Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

We engage in certain business transactions with related parties, including but not limited to asset acquisition and dispositions of real estate. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest.

Pillar and Regis are wholly owned by an affiliate of May Realty Holdings, Inc., which also owns approximately 90.8% of ARL. Pillar is compensated for advisory services in accordance with an agreement. Regis receives property management fees and leasing commissions in accordance with the terms of its property-level management agreement. In addition, Regis is entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement.

Rental income includes $268 and $256 for the three months ended March 31, 2023 and 2022, respectively, for office space leased to Pillar and Regis.

Property operating expense includes $100 and $117 for the three months ended March 31, 2023 and 2022, respectively, for management fees on commercial properties payable to Regis.

General and administrative expense includes $1,431 and $1,292 for the three months ended March 31, 2023 and 2022, respectively, for employee compensation and other reimbursable costs payable to Pillar.

Advisor fees paid to Pillar were $2,170 and $3,005 for the three months ended March 31, 2023 and 2022, respectively.

Notes receivable include amounts held by UHF (See Note 9 – Notes Receivable). UHF is deemed to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. In addition, we have receivables from Pillar and other related parties. Interest income on these notes and related party receivables was $6,081 and $3,963 for the three months ended March 31, 2023 and 2022, respectively.

Interest expense on payable to Pillar was $944 and $418 for the three months ended March 31, 2023 and 2022, respectively.

Related party receivables, net represents the net amounts outstanding from Pillar for loans and advances, net of unreimbursed fees, expenses and costs as provided above.