Note 6 – Related Party Transactions

Management Agreement

On July 9, 2020, we completed the Internalization.  Prior to the Internalization, the Company was subject to a management agreement dated July 1, 2016, by and between the Company and the Former Advisor (the “Management Agreement”), the material terms of which are summarized below:

Base Management Fee

The Company paid its Former Advisor a base management fee in an amount equal to 1.5% of its stockholders’ equity (as defined in the Management Agreement) per annum, calculated quarterly for the most recently completed fiscal quarter and payable in quarterly installments in arrears in cash.

Incentive Fee

The Management Agreement also provided for an incentive fee payable to the Former Advisor based on a percentage (20%) of the amount the Company’s AFFO (as defined in the Management Agreement) exceeded a specified return on equity hurdle rate (8%).   As of December 31, 2020, the Company had not incurred or paid an incentive fee.

Management Fees and Accrued Management Fees

For the years ended December 31, 2020 (prior to the Internalization), 2019, and 2018, management fees of $4,024, $6,266, and $4,422, respectively, were incurred and expensed by the Company. As a result of the Internalization, there were no accrued management fees due to the Former Advisor as of December 31, 2020. Accrued management fees due to the Former Advisor were $1,727 as of December 31, 2019. No incentive management fee was incurred by the Company during the years ended December 31, 2020, 2019, and 2018.

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Related Party Balances

A rollforward of the due from related parties and due to related party balance, net, as of December 31, 2020 is as follows:

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A rollforward of the due from related parties and due to related party balance, net, as of December 31, 2019 is as follows:

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