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Business and Property Management Agreements with RMR LLC
9 Months Ended
Sep. 30, 2018
Real Estate [Abstract]  
Business and Property Management Agreements with RMR LLC
Note 9. Business and Property Management Agreements with RMR LLC
We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of the office building component of one of our hotels.
Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $10,430 and $10,865 for the three months ended September 30, 2018 and 2017, respectively, and $30,048 and $68,526 for the nine months ended September 30, 2018 and 2017, respectively. Based on our common share total return, as defined in our business management agreement, as of September 30, 2018, no 2018 incentive fees are included in the net business management fees we recognized for the three and nine months ended September 30, 2018. The actual amount of annual incentive fees for 2018, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2018, and will be payable in 2019. The net business management fees we recognized for the three and nine months ended September 30, 2017 included $873 and $38,243, respectively, of then estimated 2017 incentive fees; in January 2018, we paid RMR LLC an incentive fee of $74,573 for 2017. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. 
Pursuant to our property management agreement with RMR LLC, we recognized property management fees of $18 and $12 for the three months ended September 30, 2018 and 2017, respectively, and $43 and $33 for the nine months ended September 30, 2018 and 2017, respectively. These fees are payable in connection with the management of the office building component of one of our hotels. These amounts are included in hotel operating expenses in our condensed consolidated statements of comprehensive income.
We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. We reimbursed RMR LLC $56 and $40 for property management related expenses related to the office building component of one of our hotels for the three months ended September 30, 2018 and 2017, respectively, and $167 and $131 for the nine months ended September 30, 2018 and 2017, respectively, which amounts are included in hotel operating expenses in our condensed consolidated statements of comprehensive income. In addition, we are responsible for our share of RMR LLC’s costs for providing our internal audit function. The amounts recognized as expense for internal audit costs were $49 and $67 for the three months ended September 30, 2018 and 2017, respectively, and $173 and $202 for the nine months ended September 30, 2018 and 2017, respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income for these periods.