled to receive distributions of up to 15% of net proceeds, provided certain return thresholds are met for the initial investors in the Operating Partnership. To date, there have been no distributions of Available Cash by the Operating Partnership.

Other amounts due to the advisor represent asset management fees payable and reimbursable expenses.

This balance is primarily comprised of amounts due from consolidated joint ventures to our joint venture partners.

Other is primarily comprised of amounts due to Carey Financial, representing selling commissions and dealer manager fees, and amounts due to Carey REIT II, Inc., a subsidiary of W. P. Carey, representing directors' fees paid on our behalf.

In January 2013, our Board of Directors and the board of directors of W. P. Carey approved loans to us of up to $50.0 million in the aggregate, at a rate of LIBOR plus 2.0%, which is equal to the rate at which W. P. Carey currently borrows funds, under its existing credit facility, for the purpose of facilitating acquisitions approved by our investment committee that we might not otherwise have sufficient available funds to complete. Any such loans may be made solely at the discretion of the management of W. P. Carey. Through the date of this Report, no such loans have been made pursuant to these approvals; however, W. P. Carey has provided similar loans to us in the past, all of which were repaid on or prior to their maturity dates.