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Other Expenses
9 Months Ended
Sep. 30, 2017
Other Income and Expenses [Abstract]  
Other Expenses

12. OTHER EXPENSES

Our other expenses consist of the management and incentive fees we pay to our Manager and our general and administrative expenses.

Management and Incentive Fees

Pursuant to a management agreement between our Manager and us, or our Management Agreement, our Manager earns a base management fee in an amount equal to 1.50% per annum multiplied by our outstanding equity balance, as defined in the Management Agreement. In addition, our Manager is entitled to an incentive fee in an amount equal to the product of (i) 20% and (ii) the excess of (a) our Core Earnings (as defined in our Management Agreement) for the previous 12-month period over (b) an amount equal to 7.00% per annum multiplied by our outstanding Equity, provided that our Core Earnings over the prior three-year period is greater than zero. Core Earnings, as defined in our Management Agreement, is generally equal to our net income (loss) prepared in accordance with GAAP, excluding (i) certain non-cash items (ii) the net income (loss) related to our legacy portfolio and (iii) incentive management fees.

During the three and nine months ended September 30, 2017, we incurred $9.5 million and $28.6 million, respectively, of management fees payable to our Manager, compared to $9.5 million and $28.4 million during the same periods in 2016. In addition, during the three and nine months ended September 30, 2017, we incurred $3.7 million and $11.9 million, respectively, of incentive fees payable to our Manager, compared to $4.2 million and $14.8 million during the same periods in 2016.

As of September 30, 2017 and December 31, 2016, we had accrued management and incentive fees payable to our Manager of $13.2 million and $12.8 million, respectively.

 

 

General and Administrative Expenses

General and administrative expenses consisted of the following ($ in thousands):

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2017      2016      2017      2016  

Professional services(1)

   $ 933      $ 828      $ 2,811      $ 2,474  

Operating and other costs(1)

     489        305        1,424        1,695  
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     1,422        1,133        4,235        4,169  

Non-cash and CT Legacy Portfolio compensation expenses

           

Management incentive awards plan - CTOPI(2)

     —          938        —          1,106  

Management incentive awards plan - CT Legacy Partners(3)

     —          354        —          1,112  

Restricted class A common stock earned

     5,819        4,855        17,496        14,190  

Director stock-based compensation

     125        94        313        282  
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     5,944        6,241        17,809        16,690  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total BXMT expenses

     7,366        7,374        22,044        20,859  

Other expenses

     53        40        175        131  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total general and administrative expenses

   $ 7,419      $ 7,414      $ 22,219      $ 20,990  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)    During the three and nine months ended September 30, 2017 we recognized an aggregate $112,000 of expenses related to our Multifamily Joint Venture.

(2)    Represents the portion of CTOPI promote revenue recorded under compensation awards. See Note 4 for further discussion.

(3)    Represents the amounts recorded under the CT Legacy Partners management incentive awards during the period. See below for discussion of the CT Legacy Partners management incentive awards plan.

     

     

     

CT Legacy Partners Management Incentive Awards Plan

In conjunction with our March 2011 restructuring, we created an employee pool for up to 6.75% of the distributions paid to the common equity holders of our subsidiary, CT Legacy Partners (subject to certain caps and priority distributions). During the three and nine months ended September 30, 2016 we recognized $354,000 and $1.1 million, respectively, of expenses under the CT Legacy Partners incentive plan. Our investment in CT Legacy Partners was substantially realized as of December 31, 2016.