What changed in this filing

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Item 9A. Controls and Procedures

2022-03-29 compared with 2021-03-26 · 42 added, 43 removed, 391 unchanged (18% of the section changed)

46 unchanged sentences

Certain Relationships and Related Transactions, and Director Independence.

BUTLER, age 70, Director, Affiliated, since November 2005 and Chairman of the Board since May 2009

BUTLER, age 71, Director, Independent, since November 2005 and Chairman of the Board since May 2009

Retired (since April 30, 2019);

3 unchanged sentences

HOGAN, age 64, Director, Independent, since February 2020

Registered Representative and Investment Advisor Representative, employed (since January 2013) by Cetera Advisor Networks LLC, a general securities and investment advisory firm, with an office in San Antonio, Texas.

Retired (since December 31, 2020);

Registered Representative and Investment Advisor Representative from January 2013 to December 2020 by Cetera Advisor Networks LLC, a general securities and investment advisory firm, with an office in San Antonio, Texas.

From November 2009 through December 2012, Mr.

43 unchanged sentences

All of the current members of the Audit Committee are independent within the meaning of the SEC Regulations, the listing standards of the NYSE and our Corporate Governance Guidelines.

Munselle, a the chairman of our Audit Committee, is qualified as an Audit Committee financial expert within the meaning of SEC Regulations, and the Board has determined that he has accounting and related financial management expertise within the meaning of the listing standards of the NYSE.

Munselle, the chairman of our Audit Committee, is qualified as an Audit Committee financial expert within the meaning of SEC Regulations, and the Board has determined that he has accounting and related financial management expertise within the meaning of the listing standards of the NYSE.

All of the members of the Audit Committee meet the experience requirements of the listing standards of the NYSE.

5 unchanged sentences

The Charter of the Governance and Nominating Committee was adopted on March 17, 2004 and is available on our Investor Relations Website.

The Governance and Nominating Committee met two during 2020.

The Governance and Nominating Committee met three times during 2021 .

Compensation Committee

7 unchanged sentences

The presiding director also advises the Chairman of the Board and, as appropriate, Committee Chairs with respect to agendas and information needs relating to Board and Committee meetings, provides advice with respect to the selection of Committee Chairs and performs other duties that the Board may from time to time delegate to assist the Board in fulfillment of its responsibilities.

The day following the annual meeting of stockholders held December 16, 2020 representing all stockholders of record dated November 2, 2020, the full Board met and re-appointed Ted R.

The da y following the annual meeting of stockholders held December 16, 2021 representing all stockholders of record dated November 4, 2021, the full Board met and re-appointed Ted R.

Munselle as Presiding Director, to serve in such position until the Company’s next annual meeting of stockholders to be held subsequently in 12/31/2022.

Determination of Director’s Independence

Our Corporate Governance Guidelines ("Guideines") meet or exceed the new listing standards adopted during that year by the NYSE.

The full text of our Guideines can be found on our Investor Relations Website.

Pursuant to the Guideines, the Board undertook its annual review of director independence in February 2020 and during this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its su bsidiaries and related parties, including those reported under Certain Relationships and Related Transactions below.

Determination of Directors' Independence

Our Corporate Governance Guidelines ("Guidelines") meet or exceed the new listing standards adopted during that year by the NYSE.

The full text of our Guidelines can be found on our Investor Relations Website.

Pursuant to the Guidelines, the Board undertook its annual review of director independence in May 2021 and during this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its su bsidiaries and related parties, including those reported under Certain Relationships and Related Transactions below.

The Board also examined transactions and relationship between directors or their related parties and members of our senior management or their related parties.

As provided in the Guideines, the purpose of such review was to determine whether such relationships or transactions were inconsistent with the determination that the director is independent.

Prior to this election as director, on January 28, 2020, the Board undertook a similar review with respect to Mr.

As provided in the Guidelines, the purpose of such review was to determine whether such relationships or transactions were inconsistent with the determination that the director is independent.

As a result of these reviews, the Board affirmatively determined of the then directors, Messrs.

Munselle, Hogan, Jakuszewski and Roberts are each independent of the Company and its Management under the standards set forth in the Corporate Governance Guidelines.

Butler, Munselle, Hogan, Jakuszewski and Roberts are each independent of the Company and its Management under the standards set forth in the Corporate Governance Guidelines.

Executive Officers

5 unchanged sentences

No family relationships exist among any of the executive officers or directors of the Company.

Johnson has served as the Executive Vice President and Chief Financial Officer of the Company and ARL since August 17, 2020.

Muth has served as the President and Chief Executive Officer of the Company, ARL and IOR since December 16, 2021.

He has also been President and Chief Executive Officer of Pillar since October 18, 2021.

Prior to joining the Company, he served as Senior Managing Director, Capital Markets and Development of ValueRock Realty Partners, a national real estate investment services firm, focusing on value-ad commercial real estate throughout California, Hawaii and Arizona.

Prior thereto, from December 2014 to June 2019, he was Senior Managing Director, Portfolio and Asset Management of Madison Marquette, a leading commercial real estate investment manager, service provider, developer and operator of real property.

From 2012 to 2014, he was Chief Investment Officer of Buckingham Companies, a real estate investment firm engaged in the multifamily sector.

Muth, from 1994 to 2012, was Managing Principal or Senior Managing Partner of ING/Concert Realty Partners, a real estate investment and operations firm.

He is also a CPA.

Johnson has served as the Executive Vice President and Chief Financial Officer of the Company and ARL since December 16, 2021.

He has also been Chief Financial Officer of Pillar since June 29, 2020.

1 unchanged sentence

MAC) and has served as the Chief Accounting Officer of North American Scientific, Inc.

He began his career as an auditor with PricewaterhouseCooppers and is a CPA.

He began his career as an auditor with PricewaterhouseCoopers and is a CPA.

Corna has served as Executive Vice President, General Counsel/Tax Counsel and Secretary of the Company, ARL and IOR since February 2004.

1 unchanged sentence

Corna was also a Director and Vice President from June 2004 to December 2010 and Secretary from January 2005 to December 2010 of First Equity Properties, Inc.

ALLA DZYUBA, 44

Dzyuba has served as the Vice President and Chief Accounting Officer of the Company, ARL, and Southern Properties Capital, Ltd, our wholly owned subsidiary (“SPC”), since July 2019 as well as Director for SPC since April 2018.

Dzyuba has been employed by Pillar since June 2004, she has over fifteen years of real estate accounting and financial reporting experience, including six years of broker-dealer regulatory reporting experience.

In addition to the foregoing executive officers, we have several vice presidents and assistant secretaries that are not listed herein.

Since the August 14, 2020 resignation of Daniel J.

Moos, age 70, the offices of President and Chief Executive Officer has been vacant.

Moos was President (from April 2007 and August 14, 2020) and Chief Executive Officer (from March 2010 until August 14, 2020).

At the time of his resignation, Mr.

Moos advised that his resignation was not the result of any disagreement with the Company, its management, the Board of Directors, or any committee of the Board with respect to procedure, policies or operations.

He is also a CPA.

Code of Ethics

25 unchanged sentences

Pillar is a company of which Messrs.

Johnson and Corna serve as executive officers, and for which Mr.

Moos previously served as an executive officer.

Muth, Johnson and Corna serve as executive officers.

The Advisory Agreement provides for Pillar to be responsible for our day-to-day operations and to receive, as compensation for basic management and advisory services, a gross asset fee of 0.0625% per month (0.75% per annum) of the average of the gross asset value (total assets less allowance for amortization, depreciation or depletion and valuation reserves).

42 unchanged sentences

Refer to Part III, Item 13 “Certain Relationships and Related Transactions, and Director Independence”.

Pillar may assign the Advisory Agreement only with our prior consent.

The principal executive officers and directors of Pillar are set forth below:

Pillar may assign the Advisory Agreement with our prior consent.

The principal executive officers of Pillar are set forth below:

Name Officers

Johnson Chief Financial Officer

Kay Executive Vice President and Chief Accounting Officer

Muth President and Chief Executive Officer

Johnson Executive Vice President and Chief Financial Officer

Corna Executive Vice President and Secretary

Property Management

Regis manages our commercial properties for a fee of 3.0% or less of the monthly gross rents collected on the commercial properties it manages, and leasing commissions of 6.0% or less in accordance with the terms of its property-level management agreement.

We engage third-party companies to lease and manage our apartment properties for a fee of 6.0% or less of the monthly gross rents collected on the residential properties under their management.

Regis manages four of our commercial properties for a fee of 3.0% or less of the monthly gross rents collected on the commercial properties it manages, and leasing commissions of 6.0% or less in accordance with the terms of its property-level management agreement.

Real Estate Brokerage

15 unchanged sentences

Directors who are also employees of the Company or its advisor receive no additional compensation for service as a Director.

During 2020, $90,200 was paid to non-employee Directors in total Directors’ fees.

During December 31, 2021 , $83,400 was paid to non-employee Directors in total Directors’ fees.

The fees paid to the directors are as follows:

22 unchanged sentences

RAI is a wholly owned subsidiary of MRHI, which is a wholly owned subsidiary of The May Trust.

The beneficiaries of the The May Trust are the children of the late Gene E.

The beneficiaries of The May Trust are the children of the late Gene E.

Security Ownership of Management.

3 unchanged sentences

Percent of Class**

Alla Dzyuba — — %

Johnson — — %

Jakuszewski — — %

Johnson — — %

Munselle — — %

39 unchanged sentences

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 the best interest of our company.

In 2020, we paid Pillar advisory fees of $5.8 million, net income fees of $0.4 million and cost reimbursements of $3.6 million.

In 2021, we paid Pillar advisory fees of $14.0 million and cost reimbursements of $3.6 million.

We paid property management fees, construction management fees and leasing commissions of $0.9 million to Regis in 2021.

1 unchanged sentence

During 2021, SPC paid management fees to Pillar in the amount of $2.5 million.

As of December 31, 2020, the we had notes and interest receivables of $63.3 million and $3.9 million, respectively, due from related parties.

As of December 31, 2021, we had notes and interest receivables of $67.3 million and $3.9 million, respectively, due from related parties.

Refer to Part 2, Item 8.

2 unchanged sentences

We were the primary guarantor, on a $24.3 million mezzanine loan between UHF and a lender.

The guarantee was remove on January 29, 2021, concurrent with the repayment of the loan by UHF.

The guarantee was removed on January 29, 2021, concurrent with the repayment of the loan by UHF.

We received rental revenue $0.9 million,for the years ended December 31, 2021 for office space leased to Pillar and Regis.

From time to time, we have made advances and/or borrowing to/fom other related parties, which generally have not had specific repayment terms, did not bear interest, are unsecured, and have been reflected our financial statements as other assets or other liabilities.

From time to time, we have made advances and/or borrowing to/from other related parties, which generally have not had specific repayment terms, did not bear interest, are unsecured, and have been reflected our financial statements as other assets or other liabilities.

We charge interest on the outstanding balance of funds advanced from us.

62 unchanged sentences

Subsidiaries of the Registrant.

Rule 13a-14(a) Certification by Principal Executive and Financial Officer.

Rule 13a-14(a) Certification by Principal Executive Officer.

Rule 13a-14(a) Certification by Principal Financial Officer.

Certification Pursuant to 18 U.S.C.

13 unchanged sentences

Executive Vice President and Chief Financial Officer

(Principal Executive and Financial Officer)

(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

10 unchanged sentences

Director March 28, 2021

/s/ BRADLEY J.

MUTH President and Chief Executive Officer March 28, 2021

Muth (Principal Executive Officer)

JOHNSON Executive Vice President and Chief Financial Officer March 28, 2021

Johnson (Principal Executive and Financial Officer)

/s/ ALLA DZYUBA Vice President and Chief Accounting Officer March 24, 2021

Johnson (Principal Financial Officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures