Other Expenses

6 Months Ended

Jun. 30, 2020

Other Income and Expenses [Abstract]

Other Expenses

11. 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 six months ended June 30, 2020, we incurred $14.8 million and $29.2 million, respectively, of management fees payable to our Manager, compared to $13.3 million and $26.4 million during the same period in 2019. In addition, during the three and six months ended June 30, 2020, we incurred $5.7 million and $10.5 million, respectively, of incentive fees payable to our Manager, compared to $7.7 million and $14.4 million during the same period in 2019. During the three months ended June 30, 2020, we issued 840,696 shares of class A common stock to our Manager in satisfaction of our aggregate $19.3 million of management and incentive fees accrued in the first quarter of 2020.

As of June 30, 2020 and December 31, 2019 we had accrued management and incentive fees payable to our Manager of $20.5 million and $20.2 million, respectively.

General and Administrative Expenses

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Professional services(1)	$	1,752	$	1,249	$	3,414	$	2,439
Operating and other costs(1)		882		894		2,335		1,249
Subtotal		2,634		2,143		5,749		3,688
Non-cash compensation expenses
Restricted class A common stock earned		8,527		7,629		17,079		15,272
Director stock-based compensation		125		125		250		250
Subtotal		8,652		7,754		17,329		15,522
Total general and administrative expenses	$	11,286	$	9,897	$	23,078	$	19,210

(1)   During the three and six months ended June 30, 2020, we recognized an aggregate $200,000 and $576,000, respectively, of expenses related to our Multifamily Joint Venture. During the three and six months ended June 30, 2019, we recognized an aggregate $164,000 and $333,000, respectively, of expenses related to our Multifamily Joint Venture.