RELATED PARTY TRANSACTIONS AND FEES

12 Months Ended

Dec. 31, 2015

RECEIVABLE FROM AND PAYABLE TO RELATED PARTIES

RELATED PARTY TRANSACTIONS AND FEES

NOTE 6.            RELATED PARTY TRANSACTIONS AND FEES

The Advisory agreement provides for Pillar or a related party of Pillar to receive fees and cost reimbursements as defined in Part III, Item 10. “Directors, Executive Officers and Corporate Governance – The Advisor”. Cost reimbursements are allocated based on the relative market values of the Company’s assets. The Company and Pillar entered into an Advisory Agreement and Cash Management Agreement to further define the administration of the Company’s day-to-day investment operations, relationship contacts, flow of funds and deposit and borrowing of funds. The fees and cost reimbursements paid to Pillar, TCI and related parties are detailed below (dollars in thousands):

Fees:		2015		2014		2013
Advisory		704		692		830
Net income		187		203		695
Tax sharing agreement				946		3,055
	$	891	$	1,841	$	4,580
Other Expense:
Cost reimbursements		240		237		234
Revenue:
Interest received	$	1,636	$	1,692	$	2,364
		1,636		1,692		2,364

As of December 31, 2015, IOT has notes and interest receivable of $26.7 million due from Unified Housing Foundation, Inc. and recognized interest income of $2.7 million related to these notes receivable. See details in Part 2, Item 8. “Note 3. Notes and Interest Receivable from Related Parties.”

The following table reconciles the beginning and ending balances of amounts receivable from related parties as of December 31, 2015 (dollars in thousands):

	TCI			Pillar			Total
Balance, December 31, 2014	$	40,460		$	—		$	40,460
Cash transfers		—			7,619			7,619
Advisory fees		—			(704	)		(704	)
Net income fee		—			(187	)		(187	)
Cost reimbursements		—			(240	)		(240	)
Expenses paid by advisor		—			(1,370	)		(1,370	)
Financing (mortgage payments)		—			(1,224	)		(1,224	)
Significant transaction		—			(9,546	)		(9,546	)
Interest income		1,636			—			1,636
Income tax expense		—			(807)			(807)
Deferred tax asset		(1,324)			---			(1,324)
Purchase of obligation		(6,459	)		6,459			—
Balance, December 31, 2015	$	34,313		$	—		$	34,313

IOT is part of a tax sharing and compensating agreement with respect to federal income taxes between ARL, TCI and IOT and their subsidiaries. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory tax rate of 35%. There were no payments under this agreement in  2015.