Related Party Transactions

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions [Text Block]

11. RELATED PARTY TRANSACTIONS

Through January 31, 2013, the Company had a property management agreement with CHG to manage all of its properties at rates up to 5% of gross income. The Company paid CHG management fees of $113,000 during 2013.

Effective January 31, 2013, the Company entered into an Agreement and Plan of Merger to consummate the acquisition of CHG Properties, Inc. (CHG), a subsidiary of C I Holding Group, Inc. (CIH). At the time of its acquisition, CHG was the property manager for all of NetREIT’s properties. The President and CEO of the Company (Jack K. Heilbron) also was the President of CIH. In connection with its acquisition, the Company acquired all of the existing infrastructure and computer systems previously owned by CHG. The Company has accounted for the transaction as a business combination. Of the $1.9 million purchase price, $600,000 has been allocated to customer contracts and/or relationships. This asset is being amortized over a ten year period. The remaining purchase price of approximately $1.3 million has been attributed to goodwill. Pursuant to the terms and conditions of the Agreement and Plan of Merger with CHG, the Company formed NTR Property Management, Inc., which has operated as the Company’s sole in house property manager subsequent to the acquisition of CHG.

The Company leases a portion of its corporate headquarters at Pacific Oaks Plaza in Escondido, California to an entity 100% owned by the Company’s Chairman and Chief Executive Officer and another related party. Total rents charged and paid by these affiliates was approximately $36,000 and $43,000 for the years ended December 31, 2014 and 2013, respectively.

In January 2014, the former limited partner of NetREIT 01, LP, a consolidated subsidiary of the Company (the "Partnership") that owns the Presidio, exercised its option to convert approximately 52.8% of its ownership interests in the Partnership in exchange for approximately 21,000 shares of Company common stock. After conversion, the Company’s interest in the Partnership increased to approximately 89%. The Company purchased these shares from the limited partner at a price that was determined when the Partnership was formed, which, adjusted for stock dividends, was $7.858 per share. The stock purchase transaction was subject to the Company's related party transaction policy, which required a review of the transaction by the non-interested parties of the Audit Committee and a subsequent vote by the Company's Board of Directors (and was formally approved in December 2013). Effective April 2014, the former limited partner elected to convert all of its remaining interest in the Partnership in exchange for 18,807 shares of Company common stock. The Company bought these shares back in January 2015 for an aggregate purchase price of approximately $148,000.

The limited partner of NetREIT 01, LP is the Allen Trust DTD 7-9-1999. William H. Allen, a Director of the Company and Chairman of the Audit Committee, is a beneficiary and a trustee of the trust. The Partnership was formed approximately one year before Mr. Allen became a Board Member.