NOTE 17 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has sponsored and manages investment entities. Additionally, it has ongoing relationships with several related entities. The following table details these receivables and payables (in thousands):



	December 31,
	2014		2013
Receivables from managed entities and related parties, net:
Real estate investment entities	$	23,733	$	21,487
Commercial finance investment entities ⁽¹⁾	2,883		8,174
Financial fund management investment entities	663		1,138
Other	488		124
Loan to CVC Credit Partners	2,536		—
Receivables from managed entities and related parties	$	30,303	$	30,923

Payables due to managed entities and related parties, net:
Real estate investment entities ⁽²⁾	$	2,942	$	2,940
Other	73		170
Payables to managed entities and related parties	$	3,015	$	3,110


(1)	Net of reserves for credit losses of $17.0 million and $36.2 million, respectively, related to management fees owed from one of the commercial finance investment partnerships, respectively which, based on estimated cash distributions, are not expected to be collectible.


(2)	Reflects $2.6 million and $2.9 million, respectively, in funds provided by the real estate investment entities, which are held by the Company to self-insure the properties held by those entities.

The Company receives fees, dividends and reimbursed expenses from several related/managed entities. In addition, the Company pays fees to, and reimburses certain operating expenses of related entities. The following table details those activities (in thousands):



	Years Ended December 31,
	2014			2013			2012
Fees from unconsolidated investment entities:
Real estate ⁽¹⁾	$	34,395		$	23,356		$	17,550
Financial fund management	3,633			3,115			3,093
Commercial finance ⁽²⁾	—			—			—
CVC Credit Partners – reimbursement of net costs and expenses	1,037			1,195			2,082
Opportunity REIT I:
Reimbursement of costs and expenses	2,227			1,633			844
Dividends paid	117			114			14
Opportunity REIT II:
Reimbursement of costs and expenses	2,342			—			—
LEAF:
Payment for sub-servicing the commercial finance investment partnerships	(293		)	(898		)	(2,149		)
Payment for rent and related expenses	—			(543		)	(763		)
Reimbursement of net costs and expenses	129			213			287
1845 Walnut Associates Ltd:
Payment for rent and related expenses	(767		)	(702		)	(685		)
Property management fees	205			122			—
Brandywine Construction & Management, Inc. – payment for property management of hotel property	(232		)	(226		)	(211		)
Atlas Energy, L.P. – reimbursement of net costs and expenses	163			240			609
Ledgewood P.C. – payment for legal services	(180		)	(240		)	(462		)
Graphic Images, LLC – payment for printing services	(156		)	(179		)	(235		)
The Bancorp, Inc. – reimbursement of net costs and expenses	111			114			118
9 Henmar LLC – payment of broker/consulting fees	(38		)	(41		)	(47		)


(1)	Reflects discounts recorded by the Company of $82,000, $179,000 and $678,000 recorded in 2014, 2013 and 2012 in connection with management fees from its real estate investment entities that it expects to receive in future periods.


(2)	During 2014, 2013 and 2012, the Company waived $683,000, $1.8 million and $3.9 million, respectively, of its fund management fees from its commercial finance investment entities.

Relationship with CVC Credit Partners. In conjunction with the sale of Apidos to CVC, the Company received, in part, a 33% limited partner interest in CVC Credit Partners, a joint venture between the Company and CVC, and a 33% interest in the General Partner of CVC Credit Partners. As the Company holds at least 25% of the partnership interests, the Company's consent will be required for all non-routine partnership actions, including dispositions and acquisitions in excess of specified thresholds, declarations of distributions, appointment and termination of senior employees, establishment of new investment funds and financings in excess of specified thresholds.

Under a fee agreement, in connection with the April 2012 sale of Apidos to CVC, the Company is required to remit a portion of the base management fee and incentive compensation it receives from RSO to Apidos-CVC. The percentage paid to Apidos-CVC is determined by dividing the equity RSO holds in two Apidos CLOs by the calculated equity used to determine the base management fee. Any incentive compensation paid to Apidos-CVC excludes non-recurring items unrelated to Apidos-CVC. In October 2014, Apidos CLO I was liquidated, resulting in a $28.5 million reduction in RSO equity in Apidos CLOs and, therefore, a reduction in the base and incentive compensation due to Apidos-CVC.

In February 2011, the Company entered into a services agreement with RSO to provide sub-advisory collateral management and administrative services for five CLOs holding approximately $1.7 billion in bank loans whose management contracts RSO had acquired. In connection with services provided by Apidos-CVC, in February 2011 the management agreement was further amended to permit RSO to pay Apidos-CVC 10% of all base and additional collateral management fees and 50% of all incentive collateral management fees it collects and to reimburse Apidos-CVC expenses relative to the management of these CLOs. As of December 31, 2014, Apidos-CVC continues to provide subadvisory services to three of these CLOs holding approximately $800.0 million in bank loans.

On May 6, 2014, the Company made a €1.5 million bridge loan to CVC Credit Partners with interest accruing at a rate of the Euro Interbank Offered Rate ("EURIBOR") plus 7%. In September 2014, the Company and CVC Credit Partners agreed to extend the maturity of the note until April 2015. In connection with the original loan agreement, on December 8, 2014, the Company made an additional advance of €500,000.

Relationship with Opportunity REIT I. The Company formed Opportunity REIT I in 2009 to primarily focus on acquiring non-performing real estate loans and distressed real estate at a discount. In December 2013, the initial offering for Opportunity REIT I was closed having raised an aggregate of $635.0 million. The Company is entitled to receive reimbursements for costs associated with the formation and operating expenses of Opportunity REIT I. As of December 31, 2014, the Company had a $325,000 receivable due from Opportunity REIT I.

Relationship with Opportunity REIT II. On February 6, 2014, Opportunity REIT II commenced its initial public offering of up to $1.0 billion in common stock at a maximum price of $10 per share. Opportunity REIT II will focus on acquiring under-performing multifamily rental properties, distressed real estate and performing loans. Resource Real Estate, a subsidiary of the Company, is the external manager. As of December 31, 2014, the Company had a $3.4 million receivable due from Opportunity REIT II for offering costs and operating expense reimbursements.

On June 14, 2014, the Company provided a $1.3 million short-term bridge loan to Opportunity REIT II with interest accruing at a rate of LIBOR plus 300 basis points basis points. The loan and related interest were repaid in full by June 30, 2014.

Relationship with LEAF. The Company maintains a shared service agreement with LEAF for the reimbursement of various costs and expenses it incurs on behalf of LEAF. In addition, the Company sublet office space in Philadelphia, Pennsylvania from LEAF under a lease that expired in August 2013.

Sub-servicing agreement with LEAF for the commercial finance investment funds. The Company has a sub-servicing agreement with LEAF to provide management services for the commercial finance investment funds. The fee is equal to LEAF's costs to provide these services up to a maximum of 1% of the net present value of all lease and loan contracts comprising each commercial finance fund's borrowing base under its credit facilities or securitizations. In addition, LEAF is entitled to an evaluation fee equal to 50% of any acquisition or similar fee collected by the Company in connection with the acquisition of any new lease or loan contracts for which LEAF provides evaluation services.

Relationship with Atlas Energy, L.P. (“Atlas”). Mr. E. Cohen, the Company’s Chairman of the Board, also serves as the chief executive officer (“CEO”) and president of the general partner of Atlas. Mr. Jonathan Z. Cohen (“Mr. J. Cohen”), the Company’s CEO and President, is the general partner’s chairman of the board. Atlas reimburses the Company for certain shared services. At December 31, 2014, the Company had a $27,000 payable balance due to Atlas as a result of expenses paid by Atlas on the Company's behalf.

Relationship with 1845 Walnut Associates Ltd. The Company owns a 7% investment in a real estate partnership that owns a building at 1845 Walnut Street, Philadelphia in which the Company also leases office space. In February 2009, the Company amended its lease for its offices in this building to extend the lease termination date through May 2013. In October 2012, the Company signed a new ten-year lease which was amended in May 2013 for 34,476 square feet of office space in the same building commencing in August 2013. The Company was provided a tenant allowance of $1.5 million for renovation of the office and the lease provides for a five-year extension. In March 2013, the Company assumed the property management of the building.

Relationship with Ledgewood P.C. (“Ledgewood”). Until March 2006, Mr. Jeffrey F. Brotman was the managing member of Ledgewood, which provides legal services to the Company. Mr. Brotman remained of counsel to Ledgewood through June 2007, at which time he became an Executive Vice President of the Company. In addition, Mr. Brotman was a trustee of the SERP retirement trusts until he joined the Company. In connection with his separation, Mr. Brotman will receive payments from Ledgewood.

Mr. E. Cohen, who was of counsel to Ledgewood until April 1996, receives certain debt service payments from Ledgewood related to the termination of his affiliation with Ledgewood and its redemption of his interest in the firm.

Relationship with Graphic Images, LLC (“Graphic Images”). The Company utilizes the services of Graphic Images, a printing company, whose principal owner is the father of the Company’s Chief Financial Officer.

Relationship with Retirement Trusts. The Company has established two trusts to fund the SERP for Mr. E. Cohen. The 1999 Trust, a secular trust, purchased 100,000 shares of the common stock of TBBK ($1.7 million fair value at December 31, 2014). See “Relationship with TBBK,” below. This trust and its assets are not included in the Company’s consolidated balance sheets. However, trust assets are considered in determining the amount of the Company’s liability under the SERP. The 2000 Trust, a “Rabbi Trust,” held 103,494 shares of TBBK common stock at December 31, 2010, all of which were sold during 2011 and 2012. The SERP liability of $6.4 million is included in accrued expenses and other liabilities.

Relationship with 9 Henmar LLC (“9 Henmar”). The Company owns interests in the Trapeza entities that have sponsored CDO issuers and manage pools of trust preferred securities acquired by the CDO issuers. The Trapeza entities and CDO issuers were originated and developed in large part by Mr. Daniel G. Cohen (“Mr. D. Cohen”). The Company agreed to pay Mr. D. Cohen’s company, 9 Henmar, 10% of the fees the Company receives, before expenses, in connection with the first four Trapeza CDOs that the Company sponsored and manages.

Relationship with TBBK. Mr. D. Cohen is the chairman of the board of TBBK. Mrs. Betsy Z. Cohen (“Mrs. B. Cohen”, who is the wife of Mr. E. Cohen and, together with Mr. E. Cohen are the parents of Messrs. J. Cohen and D. Cohen) was, until December 31, 2014, the CEO of TBBK and its subsidiary bank. From June 2011 until January 2015, the Company sublet a portion of its New York office space to TBBK. In 2012, the Company sold 6,992 of its shares of TBBK common stock for $55,000 and realized gains of $5,000. The Company did not sell any of its TBBK stock during 2014 and 2013. In addition, TBBK provides banking and operational services to LEAF Financial. As of December 31, 2014, the Company held $29,000 in cash deposits at TBBK

Relationship with Certain Directors, Officers, Employees and Other Related Parties. The Company serves as the general partner of seven partnerships that invest in regional domestic banks. The general partner may receive a carried interest of up to 20% upon meeting specific investor return rates. Some of the partnerships’ investors wanted to ensure that certain individuals who are critical to the success of the partnerships would participate in the carried interest. For four of these partnerships, the total participation authorized by the Company’s compensation committee was 48.5% of the 20% carried interest, of which Mr. J. Cohen is entitled to receive 10%. Nine individuals, three of whom are employees of the Company, are entitled to receive the remaining 38.5%. For the remaining three partnerships, the total participation authorized by the Company's compensation committee was 50% of the 20% carried interest. Six individuals, four of whom are employees of the Company, are entitled to receive the remaining 50%. No carried interest had been earned by any of the individuals through December 31, 2014.

In February 2014, the Company loaned a non-executive employee $300,000 under a promissory note bearing interest at 3-month LIBOR plus 3%, resetting annually. Principal and interest are payable annually commencing January 15, 2015 with equal payments due on January 15, 2015 and 2016 with a final maturity of January 15, 2016. In December 31, 2014, the Company amended the terms of the note to extend the payments to March 15, 2015 and 2016 and to make the final maturity March 15, 2016.

Relationship with Brandywine Construction & Management, Inc. (“BCMI”). BCMI manages the property underlying one of the Company’s real estate investments. Mr. E. Cohen is the chairman of BCMI.

In March 2008, the Company sold a 19.99% interest in two indirect subsidiaries that hold a hotel property in Savannah, Georgia to a limited liability company owned by Mr. Adam Kauffman ("Mr. A. Kauffman") for $1.0 million plus $130,000 in fees, and recognized a gain of $612,000. The terms of the sale agreement provided an option to Mr. A. Kauffman, who is president of BCMI, to purchase up to the balance of the Company’s interest in the hotel for $50,000 per 1% interest purchased. The purchase option expired in July 2011. Mr. A. Kauffman now has a right-of-first-offer to purchase the balance of the Company’s interest in the hotel.

In November 2012, the Company paid a $95,000 fee to BCMI in connection with the negotiation and ultimate sale of a property in which the Company had a loan investment.