Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 24, 2016 | Jun. 30, 2015 | |
Document And Entity Information [Line Items] | |||
Entity Registrant Name | Inland Residential Properties Trust, Inc. | ||
Entity Central Index Key | 1,595,627 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 0 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Class A Common Stock [Member] | |||
Document And Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 515,696 | ||
Class T Common Stock [Member] | |||
Document And Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 27,635 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Real estate: | ||
Land | $ 6,301,838 | |
Building and other improvements | 38,824,096 | |
Total real estate | 45,125,934 | |
Less accumulated depreciation | (364,520) | |
Net real estate | 44,761,414 | |
Cash and cash equivalents | 5,281,172 | $ 232,635 |
Accounts and rent receivable | 35,763 | |
Acquired lease intangibles, net | 343,785 | |
Deferred costs, net | 103,046 | 2,614,621 |
Other assets | 464,937 | 19,867 |
Total assets | 50,990,117 | 2,867,123 |
Liabilities: | ||
Mortgages payable | 45,750,000 | 0 |
Accounts payable and accrued expenses | 422,223 | 1,319,477 |
Distributions payable | 23,738 | |
Due to related parties | 5,064,415 | 1,532,667 |
Other liabilities | 49,655 | |
Total liabilities | $ 51,310,031 | $ 2,852,144 |
Commitments and contingencies | ||
Stockholders’ (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 $4,597,765 and $0 as of December 31, 2015 and 2014, respectively) | $ 2,398,277 | 199,992 |
Accumulated distributions and net loss | (2,718,480) | (185,021) |
Total stockholders’ (deficit) equity | (319,914) | 14,979 |
Total liabilities and stockholders’ (deficit) equity | 50,990,117 | $ 2,867,123 |
Class A Common Stock [Member] | ||
Liabilities: | ||
Distributions payable | 36,567 | |
Stockholders’ (deficit) equity: | ||
Common stock | 274 | |
Total stockholders’ (deficit) equity | 274 | |
Class T Common Stock [Member] | ||
Liabilities: | ||
Distributions payable | 854 | |
Stockholders’ (deficit) equity: | ||
Common stock | 15 | |
Total stockholders’ (deficit) equity | $ 15 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2015 | Feb. 18, 2015 | Dec. 31, 2014 |
Preferred stock, par value | $ 0.001 | $ 0.001 | |
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 | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 400,000,000 | 400,000,000 | |
Common stock, shares issued | 8,000 | ||
Common stock, shares outstanding | 8,000 | ||
Offering costs included as reduction to additional paid in capital | $ 4,597,765 | $ 0 | |
Class A Common Stock [Member] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 320,000,000 | 320,000,000 | |
Common stock, shares issued | 274,481 | 0 | |
Common stock, shares outstanding | 274,481 | 0 | |
Class T Common Stock [Member] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 80,000,000 | 80,000,000 | |
Common stock, shares issued | 15,157 | 0 | |
Common stock, shares outstanding | 15,157 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 |
Income: | |||
Rental income | $ 865,899 | ||
Other property income | 101,572 | ||
Total income | 967,471 | ||
Expenses: | |||
Property operating expenses | 253,268 | ||
Real estate tax expense | 87,003 | ||
General and administrative expenses | $ 30,311 | 657,293 | $ 154,710 |
Acquisition related costs | 0 | 1,247,622 | 0 |
Business management fee | 91,455 | ||
Depreciation and amortization | 622,359 | ||
Total expenses | 30,311 | 2,959,000 | 154,710 |
Operating loss | (30,311) | (1,991,529) | (154,710) |
Interest expense | (501,073) | ||
Net loss | $ (30,311) | $ (2,492,602) | $ (154,710) |
Net loss per common share, basic and diluted | $ (3.79) | $ (48.07) | $ (19.34) |
Weighted average number of common shares outstanding, basic and diluted | 8,000 | 51,851 | 8,000 |
CONSOLIDATED STATEMENTS OF (DEF
CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY - USD ($) | Total | Class A Common Stock [Member] | Class T Common Stock [Member] | Common Stock [Member] | Common Stock [Member]Class A Common Stock [Member] | Additional Paid In Capital [Member] | Distributions and Accumulated Losses [Member] |
Balance at Dec. 31, 2013 | $ 169,689 | $ 8 | $ 199,992 | $ (30,311) | |||
Balance, shares at Dec. 31, 2013 | 8,000 | ||||||
Net loss | (154,710) | (154,710) | |||||
Balance at Dec. 31, 2014 | 14,979 | 8 | 199,992 | (185,021) | |||
Balance, shares at Dec. 31, 2014 | 8,000 | ||||||
Proceeds from the offering | 6,779,935 | $ 266 | $ 15 | 6,779,654 | |||
Proceeds from the offering, shares | 266,283 | 15,156 | |||||
Offering costs | (4,597,765) | (4,597,765) | |||||
Conversion of common into Class A | $ 8 | $ (8) | |||||
Conversion of common into Class A, shares | 8,000 | (8,000) | |||||
Discount on shares to related parties | 8,065 | 8,065 | |||||
Issuance of shares from distribution reinvestment plan | 1,457 | 1,457 | |||||
Issuance of shares from distribution reinvestment plan, shares | 61 | ||||||
Distributions declared | (37,421) | (37,421) | |||||
Stock dividends issued | 3,436 | (3,436) | |||||
Stock dividends issued, shares | 137 | 1 | |||||
Net loss | (2,492,602) | (2,492,602) | |||||
Balance at Dec. 31, 2015 | (319,914) | $ 274 | $ 15 | 2,398,277 | $ (2,718,480) | ||
Balance, shares at Dec. 31, 2015 | 274,481 | 15,157 | |||||
Equity based compensation | $ 3,438 | $ 3,438 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 |
Cash flows from operating activities: | |||
Net loss | $ (30,311) | $ (2,492,602) | $ (154,710) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 622,359 | ||
Amortization of loan fees | 34,233 | ||
Amortization of equity based compensation | 3,438 | ||
Discount on shares issued to related parties | 8,065 | ||
Changes in assets and liabilities: | |||
Accounts payable and accrued expenses | 30,311 | 75,759 | 74,492 |
Accounts and rents receivable | (35,763) | ||
Due to related parties | 809,512 | 77,705 | |
Other liabilities | 49,655 | ||
Other assets | (280,140) | ||
Net cash flows used in operating activities | (1,205,484) | (2,513) | |
Cash flows from investing activities: | |||
Purchase of real estate | (45,901,562) | ||
Net cash flows used in investing activities | (45,901,562) | ||
Cash flows from financing activities: | |||
Proceeds from offering | 200,000 | 6,779,935 | |
Payment of offering costs | (2,989,222) | (264,852) | |
Distributions paid | (12,226) | ||
Advances from sponsor | 300,000 | 2,650,000 | |
Proceeds from mortgages payable | 45,750,000 | ||
Payment of loan fees | (22,904) | ||
Net cash flows provided by (used in) financing activities | 500,000 | 52,155,583 | (264,852) |
Net increase (decrease) in cash and cash equivalents | 500,000 | 5,048,537 | (267,365) |
Cash and cash equivalents at beginning of the period | 232,635 | 500,000 | |
Cash and cash equivalents at end of the period | 500,000 | 5,281,172 | 232,635 |
Supplemental disclosure of cash flow information: | |||
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 | ||
Assumed liabilities | 174,005 | ||
Purchase of real estate | 45,901,562 | ||
Supplemental schedule of non-cash investing and financing activities: | |||
Cash paid for interest | 476,881 | ||
Distributions payable | 23,738 | ||
Change in accrued offering costs payable | $ 496,053 | (1,006,078) | $ 1,853,716 |
Common stock issued through distribution reinvestment plan | $ 1,457 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION Inland Residential Properties Trust, Inc. (the “Company”) was formed on December 19, 2013 to acquire and manage a portfolio of multi-family properties located primarily in the top 100 United States metropolitan statistical areas, which generally contain populations greater than 500,000 people. The Company entered into a business management agreement with Inland Residential Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”) 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 a price of $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 Company’s distribution reinvestment plan (as amended, the “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 Company’s charter converted into one Class A Share. As a result, the 8,000 shares of common stock the Sponsor owned as of February 18, 2015 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 general escrow in connection with the Offering. The Company provides the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders. Distribution Reinvestment Plan 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 Company’s 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 Company’s Class A Shares or Class T Shares, as applicable. Share Repurchase Program Under the share repurchase program (as amended, the “SRP”), the Company is authorized to purchase shares from stockholders who have held their shares for at least one year, if requested, 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 because of 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 Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP. Tax Status The Company has elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), beginning with the tax year ended December 31, 2015. Because the Company qualifies for taxation as a REIT, it generally will not be subject to federal income tax on taxable income that is distributed to stockholders. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, it will be subject to federal (including any applicable alternative minimum tax) and state income tax on its taxable income at regular corporate rates. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income, property or net worth, respectively, and to federal income and excise taxes on its undistributed income. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 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 generally accepted accounting principles in the United States (“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. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation. 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 Company’s wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. The fiscal year-end of the Company is December 31. 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 were included in deferred costs, net in the accompanying consolidated financial statements. Offering costs were reclassified to additional paid in capital on the effective date of the Company’s Offering on February 17, 2015. 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”). 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 Company’s 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. 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. Distribution and Stockholder Servicing Fee The Company pays a distribution and stockholder servicing fee equal to 1.0% per annum of the purchase price per share (or, once reported, the amount of our estimated value per share) for each Class T Share sold in its Offering. The distribution and stockholder servicing fee accrues daily and is paid monthly in arrears. The fee is ongoing and is not paid at the time of purchase. The Company accounts for this fee as a charge to equity on a periodic basis as it becomes contractually due and payable. 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 Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis. Under the terms of residential leases, the residents of the Company’s residential communities are obligated to reimburse the Company for certain utility usage, water and electricity, where the Company is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property income in the accompanying consolidated statements of operations. 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 and payment history of the tenant, which taken as a whole determines the valuation. Equity-Based Compensation: The Company had restricted shares outstanding at December 31, 2015. The Company recognizes expense related to the fair value of equity-based compensation awards as general and administrative cost in the consolidated statements of operations. The Company primarily recognizes expense determined based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 6, "Equity-Based Compensation" for further information. REIT Status The Company has qualified and has elected to be taxed as a REIT beginning with the tax year ended December 31, 2015. In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual taxable income, subject to certain adjustments, to its stockholders. The Company must also meet certain asset and income tests, as well as other requirements. The Company will monitor the business and transactions that may potentially impact its REIT status. If it fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, it will be subject to federal (including any applicable alternative minimum tax) and state income tax on its taxable income at regular corporate rates. Income Taxes Income taxes were accounted for under the asset and liability method during the year ended December 31, 2014. Deferred tax assets and liabilities were recognized for future tax consequences and were attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance was established for uncertainties relating to realization of deferred tax assets. At December 31, 2014, the Company had a deferred tax asset of approximately $74,008 for which a valuation allowance was recorded in the same amount due to the uncertainty of realization. As a result of the REIT election at December 31, 2015, the Company reversed a deferred tax asset of $726,017 and associated valuation allowance related to its REIT activities. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). In September 2015, the FASB issued 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." This standard provides a single comprehensive model to use in accounting for revenue arising from contracts with customers and gains and losses arising from transfers of non-financial assets including sales of property, plant, and equipment, real estate, and intangible assets. ASU No. 2014-09 supersedes most current revenue recognition guidance, including industry-specific guidance. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of ASU No. 2014-09 one year to annual reporting periods beginning after December 15, 2017 for public entities. ASU No. 2015-14 permits public entities to adopt ASU No. be applied either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the application of this ASU and its effect on our financial position and results of operations. |
INCOME TAX AND DISTRIBUTIONS
INCOME TAX AND DISTRIBUTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX AND DISTRIBUTIONS | NOTE 3 – INCOME TAX AND DISTRIBUTIONS The Company has qualified and has elected to be taxed as a REIT under the Internal Revenue Code for federal income tax purposes commencing with the tax year ending December 31, 2015. As a result, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to its stockholders. Subsequently, if the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. The Company had no uncertain tax positions as of December 31, 2015. The Company expects no significant increases in uncertain tax positions due to changes in tax positions within one year of December 31, 2015. The Company has no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the years ended December 31, 2015, 2014 and the period from December 19, 2013 (inception) through December 31, 2013. As of December 31, 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. As a result of the REIT election at December 31, 2015, the Company reversed a deferred tax asset of $726,017 and associated valuation allowance related to its REIT activities. Generally, as a REIT, the Company will not pay federal income tax at the REIT level (including its qualified For the year ended December 31, 2015, the Company paid and declared cash dividends of approximately $13,673 and $36,567, respectively, to stockholders of Class A Shares and paid and declared cash dividends of approximately $10 and $854, respectively, to stockholders of Class T Shares. For income tax purposes only, 100% of the cash dividends to the Class A stockholders and Class T stockholders will be treated as nondividend distributions (which are treated for income tax purposes as a return of capital to the extent of a stockholder’s basis in its shares and thereafter as capital gain) and none will be treated as ordinary dividends or capital gain. For the year ended December 31, 2015, the Company paid stock distributions of 136.965 Class A Shares and 0.522 Class T Shares to stockholders of Class A Shares and Class T Shares, respectively, all of which will be treated as non-taxable distributions to the recipient stockholder. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 4 - ACQUISITIONS 2015 Acquisitions Date Acquired Property Name Location Total Number of Units (unaudited) Square Footage (unaudited) Purchase Price 9/30/15 The Retreat at Market Square Frederick, 206 194,732 $ 45,727,557 During the year ended December 31, 2015, the Company acquired, through its indirect wholly owned subsidiary, the real estate property above by borrowing $45,750,000 in mortgage debt that is secured by a first priority mortgage on the property. For the property acquired during the year ended December 31, 2015, the Company recorded revenue of $967,471 and property net loss of $496,232 which excludes expensed acquisition related costs. The Company incurred $1,247,622, $0 and $0 during the years ended December 31, 2015 and 2014 and the period from December 19, 2013 (inception) to December 31, 2013, 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 Company’s acquisition during 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 (unaudited) The following condensed pro forma consolidated financial statements for the years ended December 31, 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 the year ended December 31, 2015 of $1,247,622, related to the acquisition, are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. For the year ended December 31 2015 2014 Pro forma total income $ 3,587,348 $ 1,306,186 Pro forma net loss $ (2,553,298 ) $ (3,744,548 ) Net loss per common share (a) $ (8.82 ) $ (12.93 ) (a) Based on number of common shares outstanding as of December 31, 2015. |
MORTGAGES PAYABLE
MORTGAGES PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
MORTGAGES PAYABLE | NOTE 5 – MORTGAGES PAYABLE As of December 31, 2015 and 2014, the Company had mortgages payable of $45,750,000 and $0, respectively. The following mortgage loan is secured by a first mortgage on the property. Property Name Stated Interest Rate Per Annum Principal Balance at December 31, 2015 Principal Balance at December 31, 2014 Maturity Date Notes The Retreat at Market Square 3.95% $ 45,750,000 $ — September 30, (a) (a) The mortgage payable requires monthly payments of interest only until the maturity date. The Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023, subject to an appraisal of the property showing a loan to value ratio not to exceed 60% and the lender’s verification of a minimum debt service coverage ratio of 2.45. If extended, the mortgage payable would bear interest at a fixed rate equal to 3.79%, require monthly payments of interest only for the next five years and thereafter, require monthly payments of principal and interest based upon a 30 year amortization until maturity. 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. In 2016, the Company paid down $8,363,800, and it expects to continue to pay down, the mortgage payable with proceeds from the Company’s Offering until the 60% loan to value, as defined, is achieved. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
EQUITY-BASED COMPENSATION | NOTE 6 – EQUITY-BASED COMPENSATION In November 2015, the Company granted 822 non-vested restricted shares that entitle the holder to receive one Class A Share for each restricted share when it vests. Restricted shares were issued to non-employee directors as compensation in accordance with the Company’s Employee and Director Incentive Restricted Share Plan (the “RSP”). Under the RSP, restricted shares generally vest over a one to three year vesting period from the date of the grant based on the specific terms of the grant. The grant-date value of the restricted shares is amortized over the vesting period representing the requisite service period. At vesting, any restrictions on the shares lapse. Compensation expense associated with the director restricted shares was $3,438, $0 and $0 in 2015, 2014 and 2013, respectively. As of December 31, 2015, the Company had $15,313 of unrecognized compensation cost related to the unvested restricted share awards. The weighted average remaining period that compensation expense related to non-vested restricted shares will be recognized is 1.83 years. The weighted average remaining contractual term for restricted shares granted in 2015 was approximately 2 years. A summary of the status of the restricted shares is presented below: Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at January 1, 2015 — — — Granted 822 $ 18,750 $ 18,750 Converted — — — Forfeited — — — Outstanding at December 31, 2015 822 $ 18,750 $ 18,750 Convertible at December 31, 2015 — $ — $ — Restricted Stock Weighted Average Grant Date Fair Value Non-vested at January 1, 2015 — $ — Granted 822 18,750 Vested — — Forfeited — — Non-vested at December 31, 2015 822 $ 18,750 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 7 – SEGMENT REPORTING The Company has one reportable segment, multi-family real estate, as defined by U.S. GAAP for the years ended December 31, 2015, 2014 and 2013. |
TRANSACTIONS WITH RELATED PARTI
TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH RELATED PARTIES | NOTE 8 – 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 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. As of December 31, 2015, the Company had incurred $4,660,861 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 Company’s related party transactions for the years ended December 31, 2015, 2014 and 2013. Year ended December 31, Unpaid amounts as of 2015 2014 2013 December 31, 2015 December 31, 2014 General and administrative reimbursements (a) $ 198,095 $ 75,422 $ — $ 95,239 $ 75,422 Affiliate share discounts (b) 8,065 — — — — Organization costs (c) — 1,227 930 — 1,227 Total general and administrative costs 206,160 76,649 930 95,239 76,649 Acquisition related costs (d) 711,657 — — 690,485 — Offering costs (e) 611,128 999,396 181,006 1,104,314 1,156,018 Business management fee (f) 91,455 — — 91,455 — Mortgage financing fee (g) 114,375 — — 114,375 — Sponsor non-interest bearing advances (h) 2,650,000 — 300,000 2,950,000 300,000 Property management fee 37,699 — — — — Property operating expenses 58,039 — — 18,547 — Total property operating expenses (i) 95,738 — — 18,547 — (a) 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. (b) The Company established a discount stock purchase policy for related parties that enable them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the year ended December 31, 2015. (c) 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. (d) 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. (e) The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering. 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 and pays no or reduced selling commissions and dealer manager fees in connection with certain special sales. (f) 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. (g) 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. (h) This amount on the accompanying consolidated balance sheets contains non-interest bearing advances made by the Sponsor which the Company intends to repay. (i) The Company pays the Real Estate Manager a monthly management fee of up to 4% of the gross income from any property managed directly by the Real Estate Manager or its affiliates. The Real Estate Manager may reduce, in its sole discretion, the amount of the management fee payable in connection with a particular property, subject to these limits. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses, benefits and severance payments for persons performing services, including without limitation acquisition due diligence services, for the Real Estate Manager and its affiliates (excluding the executive officers of the Real Estate Manager and the Company’s executive officers). |
QUARTERLY SUPPLEMENTAL FINANCIA
QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) | NOTE 9 – QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) The following represents the results of operations, for each quarterly period, during 2015 and 2014. 2015 Dec 31 Sept 30 Jun 30 Mar 31 Total income $ 957,030 $ 10,441 $ — $ — Net loss $ (862,580 ) $ (1,364,824 ) $ (111,807 ) $ (153,391 ) Net loss per common share, basic and diluted (1) $ (5.48 ) $ (43.30 ) $ (13.98 ) $ (19.17 ) Weighted average number of common shares outstanding, basic and diluted (1) 157,326 31,520 8,000 8,000 2014 Dec 31 Sept 30 Jun 30 Mar 31 Total income $ — $ — $ — $ — Net loss $ (144,248 ) $ (4,679 ) $ (1,875 ) $ (3,908 ) Net loss per common share, basic and diluted (1) $ (18.03 ) $ (0.58 ) $ (0.23 ) $ (0.49 ) Weighted average number of common shares outstanding, basic and diluted (1) 8,000 8,000 8,000 8,000 (1) Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS In 2016, the Company has made principal payments of approximately $8,363,800 on its outstanding mortgage payable. Cash dividends The Company’s board of directors declared cash dividends payable to stockholders of record each day beginning on the close of business December 1, 2015 through the close of business December 31, 2015, in a daily amount equal to $0.003424658 per day per Class A Share and $0.002768493 per day per Class T Share, based upon a 365-day period. The Company’s board of directors declared cash dividends payable to stockholders of record each day beginning on the close of business January 1, 2016 through the close of business June 30, 2016, in a daily amount equal to $0.003415301 per day per Class A Share and $0.002760929 per day per Class T Share, based upon a 366-day period. Distributions were paid monthly in arrears as follows: Distribution Month Month Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through DRP Shares Issued Net Cash Distribution December 2015 January 2016 $ 23,738 $ 5,276 223 $ 18,462 January 2016 February 2016 $ 35,123 $ 10,362 438 $ 24,761 February 2016 March 2016 $ 41,781 $ 14,775 624 $ 27,006 Stock dividends The Company’s board of directors declared a monthly stock dividend of 0.000833333 Class A Shares and 0.000833333 Class T Shares per Class A Share and Class T Share owned, respectively, payable to stockholders of record at the close of business on December 31, 2015, January 31, 2016, February 29, 2016, March 31, 2016, April 30, 2016, May 31, 2016 and June 30, 2016. Stock dividends were issued as follows: Distribution Month Month Distribution Issued Shares Issued December 2015 January 2016 242 January 2016 February 2016 314 February 2016 March 2016 391 |
Schedule III - Real Estate and
Schedule III - Real Estate and Accumulated Depreciation | 12 Months Ended |
Dec. 31, 2015 | |
Real Estate And Accumulated Depreciation Disclosure [Abstract] | |
Real Estate and Accumulated Depreciation | Schedule III Real Estate and Accumulated Depreciation December 31, 2015 Initial cost (A) Gross amount carried at end of period (B) Property Name Encum- brance Land Buildings and Improvements Land(C) Buildings Improve-ments (C) Total (C) Accumulated Depreciation (D) Date structed Date Acquired Depreciable Lives The Retreat at Market Square $ 45,750,000 $ 6,301,838 $ 38,824,096 $ 6,301,838 $ 38,824,096 $ 45,125,934 $ (364,520 ) 2014 2015 7-30 Frederick, MD Notes: (A) The initial cost to the Company represents the original purchase price of the property. (B) The aggregate cost of real estate owned at December 31, 2015 and 2014 for federal income tax purposes was approximately $46,975,000 and $0, respectively (unaudited). (C) Reconciliation of real estate owned: 2015 2014 2013 Balance at January 1, $ — $ — $ — Acquisitions 45,125,934 — — Improvements, net of master lease — — — Balance at December 31, $ 45,125,934 $ — $ — (D) Reconciliation of accumulated depreciation: Balance at January 1, $ — $ — $ — Depreciation expense 364,520 — — Balance at December 31, $ 364,520 $ — $ — |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
General | General The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“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. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation. |
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 Company’s wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. The fiscal year-end of the Company is December 31. |
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 were included in deferred costs, net in the accompanying consolidated financial statements. Offering costs were reclassified to additional paid in capital on the effective date of the Company’s Offering on February 17, 2015. |
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”). 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 Company’s 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. 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. |
Distribution And Stockholder Servicing Fee | Distribution and Stockholder Servicing Fee The Company pays a distribution and stockholder servicing fee equal to 1.0% per annum of the purchase price per share (or, once reported, the amount of our estimated value per share) for each Class T Share sold in its Offering. The distribution and stockholder servicing fee accrues daily and is paid monthly in arrears. The fee is ongoing and is not paid at the time of purchase. The Company accounts for this fee as a charge to equity on a periodic basis as it becomes contractually due and payable. |
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 Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis. Under the terms of residential leases, the residents of the Company’s residential communities are obligated to reimburse the Company for certain utility usage, water and electricity, where the Company is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property income in the accompanying consolidated statements of operations. |
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 and payment history of the tenant, which taken as a whole determines the valuation. |
Equity-Based Compensation | Equity-Based Compensation: The Company had restricted shares outstanding at December 31, 2015. The Company recognizes expense related to the fair value of equity-based compensation awards as general and administrative cost in the consolidated statements of operations. The Company primarily recognizes expense determined based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 6, "Equity-Based Compensation" for further information. |
REIT Status | REIT Status The Company has qualified and has elected to be taxed as a REIT beginning with the tax year ended December 31, 2015. In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual taxable income, subject to certain adjustments, to its stockholders. The Company must also meet certain asset and income tests, as well as other requirements. The Company will monitor the business and transactions that may potentially impact its REIT status. If it fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, it will be subject to federal (including any applicable alternative minimum tax) and state income tax on its taxable income at regular corporate rates. |
Income Taxes | Income Taxes Income taxes were accounted for under the asset and liability method during the year ended December 31, 2014. Deferred tax assets and liabilities were recognized for future tax consequences and were attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance was established for uncertainties relating to realization of deferred tax assets. At December 31, 2014, the Company had a deferred tax asset of approximately $74,008 for which a valuation allowance was recorded in the same amount due to the uncertainty of realization. As a result of the REIT election at December 31, 2015, the Company reversed a deferred tax asset of $726,017 and associated valuation allowance related to its REIT activities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). In September 2015, the FASB issued 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." This standard provides a single comprehensive model to use in accounting for revenue arising from contracts with customers and gains and losses arising from transfers of non-financial assets including sales of property, plant, and equipment, real estate, and intangible assets. ASU No. 2014-09 supersedes most current revenue recognition guidance, including industry-specific guidance. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of ASU No. 2014-09 one year to annual reporting periods beginning after December 15, 2017 for public entities. ASU No. 2015-14 permits public entities to adopt ASU No. be applied either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the application of this ASU and its effect on our financial position and results of operations. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of 2015 Acquisitions | 2015 Acquisitions Date Acquired Property Name Location Total Number of Units (unaudited) Square Footage (unaudited) Purchase Price 9/30/15 The Retreat at Market Square Frederick, 206 194,732 $ 45,727,557 |
Schedule of Major Assets Acquired and Liabilities Assumed | The following table presents certain additional information regarding the Company’s acquisition during 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 years ended December 31, 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 the year ended December 31, 2015 of $1,247,622, related to the acquisition, are not expected to have a continuing impact and, therefore, have been excluded from these pro forma results. For the year ended December 31 2015 2014 Pro forma total income $ 3,587,348 $ 1,306,186 Pro forma net loss $ (2,553,298 ) $ (3,744,548 ) Net loss per common share (a) $ (8.82 ) $ (12.93 ) (a) Based on number of common shares outstanding as of December 31, 2015. |
MORTGAGES PAYABLE (Tables)
MORTGAGES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgages Payable | As of December 31, 2015 and 2014, the Company had mortgages payable of $45,750,000 and $0, respectively. The following mortgage loan is secured by a first mortgage on the property Property Name Stated Interest Rate Per Annum Principal Balance at December 31, 2015 Principal Balance at December 31, 2014 Maturity Date Notes The Retreat at Market Square 3.95% $ 45,750,000 $ — September 30, (a) (a) The mortgage payable requires monthly payments of interest only until the maturity date. The Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023, subject to an appraisal of the property showing a loan to value ratio not to exceed 60% and the lender’s verification of a minimum debt service coverage ratio of 2.45. If extended, the mortgage payable would bear interest at a fixed rate equal to 3.79%, require monthly payments of interest only for the next five years and thereafter, require monthly payments of principal and interest based upon a 30 year amortization until maturity. 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. |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of the Restricted Shares | A summary of the status of the restricted shares is presented below: Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at January 1, 2015 — — — Granted 822 $ 18,750 $ 18,750 Converted — — — Forfeited — — — Outstanding at December 31, 2015 822 $ 18,750 $ 18,750 Convertible at December 31, 2015 — $ — $ — |
Summary of the Non-Vested Restricted Stock | Restricted Stock Weighted Average Grant Date Fair Value Non-vested at January 1, 2015 — $ — Granted 822 18,750 Vested — — Forfeited — — Non-vested at December 31, 2015 822 $ 18,750 |
TRANSACTIONS WITH RELATED PAR22
TRANSACTIONS WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of Transactions with Related Parties | The following table summarizes the Company’s related party transactions for the years ended December 31, 2015, 2014 and 2013. Year ended December 31, Unpaid amounts as of 2015 2014 2013 December 31, 2015 December 31, 2014 General and administrative reimbursements (a) $ 198,095 $ 75,422 $ — $ 95,239 $ 75,422 Affiliate share discounts (b) 8,065 — — — — Organization costs (c) — 1,227 930 — 1,227 Total general and administrative costs 206,160 76,649 930 95,239 76,649 Acquisition related costs (d) 711,657 — — 690,485 — Offering costs (e) 611,128 999,396 181,006 1,104,314 1,156,018 Business management fee (f) 91,455 — — 91,455 — Mortgage financing fee (g) 114,375 — — 114,375 — Sponsor non-interest bearing advances (h) 2,650,000 — 300,000 2,950,000 300,000 Property management fee 37,699 — — — — Property operating expenses 58,039 — — 18,547 — Total property operating expenses (i) 95,738 — — 18,547 — (a) 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. (b) The Company established a discount stock purchase policy for related parties that enable them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the year ended December 31, 2015. (c) 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. (d) 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. (e) The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering. 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 and pays no or reduced selling commissions and dealer manager fees in connection with certain special sales. (f) 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. (g) 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. (h) This amount on the accompanying consolidated balance sheets contains non-interest bearing advances made by the Sponsor which the Company intends to repay. (i) The Company pays the Real Estate Manager a monthly management fee of up to 4% of the gross income from any property managed directly by the Real Estate Manager or its affiliates. The Real Estate Manager may reduce, in its sole discretion, the amount of the management fee payable in connection with a particular property, subject to these limits. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses, benefits and severance payments for persons performing services, including without limitation acquisition due diligence services, for the Real Estate Manager and its affiliates (excluding the executive officers of the Real Estate Manager and the Company’s executive officers). |
QUARTERLY SUPPLEMENTAL FINANC23
QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Supplemental Financial Information | The following represents the results of operations, for each quarterly period, during 2015 and 2014. 2015 Dec 31 Sept 30 Jun 30 Mar 31 Total income $ 957,030 $ 10,441 $ — $ — Net loss $ (862,580 ) $ (1,364,824 ) $ (111,807 ) $ (153,391 ) Net loss per common share, basic and diluted (1) $ (5.48 ) $ (43.30 ) $ (13.98 ) $ (19.17 ) Weighted average number of common shares outstanding, basic and diluted (1) 157,326 31,520 8,000 8,000 2014 Dec 31 Sept 30 Jun 30 Mar 31 Total income $ — $ — $ — $ — Net loss $ (144,248 ) $ (4,679 ) $ (1,875 ) $ (3,908 ) Net loss per common share, basic and diluted (1) $ (18.03 ) $ (0.58 ) $ (0.23 ) $ (0.49 ) Weighted average number of common shares outstanding, basic and diluted (1) 8,000 8,000 8,000 8,000 (1) Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Cash Dividend | |
Schedule of Dividends Distributions | Distribution Month Month Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through DRP Shares Issued Net Cash Distribution December 2015 January 2016 $ 23,738 $ 5,276 223 $ 18,462 January 2016 February 2016 $ 35,123 $ 10,362 438 $ 24,761 February 2016 March 2016 $ 41,781 $ 14,775 624 $ 27,006 |
Stock Dividend | |
Schedule of Dividends Distributions | Distribution Month Month Distribution Issued Shares Issued December 2015 January 2016 242 January 2016 February 2016 314 February 2016 March 2016 391 |
ORGANIZATION (Narrative) (Detai
ORGANIZATION (Narrative) (Details) - USD ($) | Dec. 31, 2015 | Sep. 09, 2015 | Dec. 31, 2013 | Dec. 31, 2015 | Feb. 18, 2015 | Feb. 17, 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 | $ 0.001 | $ 0.001 | |||||
Total value of common stock company is authorized to sell pursuant to distribution reinvestment plan | $ 190,000,000 | ||||||
Number of common shares Sponsor received, subsequently converted in Class A Common Stock | 8,000 | 8,000 | 8,000 | ||||
Number of Class A shares issued as result of Sponsor converting common shares | 8,000 | 8,000 | 8,000 | ||||
Advances from sponsor | $ 300,000 | $ 2,650,000 | |||||
Approximate total proceeds raised in offering | $ 200,000 | $ 6,779,935 | |||||
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% | ||||||
Class A Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | 0.001 | ||||
Shares sold during period | 87,680.842 | 266,283 | |||||
Advances from sponsor | $ 2,000,000 | ||||||
Equity issuance, price per share | $ 22.81 | ||||||
Approximate total proceeds raised in offering | $ 2,348,800 | ||||||
Adjusted price of each common share authorized pursuant to distribution reinvestment plan | $ 25 | $ 25 | |||||
Class A Common Stock [Member] | Sponsor [Member] | |||||||
Class of Stock [Line Items] | |||||||
Shares sold during period | 87,680.842 | ||||||
Advances from sponsor | $ 2,000,000 | ||||||
Equity issuance, price per share | $ 22.81 | ||||||
Class A Common Stock [Member] | Reasonable Best Efforts Offering [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, par value | 0.001 | 0.001 | |||||
Initial price of each common share authorized pursuant to distribution reinvestment plan | $ 25 | ||||||
Class A Common Stock [Member] | Distribution Reinvestment Plan [Member] | |||||||
Class of Stock [Line Items] | |||||||
Initial price of each common share authorized pursuant to distribution reinvestment plan | 23.75 | 23.75 | |||||
Class T Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, par value | 0.001 | $ 0.001 | $ 0.001 | ||||
Shares sold during period | 15,156 | ||||||
Adjusted price of each common share authorized pursuant to distribution reinvestment plan | 23.95 | $ 23.95 | |||||
Class T Common Stock [Member] | Reasonable Best Efforts Offering [Member] | |||||||
Class of Stock [Line Items] | |||||||
Common stock, par value | 0.001 | 0.001 | |||||
Initial price of each common share authorized pursuant to distribution reinvestment plan | $ 23.95 | ||||||
Class T Common Stock [Member] | Distribution Reinvestment Plan [Member] | |||||||
Class of Stock [Line Items] | |||||||
Initial price of each common share authorized pursuant to distribution reinvestment plan | $ 22.81 | $ 22.81 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Significant Accounting Policies [Line Items] | ||
Deferred costs, net | $ 103,046 | $ 2,614,621 |
Deferred tax asset, gross | 726,017 | 74,008 |
Deferred tax asset valuation allowance | $ 726,017 | $ 74,008 |
Minimum [Member] | ||
Significant Accounting Policies [Line Items] | ||
REIT annual taxable income distribution requirement percentage | 90.00% | |
Class T Common Stock [Member] | ||
Significant Accounting Policies [Line Items] | ||
Percentage of distribution and stockholder servicing fee | 1.00% |
INCOME TAX AND DISTRIBUTIONS (D
INCOME TAX AND DISTRIBUTIONS (Details) - USD ($) | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Contingency [Line Items] | |||
Uncertain tax positions | $ 0 | ||
Interest or penalties relating to income taxes recognized in the consolidated statements of operations | $ 0 | 0 | $ 0 |
Deferred tax asset, gross | 726,017 | 74,008 | |
Deferred tax asset valuation allowance | 726,017 | $ 74,008 | |
Payments of dividends | 12,226 | ||
Distributions payable | 23,738 | ||
Class A Common Stock [Member] | |||
Income Tax Contingency [Line Items] | |||
Payments of dividends | 13,673 | ||
Distributions payable | $ 36,567 | ||
Percentage of cash dividend to stockholders to be treated as non-dividend distributions | 100.00% | ||
Stock distributions | 136.965 | ||
Class T Common Stock [Member] | |||
Income Tax Contingency [Line Items] | |||
Payments of dividends | $ 10 | ||
Distributions payable | $ 854 | ||
Percentage of cash dividend to stockholders to be treated as non-dividend distributions | 100.00% | ||
Stock distributions | 0.522 | ||
Minimum [Member] | |||
Income Tax Contingency [Line Items] | |||
Percentage of REIT taxable income. | 90.00% | ||
Open tax year | 2,013 | ||
Maximum [Member] | |||
Income Tax Contingency [Line Items] | |||
Open tax year | 2,014 |
ACQUISITIONS (Schedule of 2015
ACQUISITIONS (Schedule of 2015 Acquisitions) (Details) - The Retreat at Market Square [Member] | 12 Months Ended |
Dec. 31, 2015USD ($)ft²Unit | |
Business Acquisition [Line Items] | |
Property acquisition, date acquired | Sep. 30, 2015 |
Property acquisition, location | Frederick, MD |
Property acquisition, total number of units acquired (unaudited) | Unit | 206 |
Property acquisition, square footage (unaudited) | ft² | 194,732 |
Property acquisition, purchase price | $ | $ 45,727,557 |
ACQUISITIONS (Narrative) (Detai
ACQUISITIONS (Narrative) (Details) - USD ($) | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||
Proceeds from mortgages payable | $ 45,750,000 | ||
Acquisition related costs incurred during the period | $ 0 | 1,247,622 | $ 0 |
The Retreat at Market Square [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 967,471 | ||
Net loss from property acquired during the period, net of expensed acquisition related costs | $ 496,232 |
ACQUISITIONS (Schedule of Major
ACQUISITIONS (Schedule of Major Assets Acquired and Liabilities Assumed) (Details) - The Retreat at Market Square [Member] | Dec. 31, 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 ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Business Combinations [Abstract] | |||
Pro forma total income | $ 3,587,348 | $ 1,306,186 | |
Pro forma net loss | $ (2,553,298) | $ (3,744,548) | |
Net loss per common share | [1] | $ (8.82) | $ (12.93) |
[1] | Based on number of common shares outstanding as of December 31, 2015. |
MORTGAGES PAYABLE (Narrative) (
MORTGAGES PAYABLE (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Mortgages payable | $ 45,750,000 | $ 0 | |
Mortgage Payable [Member] | Scenario Forecast [Member] | |||
Debt Instrument [Line Items] | |||
Principal payment of outstanding mortgage payable | $ 8,363,800 | ||
Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Loan payment until it achieves specific percentage | 60.00% |
MORTGAGES PAYABLE (Details)
MORTGAGES PAYABLE (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Debt Instrument [Line Items] | |||
Outstanding principal balance | $ 45,750,000 | $ 0 | |
Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Loan payment until it achieves specific percentage | 60.00% | ||
The Retreat at Market Square [Member] | |||
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 | |
Minimum debt service coverage ratio | 2.45% | ||
Interest rate on mortgage loan if maturity date is extended | 3.79% | ||
Monthly interest payments for initial number of years | 5 years | ||
Monthly interest payments for number of years, thereafter | 30 years | ||
Maximum guarantee obligation for Sponsor | $ 9,150,000 | ||
The Retreat at Market Square [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Loan payment until it achieves specific percentage | 60.00% | ||
[1] | The mortgage payable requires monthly payments of interest only until the maturity date. The Company has a one-time option to extend the maturity date for an additional seven year period to September 30, 2023, subject to an appraisal of the property showing a loan to value ratio not to exceed 60% and the lender’s verification of a minimum debt service coverage ratio of 2.45. If extended, the mortgage payable would bear interest at a fixed rate equal to 3.79%, require monthly payments of interest only for the next five years and thereafter, require monthly payments of principal and interest based upon a 30 year amortization until maturity. 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 $9,150,000, plus enforcement costs. The Company has not paid, and will not pay, any fees or other consideration to the Sponsor for this guarantee. |
EQUITY-BASED COMPENSATION (Narr
EQUITY-BASED COMPENSATION (Narrative) (Details) - Restricted Stock [Member] - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of shares granted | 822 | 822 | ||
Unrecognized compensation cost related to the unvested restricted share awards | $ 15,313 | |||
Weighted average remaining contractual term related to non-vested restricted shares | 1 year 9 months 29 days | |||
Weighted average remaining contractual term | 2 years | |||
Director [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 3,438 | $ 0 | $ 0 | |
Employee and Director Incentive Restricted Share Plan [Member] | Maximum [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Employee and Director Incentive Restricted Share Plan [Member] | Minimum [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Class A Shares [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of shares to be received for each restricted shares | 1 |
EQUITY-BASED COMPENSATION (Summ
EQUITY-BASED COMPENSATION (Summary of the Restricted Shares) (Details) - Restricted Stock [Member] | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Granted, Shares | 822 |
Outstanding, Shares | 822 |
Granted, Weighted Average Grant Date Fair Value | $ / shares | $ 18,750 |
Outstanding, Weighted Average Grant Date Fair Value | 18,750 |
Granted, Aggregate Intrinsic Value | $ / shares | $ 18,750 |
Outstanding, Aggregate Intrinsic Value | $ | $ 18,750 |
EQUITY-BASED COMPENSATION (Su36
EQUITY-BASED COMPENSATION (Summary of the Non-Vested Restricted Stock) (Details) - Restricted Stock [Member] - $ / shares | 1 Months Ended | 12 Months Ended |
Nov. 30, 2015 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Granted, Restricted Stock | 822 | 822 |
Non-vested at December 31, 2015 | 822 | |
Granted, Weighted Average Grant Date Fair Value | $ 18,750 | |
Non-vested, Weighted Average Grant Date Fair Value | $ 18,750 |
SEGMENT REPORTING (Narrative) (
SEGMENT REPORTING (Narrative) (Details) - Segment | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting [Abstract] | |||
Number of reportable segments | 1 | 1 | 1 |
TRANSACTIONS WITH RELATED PAR38
TRANSACTIONS WITH RELATED PARTIES (Narrative) (Details) - USD ($) | Sep. 09, 2015 | Dec. 31, 2013 | Dec. 31, 2015 | Feb. 18, 2015 |
Related Party Transaction [Line Items] | ||||
Number of common shares Sponsor received, subsequently converted in Class A Common Stock | 8,000 | 8,000 | ||
Number of Class A shares issued as result of Sponsor converting common shares | 8,000 | 8,000 | ||
Advances from sponsor | $ 300,000 | $ 2,650,000 | ||
Total offering and organizational costs incurred since inception | $ 4,660,861 | |||
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% | |||
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 | |||
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” | 0.60% | |||
Fee paid to Business Manager or its affiliates expressed as a percentage of the 'average invested assets' as defined | 0.15% | |||
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 | 266,283 | ||
Advances from sponsor | $ 2,000,000 | |||
Equity issuance, price per share | $ 22.81 | |||
Sponsor [Member] | ||||
Related Party Transaction [Line Items] | ||||
Capital contributed by Sponsor for common stock shares | $ 200,000 | |||
Sponsor [Member] | 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 | |||
Real Estate Manager Or Affiliates [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Management fee percentage | 4.00% |
TRANSACTIONS WITH RELATED PAR39
TRANSACTIONS WITH RELATED PARTIES (Schedule of Transactions with Related Parties) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Related Party Transaction [Line Items] | ||||
Due to related parties | $ 5,064,415 | $ 1,532,667 | ||
Acquisition Related Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | [1] | 711,657 | ||
Due to related parties | [1] | 690,485 | ||
General and Administrative Reimbursements [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | [2] | 95,239 | $ 75,422 | |
Organization Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | [3] | 1,227 | ||
Offering Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | [4] | 611,128 | 999,396 | $ 181,006 |
Due to related parties | [4] | 1,104,314 | $ 1,156,018 | |
Business Management Fee [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | [5] | 91,455 | ||
Due to related parties | [5] | 91,455 | ||
Mortgage Financing Fee [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | [6] | 114,375 | ||
Due to related parties | [6] | 114,375 | ||
Sponsor Non-interest Bearing Advances [Member] | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | [7] | 2,650,000 | $ 300,000 | |
Due to related parties | [7] | 2,950,000 | $ 300,000 | |
Property Operating Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 18,547 | |||
Total General And Administrative Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | 95,239 | 76,649 | ||
Real Estate Manager Or Affiliates [Member] | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | [8] | 18,547 | ||
Total General and Administrative Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | 206,160 | 76,649 | $ 930 | |
Total General and Administrative Costs [Member] | General and Administrative Reimbursements [Member] | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | [2] | 198,095 | $ 75,422 | |
Total General and Administrative Costs [Member] | Affiliate Share Discounts [Member] | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | [9] | $ 8,065 | ||
Total General and Administrative Costs [Member] | Organization Costs [Member] | ||||
Related Party Transaction [Line Items] | ||||
General and administrative expenses | [3] | $ 1,227 | $ 930 | |
Total Property Operating Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Operating property expenses | [8] | $ 95,738 | ||
Total Property Operating Expenses [Member] | Property Management Fee [Member] | ||||
Related Party Transaction [Line Items] | ||||
Operating property expenses | 37,699 | |||
Total Property Operating Expenses [Member] | Property Operating Expenses [Member] | ||||
Related Party Transaction [Line Items] | ||||
Operating property expenses | $ 58,039 | |||
[1] | 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. | |||
[2] | 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. | |||
[3] | 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. | |||
[4] | The Company reimburses the Sponsor and its affiliates for costs and other expenses of the Offering. 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 and pays no or reduced selling commissions and dealer manager fees in connection with certain special sales. | |||
[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. | |||
[8] | The Company pays the Real Estate Manager a monthly management fee of up to 4% of the gross income from any property managed directly by the Real Estate Manager or its affiliates. The Real Estate Manager may reduce, in its sole discretion, the amount of the management fee payable in connection with a particular property, subject to these limits. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses, benefits and severance payments for persons performing services, including without limitation acquisition due diligence services, for the Real Estate Manager and its affiliates (excluding the executive officers of the Real Estate Manager and the Company’s executive officers). | |||
[9] | The Company established a discount stock purchase policy for related parties that enable them to purchase shares of common stock at $22.81 per share. The Company sold 3,683 shares to related parties during the year ended December 31, 2015. |
QUARTERLY SUPPLEMENTAL FINANC40
QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) (Schedule of Quarterly Supplemental Financial Information) (Details) - USD ($) | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | ||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||
Total income | $ 957,030 | $ 10,441 | $ 967,471 | |||||||||||||||||
Net loss | $ (30,311) | $ (30,311) | $ (862,580) | $ (1,364,824) | $ (111,807) | $ (153,391) | $ (144,248) | $ (4,679) | $ (1,875) | $ (3,908) | $ (2,492,602) | $ (154,710) | ||||||||
Net loss per common share, basic and diluted | $ (3.79) | $ (5.48) | [1] | $ (43.30) | [1] | $ (13.98) | [1] | $ (19.17) | [1] | $ (18.03) | [1] | $ (0.58) | [1] | $ (0.23) | [1] | $ (0.49) | [1] | $ (48.07) | $ (19.34) | |
Weighted average number of common shares outstanding, basic and diluted | 8,000 | 157,326 | [1] | 31,520 | [1] | 8,000 | [1] | 8,000 | [1] | 8,000 | [1] | 8,000 | [1] | 8,000 | [1] | 8,000 | [1] | 51,851 | 8,000 | |
[1] | Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Cash Dividend | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.003424658 | ||
Cash Dividend | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.002768493 | ||
Cash Dividend | Minimum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 1, 2015 | ||
Cash Dividend | Minimum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 1, 2015 | ||
Cash Dividend | Maximum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 31, 2015 | ||
Cash Dividend | Maximum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 31, 2015 | ||
Stock Dividend | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.000833333 | ||
Stock Dividend | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.000833333 | ||
Stock Dividend | Minimum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 31, 2015 | ||
Stock Dividend | Minimum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Dec. 31, 2015 | ||
Scenario Forecast [Member] | Cash Dividend | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.003415301 | ||
Scenario Forecast [Member] | Cash Dividend | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Amount per share of distributions | $ 0.002760929 | ||
Scenario Forecast [Member] | Cash Dividend | Minimum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jan. 1, 2016 | ||
Scenario Forecast [Member] | Cash Dividend | Minimum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jan. 1, 2016 | ||
Scenario Forecast [Member] | Cash Dividend | Maximum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jun. 30, 2016 | ||
Scenario Forecast [Member] | Cash Dividend | Maximum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jun. 30, 2016 | ||
Scenario Forecast [Member] | Stock Dividend | Maximum [Member] | Class A Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jun. 30, 2016 | ||
Scenario Forecast [Member] | Stock Dividend | Maximum [Member] | Class T Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Dividends payable, record date | Jun. 30, 2016 | ||
Mortgage Payable [Member] | Scenario Forecast [Member] | |||
Subsequent Event [Line Items] | |||
Principal payment of outstanding mortgage payable | $ 8,363,800 |
SUBSEQUENT EVENTS (Schedule of
SUBSEQUENT EVENTS (Schedule of Dividends Distributions) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Feb. 29, 2016 | Jan. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2015 | |
Subsequent Event [Line Items] | ||||
Distribution Reinvested through DRP | $ 1,457 | |||
Cash Dividend | ||||
Subsequent Event [Line Items] | ||||
Distribution Month | 2015-12 | 2015-12 | ||
Month Distribution Paid | 2016-01 | 2016-01 | ||
Gross Amount of Distribution Paid | $ 23,738,000 | |||
Distribution Reinvested through DRP | $ 5,276,000 | |||
Stock distributions | 223 | |||
Net Cash Distribution | $ 18,462,000 | |||
Stock Dividend | ||||
Subsequent Event [Line Items] | ||||
Distribution Month | 2015-12 | 2015-12 | ||
Month Distribution Paid | 2016-01 | 2016-01 | ||
Stock distributions | 242 | |||
Subsequent Event [Member] | Cash Dividend | ||||
Subsequent Event [Line Items] | ||||
Distribution Month | 2016-02 | 2016-01 | ||
Month Distribution Paid | 2016-03 | 2016-02 | ||
Gross Amount of Distribution Paid | $ 41,781,000 | $ 35,123,000 | ||
Distribution Reinvested through DRP | $ 14,775,000 | $ 10,362,000 | ||
Stock distributions | 624 | 438 | ||
Net Cash Distribution | $ 27,006,000 | $ 24,761,000 | ||
Subsequent Event [Member] | Stock Dividend | ||||
Subsequent Event [Line Items] | ||||
Distribution Month | 2016-02 | 2016-01 | ||
Month Distribution Paid | 2016-03 | 2016-02 | ||
Stock distributions | 391 | 314 |
Schedule III - (Real Estate and
Schedule III - (Real Estate and Accumulated Depreciation) (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | ||
Real Estate And Accumulated Depreciation [Line Items] | ||
Gross amount carried at end of period, Total | $ 45,125,934 | |
Accumulated Depreciation | (364,520) | |
The Retreat at Market Square [Member] | Frederick, MD [Member] | ||
Real Estate And Accumulated Depreciation [Line Items] | ||
Encumbrance | 45,750,000 | |
Initial cost, Land | 6,301,838 | [1] |
Initial cost, Buildings and Improvements | 38,824,096 | [1] |
Gross amount carried at end of period, Land | 6,301,838 | [2],[3] |
Gross amount carried at end of period, Buildings and Improvements | 38,824,096 | [2],[3] |
Gross amount carried at end of period, Total | 45,125,934 | [2],[3] |
Accumulated Depreciation | $ (364,520) | [4] |
Date Constructed | 2,014 | |
Date Acquired | 2,015 | |
The Retreat at Market Square [Member] | Frederick, MD [Member] | Minimum [Member] | ||
Real Estate And Accumulated Depreciation [Line Items] | ||
Depreciable Lives | 7 years | |
The Retreat at Market Square [Member] | Frederick, MD [Member] | Maximum [Member] | ||
Real Estate And Accumulated Depreciation [Line Items] | ||
Depreciable Lives | 30 years | |
[1] | (A) The initial cost to the Company represents the original purchase price of the property. | |
[2] | (B) The aggregate cost of real estate owned at December 31, 2015 and 2014 for federal income tax purposes was approximately $46,975,000 and $0, respectively (unaudited). | |
[3] | (C) Reconciliation of real estate owned: 2015 2014 2013 Balance at January 1, $— $— $— Acquisitions 45,125,934 — — Improvements, net of master lease — — — Balance at December 31, $45,125,934 $— $— | |
[4] | (D) Reconciliation of accumulated depreciation: Balance at January 1, $— $— $— Depreciation expense 364,520 — — Balance at December 31, $364,520 $— $— |
Schedule III - (Real Estate a44
Schedule III - (Real Estate and Accumulated Depreciation) (Parenthetical) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Real Estate And Accumulated Depreciation Disclosure [Abstract] | ||
Aggregate cost of real estate for federal income tax purpose | $ 46,975,000 | $ 0 |
Schedule III - (Summary of Reco
Schedule III - (Summary of Reconciliation of Real Estate Owned) (Parenthetical) (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Real Estate And Accumulated Depreciation Disclosure [Abstract] | |
Acquisitions | $ 45,125,934 |
Real estate owned, ending balance | $ 45,125,934 |
Schedule III - (Summary of Re46
Schedule III - (Summary of Reconciliation of Accumulated Depreciation) (Parenthetical) (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Real Estate And Accumulated Depreciation Disclosure [Abstract] | |
Depreciation expense | $ 364,520 |
Accumulated depreciation, ending balance | $ 364,520 |
Uncategorized Items - ck0001595
Label | Element | Value |
Stock Issued During Period Value New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 200,000 |
Additional Paid In Capital [Member] | ||
Stock Issued During Period Value New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 199,992 |
Common Stock [Member] | ||
Stock Issued During Period Shares New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 8,000 |
Retained Earnings [Member] | ||
Net Income Loss | us-gaap_NetIncomeLoss | $ (30,311) |
Common Class A [Member] | Common Stock [Member] | ||
Stock Issued During Period Value New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 8 |