Related Party Transactions and Arrangements

Cole Capital

The Company was contractually responsible for managing the Cole REITs’ affairs on a day-to-day basis, identifying and making acquisitions and investments on the Cole REITs’ behalf, and recommending to the respective board of directors of each of the Cole REITs an approach for providing investors with liquidity. In addition, the Company was responsible for raising capital for certain Cole REITs, advised them regarding offerings, managed relationships with participating broker-dealers and financial advisors, and provided assistance in connection with compliance matters relating to the offerings. The Company received compensation and reimbursement for services relating to the Cole REITs’ offerings and the investment, management and disposition of their respective assets, as applicable.

As discussed in Note 5 —Discontinued Operations, the Company entered into the Cole Capital Purchase and Sale Agreement to sell substantially all of Cole Capital. The sale closed on February 1, 2018. The assets and liabilities transferred pursuant to the Cole Capital Purchase and Sale Agreement and related financial results are reflected in the consolidated balance sheets and consolidated statements of operations as discontinued operations for all periods presented. At closing, the Company entered into the Services Agreement with the Cole Purchaser pursuant to which the Company will continue to provide certain services to the Cole Purchaser and the Cole REITs, including operational real estate support, over the next year. Under the terms of the Services Agreement, the Company will be entitled to receive reimbursement for certain of the services provided. The Company could also receive Net Revenue Payments over the next six years if future revenues of Cole Capital exceed a specified dollar threshold, up to an aggregate of $80.0 million in Net Revenue Payments.

Offering-Related Revenue

The Company generally received a selling commission, dealer manager fee and/or a distribution and stockholder servicing fee based on the gross offering proceeds related to the sale of shares of the Cole REITs’ common stock in their primary offerings. The Company reallowed 100% of selling commissions earned to participating broker-dealers. The Company, in its sole discretion, could reallow all or a portion of its dealer manager and distribution and stockholder servicing fee to such participating broker-dealers as a marketing and due diligence expense reimbursement, based on factors such as the volume of shares issued by such participating broker-dealers and the amount of marketing support provided. No selling commissions or dealer manager fees were paid to the Company or other broker-dealers with respect to shares issued under the respective Cole REIT’s distribution reinvestment plan, under which the stockholders may elect to have distributions reinvested in additional shares.

The following table shows the offering fee summary information for the Cole REITs conducting offerings as of December 31, 2017:



	Selling Commissions ⁽¹⁾	Dealer Manager Fees ⁽²⁾		Annual Distribution and Stockholder Servicing Fee ⁽²⁾
Open Programs ⁽³⁾⁽⁴⁾

CCPT V ⁽⁵⁾
Class A Shares	7%	2%		—%
Class T Shares ⁽⁶⁾	3%	2%		1%	⁽⁷⁾⁽⁸⁾

INAV
Wrap Class Shares	—%	0.55%	⁽⁸⁾	—%
Advisor Class Shares	up to 3.75%	0.55%	⁽⁸⁾	0.5%	⁽⁸⁾
Institutional Class Shares	—%	0.25%	⁽⁸⁾	—%

CCIT III ⁽⁵⁾
Class A Shares	7%	2%		—%
Class T Shares	3%	2%		1%	⁽⁸⁾

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(1)	The Company reallowed 100% of selling commissions to participating broker-dealers during the years ended December 31, 2017, 2016 and 2015.


(2)	The Company could reallow all or a portion of its dealer manager fee and/or distribution and stockholder servicing fee to participating broker-dealers as a marketing and due diligence expense reimbursement.


(3)	The Company received selling commissions, an asset-based dealer manager fee and/or an asset-based distribution and stockholder servicing fee, all based on the net asset value for each class of common stock.


(4)	CCIT II closed its offering during the three months ended September 30, 2016. The program’s fee structure was similar to that of CCPT V.


(5)	The maximum amount of the distribution and stockholder servicing fees with respect to sales of Class T shares was 4.0% of the gross offering proceeds for CCPT V and CCIT III. Distribution and stockholder servicing fees continue to be paid after the offering closes if the 4.0% maximum has not been met.


(6)	Commencing on April 29, 2016, CCPT V began offering Class T shares of common stock in addition to the class of shares of common stock previously offered (now referred to as Class A shares).


(7)	During the three months ended December 31, 2016, the annual distribution and stockholder servicing fee was amended to be 1.0%. Prior to the amendment, the distribution and stockholder servicing fee was 0.8% per annum.


(8)	Fees were accrued daily in the amount of 1/365th of a percentage of the estimated per share NAV and payable monthly in arrears. Distribution and stockholder servicing fees continue to be paid after the offering closes.

Transaction Service Revenue

The Company earned acquisition fees related to the acquisition, development or construction of properties on behalf of certain of the Cole REITs. In addition, the Company was reimbursed for acquisition expenses incurred in the process of acquiring properties up to certain limits per the respective advisory agreement. The Company was not reimbursed for personnel costs in connection with services for which it receives acquisition fees or real estate commissions. In addition, the Company could earn disposition fees related to the sale of one or more properties, including those held indirectly through joint ventures, on behalf of a Cole REIT and other affiliates.

The following table shows the transaction-related fees for the Cole REITs as of December 31, 2017:



Program	Acquisition Fees ⁽¹⁾	Disposition Fees	Performance Fees ⁽²⁾	Financing Coordination Fee ⁽³⁾
Open Programs
CCPT V	2%	1%	15%	—
INAV	—	—	—	—
CCIT III	2%	1%	15%	1%

Closed Programs
CCIT II	2%	1%	15%	—
CCPT IV	2%	1%	15%	—

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(1)	Percent was taken on gross purchase price.

(2)

Performance fee was paid only under the following circumstances: (i) if shares are listed on a national securities exchange; (ii) if the respective Cole REIT is sold or the assets are liquidated; or (iii) upon termination of the advisory agreement. In connection with such events, the performance fee will only be earned upon the return to investors of their net capital invested and a 6% annual cumulative, non-compounded return (8% in the case of CCIT II and CCPT IV).


(3)	Financing coordination fee payable for services in connection with the origination, assumption, or refinancing of any debt (other than loans advanced by the Company) to acquire properties or make other permitted investments.

Management Service Revenue

The Company earned advisory and asset and property management fees from certain Cole REITs. The Company was also reimbursed for expenses incurred in providing advisory and asset and property management services, subject to certain limitations. In addition, the Company earned a performance fee relating to INAV for any year in which the total return on stockholders’ capital exceeded 6% per annum on a calendar year basis.

The following table shows the management fees for the Cole REITs as of December 31, 2017:



Program	Asset Management / Advisory Fees ⁽¹⁾	Performance Fees ⁽²⁾
Open Programs
CCPT V	0.65% - 0.75%	—
INAV	0.90%	25%
CCIT III	0.65% - 0.75%	—

Closed Programs
CCIT II	0.65% - 0.75%	—
CCPT IV	0.65% - 0.75%	—

_______________________________________________

(1) Annualized fee was based on the average monthly invested assets or average assets, as defined in the respective agreements, or net asset value, if available.

(2) The performance fee was limited to 10% of the aggregate total return, for each class, for any individual year.

The table below reflects the revenue earned from the Cole REITs (including closed programs, as applicable) and joint ventures for the years ended December 31, 2017, 2016 and 2015 (in thousands).



	Year Ended December 31,
	2017		2016		2015
Offering-related fees and reimbursements
Selling commissions ⁽¹⁾	$	7,746	$	19,943	$	14,101
Dealer manager and distribution fees ⁽²⁾	5,021		8,300		5,133
Reimbursement revenue	3,329		8,283		5,178
Offering-related fees and reimbursements	16,096		36,526		24,412

Transaction service fees and reimbursements
Acquisition fees	11,049		9,513		18,742
Financing coordination fee	100		220		—
Disposition fees ⁽³⁾	—		—		4,974
Reimbursement revenues	2,780		2,800		2,164
Transaction service fees and reimbursements	13,929		12,533		25,880

Management fees and reimbursements
Asset and property management fees and leasing fees	220		220		452
Advisory and performance fee revenue	57,765		51,099		44,948
Reimbursement revenues	18,449		17,587		13,845
Management fees and reimbursements	76,434		68,906		59,245

Interest income on Affiliate Lines of Credit	262		453		1,275

Total related party revenues⁽⁴⁾	$	106,721	$	118,418	$	110,812

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(1)	The Company reallowed 100% of selling commissions to participating broker-dealers during the years ended December 31, 2017, 2016 and 2015.


(2)	During the years ended December 31, 2017, 2016 and 2015, the Company reallowed $2.1 million, $3.2 million and $2.1 million, respectively, of dealer manager fees and/or distribution and stockholder servicing fees to participating broker-dealers as a marketing and due diligence expense reimbursement.


(3)	The Company earned a disposition fee of $4.4 million on behalf of CCIT when CCIT merged with Select Income REIT on January 29, 2015.


(4)	Total related party revenues excludes fees earned from 1031 real estate programs of $1.8 million, $1.4 million and $5.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Investment in the Cole REITs

As of December 31, 2017 and December 31, 2016, the Company owned aggregate equity investments of $3.3 million and $4.7 million, respectively, in the Cole REITs and other affiliated offerings, which are presented in investment in unconsolidated entities in the consolidated balance sheets, as the Company retained certain interests subsequent to the sale of Cole Capital. The Company accounts for these investments using the equity method of accounting which requires the investment to be initially recorded at cost and subsequently adjusted for the Company’s share of equity in the respective Cole REIT’s earnings and distributions. The Company records its proportionate share of net income or loss from the Cole REITs in equity in income and gain on disposition of unconsolidated entities in the consolidated statements of operations. During the years ended December 31, 2017 and 2016, the Company recognized a net loss of $0.5 million and $1.3 million, respectively, from the Cole REITs. During the year ended December 31, 2015, the Company recorded net income of $0.1 million from the Cole REITs.

The table below presents certain information related to the Company’s investments in the Cole REITs as of December 31, 2017 (carrying amount in thousands):



	December 31, 2017
Cole REIT	% of Outstanding Shares Owned	Carrying Amount of Investment
CCPT V	0.76%	$	1,231
INAV	0.05%	125
CCIT II	0.44%	1,126
CCIT III	14.25%	675
CCPT IV	0.01%	107
Total		$	3,264

Due to Affiliates

Due to affiliates was $66,000 and $16,000 as of December 31, 2017 and December 31, 2016, respectively, related to amounts due to the Cole REITs.

Due from Affiliates, Net

As of December 31, 2017 and December 31, 2016, $4.4 million and $5.2 million, respectively, was expected to be collected from affiliates, excluding any outstanding balances from a line of credit with one of the Cole REITs, discussed below, related to services provided by the Company and expenses subject to reimbursement by the Cole REITs in accordance with their respective advisory and property management agreements. These amounts will be settled with the respective Cole REIT and were not transferred pursuant to the Cole Capital Purchase and Sale Agreement.

On September 23, 2016, the Company entered into a $30.0 million revolving line of credit (the “Subordinate Promissory Note”) with Cole Corporate Income Operating Partnership III, LP (“CCI III OP”), the operating partnership of CCIT III (the “Subordinate Promissory Note Agreement”). The Subordinate Promissory Note bears variable interest rates of one-month LIBOR plus the Credit Facility Margin (as defined in the Subordinate Promissory Note Agreement), which ranges from 2.20% to 2.75%, plus 1.75% and matured on September 22, 2017. On March 28, 2017, CCI III OP entered into a modification agreement in order to extend the maturity date of the Subordinate Promissory Note from September 22, 2017 to September 30, 2018. As of December 31, 2017, the Subordinate Promissory Note had an interest rate of 5.6% and $1.6 million and $10.3 million were outstanding as of December 31, 2017 and 2016, respectively. The Subordinate Promissory Note was not transferred pursuant to the Cole Capital Purchase and Sale Agreement.

As of December 31, 2015, the Company had revolving line of credit agreements in place with CCIT II and CCPT V (the “Affiliate Lines of Credit”) that provided for maximum borrowings of $60.0 million to each of CCIT II and CCPT V and bore variable interest rates of one month LIBOR plus 2.20%. As of December 31, 2015, there was $50.0 million outstanding on the Affiliate Lines of Credit. During the year ended December 31, 2016, the Affiliate Lines of Credit matured and no amounts were outstanding as of December 31, 2017 or 2016.