CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Background
In 2021 and 2022,
• | Matthew J. Gould, Chairman of our Board of Directors, served as a Senior Vice President and director of BRT Apartments Corp., as Chairman of the Board and Chief Executive Officer of the managing general partner of Gould Investors (which as of April 3, 2023 owned approximately 9.6% of our outstanding shares of common stock), and as a Vice President of Majestic; |
• | Fredric H. Gould, Vice Chairman of our Board of Directors, served as a director of BRT Apartments, as Chairman of the Board of Directors and sole stockholder of Majestic and, through December 31, 2021, as a director and sole stockholder of the managing general partner of Gould Investors; and |
• | Jeffrey A. Gould, a Director and Senior Vice President of our company, served as a Director, President and Chief Executive Officer of BRT Apartments, and as a Senior Vice President and Director of the managing general partner of Gould Investors. |
Matthew J. Gould and Jeffrey A. Gould are brothers and the sons of Fredric H. Gould. In addition, David W. Kalish, Mark H. Lundy, Israel Rosenzweig and Isaac Kalish, each of whom is an executive officer of our company, are officers of BRT Apartments and of the corporate managing general partner of Gould Investors. Isaac Kalish, David Kalish’s son, and Steven Rosenzweig, Israel Rosenzweig’s son, are employed by our affiliates.
Related Party Transactions
Pursuant to the C&SA, Majestic provides us with the Services. In accordance with such agreement, we paid Majestic, $3,111,000 and $3,067,000 in 2021 and 2022, respectively, which included $1,365,000 and $1,346,000 for property management services, respectively. In 2023, we will pay Majestic $1,806,000 and in addition, for its property management services, will pay it 1.5% and 2.0% of the rental payments (including tenant reimbursements and deferred rent) actually received by us from net lease tenants and operating lease tenants, respectively. We will not pay Majestic property management fees with respect to properties managed by third parties. Based on our property portfolio at December 31, 2022, we estimate that the property management fee in 2023 will be approximately $1.4 million. Majestic may earn a profit from payments made to it under such agreement. In addition, under this agreement, we also paid Majestic $295,000 and $317,000 in 2021 and 2022, respectively, and will pay Majestic $317,000 in 2023, as reimbursement for our share of direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. Majestic is wholly owned by the vice chairman of our board, and certain of our part-time officers, including our part-time named executive officers, are officers of, and receive compensation from, Majestic.
Our part-time officers also receive compensation from other companies affiliated with us for services unrelated to us.
Majestic allocated an aggregate of $1,717,000 and $1,713,000 to the following officers (some of whom are also officers of Majestic and other affiliated companies) for the services they performed on our behalf in 2021 and 2022, respectively: Jeffrey A. Gould, $451,000 and $449,000; Mark H. Lundy, $294,000 and $290,000; Israel Rosenzweig, $63,000 and $62,000; Isaac Kalish, $137,000 and $141,000; and Steven Rosenzweig, $81,000 and $85,000. See “Executive Compensation - Summary Compensation Table” for amounts allocated to Messrs. M. Gould and D. Kalish. The allocated amounts do not represent the amounts paid to such individuals which may be greater or less than the allocated amounts. These individuals also received compensation in 2021 and 2022 from our other affiliates, including BRT Apartments and Gould Investors, as well as other entities owned by Fredric H. Gould and/or members of his family, none of which provided services to us in 2021 or 2022. See “Executive Compensation - Compensation of Part-Time Named Executive Officers” for information regarding the determination of amounts paid by Majestic to these officers.
We obtain our property insurance in conjunction with Gould Investors and its affiliates and in 2021 and 2022, we reimbursed Gould $1,402,000 and $586,000, respectively, for our share of the insurance premiums.
During 2021 and 2022, $2,590,000 and $2,572,000, respectively, of non-cash compensation expense relating to the restricted stock and RSUs held by our part-time executive officers and employees (who may also be