The Company is externally managed and advised by the Advisor. Prior to the Self-Management Transaction on September 8, 2020, the Advisor was an indirect wholly-owned subsidiary of RAI. After the Self-Management Transaction, the Advisor is an indirect wholly-owned subsidiary of OP I, the operating partnership of REIT I.

Pursuant to the terms of the Advisory Agreement, the Advisor provides the Company with the services of its management team, including its officers, along with appropriate support personnel. The Advisor is reimbursed for the Company’s allocable share of costs for Advisor personnel, including allocable personnel salaries and benefits. Each of the Company’s officers is an employee of REIT I, our sponsor following the Self-Management Transaction, or one of its affiliates. The Company does not have any employees. The Advisor is not obligated to dedicate any specific portion of its time or the time of its personnel to the Company’s business. The Advisor is at all times subject to the supervision and oversight of the Company’s board of directors and has only such functions and authority as the Company delegates to it.

The Advisory Agreement has a one -year term and can be renewed for an unlimited number of successive one -year terms upon the approval of the Conflicts Committee of the Company's board of directors. Under the Advisory Agreement, the Advisor receives fees and is reimbursed for its expenses as set forth below:

Acquisition fees. The Advisor earns an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital expenditure reserves allocated, or the amount funded by the Company to acquire loans, including acquisition expenses and any debt attributable to such investments. Pursuant to the Advisory Agreement, the Advisor agreed to waive an acquisition fee and debt financing fee in connection with the REIT III Merger. No such waiver was sought with respect to the REIT I Merger because, if owed, it would be paid with OP II funds to an entity that would then be wholly owned by OP II.

Asset management fees. The Advisor earns a monthly asset management fee equal to one-twelfth of 1.0% of the cost of each asset, without deduction for depreciation, bad debts or other non-cash reserves. The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all of an asset and does not manage or control the asset.

Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of (i) one-half of the aggregate brokerage commission paid, or if none is paid, the amount that customarily would be paid at a market rate or (ii) 2.0% of the contract sales price.

Debt financing fees. The Advisor earns a debt financing fee equal to 0.5% of the amount available under any debt financing obtained for which it provided substantial services. As described above, the Advisor has waived any debt financing fee in connection with the REIT III Merger.

Expense reimbursements. The Company also pays directly or reimburses the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out-of-pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment. However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees.

Prior to the Self-Management Transaction on September 8, 2020, RAI and C-III were related parties of the Company.

Property loss pool: The Company participates (with other properties directly or indirectly managed by RAI and C-III) in a catastrophic insurance policy, which covers claims up to $250 million, after either a $25,000 or $100,000 deductible per incident, depending on location and/or type of loss. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results. This policy will expire on March 1, 2021.

General liability loss policy: The Company (with other properties directly or indirectly managed by RAI and C-III) has an insured and dedicated limit for the general liability policy of $1.0 million per occurrence. Total claims are limited to $2.0 million per premium year. In excess of these limits, the Company participates (with other properties directly or indirectly managed by RAI and C-III) in a $50.0 million per occurrence excess liability program. Therefore, the total insured limit per occurrence is $51.0 million for the general and excess liability program, after a $25,000 deductible per incident. This policy will expire on March 1, 2021.

Internal audit fees. Prior to the Self-Management Transaction RAI performed, RAI performed internal audit services for the Company.

Directors and officers insurance: The Company participates in a liability insurance program for directors and officers coverage with REIT I and REIT III. Prior to the Self-Management Transaction, the Company participated in a liability insurance program for directors and officers’ coverage with other C-III managed entities and subsidiaries.

Other expenses. The Company utilizes the services of The Planning and Zoning Resource Company, an affiliate of C-III, for zoning reports for acquisitions.

The Manager manages real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to the Company’s real estate properties pursuant to the terms of the management agreement with the Manager.

Property management fees. The Manager earns a property management fee equal to 4.5% of actual gross cash receipts from the operations of real property investments. The Manager subcontracts certain services to an unaffiliated third-party and pays for those services from its property management fee.

Construction management fees. The Manager earns a construction management fee of 5.0% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property.

Debt servicing fees. The Manager earns a debt servicing fee of 2.75% on payments received from loans held by the Company for investment. No debt servicing fees were earned during the three months ended September 30, 2020 and 2019.

Expense reimbursement. During the ordinary course of business, the Manager or other affiliates may pay certain shared operating expenses on behalf of the Company for which they are reimbursed by the Company.

The fees earned/expenses incurred and the amounts payable to such related parties are summarized in the following tables (in thousands):

	September 30, 2020		December 31, 2019
Due from related parties:
RAI - self-insurance funds held	$	-	$	33
Operating expense reimbursements		-		264
Properties
Green Trails		1		-
	$	1	$	297
Due to related parties:
Advisor
Operating expense reimbursements	$	1,111	$	6
Internal audit		7		-
Manager
Property management fees		316		328
Operating expense reimbursements		-		96
Properties
Meridian		-		2
	$	1,434	$	432

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Fees earned / expenses incurred:
Advisor
Asset management fees ^{(1) (5) (6)}	$	2,303	$	2,321	$	6,777	$	7,054
Debt financing fees ⁽²⁾	$	—	$	—	$	—	$	39
Disposition fees⁽⁴⁾	$	—	$	—	$	—	$	274
Operating expense reimbursements ^{(2) (8)}	$	845	$	834	$	2,920	$	2,682
Internal audit ⁽⁹⁾	$	27	$	-	$	79	$	-

Manager
Property management fees ^{(1) (7)}	$	952	$	1,003	$	2,847	$	2,910
Construction management fees ⁽³⁾	$	—	$	37	$	103	$	150
Construction payroll reimbursements ⁽³⁾	$	—	$	7	$	—	$	61
Operating expense reimbursements ⁽²⁾	$	—	$	—	$	—	$	70

(1)	Included in Management fees on the consolidated statements of operations and comprehensive income (loss).

(2)	Included in General and administrative on the consolidated statements of operations and comprehensive income (loss).

(3)	Capitalized and included in Rental properties, net on the consolidated balance sheets.

(4)	Included in Net gain on disposition of property on the consolidated statements of operations and comprehensive income (loss).

(5)	Net with acquisition fees returned as a result of capital expense reallocation.

(6)	After the Self-Management Transaction on September 8, 2020, approximately $563,000 of this balance was earned by Resource Real Estate Opportunity OP, LP.

(7)	After the Self-Management Transaction on September 8, 2020, approximately $231,000 of this balance was earned by Resource Real Estate Opportunity OP, LP.

(8)	After the Self-Management Transaction on September 8, 2020, approximately $279,000 of this balance was earned by Resource Real Estate Opportunity OP, LP.

(9)	After the Self-Management Transaction on September 8, 2020, approximately $7,000 of this balance was earned by Resource Real Estate Opportunity OP, LP.