12.

Related-Party Transactions

The activities of the Liquidating Trust are administered by FUR Advisors pursuant to the terms of the Advisory Agreement between Winthrop and FUR Advisors. FUR Advisors is majority owned by Winthrop’s former executive officers and senior management, including two of the Liquidating Trust’s Trustees. Pursuant to the terms of the Advisory Agreement, FUR Advisors is responsible for providing asset management services to the Liquidating Trust and coordinating with the Liquidating Trust’s unitholder transfer agent and property managers. FUR Advisors is entitled to receive a base management fee and a termination fee and/or an incentive fee in accordance with the terms of the Advisory Agreement. In addition, FUR Advisors or its affiliate is entitled to receive property and construction management fees subject to the approval of the Trustees.

Base Asset Management Fee – FUR Advisors is entitled to receive a base management fee of 1.5% of equity as defined in the Advisory Agreement and a termination fee and/or an incentive fee in accordance with the terms of the Advisory Agreement. Additionally, FUR Advisors receives a fee equal to 0.25% of any equity contributions by unaffiliated third parties to a venture with the Liquidating Trust and managed by FUR Advisors. Following the liquidating distribution paid in May 2018, equity as deemed in the Advisory Agreement was reduced to zero and the Advisor is no longer entitled to a base management fee.

In connection with the adoption of the plan of liquidation, the Liquidating Trust accrues costs it expects to incur through the end of the liquidation. In this regard, at December 31, 2018 the Liquidating Trust has not accrued any base management fees.

Incentive Fee / Termination Fee – The incentive fee is equal to 20% of any amounts available for distribution in excess of the threshold amount and is only payable at such time, if at all, (i) when holders of Units receive aggregate distributions above the threshold amount or (ii) upon termination of the Advisory Agreement if the net value of the Liquidating Trust’s assets exceeds the threshold amount based on then current market values and appraisals. That is, the incentive fee is not payable annually but only at such time, if at all, as unitholders have received distributions in excess of the threshold amount (set at $569,963,000 on December 31, 2014 plus an annual return thereon equal to the greater of (x) 4% or (y) the 5 year U.S. Treasury Yield plus 2.5% (such return, the “Growth Factor”) less any distributions paid from and after January 1, 2015). The incentive fee will also be payable if the Advisory Agreement is terminated, other than for cause (as defined) by the Liquidating Trust or with cause by the Advisor, and if on the date of termination the net value of the Liquidating Trust’s assets exceeds the threshold amount. At December 31, 2018 the threshold amount required to be distributed before any incentive fee would be payable to FUR Advisors was $17,391,000, which was equivalent to $0.49 per Unit. At December 31, 2018, based on the Liquidating Trust’s estimate of liquidating distributions, it is estimated that the Advisor would be not entitled to an incentive fee.

On May 2, 2018 the Advisor was paid a termination fee of $9,496,000. The termination fee was payable equal to the lesser of (i) the base management fee paid to our Advisor for the twelve month period immediately prior to the approved plan of liquidation or (ii) 20% of any liquidating distributions paid on account of our Units at such time as the threshold amount was reduced to $104,980,000. No additional termination fee payments will be paid.

Property Management and Construction Management – Winthrop Management LP (“Winthrop Management”), an affiliate of FUR Advisors and Winthrop’s former executive officers, assumed property management responsibilities for various properties owned by the Liquidating Trust. Winthrop Management receives a property management fee and construction management fee pursuant to the terms of individual property management agreements.

The following table sets forth the fees and reimbursements paid or accrued by the Liquidating Trust for the years ended December 31, 2018 and 2017 to FUR Advisors and Winthrop Management (in thousands):


	For the Years Ended December 31,
	2018		2017
Base Asset Management Fee (1)	$	964	$	3,258
Termination Fee		9,496		—
Property Management Fee		227		532
Construction Management Fee		—		27

	$	10,687	$	3,817

(1)

Includes fees on third party contributions of $0 and $10 for the years ended December 31, 2018 and 2017, respectively.

At December 31, 2018 and 2017, $0 and $751,000, respectively, payable to FUR Advisors and $3,000 and $17,000 respectively, payable to Winthrop Management were included in related party fees payable.