Related Party Transactions and Arrangements

Advisory Agreement Fees and Reimbursements

Pursuant to the Advisory Agreement, the Company makes or was required to make the following payments and reimbursements to the Advisor:

•The Company reimburses the Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to the Company’s executive officers.

•The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholder’s equity as calculated pursuant to the Advisory Agreement.

•The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0% per annum, our Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to our Advisor exceed 10.0% of the aggregate total return for such year.

•The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company‘s behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments.

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the three months ended March 31, 2020 and March 31, 2019 and the associated payable as of March 31, 2020 and December 31, 2019 (dollars in thousands):



	Three Months Ended March 31,				Payable as of
	2020		2019		March 31, 2020		December 31, 2019
Acquisition expenses ⁽¹⁾	$	142	$	248	$	1	$	225
Administrative services expenses	4,112		3,963		4,392		1,238
Asset management and subordinated performance fee	3,912		3,644		5,901		3,326
Other related party expenses ⁽²⁾⁽³⁾	582		265		3,744		—
Total related party fees and reimbursements	$	8,748	$	8,120	$	14,038	$	4,789

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⁽¹⁾ Total acquisition expenses paid during the three months ended March 31, 2020 and March 31, 2019 were $2.1 million and $1.8 million respectively, of which $2.0 million and $1.5 million were capitalized within the commercial mortgage loans, held for investment line of the consolidated balance sheets for the periods ended March 31, 2020 and 2019.

⁽²⁾ These are primarily related to reimbursable costs incurred related to the increase in loan origination activities. These amounts are included in Other expenses in the Company's consolidated statements of operations.

⁽³⁾The related party payable includes $2.5 million of payments made by the Advisor to third party vendors on behalf of the Company and $0.7 million of capitalized acquisition expenses that are amortized over the life of the loan.

The payables as of March 31, 2020 and December 31, 2019 in the table above are included in Due to affiliates on the Company's consolidated balance sheets.

Other Transactions

On February 22, 2018, the Company purchased commercial mortgage loans, held-for-sale from an entity that is an affiliate of our Advisor, for an aggregate purchase price of $27.8 million. The purchase of the commercial mortgage loans and the $27.8 million purchase price were approved by the Company’s board of directors. On April 18, 2018, the Company sold $23.3 million of these commercial mortgage loans into a CMBS securitization. There had been a full principal pay-down on the remaining $4.5 million of these commercial mortgage loans as of March 31, 2020, which were previously recorded in commercial mortgage loans, held-for-investment, on the consolidated balance sheets.

On March 26, 2020, the Company and certain of its subsidiaries entered into a material amendment to an existing lending agreement with SBL, an entity that also holds 14,950 of the Company’s outstanding shares of Series A Preferred Stock, secured by a pledge of equity interests in certain of the Company’s subsidiaries, for a total commitment of $100.0 million with a maturity of February 10, 2023 and a rate of one-month LIBOR + 4.5%. The amendment revised the terms of the existing SBL lending agreement, entered into in February 2020, to permit the Company to borrow under the agreement. The Company incurred $17 thousand of interest expense on the lending agreement with SBL for the three months ended March 31, 2020. As of March 31, 2020 there was no outstanding balance.