CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In the ordinary course of its business operations, the Partnership has ongoing relationships with several related entities.

Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. The Partnership's Properties participate in insurance pools with other properties directly and indirectly managed by RAI for both property insurance and general liability. RAI holds the escrow funds related to the insurance pool on its books. The insurance pool covers losses up to $2.5 million for property losses and the first $25,000 of each general liability loss up to an annual maximum of $1.0 million. Catastrophic insurance would cover property losses in excess of the insurance pool up to $140 million. Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership financial condition and operating results.

RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds, net of any amounts otherwise attributable to LP interests owned by RCP.  During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.  As of March 31, 2016 and December 31, 2015, the amount of unpaid subordinated investment management fees totaled $62,000 and $15,000, respectively. During the three months ended March 31, 2016 and 2015 the Partnership paid investment management fees totaling $0 and $1.9 million, respectively.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”) is entitled to receive property and debt management fees.  RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties.  As of March 31, 2016 and December 31, 2015, property management fees due totaled $50,000 and $62,000, respectively. Because the Partnership has not acquired any real estate debt investments, there were no debt management fees as of March 31, 2016 and December 31, 2015.

During the ordinary course of business, RCP and RREMI advance funds for ordinary operating expenses on behalf of the Properties.  As of March 31, 2016 and December 31, 2015, advances due totaled $34,000 and $61,000, respectively. Total operating expenses reimbursed during the three months ended March 31, 2016 and March 31, 2015 were $429,000 and $523,000, respectively. Reimbursed expenses include payroll and miscellaneous operating expenses. Reimbursed operating expenses are included in property rental operating expenses in the consolidated statements of operations.

The Partnership pays investment management fees and property management fees to related parties.  These expenses are summarized as follows (in thousands):

	Three Months Ended   March 31,
	2016		2015
RCP:
Investment management fees (1)	$	46	$	78
RREML:
Property management fees - 5% of gross cash receipts (2)	102		155
	$	148	$	233

(1) RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML is entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.