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EXCEL - IDEA: XBRL DOCUMENT - Cole Credit Property Trust IncFinancial_Report.xls
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EX-31.1 - EXHIBIT 31.1 - Cole Credit Property Trust Incccpt93012ex311.htm
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10-Q - FORM 10-Q - Cole Credit Property Trust Incccpt9301210q.htm
v2.4.0.6
Related-Party Transactions and Arrangements
9 Months Ended
Sep. 30, 2012
Related Party Transactions [Abstract]  
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS
RELATED-PARTY TRANSACTIONS AND ARRANGEMENTS
Certain affiliates of the Company’s advisor received fees and compensation in connection with the Company’s private placement of shares of its common stock. Certain affiliates of the Company’s advisor have received, and may continue to receive, fees and compensation in connection with the acquisition, financing, management and disposition of the assets of the Company. Other various transactions may result in the receipt of commissions, fees and other compensation by Cole Advisors and its affiliates, including subordinated participation in net sale proceeds and subordinated performance fees.
If Cole Advisors provides substantial services, as determined by the Company, in connection with the origination or refinancing of any debt financing obtained by the Company that is used to acquire properties or to make other permitted investments, or that is assumed, directly or indirectly, in connection with the acquisition of properties, the Company will pay Cole Advisors a financing coordination fee equal to 1% of the amount available under such financing; provided, however, that Cole Advisors shall not be entitled to a financing coordination fee in connection with the refinancing of any loan secured by any particular property that was previously subject to a refinancing in which Cole Advisors received such a fee. Financing coordination fees payable on loan proceeds from permanent financing will be paid to Cole Advisors as the Company acquires such permanent financing. However, no fees will be paid on loan proceeds from any lines of credit until such time as all net offering proceeds have been invested by the Company. No such fees were incurred by the Company during the nine months ended September 30, 2012 and 2011.
The Company paid, and expects to continue to pay, Cole Realty Advisors, Inc. (“Cole Realty”), its property manager and an affiliate of the Company's advisor, fees for the management and leasing of the Company’s properties. Property management fees are equal to 3% of gross revenues, and leasing fees are at prevailing market rates, not to exceed the greater of $4.50 per square foot or 7.5% of the total lease obligation. During the three and nine months ended September 30, 2012, the Company incurred $100,000 and $323,000 for property management fees, respectively, of which $10,000 and $37,000, respectively, has been included within discontinued operations. During the three and nine months ended September 30, 2011, the Company incurred $117,000 and $351,000 for property management fees, respectively, of which $24,000 and $64,000, respectively, has been included within discontinued operations. As of September 30, 2012 and December 31, 2011, $32,000 and $39,000, respectively, of such costs had been incurred, but not paid, by the Company, and are included in due to affiliates on the condensed consolidated unaudited financial statements.
Cole Realty, or its affiliates, also receives acquisition and advisory fees of up to 3% of the contract purchase price of each property. No such fees were incurred by the Company during the nine months ended September 30, 2012 or 2011.
The Company is obligated to pay Cole Advisors an annualized asset management fee of up to 0.25% of the aggregate asset value of the Company’s assets. Pursuant to a waiver of the fee by Cole Advisors, no asset management fees were incurred by the Company during the nine months ended September 30, 2012 or 2011. The Company is not obligated to pay any amounts for such periods. However, Cole Advisors may elect to charge asset management fees in future periods up to the 0.25% fee.
If Cole Advisors, or its affiliates, provides a substantial amount of services, as determined by the Company, in connection with the sale of one or more properties, the Company will pay Cole Advisors an amount up to 3% of the contract price of each asset sold. In no event will the combined disposition fee paid to Cole Advisors, its affiliates and unaffiliated third parties exceed the reasonable, customary and competitive amount for such services. In addition, after investors have received a return of their net capital contributions and a 7.5% annual cumulative, non-compounded return, then Cole Advisors is entitled to receive 20% of the remaining net sale proceeds. No such fees were incurred by the Company during the nine months ended September 30, 2012 or 2011 relating to the sale of properties.
In the event the Company’s common stock is listed in the future on a national securities exchange, a subordinated incentive listing fee equal to 20% of the amount by which the market value of the Company’s outstanding stock plus all distributions paid by the Company prior to listing exceeds the sum of the total amount of capital raised from investors and the amount of cash flow necessary to generate a 7.5% annual cumulative, non-compounded return to investors, will be paid to Cole Advisors.
The Company may reimburse Cole Advisors for expenses it incurs in connection with its provision of administrative services, including related personnel costs. The Company does not reimburse for personnel costs in connection with services for which Cole Advisors receives acquisition fees or disposition fees. No such costs were incurred by the Company during the nine months ended September 30, 2012 or 2011.
As of September 30, 2012, the Company had no amounts outstanding on its two lines of credit with affiliates of Cole Advisors, which had total available borrowings of $2.9 million. Each of the lines of credit matures in March 2013 and bears a fixed rate of 5.75%. No financing coordination fee was paid, or will be paid, to Cole Advisors or its affiliates in connection with the revolving lines of credit. During each of the three and nine months ended September 30, 2012 and 2011, the Company incurred $28,000 and $84,000, respectively, of interest expense related to the aforementioned lines of credit. As of December 31, 2011, $10,000 of such expense had been incurred but not paid by the Company, and is included in due to affiliates on the condensed consolidated unaudited financial statements.