Related Party Transactions |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions |
Related Party Transactions
The following summarizes related party activity as of and for the years ended December 31, 2018, 2017 and 2016. The amounts disclosed below reflect the activity between the Company and its affiliates (in thousands).
As discussed in Note 4, the Company loaned $11.00 million for the partial funding of Pineland Station Shopping Center in Hilton Head, South Carolina to be known in the future as Sea Turtle Development and loaned $1.00 million for the sale of land to be used in the development. At December 31, 2018 and 2017, the Company recognized a $1.74 million and $5.26 million impairment charge, respectively, on the note receivable as discussed in greater detail in Note 4. The Company has placed the notes receivable on nonaccrual status and has not recognized $1.44 million of interest income due on the notes for the year ended December 31, 2018. In February 2018, the Company's agreement to perform development, leasing, property and asset management services for Sea Turtle Development was terminated. Sea Turtle Development is a related party as Jon Wheeler, the Company's former CEO and shareholder of the Company, is the managing member. Prior to the termination of the agreements, development fees of 5% of hard costs incurred were due to the Company. Leasing, property and asset management fees were consistent with those charged for services provided to non-related properties.
The Company recovered $77 thousand in amounts due from related parties for the year ended December 31, 2018, respectively, which were previously reserved. The recovery is included in “provision for credit losses” on the consolidated statements of operations. The total allowance on related party receivables at December 31, 2018 and 2017 is $2.20 million and $2.36 million, respectively.
A detail of the allowance on related party receivables as of December 31, 2018 and 2017 is presented below (in thousands):
Amounts due from Sea Turtle Development are reserved due to uncertainty surrounding the collectability given current cash flow models. The Company’s estimated fair value of the project is based upon cash flow models that include information available to the Company at December 31, 2018, including assumptions on future lease up and the estimated fair value at full stabilization. Capitalization rates utilized in these models are based upon rates that the Company believes to be within a reasonable range of current market rates for the respective project.
Amounts due from other non-REIT properties have been reserved based on available cash flows at the respective properties and payment history. The reserve of $636 thousand was recorded in 2017 and is included in “provision for credit losses” on the consolidated statements of operations. There were no additional reserves recorded in 2018. In February 2018 the management agreements for these properties were terminated.
In 2016, in connection with the acquisition of Berkley and Sangaree/Tri-County, the Operating Partnership entered into a tax protection agreement that obligates the Operating Partnership to reimburse Jon Wheeler, the Company's former CEO, for his tax liabilities resulting from the recognition of certain taxable income or gain in the event the Operating Partnership takes certain action prior to November 10, 2023 with respect to Sangaree Plaza, Tri-County Plaza and Berkley.
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