Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 10, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Inland Residential Properties Trust, Inc. | |
Entity Central Index Key | 1,595,627 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 119,095 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Real estate: | ||
Land | $ 6,301,838 | |
Building and other improvements | 38,824,096 | |
Total real estate | 45,125,934 | |
Cash and cash equivalents | 1,689,711 | $ 232,635 |
Acquired in place lease intangibles | 601,623 | |
Deferred costs, net | 136,930 | $ 2,614,621 |
Other assets | 351,113 | 19,867 |
Total assets | 47,905,311 | $ 2,867,123 |
Liabilities: | ||
Mortgages payable | 45,750,000 | |
Accounts payable and accrued expenses | 249,363 | $ 1,319,477 |
Due to related parties | 4,889,407 | $ 1,532,667 |
Other liabilities | 19,727 | |
Total liabilities | $ 50,908,497 | $ 2,852,144 |
Commitments and contingencies | ||
Stockholder's (deficit) equity: | ||
Preferred stock, $.001 par value, 50,000,000 shares authorized, none outstanding | ||
Common stock | $ 8 | |
Additional paid in capital (net of offering costs of $3,754,008 and $0 as of September 30, 2015 and December 31, 2014, respectively) | $ (1,188,254) | 199,992 |
Retained deficit | (1,815,043) | (185,021) |
Total stockholder's (deficit) equity | (3,003,186) | 14,979 |
Total liabilities and stockholder's (deficit) equity | 47,905,311 | $ 2,867,123 |
Class A Common Stock [Member] | ||
Stockholder's (deficit) equity: | ||
Common stock | $ 111 | |
Class T Common Stock [Member] | ||
Stockholder's (deficit) equity: | ||
Common stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 0 | 8,000 |
Common stock, shares outstanding | 0 | 8,000 |
Offering costs included as reduction to additional paid in capital | $ 3,754,008 | |
Class A Common Stock [Member] | ||
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 320,000,000 | 320,000,000 |
Common stock, shares issued | 111,058 | 0 |
Common stock, shares outstanding | 111,058 | 0 |
Class T Common Stock [Member] | ||
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income: | ||||
Rental income | $ 10,441 | $ 10,441 | ||
Total income | 10,441 | 10,441 | ||
Expenses: | ||||
Property operating expenses | 1,510 | 1,510 | ||
General and administrative expenses | 143,703 | $ 4,679 | 408,901 | $ 10,462 |
Acquisition related costs | 1,207,188 | 1,207,188 | ||
Business management fee | 22,864 | 22,864 | ||
Total expenses | 1,375,265 | $ 4,679 | 1,640,463 | $ 10,462 |
Operating loss | (1,364,824) | (4,679) | (1,630,022) | (10,462) |
Net loss | $ (1,364,824) | $ (4,679) | $ (1,630,022) | $ (10,462) |
Net loss per common share, basic and diluted | $ (43.30) | $ (0.58) | $ (102.35) | $ (1.31) |
Weighted average number of common shares outstanding, basic and diluted | 31,520 | 8,000 | 15,926 | 8,000 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - 9 months ended Sep. 30, 2015 - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Retained Earnings (Deficit) [Member] | Total |
Balance at Dec. 31, 2014 | $ 8 | $ 199,992 | $ (185,021) | $ 14,979 |
Balance, shares at Dec. 31, 2014 | 8,000 | |||
Proceeds from the offering | $ 103 | $ 2,357,697 | 2,357,800 | |
Proceeds from the offering, shares | 103,058 | |||
Offering costs | $ (3,754,008) | (3,754,008) | ||
Discount on shares to related parties | $ 8,065 | 8,065 | ||
Net loss | $ (1,630,022) | (1,630,022) | ||
Balance at Sep. 30, 2015 | $ 111 | $ (1,188,254) | $ (1,815,043) | $ (3,003,186) |
Balance, shares at Sep. 30, 2015 | 111,058 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (1,630,022) | $ (10,462) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Discount on shares issued to related parties | 8,065 | |
Changes in assets and liabilities: | ||
Accounts payable | (20,924) | $ 34,394 |
Due to related parties | 704,154 | $ (24,025) |
Other liabilities | 18,072 | |
Other assets | (79,313) | |
Net cash flows used in operating activities | (999,968) | $ (93) |
INVESTING ACTIVITIES: | ||
Purchase of real estate | (45,986,910) | |
Net cash flows used in investing activities | (45,986,910) | |
FINANCING ACTIVITIES: | ||
Proceeds from offering | 2,357,800 | |
Proceeds from mortgages payable | 45,750,000 | |
Payment of offering costs | (2,291,290) | |
Advances from sponsor | 2,650,000 | |
Payment of loan costs | (22,556) | |
Net cash flows provided by financing activities | 48,443,954 | |
Net increase (decrease) in cash and cash equivalents | 1,457,076 | $ (93) |
Cash and cash equivalents at beginning of the period | 232,635 | 500,000 |
Cash and cash equivalents, at end of period | 1,689,711 | $ 499,907 |
SUPPLEMENTAL DISCLOSURES: In conjunction with the purchase of real estate, the Company acquired assets and assumed liabilities as follows: | ||
Land | 6,301,838 | |
Building and other improvements | 37,591,342 | |
Furniture, fixtures and equipment | 1,232,754 | |
Acquired in place lease intangibles | 601,623 | |
Acquired assets, net | 259,353 | |
Purchase of real estate | 45,986,910 | |
NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||
Accrued offering costs payable | $ (1,151,904) | $ (295,958) |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION Inland Residential Properties Trust, Inc. was formed on December 19, 2013 to acquire and manage a portfolio of multifamily properties located primarily in the top 100 United States metropolitan statistical areas, which generally contain populations greater than 500,000 people. Effective July 14, 2014, the Company changed its name from Inland Retail Properties Trust V, Inc. to Inland Residential Properties Trust, Inc. The Company entered into a Business Management Agreement (the Business Management Agreement) with Inland Residential Business Manager & Advisor, Inc. (the Business Manager), a related party of the Company, to be the Business Manager to the Company. The Company is authorized to sell up to $1,000,000,000 of shares of common stock which consist of Class A common stock, $.001 par value per share (Class A Shares), at a price of $25.00 per share and Class T common stock, $.001 par value per share (Class T Shares), at $23.95 per share, in any combination, in an initial reasonable best efforts offering (the Offering) which commenced on February 17, 2015. The Company is also authorized to issue up to $190,000,000 of Class A and Class T Shares at a per share price of $23.75 and $22.81, respectively, pursuant to the Companys distribution reinvestment plan (as amended, DRP). In addition, the Company declared that each share of common stock that was issued and outstanding immediately prior to the effective date of the amendment of the Companys charter converted into one Class A Share. As a result, the 8,000 shares of common stock Inland Real Estate Investment Corporation, (the Sponsor), owned as of December 31, 2014 were converted into 8,000 Class A Shares. On September 9, 2015, the Company sold 87,680.842 Class A Shares to the Sponsor for an aggregate purchase price of $2,000,000, or $22.81 per share. Giving effect to this sale, as of such date, having raised approximately $2,348,800 in Class A Shares, the Company met its minimum offering requirement and broke escrow in all states, except Ohio, Pennsylvania, Tennessee and Washington. The Company provides the following programs to facilitate investment in the Companys shares and to provide limited liquidity for stockholders. The Company provides stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions through the DRP, subject to certain share ownership restrictions. For participants in the DRP, cash distributions paid on Class A Shares and Class T Shares, as applicable, will be used to purchase Class A Shares and Class T Shares, respectively. Such purchases under the DRP will not be subject to selling commissions, dealer manager fees, distribution and stockholder servicing fees or reimbursement of issuer costs in connection with shares of common stock issued through the DRP and are made initially at a price of $23.75 and $22.81 per Class A Share and Class T Share, respectively. The price is subject to change after the earlier of (1) the change of the public offering price in a public reasonable best efforts offering of the Companys Class A Shares from $25.00 per Class A Share or Class T Shares from $23.95 per Class T Share, as applicable, if there is a change, and (2) termination of all reasonable best efforts public offerings of the Companys Class A Shares or Class T Shares, as applicable. The Company may purchase shares under the share repurchase program (as amended, SRP), if the Company chooses to repurchase them. Subject to funds being available, the Company will limit the number of shares repurchased during any calendar year to 5% of the number of shares of common stock outstanding on December 31st of the previous calendar year. Funding for the SRP will come from proceeds that the Company receives from the DRP. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, neither the one year holding period, the limit regarding funds available from the DRP nor the 5% limit will apply. The SRP will immediately terminate if the Companys shares become listed for trading on a national securities exchange. In addition, the Companys board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP. The Company intends to elect to be taxed as a real estate investment trust (REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code), beginning with its taxable year ending December 31, 2015 or the Companys first year of material operations. In order to maintain the Companys qualification as a REIT, the Company is required to, among other things, make aggregate annual distributions (other than capital gain dividends) to the Companys stockholders of at least 90% of the Companys annual REIT taxable income (which does not equal net income as calculated in accordance with U.S. GAAP) determined without regard to the deduction for dividends paid and excluding net capital gain, and meet certain tests regarding the nature of the Companys income and assets. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to U.S. federal income tax to the extent it meets certain criteria and distributes its REIT taxable income to its stockholders. Even if the Company qualifies for taxation as a REIT, the Company may be subject to (1) certain state and local taxes on its income, property or net worth, and (2) U.S. federal income and excise taxes on its undistributed income, if any income remains undistributed. The Company intends to operate in a manner that allows the Company to meet the requirements for taxation as a REIT, including creating taxable REIT subsidiaries to hold assets that generate income that would not be consistent with the rules applicable to qualification as a REIT if held directly by the REIT. If the Company were to fail to meet these requirements, it could be subject to U.S. federal income tax on the Companys taxable income at regular corporate rates. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. The Company will also be disqualified for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Consolidation The accompanying consolidated financial statements include the accounts of the Company, as well as Inland Residential Operating Partnership, L.P., of which the Company is the sole general partner, and the accounts of the Companys wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Partially-Owned Entities The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity or VIE or has substantial influence and control of the entity. The primary beneficiary is the party that has the ability to direct the activities that most significantly impact the entitys economic performance and the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. There are significant judgments and estimates involved in determining the primary beneficiary of a VIE or the determination of who has control and influence of the entity. When the Company consolidates an entity, the assets, liabilities and results of operations will be included in the Companys consolidated financial statements. In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Companys operations but instead its share of operations will be reflected as equity in earnings (loss) on unconsolidated entity on the Companys consolidated statements of operations. Additionally, the Companys net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. Offering and Organization Costs Costs associated with the Offering are deferred and charged against the gross proceeds of the Offering upon the sale of shares. Formation and organizational costs were expensed as incurred. Deferred Offering costs were $2,614,621 at December 31, 2014 and are included in deferred costs, net in the accompanying consolidated financial statements. Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The account balance may periodically exceed the Federal Deposit Insurance Corporation (FDIC) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions non-performance. Acquisitions Upon acquisition, the Company determines the total purchase price of each property (see Note 4 Acquisitions), which includes the estimated contingent consideration to be paid or received in future periods, if any. The Company allocates the total purchase price of properties based on the fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. Such tangible assets include land, building improvements, furniture, fixtures and equipment and such intangible assets include acquired above market and below market leases, in place lease value and any assumed financing that is determined to be above or below market terms. The Company expenses acquisition costs of all transactions as incurred. All costs related to finding, analyzing and negotiating a transaction are expensed as incurred as acquisition related costs, whether or not the acquisition is completed. These expenses include acquisition fees paid to the Business Manager. Impairment The Company assesses the carrying values of the respective long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. If it is determined that the carrying value is not recoverable because the undiscounted cash flows do not exceed the carrying value, the Company will be required to record an impairment loss to the extent that the carrying value exceeds fair value. The valuation and possible subsequent impairment of real estate properties will be a significant estimate that can change based on the Companys continuous process of analyzing each property and reviewing assumptions about inherently uncertain factors, as well as the economic condition of the property at a particular point in time. Cost Capitalization and Depreciation Policies Real estate acquisitions are recorded at cost less accumulated depreciation. Improvements and betterment costs will be capitalized and ordinary repairs and maintenance will be expensed as incurred. Depreciation expense is computed using the straight-line method. Buildings and improvements are depreciated on a straight-line basis based upon estimated useful lives of thirty years for buildings and improvements, and five to fifteen years for furniture, fixtures and equipment and site improvements. Loan fees are amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loan as a component of interest expense. The portion of the purchase price allocated to acquired above market lease costs and acquired below market lease costs is amortized on a straight-line basis over the life of the related lease (including renewal periods for below market leases with fixed rate renewals) as an adjustment to net rental income. Acquired in-place lease costs and other leasing costs are amortized on a straight-line basis over the weighted-average remaining lease term as a component of amortization expense. Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. Fair Value Measurements The Company estimates fair value using available market information and valuation methodologies it believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they will not necessarily be indicative of amounts that would be realized upon disposition. The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy will consist of three broad levels, which are described below: ▪ Level 1 − Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. ▪ Level 2 − Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ▪ Level 3 − Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Revenue Recognition Rental income attributable to leases is recorded on a straight-line basis, which is not materially different than if it were recorded when due from residents, and recognized monthly as it was earned. Leases entered into between a resident and a property for the rental of an apartment unit will generally be year-to-year, renewable upon consent of both parties. Retail/commercial leases will generally have five to ten year lease terms with market based renewal options. Valuation of Accounts and Rents Receivable The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding, payment history and financial strength of the tenant, which taken as a whole determines the valuation. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences and are attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance is established for uncertainties relating to realization of deferred tax assets. At September 30, 2015 and December 31, 2014, the Company had a deferred tax asset of approximately $726,017 and $74,000, respectively, for which a valuation allowance was recorded in the same amount due to the uncertainty of realization. Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
INCOME TAX
INCOME TAX | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 3 INCOME TAX The Company had no uncertain tax positions as of September 30, 2015. The Company expects no significant increases in uncertain tax positions due to changes in tax positions within one year of September 30, 2015. The Company has no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014. As of September 30, 2015, the tax returns for the calendar years 2014 and 2013 remain subject to examination by U.S. and various state and local tax jurisdictions. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 4 - ACQUISITIONS 2015 Acquisitions Date Acquired Property Name Location Total Number of Units Square Footage Purchase Price 9/30/15 The Retreat at Market Square Frederick, MD 206 194,732 $ 45,727,557 For properties acquired during the nine months ended September 30, 2015, the Company recorded revenue of $10,441 and property net income of $8,931 which excludes expensed acquisition related costs. The Company incurred $1,207,188 and $0 during the three months ended September 30, 2015 and 2014, respectively, and $1,207,188 and $0 during the nine months ended September 30, 2015 and 2014, respectively, of acquisition, dead deal and transaction related costs. These costs include third party due diligence costs such as appraisals, environmental studies, and legal fees as well as acquisition fees and time and travel expense reimbursements to the Sponsor and its affiliates. The following table presents certain additional information regarding the Companys acquisition during the nine months ended September 30, 2015. The amounts recognized for major assets acquired as of the acquisition date are as follows: Property Name Land Building and Improvements Furniture, Fixtures and Equipment Acquired Lease Intangibles The Retreat at Market Square $ 6,301,838 $ 37,591,342 $ 1,232,754 $ 601,623 Pro Forma Disclosures The following condensed pro forma consolidated financial statements for the three and nine months ended September 30, 2015 and 2014 include pro forma adjustments related to the acquisition and financing during 2015. The 2015 acquisition is presented assuming the acquisition occurred on January 1, 2014. Acquisition expenses for both the three and nine months ended September 30, 2015 of $1,207,188, related to the acquisition, are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Pro forma total income $ 942,215 $ 382,621 $ 2,630,318 $ 593,608 Pro forma net loss $ (575,275 ) $ (921,691 ) $ (1,649,628 ) $ (3,215,658 ) Loss per share $ (5.18 ) $ (8.30 ) $ (14.85 ) $ (28.95 ) |
MORTGAGES PAYABLE
MORTGAGES PAYABLE | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
MORTGAGES PAYABLE | NOTE 5 MORTGAGES PAYABLE As of September 30, 2015, the Companys mortgage loan is secured by a first mortgage on the property. Property Name Stated Interest Rate Per Annum Principal Balance at September 30, 2015 Principal Balance at December 31, 2014 Maturity Date Notes The Retreat at Market Square 3.95% $ 45,750,000 $ September 30, 2016 (a) (a) The loan requires monthly payments of interest only until the maturity date. Subject to certain conditions, the Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023. If extended, the mortgage loan would bear interest at a fixed rate equal to 3.79%. During the initial one-year term of the loan, the Sponsor has agreed to guarantee the payment of (i) all real estate taxes on the property which accrue or become due during the term of the loan, (ii) all Costs and Expenses, as defined, and (iii) any and all losses, damages, costs or expenses of the lender, which arise in consequence of certain events, as defined, provided that the guaranteed obligation will be limited to the payment of $9,150,000, plus enforcement costs. The Company has not paid, and will not pay, any fees or other consideration to the Sponsor for this guarantee. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 6 SEGMENT REPORTING The Company has one reportable segment, multifamily real estate, as defined by U.S. GAAP for the nine months ended September 30, 2015 and 2014. |
TRANSACTIONS WITH RELATED PARTI
TRANSACTIONS WITH RELATED PARTIES | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH RELATED PARTIES | NOTE 7 TRANSACTIONS WITH RELATED PARTIES The Sponsor contributed $200,000 to the capital of the Company for which it received 8,000 shares of common stock which were subsequently converted into 8,000 shares of Class A common stock. On September 9, 2015, the Company sold 87,680.842 shares of Class A common stock to the Sponsor for an aggregate purchase price of $2,000,000, or $22.81 per share. Since inception, the Sponsor has advanced $2,950,000 in cash to the Company, which is included in due to related parties on the accompanying consolidated balance sheets, to partially fund formation, offering and organization costs. As of September 30, 2015, the Company had incurred $3,817,104 of offering and organization costs. Pursuant to the terms of the Offering, the Business Manager will repay all offering and organization expenses (excluding selling commissions) in excess of 2.0% of the gross proceeds of the Offering or all offering and organization expenses (including selling commissions) which together exceed 10.75% of the gross offering proceeds from Class A Shares and 6.75% of the gross offering proceeds from Class T Shares, sold in the primary offering over the life of the Offering. The following table summarizes the Companys related party transactions for the three and nine months ended September 30, 2015 and 2014 and as of September 30, 2015 and December 31, 2014. Three months ended September 30, Nine months ended September 30, Amount Unpaid as of 2015 2014 2015 2014 September 30, 2015 December 31, 2014 General and administrative expenses (a) $ 61,168 $ $ 147,548 $ $ 81,253 $ 95,289 Organization costs (b) 225 1,610 Acquisition related costs (c) 719,148 719,148 686,250 Offering costs (d) 25,278 57,413 145,958 71,603 1,034,665 1,137,378 Business management fee (e) 22,864 22,864 22,864 Mortgage financing fee (f) 114,375 114,375 114,375 Sponsor non-interest bearing advances (g) 450,000 2,650,000 2,950,000 300,000 (a) The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses relating to the Companys administration. Such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. The Company established a discount stock purchase policy for related parties that enables them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the nine months ended September 30, 2015. (b) The Business Manager or its affiliates will pay or reimburse any organization or offering costs, including any issuer costs, that exceed 10.75% of the gross offering proceeds from Class A Shares, and 6.75% of the gross offering proceeds from Class T Shares sold in the reasonable best efforts offering over the life of the Offering. (c) The Company pays the Business Manager or its affiliates a fee equal to 1.5% of the contract purchase price, as defined, of each property and real estate-related asset acquired. The Business Manager and its affiliates are also reimbursed for acquisition and transaction related costs of the Business Manager and its affiliates relating to the Companys acquisition of real estate assets, regardless of whether the Company acquires the real estate assets, subject to limits, as defined. Such costs are included in acquisition related costs in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (d) The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering that they pay on the Companys behalf. Offering costs are offset against the stockholders equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. An affiliate of the Business Manager also receives selling commissions equal to 6.0% of the sale price for each Class A Share sold and 2.0% of the sale price for each Class T Share sold and a dealer manager fee equal to 2.75% of the sale price for each share sold, the majority of which is re-allowed (paid) to third party soliciting dealers. The Company does not pay selling commissions or the dealer manager fee in connection with shares issued through the DRP. (e) The Company pays the Business Manager an annual business management fee equal to 0.6% of its average invested assets, payable quarterly in an amount equal to 0.15% of the Companys average invested assets as of the last day of the immediately preceding quarter. Average invested assets means, for any period, the average of the aggregate book value of the Companys assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities or consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. (f) The Company pays the Business Manager, or its affiliates, a mortgage financing fee equal to 0.25% of the amount available or borrowed under the financing or the assumed debt if the Business Manager or its affiliates provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to finance properties or other assets, or that is assumed, directly or indirectly, in connection with the acquisition of properties or other assets. (g) This amount on the accompanying consolidated balance sheets contains non-interest bearing advances made by the Sponsor which the Company intends to repay. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 SUBSEQUENT EVENTS On October 20, 2015, the Companys board of directors authorized a daily cash dividend of $0.003424658 per Class A Share and $0.002768493 per Class T Share, payable to stockholders of record each day beginning on the close of business on November 1, 2015 through the close of business on November 30, 2015. In addition, on October 20, 2015, the Companys board of directors authorized a monthly stock dividend of 0.000833333 Class A Shares per Class A Share owned and 0.000833333 Class T Shares per Class T Share owned, payable to stockholders of record at the close of business on November 30, 2015. Distributions declared for the month of November will be paid and distributed no later than December 7, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
General | General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Consolidation | Consolidation The accompanying consolidated financial statements include the accounts of the Company, as well as Inland Residential Operating Partnership, L.P., of which the Company is the sole general partner, and the accounts of the Companys wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. |
Partially-Owned Entities | Partially-Owned Entities The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity or VIE or has substantial influence and control of the entity. The primary beneficiary is the party that has the ability to direct the activities that most significantly impact the entitys economic performance and the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. There are significant judgments and estimates involved in determining the primary beneficiary of a VIE or the determination of who has control and influence of the entity. When the Company consolidates an entity, the assets, liabilities and results of operations will be included in the Companys consolidated financial statements. In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Companys operations but instead its share of operations will be reflected as equity in earnings (loss) on unconsolidated entity on the Companys consolidated statements of operations. Additionally, the Companys net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. |
Offering and Organization Costs | Offering and Organization Costs Costs associated with the Offering are deferred and charged against the gross proceeds of the Offering upon the sale of shares. Formation and organizational costs were expensed as incurred. Deferred Offering costs were $2,614,621 at December 31, 2014 and are included in deferred costs, net in the accompanying consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The account balance may periodically exceed the Federal Deposit Insurance Corporation (FDIC) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions non-performance. |
Acquisitions | Acquisitions Upon acquisition, the Company determines the total purchase price of each property (see Note 4 Acquisitions), which includes the estimated contingent consideration to be paid or received in future periods, if any. The Company allocates the total purchase price of properties based on the fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. Such tangible assets include land, building improvements, furniture, fixtures and equipment and such intangible assets include acquired above market and below market leases, in place lease value and any assumed financing that is determined to be above or below market terms. The Company expenses acquisition costs of all transactions as incurred. All costs related to finding, analyzing and negotiating a transaction are expensed as incurred as acquisition related costs, whether or not the acquisition is completed. These expenses include acquisition fees paid to the Business Manager. |
Impairment | Impairment The Company assesses the carrying values of the respective long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. If it is determined that the carrying value is not recoverable because the undiscounted cash flows do not exceed the carrying value, the Company will be required to record an impairment loss to the extent that the carrying value exceeds fair value. The valuation and possible subsequent impairment of real estate properties will be a significant estimate that can change based on the Companys continuous process of analyzing each property and reviewing assumptions about inherently uncertain factors, as well as the economic condition of the property at a particular point in time. |
Cost Capitalization and Depreciation Policies | Cost Capitalization and Depreciation Policies Real estate acquisitions are recorded at cost less accumulated depreciation. Improvements and betterment costs will be capitalized and ordinary repairs and maintenance will be expensed as incurred. Depreciation expense is computed using the straight-line method. Buildings and improvements are depreciated on a straight-line basis based upon estimated useful lives of thirty years for buildings and improvements, and five to fifteen years for furniture, fixtures and equipment and site improvements. Loan fees are amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loan as a component of interest expense. The portion of the purchase price allocated to acquired above market lease costs and acquired below market lease costs is amortized on a straight-line basis over the life of the related lease (including renewal periods for below market leases with fixed rate renewals) as an adjustment to net rental income. Acquired in-place lease costs and other leasing costs are amortized on a straight-line basis over the weighted-average remaining lease term as a component of amortization expense. Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. |
Fair Value Measurements | Fair Value Measurements The Company estimates fair value using available market information and valuation methodologies it believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they will not necessarily be indicative of amounts that would be realized upon disposition. The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy will consist of three broad levels, which are described below: ▪ Level 1 − Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. ▪ Level 2 − Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ▪ Level 3 − Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
Revenue Recognition | Revenue Recognition Rental income attributable to leases is recorded on a straight-line basis, which is not materially different than if it were recorded when due from residents, and recognized monthly as it was earned. Leases entered into between a resident and a property for the rental of an apartment unit will generally be year-to-year, renewable upon consent of both parties. Retail/commercial leases will generally have five to ten year lease terms with market based renewal options. |
Valuation of Accounts and Rents Receivable | Valuation of Accounts and Rents Receivable The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding, payment history and financial strength of the tenant, which taken as a whole determines the valuation. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences and are attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance is established for uncertainties relating to realization of deferred tax assets. At September 30, 2015 and December 31, 2014, the Company had a deferred tax asset of approximately $726,017 and $74,000, respectively, for which a valuation allowance was recorded in the same amount due to the uncertainty of realization. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of 2015 Acquisitions | 2015 Acquisitions Date Acquired Property Name Location Total Number of Units Square Footage Purchase Price 9/30/15 The Retreat at Market Square Frederick, MD 206 194,732 $ 45,727,557 |
Schedule of Major Assets Acquired and Liabilities Assumed | The following table presents certain additional information regarding the Companys acquisition during the nine months ended September 30, 2015. The amounts recognized for major assets acquired as of the acquisition date are as follows: Property Name Land Building and Improvements Furniture, Fixtures and Equipment Acquired Lease Intangibles The Retreat at Market Square $ 6,301,838 $ 37,591,342 $ 1,232,754 $ 601,623 |
Schedule of Pro Forma Financial Information for Acquisitions | The following condensed pro forma consolidated financial statements for the three and nine months ended September 30, 2015 and 2014 include pro forma adjustments related to the acquisition and financing during 2015. The 2015 acquisition is presented assuming the acquisition occurred on January 1, 2014. Acquisition expenses for both the three and nine months ended September 30, 2015 of $1,207,188, related to the acquisition, are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Pro forma total income $ 942,215 $ 382,621 $ 2,630,318 $ 593,608 Pro forma net loss $ (575,275 ) $ (921,691 ) $ (1,649,628 ) $ (3,215,658 ) Loss per share $ (5.18 ) $ (8.30 ) $ (14.85 ) $ (28.95 ) |
MORTGAGES PAYABLE (Tables)
MORTGAGES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgages Payable | As of September 30, 2015, the Companys mortgage loan is secured by a first mortgage on the property. Property Name Stated Interest Rate Per Annum Principal Balance at September 30, 2015 Principal Balance at December 31, 2014 Maturity Date Notes The Retreat at Market Square 3.95% $ 45,750,000 $ September 30, 2016 (a) (a) The loan requires monthly payments of interest only until the maturity date. Subject to certain conditions, the Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023. If extended, the mortgage loan would bear interest at a fixed rate equal to 3.79%. During the initial one-year term of the loan, the Sponsor has agreed to guarantee the payment of (i) all real estate taxes on the property which accrue or become due during the term of the loan, (ii) all Costs and Expenses, as defined, and (iii) any and all losses, damages, costs or expenses of the lender, which arise in consequence of certain events, as defined, provided that the guaranteed obligation will be limited to the payment of $9,150,000, plus enforcement costs. The Company has not paid, and will not pay, any fees or other consideration to the Sponsor for this guarantee. |
TRANSACTIONS WITH RELATED PAR18
TRANSACTIONS WITH RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of Transactions with Related Parties | The following table summarizes the Companys related party transactions for the three and nine months ended September 30, 2015 and 2014 and as of September 30, 2015 and December 31, 2014. Three months ended September 30, Nine months ended September 30, Amount Unpaid as of 2015 2014 2015 2014 September 30, 2015 December 31, 2014 General and administrative expenses (a) $ 61,168 $ $ 147,548 $ $ 81,253 $ 95,289 Organization costs (b) 225 1,610 Acquisition related costs (c) 719,148 719,148 686,250 Offering costs (d) 25,278 57,413 145,958 71,603 1,034,665 1,137,378 Business management fee (e) 22,864 22,864 22,864 Mortgage financing fee (f) 114,375 114,375 114,375 Sponsor non-interest bearing advances (g) 450,000 2,650,000 2,950,000 300,000 (a) The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses relating to the Companys administration. Such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. The Company established a discount stock purchase policy for related parties that enables them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the nine months ended September 30, 2015. (b) The Business Manager or its affiliates will pay or reimburse any organization or offering costs, including any issuer costs, that exceed 10.75% of the gross offering proceeds from Class A Shares, and 6.75% of the gross offering proceeds from Class T Shares sold in the reasonable best efforts offering over the life of the Offering. (c) The Company pays the Business Manager or its affiliates a fee equal to 1.5% of the contract purchase price, as defined, of each property and real estate-related asset acquired. The Business Manager and its affiliates are also reimbursed for acquisition and transaction related costs of the Business Manager and its affiliates relating to the Companys acquisition of real estate assets, regardless of whether the Company acquires the real estate assets, subject to limits, as defined. Such costs are included in acquisition related costs in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (d) The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering that they pay on the Companys behalf. Offering costs are offset against the stockholders equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. An affiliate of the Business Manager also receives selling commissions equal to 6.0% of the sale price for each Class A Share sold and 2.0% of the sale price for each Class T Share sold and a dealer manager fee equal to 2.75% of the sale price for each share sold, the majority of which is re-allowed (paid) to third party soliciting dealers. The Company does not pay selling commissions or the dealer manager fee in connection with shares issued through the DRP. (e) The Company pays the Business Manager an annual business management fee equal to 0.6% of its average invested assets, payable quarterly in an amount equal to 0.15% of the Companys average invested assets as of the last day of the immediately preceding quarter. Average invested assets means, for any period, the average of the aggregate book value of the Companys assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities or consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. (f) The Company pays the Business Manager, or its affiliates, a mortgage financing fee equal to 0.25% of the amount available or borrowed under the financing or the assumed debt if the Business Manager or its affiliates provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to finance properties or other assets, or that is assumed, directly or indirectly, in connection with the acquisition of properties or other assets. (g) This amount on the accompanying consolidated balance sheets contains non-interest bearing advances made by the Sponsor which the Company intends to repay. |
ORGANIZATION (Details)
ORGANIZATION (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 09, 2015 | Dec. 31, 2014 | |
Class of Stock [Line Items] | ||||
Total value of common stock company is authorized to sell through initial 'reasonable best efforts' offering | $ 1,000,000,000 | |||
Common stock, par value | $ .001 | $ .001 | ||
Number of common shares Sponsor received, subsequently converted in Class A Common Stock | 8,000 | |||
Number of Class A shares issued as result of Sponsor converting common shares | 8,000 | |||
Limit on number of shares that can be repurchased each calendar year expressed as a percentage of common stock outstanding on December 31st of the previous calendar year | 5.00% | |||
Advances from sponsor | $ 2,650,000 | |||
Class A Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Common stock, par value | $ .001 | .001 | ||
Price of each common share authorized to be sold through intial public 'best efforts' offering | 25 | |||
Initial price of each common share authorized pursuant to distribution reinvestment plan | 23.75 | |||
Adjusted price of each common share authorized pursuant to distribution reinvestment plan | $ 25 | |||
Shares sold during period | 87,680.842 | |||
Advances from sponsor | $ 2,000,000 | |||
Equity issuance, price per share | $ 22.81 | |||
Approximate total proceeds raised in offering | $ 2,348,800 | |||
Class T Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Common stock, par value | .001 | $ .001 | ||
Price of each common share authorized to be sold through intial public 'best efforts' offering | 23.95 | |||
Initial price of each common share authorized pursuant to distribution reinvestment plan | 22.81 | |||
Adjusted price of each common share authorized pursuant to distribution reinvestment plan | $ 23.95 | |||
Class A and Class T Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Total value of common stock company is authorized to sell pursuant to distribution reinvestment plan | $ 190,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Deferred costs, net | $ 136,930 | $ 2,614,621 |
Deferred tax asset, gross | 726,017 | 74,000 |
Deferred tax asset valuation allowance | $ 726,017 | $ 74,000 |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Contingency [Line Items] | ||||
Uncertain tax positions | ||||
Interest or penalties relating to income taxes recognized in the consolidated statements of operations | ||||
Minimum [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Open tax year | 2,013 | |||
Maximum [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Open tax year | 2,014 |
ACQUISITIONS (Narrative) (Detai
ACQUISITIONS (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Combinations [Abstract] | ||||
Proceeds from mortgages payable | $ 45,750,000 | |||
Acquisition related costs incurred during the period | $ 1,207,188 | 1,207,188 | ||
Revenue | $ 10,441 | 10,441 | ||
Net income from properties acquired during the period, net of expensed acquisition related costs | $ 8,931 |
ACQUISITIONS (Schedule of 2015
ACQUISITIONS (Schedule of 2015 Acquisitions) (Details) - The Retreat at Market Square [Member] | 9 Months Ended |
Sep. 30, 2015USD ($)ft²Units | |
Business Acquisition [Line Items] | |
Property acquisition, date acquired | Sep. 30, 2015 |
Property acquisition, location | Frederick, MD |
Property acquisition, total number of units acquired | Units | 206 |
Property acquisition, square footage | 194,732 |
Property acquisition, purchase price | $ | $ 45,727,557 |
ACQUISITIONS (Schedule of Major
ACQUISITIONS (Schedule of Major Assets Acquired and Liabilities Assumed) (Details) - The Retreat at Market Square [Member] | Sep. 30, 2015USD ($) |
Business Acquisition [Line Items] | |
Property acquisition, land | $ 6,301,838 |
Property acquisition, buildings and improvements | 37,591,342 |
Property acquisition, furniture, fixtures and equipment | 1,232,754 |
Property acquisition, acquired lease intangibles | $ 601,623 |
ACQUISITIONS (Schedule of Pro F
ACQUISITIONS (Schedule of Pro Forma Financial Information for Acquisitions) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Combinations [Abstract] | ||||
Pro forma total income | $ 942,215 | $ 382,621 | $ 2,630,318 | $ 593,608 |
Pro forma net loss | $ (575,275) | $ (921,691) | $ (1,649,628) | $ (3,215,658) |
Loss per share | $ (5.18) | $ (8.30) | $ (14.85) | $ (28.95) |
MORTGAGES PAYABLE (Details)
MORTGAGES PAYABLE (Details) - The Retreat at Market Square [Member] - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | ||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | [1] | 3.95% | |
Outstanding principal balance | [1] | $ 45,750,000 | |
Debt instrument, maturity date | [1] | Sep. 30, 2016 | |
Interest rate on mortgage loan if maturity date is extended | 3.79% | ||
Maximum guarantee obligation for Sponsor | $ 9,150,000 | ||
[1] | The loan requires monthly payments of interest only until the maturity date. Subject to certain conditions, the Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023. If extended, the mortgage loan would bear interest at a fixed rate equal to 3.79%. During the initial one-year term of the loan, the Sponsor has agreed to guarantee the payment of (i) all real estate taxes on the property which accrue or become due during the term of the loan, (ii) all Costs and Expenses, as defined, and (iii) any and all losses, damages, costs or expenses of the lender, which arise in consequence of certain events, as defined, provided that the guaranteed obligation will be limited to the payment of $9,150,000, plus enforcement costs. The Company has not paid, and will not pay, any fees or other consideration to the Sponsor for this guarantee. |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - Segments | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 1 | 1 |
TRANSACTIONS WITH RELATED PAR28
TRANSACTIONS WITH RELATED PARTIES (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transaction [Line Items] | ||
Capital contributed by Sponsor for common stock shares | $ 200,000 | |
Number of common shares Sponsor received, subsequently converted in Class A Common Stock | 8,000 | |
Number of Class A shares issued as result of Sponsor converting common shares | 8,000 | |
Total cash advances provided by Sponsor since Company inception | $ 2,950,000 | |
Total offering and organizational costs incurred since inception | 3,817,104 | |
Advances from sponsor | $ 2,650,000 | |
Common stock shares sold to related party during period | 3,683 | |
Price per share of common stock sold to related parties during period | $ 22.81 | |
Minimum percentage of gross offering proceeds from Class A Shares, requiring issuer cost reimbursement from the Business Manager or its affiliates | 10.75% | |
Minimum percentage of gross offering proceeds from Class T Shares, requiring issuer cost reimbursement from the Business Manager or its affiliates | 6.75% | |
Fee paid to Business Manager or its affiliates expressed as a percentage of the ‘contract purchase price’ as defined, of each property and real estate-related asset acquired | 1.50% | |
Selling commission paid to affiliate of the Business Manager expressed as a percentage of the sales price for each Class A Share sold | 6.00% | |
Selling commission paid to affiliate of the Business Manager expressed as a percentage of the sales price for each Class T Share sold | 2.00% | |
Dealer manager fee paid to affiliate of the Business Manager expressed as a percentage of the sales price for each Class A and Class T share sold | 2.75% | |
Annual business management fee paid to the Business Manager expressed as a percentage of the Company’s “average invested assets” | 0.06% | |
Mortgage financing fee paid to the Business Manager or its affiliates expressed as a percentage of the amount available or borrowed under financing or assumed debt | 0.25% | |
Class A Common Stock [Member] | ||
Related Party Transaction [Line Items] | ||
Shares sold during period | 87,680.842 | |
Advances from sponsor | $ 2,000,000 | |
Equity issuance, price per share | $ 22.81 |
TRANSACTIONS WITH RELATED PAR29
TRANSACTIONS WITH RELATED PARTIES (Schedule of Transactions with Related Parties) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | ||
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 4,889,407 | $ 4,889,407 | $ 1,532,667 | |||
General and Administrative Expense [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | [1] | 61,168 | 147,548 | |||
Due to related parties | [1] | $ 81,253 | $ 81,253 | $ 95,289 | ||
Organization Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [2] | $ 225 | $ 1,610 | |||
Due to related parties | [2] | |||||
Acquisition Related Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [3] | $ 719,148 | $ 719,148 | |||
Due to related parties | [3] | 686,250 | 686,250 | |||
Offering Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [4] | 25,278 | $ 57,413 | 145,958 | $ 71,603 | |
Due to related parties | [4] | 1,034,665 | 1,034,665 | $ 1,137,378 | ||
Business Management Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [5] | 22,864 | 22,864 | |||
Due to related parties | [5] | 22,864 | 22,864 | |||
Mortgage Financing Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [6] | 114,375 | 114,375 | |||
Due to related parties | [6] | 114,375 | 114,375 | |||
Sponsor Non-interest Bearing Advances [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [7] | 450,000 | 2,650,000 | |||
Due to related parties | [7] | $ 2,950,000 | $ 2,950,000 | $ 300,000 | ||
[1] | The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses relating to the Company's administration. Such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. The Company established a discount stock purchase policy for related parties that enables them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the nine months ended September 30, 2015. | |||||
[2] | The Business Manager or its affiliates will pay or reimburse any organization or offering costs, including any issuer costs, that exceed 10.75% of the gross offering proceeds from Class A Shares, and 6.75% of the gross offering proceeds from Class T Shares sold in the 'reasonable best efforts' offering over the life of the Offering. | |||||
[3] | The Company pays the Business Manager or its affiliates a fee equal to 1.5% of the "contract purchase price" as defined, of each property and real estate-related asset acquired. The Business Manager and its affiliates are also reimbursed for acquisition and transaction related costs of the Business Manager and its affiliates relating to the Company's acquisition of real estate assets, regardless of whether the Company acquires the real estate assets, subject to limits, as defined. Such costs are included in acquisition related costs in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||
[4] | The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering that they pay on the Company's behalf. Offering costs are offset against the stockholders' equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. An affiliate of the Business Manager also receives selling commissions equal to 6.0% of the sale price for each Class A Share sold and 2.0% of the sale price for each Class T Share sold and a dealer manager fee equal to 2.75% of the sale price for each share sold, the majority of which is re-allowed (paid) to third party soliciting dealers. The Company does not pay selling commissions or the dealer manager fee in connection with shares issued through the DRP. | |||||
[5] | The Company pays the Business Manager an annual business management fee equal to 0.6% of its "average invested assets", payable quarterly in an amount equal to 0.15% of the Company's average invested assets as of the last day of the immediately preceding quarter. "Average invested assets" means, for any period, the average of the aggregate book value of the Company's assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities or consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. | |||||
[6] | The Company pays the Business Manager, or its affiliates, a mortgage financing fee equal to 0.25% of the amount available or borrowed under the financing or the assumed debt if the Business Manager or its affiliates provides services in connection with the origination or refinancing of any debt that the Company obtains and uses to finance properties or other assets, or that is assumed, directly or indirectly, in connection with the acquisition of properties or other assets. | |||||
[7] | This amount on the accompanying consolidated balance sheets contains non-interest bearing advances made by the Sponsor which the Company intends to repay. |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - $ / shares | 1 Months Ended | |
Oct. 31, 2015 | Oct. 20, 2015 | |
Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, payment date | Dec. 7, 2015 | |
Cash Dividend [Member] | Class A Common Stock [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, declaration date | Oct. 20, 2015 | |
Amount per share of distributions | $ 0.003424658 | |
Cash Dividend [Member] | Class A Common Stock [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 1, 2015 | |
Cash Dividend [Member] | Class A Common Stock [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 30, 2015 | |
Cash Dividend [Member] | Class T Common Stock [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, declaration date | Oct. 20, 2015 | |
Amount per share of distributions | 0.002768493 | |
Cash Dividend [Member] | Class T Common Stock [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 1, 2015 | |
Cash Dividend [Member] | Class T Common Stock [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 30, 2015 | |
Stock Dividend [Member] | Class A Common Stock [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 30, 2015 | |
Dividends payable, declaration date | Oct. 20, 2015 | |
Amount per share of distributions | 0.000833333 | |
Stock Dividend [Member] | Class T Common Stock [Member] | ||
Subsequent Event [Line Items] | ||
Dividends payable, record date | Nov. 30, 2015 | |
Dividends payable, declaration date | Oct. 20, 2015 | |
Amount per share of distributions | $ 0.000833333 |