2.	Related Party Transactions

Our subsidiaries are parties to several lease agreements with Sharyland Utilities, L.P. (Sharyland) and SU FERC, L.L.C. (SU FERC), through which we lease our T&D assets to Sharyland. Under the leases we have agreed to fund capital expenditures for footprint projects. Our leases define “footprint projects” to be transmission or distribution projects primarily situated within our distribution service territory, or that physically hang from our existing transmission assets.

We earned lease revenues under these agreements of $29.4 million and $24.8 million from Sharyland during the three months ended March 31, 2015 and 2014, respectively.

As of March 31, 2015 and December 31, 2014, amounts due from affiliates on the Consolidated Balance Sheets included $21.0 million and $27.8 million, respectively, related to amounts owed by Sharyland or SU FERC associated with our leases.

We make payments to Sharyland to reimburse Sharyland for costs of gross plant and equipment related to the build out of the T&D assets as provided in the leases. For the three months ended March 31, 2015 and 2014, those amounts were $67.4 million and $46.4 million, respectively and were included as electric plant, net on the Consolidated Balance Sheets. As of March 31, 2015 and December 31, 2014, accounts payable and accrued liabilities on the Consolidated Balance Sheets included $4.1 million and $16.1 million, respectively, related to amounts owed to Sharyland as reimbursements for acquisition of gross plant and equipment.

In connection with the organization of InfraREIT, L.L.C. in November 2010, the Operating Partnership agreed to issue deemed capital credits and Class A OP Units to Hunt-InfraREIT with respect to certain development projects. The amount of the capital account credits the Operating Partnership was required to issue equaled 5% of our capital expenditures on these projects, including AFUDC. The number of Class A OP Units the Operating Partnership was required to issue equaled the amount of the capital account credit divided by $10.65. During the three months ended March 31, 2014, the Operating Partnership issued approximately 31,088 Class A OP Units, and on January 1, 2015, the Operating Partnership issued an additional 17,600 Class A OP Units to Hunt-InfraREIT. Following the consummation of our IPO, the Operating Partnership no longer has the obligation to issue deemed capital credits and related equity to Hunt-InfraREIT. We recorded these capital account credits as asset acquisition costs included as part of the capital project in our construction work in progress (CWIP) balance.

InfraREIT LP also issued deemed capital and equity in connection with its CREZ Project. For further information, see Note 11, Contingent Consideration.

Our management fee paid to Hunt Manager for the three months ended March 31, 2015 and 2014 was $2.5 million and $1.3 million, respectively. As of March 31, 2015 and December 31, 2014, there were no prepaid or accrued amounts associated with management fees on the Consolidated Balance Sheets. Additionally, during the three months ended March 31, 2015 and 2014, we paid Hunt Manager $0.2 million for reimbursement of annual software license and maintenance fees in accordance with our management agreement.

Our current management agreement with Hunt Manager, which was effective February 4, 2015, provided for an annual base fee, or management fee, of $10.0 million through April 1, 2015. Effective as of April 1, 2015, the annual base fee was adjusted to $13.1 million annually through March 31, 2016. The base fee for each twelve month period beginning April 1 thereafter will equal 1.50% of our total equity as of December 31 of the immediately preceding year, subject to a $30.0 million cap. The term of the management agreement expires December 31, 2019, and will automatically renew for successive five-year terms unless a majority of our independent directors decides to terminate the agreement.

Prior to our IPO, we and one of our stockholders were parties to a secondee agreement under which employees of the stockholder provided services to us for a secondment fee. We incurred costs associated with secondment fees of less than $0.1 million during the three months ended March 31, 2014. We did not incur any fees associated with this agreement in 2015. These fees are included in general and administrative expense in the Consolidated Statements of Operations. As of March 31, 2015 and December 31, 2014, there were no amounts owed to the member included in accounts payable and accrued liabilities on the Consolidated Balance Sheets related to the secondee agreement. As a result of our IPO, the secondee agreement terminated.

In connection with the IPO, Reorganization and related transactions, we incurred an aggregate of $5.0 million of legal fees, a portion of which was paid to reimburse Hunt and its affiliates, the founding investors and independent directors for legal expenses they incurred in connection with such transactions. This legal expense reimbursement relates to the fees and expenses of outside counsel incurred by those parties and was negotiated separately from the reorganization advisory fee that we paid to Hunt-InfraREIT in connection with the reorganization advisory services provided in connection with the IPO. For further information on additional related party transactions we entered into as a result of the Reorganization, see the caption Initial Public Offering and Reorganization included in Note 1, Description of Business and Presentation of Financial Statements.

On November 20, 2014, InfraREIT, Inc. borrowed $1.0 million from HCI. The note accrued interest at 2.5% per year and was due on November 1, 2015. This note and accrued interest was repaid in February 2015 with proceeds from our IPO for a total of $1.0 million.

On January 15, 2015, we sold assets related to the Cross Valley transmission line (Cross Valley) and the Golden Spread Electric Coop (GSEC) interconnection to Hunt for a total purchase price of $41.2 million. For further information, see Note 3, Assets Held for Sale.