Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 03, 2016 | |
Document And Entity Information [Line Items] | ||
Entity Registrant Name | Inland Residential Properties Trust, Inc. | |
Entity Central Index Key | 1,595,627 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 | |
Class A Common Stock [Member] | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 965,995 | |
Class T Common Stock [Member] | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 231,692 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Real estate: | ||
Land | $ 6,301,838 | $ 6,301,838 |
Building and other improvements | 38,910,238 | 38,824,096 |
Total real estate | 45,212,076 | 45,125,934 |
Less: accumulated depreciation | (1,456,916) | (364,520) |
Net real estate | 43,755,160 | 44,761,414 |
Cash and cash equivalents | 2,848,985 | 5,281,172 |
Accounts and rent receivable | 20,681 | 35,763 |
Acquired in place lease intangibles, net | 343,785 | |
Other assets | 398,852 | 464,937 |
Total assets | 47,023,678 | 50,887,071 |
Liabilities: | ||
Mortgages payable, net | 27,449,323 | 45,646,954 |
Accounts payable and accrued expenses | 196,178 | 422,223 |
Distributions payable | 103,354 | 23,738 |
Due to related parties | 5,571,599 | 5,064,415 |
Other liabilities | 56,292 | 49,655 |
Total liabilities | 33,376,746 | 51,206,985 |
Commitments and contingencies | ||
Stockholders’ equity (deficit): | ||
Preferred stock, $.001 par value, 50,000,000 shares authorized, none outstanding | ||
Additional paid in capital (net of offering costs of $7,209,015 and $4,597,765 as of September 30, 2016 and December 31, 2015, respectively) | 18,934,263 | 2,398,277 |
Distributions and accumulated losses | (5,288,400) | (2,718,480) |
Total stockholders’ equity (deficit) | 13,646,932 | (319,914) |
Total liabilities and stockholders’ equity (deficit) | 47,023,678 | 50,887,071 |
Class A Common Stock [Member] | ||
Stockholders’ equity (deficit): | ||
Common stock | 925 | 274 |
Class T Common Stock [Member] | ||
Stockholders’ equity (deficit): | ||
Common stock | $ 144 | $ 15 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
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 |
Offering costs included as reduction to additional paid in capital | $ 7,209,015 | $ 4,597,765 |
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 | 925,055 | 274,481 |
Common stock, shares outstanding | 925,055 | 274,481 |
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 | 144,005 | 15,157 |
Common stock, shares outstanding | 144,005 | 15,157 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income: | ||||
Rental income | $ 905,464 | $ 10,441 | $ 2,665,759 | $ 10,441 |
Other property income | 87,204 | 263,928 | ||
Total income | 992,668 | 10,441 | 2,929,687 | 10,441 |
Expenses: | ||||
Property operating expenses | 299,274 | 1,510 | 900,845 | 1,510 |
Real estate tax expense | 90,283 | 264,836 | ||
General and administrative expenses | 201,349 | 143,703 | 802,033 | 408,901 |
Business management fee | 68,665 | 22,864 | 205,850 | 22,864 |
Acquisition related costs | 1,207,188 | 1,207,188 | ||
Depreciation and amortization | 378,531 | 1,451,356 | ||
Total expenses | 1,038,102 | 1,375,265 | 3,624,920 | 1,640,463 |
Operating loss | (45,434) | (1,364,824) | (695,233) | (1,630,022) |
Interest expense | (322,478) | (1,121,542) | ||
Net loss | $ (367,912) | $ (1,364,824) | $ (1,816,775) | $ (1,630,022) |
Net loss per common share, basic and diluted | $ (0.39) | $ (43.30) | $ (2.65) | $ (102.35) |
Weighted average number of common shares outstanding, basic and diluted | 942,839 | 31,520 | 685,934 | 15,926 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - 9 months ended Sep. 30, 2016 - USD ($) | Total | Common Stock [Member]Class A Common Stock [Member] | Common Stock [Member]Class T Common Stock [Member] | Additional Paid In Capital [Member] | Distributions and Accumulated Losses [Member] |
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 | |||
Proceeds from the offering | 18,741,902 | $ 636 | $ 128 | 18,741,138 | |
Proceeds from the offering, shares | 636,293 | 127,441 | |||
Offering costs | (2,611,250) | (2,611,250) | |||
Discount on shares to related parties | 19,356 | 19,356 | |||
Issuance of shares from distribution reinvestment plan | 256,050 | $ 10 | $ 1 | 256,039 | |
Issuance of shares from distribution reinvestment plan, shares | 9,808 | 1,013 | |||
Distributions declared | $ (633,357) | (633,357) | |||
Stock dividends issued | $ 5 | 119,783 | (119,788) | ||
Stock dividends issued, shares | 4,812 | 4,418 | 394 | ||
Net loss | $ (1,816,775) | (1,816,775) | |||
Equity based compensation | 10,920 | 10,920 | |||
Equity based compensation, shares | 55 | ||||
Balance at Sep. 30, 2016 | $ 13,646,932 | $ 925 | $ 144 | $ 18,934,263 | $ (5,288,400) |
Balance, shares at Sep. 30, 2016 | 925,055 | 144,005 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (1,816,775) | $ (1,630,022) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,451,356 | |
Amortization of debt issuance costs | 102,698 | |
Amortization of equity based compensation | 10,920 | |
Discount on shares issued to related parties | 19,356 | 8,065 |
Changes in assets and liabilities: | ||
Accounts payable and accrued expenses | (74,984) | (20,924) |
Accounts and rents receivable | 15,082 | |
Due to related parties | 227,083 | 704,154 |
Other liabilities | 6,637 | 18,072 |
Other assets | 66,086 | (79,313) |
Net cash flows provided by (used in) operating activities | 7,459 | (999,968) |
Cash flows from investing activities: | ||
Purchase of real estate | (45,986,910) | |
Capital expenditures | (101,318) | |
Net cash flows used in investing activities | (101,318) | (45,986,910) |
Cash flows from financing activities: | ||
Payment of mortgage payable | (18,300,000) | |
Proceeds from mortgage payable | 45,750,000 | |
Proceeds from offering | 18,741,902 | 2,357,800 |
Payment of debt issuance costs | (329) | (22,556) |
Distributions paid | (297,691) | |
Payment of offering costs | (2,482,210) | (2,291,290) |
Advances from sponsor | 2,650,000 | |
Net cash flows (used in) provided by financing activities | (2,338,328) | 48,443,954 |
Net (decrease) increase in cash and cash equivalents | (2,432,187) | 1,457,076 |
Cash and cash equivalents, at beginning of the period | 5,281,172 | 232,635 |
Cash and cash equivalents, at end of period | 2,848,985 | 1,689,711 |
Supplemental disclosure of cash flow information: | ||
Land | 6,301,838 | |
Building and improvements | 37,591,342 | |
Furniture, fixtures and equipment | 1,232,754 | |
Acquired in place lease intangibles | 601,623 | |
Acquired assets, net | 259,353 | |
Purchase of real estate | 45,986,910 | |
Supplemental schedule of non-cash investing and financing activities: | ||
Cash paid for interest | 1,028,884 | |
Distributions payable | 103,354 | |
Accrued offering costs payable | 461,312 | $ 186,447 |
Stock dividends issued | 119,788 | |
Common stock issued through distribution reinvestment plan | $ 256,050 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 - ORGANIZATION 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 (the “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. Substantially all of the Company’s business is conducted through Inland Residential Operating Partnership, L.P. (the “operating partnership”), of which the Company is the sole general partner. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, 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 U.S. federal income tax on its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with other requirements as a REIT. 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 U.S. 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 U.S. federal income and excise taxes on its undistributed income. At September 30, 2016, the Company owned one 194,732 square foot 206 unit multi-family community. During the nine months ended September 30, 2016, the property’s daily average occupancy was 93.7% and at September 30, 2016, 198, or 96.1% residential units were leased. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Disclosures discussing all significant accounting policies are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on March 29, 2016, under the heading “Note 2 - Summary of Significant Accounting Policies.” There has been no change to the Company’s significant accounting policies during the nine months ended September 30, 2016, except as noted below. 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 the Company’s estimated value per share) for each Class T Share sold in its Offering (as defined below). The aggregate amount of underwriting compensation for the Class A Shares and Class T Shares, including the distribution and stockholder servicing fee for the Class T Shares, cannot exceed the Financial Industry Regulatory Authority’s 10% cap on underwriting compensation. The fee is not paid at the time of purchase. The Company accounts for the fee as a charge to equity at the time each Class T Share is sold in its Offering and records a corresponding payable in due to related parties. The distribution and stockholder servicing fee is payable monthly in arrears, as it becomes contractually due. At September 30, 2016, the unpaid fee equals $171,444. General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation. In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs Recent Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). 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 has begun to evaluate each of the revenue streams under the new model. The Company is currently evaluating the application of this ASU and its effect on its financial position and results of operations. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
EQUITY | NOTE 3 – EQUITY 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, “DRP”). Excluding DRP proceeds, the Company generated gross proceeds of $15,689,685 from sales of its Class A Shares and $3,052,216 from sales of its Class T Shares during the nine months ended September 30, 2016. As of September 30, 2016, the Company had 925,055 Class A Shares outstanding and 144,005 Class T Shares outstanding. For the nine months ended September 30, 2016, the Company declared cash distributions of $633,357, paid cash distributions of $297,691 and issued stock dividends of 4,812 shares to stockholders. 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, are used to purchase Class A Shares and Class T Shares, respectively. Such purchases under the DRP are not 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. Distributions reinvested through the DRP were $256,050 for the nine months ended September 30, 2016. There were no distributions paid during the nine months ended September 30, 2015. Share Repurchase Program Under the share repurchase program (as amended, the “SRP”), the Company is authorized, in its discretion, to purchase shares from stockholders who have held their shares for at least one year, if requested. 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 comes from proceeds that the Company receives from the DRP. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, neither the one year holding period, the limit regarding funds available from the DRP nor the 5% limit applies. 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. There were no repurchases through the SRP for the nine months ended September 30, 2016 and 2015. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 4 - ACQUISITIONS 2016 Acquisitions During the nine months ended September 30, 2016, the Company did not acquire any real estate properties. Pro Forma Disclosures The following condensed pro forma consolidated financial statements for the three and nine months ended September 30, 2015 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. Three Months Ended September 30, Nine Months Ended September 30, 2015 2015 Pro forma total income $ 942,920 $ 2,631,014 Pro forma net loss $ (1,685,660 ) $ (2,679,865 ) Loss per share (a) $ (1.58 ) $ (2.51 ) (a) Based on number of common shares outstanding as of September 30, 2016 |
MORTGAGES PAYABLE
MORTGAGES PAYABLE | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
MORTGAGES PAYABLE | NOTE 5 – MORTGAGES PAYABLE As of September 30, 2016, the Company’s mortgage loan is secured by a first mortgage on the property. For the nine months ended September 30, 2016, the Company paid down $18,300,000, and achieved a 60% loan to value, as defined in the mortgage loan agreement. Effective September 30, 2016, the Company exercised its option to extend the maturity date for an additional seven year period to September 30, 2023. The loan extension requires monthly payments of interest only for the next five years and thereafter, requires monthly payments of principal and interest based upon a 30-year amortization until maturity. The interest rate on the loan was modified which lowered the fixed interest rate from 3.95% to 3.64% per annum. The loan modification releases the Sponsor, and substitutes the Company as the guarantor. As the substitute guarantor, the Company agreed to guarantee the payment of (a) all real estate taxes on the property which accrue or become due during the term of the loan, (b) all costs and expenses (as defined in the guaranty agreement) and (c) any and all losses, damages, costs or expenses of the lender, which arise in consequence of certain events specified in the guaranty agreement. The Company is in compliance with all financial covenants related to its mortgage payable. The mortgage payable, unamortized debt issuance costs and the interest rates were as follows: September 30, 2016 December 31, 2015 Mortgages Principal Amount Interest Rate Principal Amount Interest Rate Mortgage payable $ 27,450,000 3.64 % $ 45,750,000 3.95 % Unamortized debt issuance costs (677 ) (103,046 ) Total debt $ 27,449,323 $ 45,646,954 |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
EQUITY-BASED COMPENSATION | NOTE 6 – EQUITY-BASED COMPENSATION The Company grants 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 $4,844 and $10,920 for the three and nine months ended September 30, 2016, respectively, and is included in general and administrative expenses in the accompanying consolidated financial statements. As of September 30, 2016, the Company had $19,392 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 1.66 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, 2016 822 $ 18,750 $ 18,750 Granted 658 15,000 15,000 Vested (55 ) (1,250 ) — Forfeited — — — Outstanding at September 30, 2016 1,425 $ 32,500 $ 33,750 |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 7 – SEGMENT REPORTING The Company has one reportable segment as defined by U.S. GAAP, multi-family real estate, for the three and nine months ended September 30, 2016. |
TRANSACTIONS WITH RELATED PARTI
TRANSACTIONS WITH RELATED PARTIES | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH RELATED PARTIES | NOTE 8 – TRANSACTIONS WITH RELATED PARTIES The Sponsor invested $200,000 by purchasing 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. Since inception, the Sponsor has advanced $2,950,000 in cash to the Company, which is included in due to related parties on the accompanying consolidated balance sheets, to partially fund formation, offering and organization costs. The following table summarizes the Company’s related party transactions for the three and nine months ended September 30, 2016 and 2015. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts. Three Months Ended September 30, Nine Months Ended September 30, Amount Unpaid as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 General and administrative reimbursements (a) $ 57,023 $ 61,168 $ 314,819 $ 147,548 $ 100,288 $ 95,239 Affiliate share purchase discounts (b) 4,814 8,065 19,356 8,065 — — Total general and administrative expenses $ 61,837 $ 69,233 $ 334,175 $ 155,613 $ 100,288 $ 95,239 Acquisition related costs (c) $ — $ 719,148 $ — $ 719,148 $ 686,250 $ 690,485 Offering costs (d) $ 622,450 $ 25,278 $ 1,897,066 $ 145,958 $ 1,402,963 $ 1,104,314 Business management fee (e) $ 68,665 $ 22,864 $ 205,850 $ 22,864 $ 297,305 $ 91,455 Mortgage financing fee (f) $ — $ 114,375 $ — $ 114,375 $ 114,375 $ 114,375 Sponsor non-interest bearing advances (g) $ — $ 450,000 $ — $ 2,650,000 $ 2,950,000 $ 2,950,000 Real estate management fee $ 40,987 $ — $ 117,715 $ — $ — $ — Property operating expenses 85,357 — 254,347 — 20,418 18,547 Total property operating expenses (h) $ 126,344 $ — $ 372,062 $ — $ 20,418 $ 18,547 (a) The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses incurred 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 affiliates and affiliates of the Business Manager that enable them to purchase shares of common stock at $22.81 per share. The Company sold 8,838 shares and 3,683 shares to affiliates during the nine months ended September 30, 2016 and 2015, respectively. (c) Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay the Business Manager or its affiliates an acquisition fee equal to 1.5% of the “contract purchase price,” as defined in that agreement, of each property and real estate-related asset acquired. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions . (d) 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. 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 the Company’s estimated value per share) for each Class T Share sold in the Offering. The fee is not paid at the time of purchase. The Company accounts for the total fee as a charge to equity at the time each Class T Share is sold in the Offering and records a corresponding payable in due to related parties. The distribution and stockholder servicing fee is payable monthly in arrears as it becomes contractually due. At September 30, 2016, the unpaid fee equals $171,444. (e) The Company pays the Business Manager an annual business management fee equal to 0.6% of its “average invested assets.” The fee is 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (f) Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay 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. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions. (g) This amount represents non-interest bearing advances made by the Sponsor which the Company intends to repay. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (h) The Company pays Inland Residential Real Estate Services, LLC (the “Real Estate Manager”) a monthly property 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). |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS On October 27, 2016, the Company entered into an amendment to the Business Management Agreement with the Business Manager to remove the provision of subordinated management performance interests to the Business Manager via Class M Units in the Company’s operating partnership based on the annual “additional total return” generated each year on the Class A Shares and Class T Shares. In addition, the limited partnership agreement of the Company’s operating partnership was amended and restated to completely eliminate Class M Units. As of October 27, 2016, no class M units had been issued to the Business Manager by the Company’s operating partnership. On November 7, 2016, the Company entered into an amendment to the dealer manager agreement with Inland Securities Corporation, the Company’s dealer manager, to allow Inland Securities Corporation to reallow a portion of the dealer manager fee to participating soliciting dealers. On November 7, 2016, the Company’s board of directors approved an extension of the termination date of the Company’s “reasonable best efforts” offering from February 17, 2017 to February 16, 2018. Cash distributions The Company’s board of directors declared cash distributions payable to stockholders of record each day beginning on the close of business October 1, 2016 through March 31, 2017. Distributions declared for 2016 are in an amount equal to $0.003415301 per day per Class A Share and $0.002760929 per day per Class T Share, based on a 366-day period. Distributions declared for 2017 will be in an amount equal to $0.003424658 per day per Class A Share and $0.002768493 per day per Class T Share, based on a 365-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 September 2016 October 2016 $ 103,354 $ 56,250 2,381 $ 47,104 October 2016 November 2016 $ 115,912 $ 62,428 2,643 $ 53,484 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 October 31, 2016, November 30, 2016, December 31, 2016, January 31, 2017, February 28, 2017 and March 31, 2017. In general, these stock dividends are non-taxable distributions to stockholders and are not considered dividends for purposes of meeting our annual distribution requirements. Stock dividends were issued as follows: Dividend Month Month Dividend Shares Issued September 2016 October 2016 892 October 2016 November 2016 984 |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
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 the Company’s estimated value per share) for each Class T Share sold in its Offering (as defined below). The aggregate amount of underwriting compensation for the Class A Shares and Class T Shares, including the distribution and stockholder servicing fee for the Class T Shares, cannot exceed the Financial Industry Regulatory Authority’s 10% cap on underwriting compensation. The fee is not paid at the time of purchase. The Company accounts for the fee as a charge to equity at the time each Class T Share is sold in its Offering and records a corresponding payable in due to related parties. The distribution and stockholder servicing fee is payable monthly in arrears, as it becomes contractually due. At September 30, 2016, the unpaid fee equals $171,444. |
General | General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation. In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). 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 has begun to evaluate each of the revenue streams under the new model. The Company is currently evaluating the application of this ASU and its effect on its financial position and results of operations. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Pro Forma Financial Information for Acquisitions | The following condensed pro forma consolidated financial statements for the three and nine months ended September 30, 2015 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. Three Months Ended September 30, Nine Months Ended September 30, 2015 2015 Pro forma total income $ 942,920 $ 2,631,014 Pro forma net loss $ (1,685,660 ) $ (2,679,865 ) Loss per share (a) $ (1.58 ) $ (2.51 ) (a) Based on number of common shares outstanding as of September 30, 2016 |
MORTGAGES PAYABLE (Tables)
MORTGAGES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgages Payable, Unamortized Debt Issuance Costs and Interest Rates | The mortgage payable, unamortized debt issuance costs and the interest rates were as follows: September 30, 2016 December 31, 2015 Mortgages Principal Amount Interest Rate Principal Amount Interest Rate Mortgage payable $ 27,450,000 3.64 % $ 45,750,000 3.95 % Unamortized debt issuance costs (677 ) (103,046 ) Total debt $ 27,449,323 $ 45,646,954 |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 822 $ 18,750 $ 18,750 Granted 658 15,000 15,000 Vested (55 ) (1,250 ) — Forfeited — — — Outstanding at September 30, 2016 1,425 $ 32,500 $ 33,750 |
TRANSACTIONS WITH RELATED PAR20
TRANSACTIONS WITH RELATED PARTIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Transactions with Related Parties | The following table summarizes the Company’s related party transactions for the three and nine months ended September 30, 2016 and 2015. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts. Three Months Ended September 30, Nine Months Ended September 30, Amount Unpaid as of 2016 2015 2016 2015 September 30, 2016 December 31, 2015 General and administrative reimbursements (a) $ 57,023 $ 61,168 $ 314,819 $ 147,548 $ 100,288 $ 95,239 Affiliate share purchase discounts (b) 4,814 8,065 19,356 8,065 — — Total general and administrative expenses $ 61,837 $ 69,233 $ 334,175 $ 155,613 $ 100,288 $ 95,239 Acquisition related costs (c) $ — $ 719,148 $ — $ 719,148 $ 686,250 $ 690,485 Offering costs (d) $ 622,450 $ 25,278 $ 1,897,066 $ 145,958 $ 1,402,963 $ 1,104,314 Business management fee (e) $ 68,665 $ 22,864 $ 205,850 $ 22,864 $ 297,305 $ 91,455 Mortgage financing fee (f) $ — $ 114,375 $ — $ 114,375 $ 114,375 $ 114,375 Sponsor non-interest bearing advances (g) $ — $ 450,000 $ — $ 2,650,000 $ 2,950,000 $ 2,950,000 Real estate management fee $ 40,987 $ — $ 117,715 $ — $ — $ — Property operating expenses 85,357 — 254,347 — 20,418 18,547 Total property operating expenses (h) $ 126,344 $ — $ 372,062 $ — $ 20,418 $ 18,547 (a) The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses incurred 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 affiliates and affiliates of the Business Manager that enable them to purchase shares of common stock at $22.81 per share. The Company sold 8,838 shares and 3,683 shares to affiliates during the nine months ended September 30, 2016 and 2015, respectively. (c) Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay the Business Manager or its affiliates an acquisition fee equal to 1.5% of the “contract purchase price,” as defined in that agreement, of each property and real estate-related asset acquired. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions . (d) 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. 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 the Company’s estimated value per share) for each Class T Share sold in the Offering. The fee is not paid at the time of purchase. The Company accounts for the total fee as a charge to equity at the time each Class T Share is sold in the Offering and records a corresponding payable in due to related parties. The distribution and stockholder servicing fee is payable monthly in arrears as it becomes contractually due. At September 30, 2016, the unpaid fee equals $171,444. (e) The Company pays the Business Manager an annual business management fee equal to 0.6% of its “average invested assets.” The fee is 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (f) Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay 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. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions. (g) This amount represents non-interest bearing advances made by the Sponsor which the Company intends to repay. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. (h) The Company pays Inland Residential Real Estate Services, LLC (the “Real Estate Manager”) a monthly property 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). |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stock Dividend [Member] | |
Schedule of Dividends Distributions | Dividend Month Month Dividend Shares Issued September 2016 October 2016 892 October 2016 November 2016 984 |
Cash Distributions [Member] | |
Schedule of Dividends Distributions | Distribution Month Month Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through DRP Shares Issued Net Cash Distribution September 2016 October 2016 $ 103,354 $ 56,250 2,381 $ 47,104 October 2016 November 2016 $ 115,912 $ 62,428 2,643 $ 53,484 |
ORGANIZATION (Narrative) (Detai
ORGANIZATION (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2016ft²PropertyUnit | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of retail properties owned | Property | 1 |
Square footage of real estate properties owned | ft² | 194,732 |
Property acquisition, total number of units acquired | 206 |
Residential property’s average occupancy rate | 93.70% |
Number of units leased | 198 |
Real estate property, residential units leased percentage | 96.10% |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies [Line Items] | ||
Underwriting compensation including the distribution and stockholders' servicing fee, description | The aggregate amount of underwriting compensation for the Class A Shares and Class T Shares, including the distribution and stockholder servicing fee for the Class T Shares, cannot exceed the Financial Industry Regulatory Authority’s 10% cap on underwriting compensation. | |
Unamortized debt issuance costs | $ 677 | $ 103,046 |
Class T Common Stock [Member] | ||
Significant Accounting Policies [Line Items] | ||
Percentage of distribution and stockholder servicing fee | 1.00% | |
Unpaid fee under distribution and servicing | $ 171,444 |
EQUITY (Narrative) (Details)
EQUITY (Narrative) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Feb. 17, 2015 | |
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 | ||||
Cash distribution, declared | $ 633,357 | ||||
Cash distribution, paid | $ 297,691 | ||||
Stock dividends issued, shares | 4,812 | ||||
Distribution reinvested through distribution reinvestment plan | $ 56,250 | $ 256,050 | |||
Distributions paid | $ 297,691 | ||||
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% | ||||
Stock repurchase program, amount | $ 0 | $ 0 | |||
Distribution Reinvestment Plan [Member] | |||||
Class Of Stock [Line Items] | |||||
Distribution reinvested through distribution reinvestment plan | $ 256,050 | ||||
Distributions paid | $ 0 | ||||
Class A Common Stock [Member] | |||||
Class Of Stock [Line Items] | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Gross proceeds from sale of shares | $ 15,689,685 | ||||
Common stock, shares outstanding | 925,055 | 925,055 | 274,481 | ||
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 | ||||
Class T Common Stock [Member] | |||||
Class Of Stock [Line Items] | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||
Gross proceeds from sale of shares | $ 3,052,216 | ||||
Common stock, shares outstanding | 144,005 | 144,005 | 15,157 | ||
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 | |||
Class A and Class T Common Stock [Member] | |||||
Class Of Stock [Line Items] | |||||
Total value of common stock company is authorized to sell through initial 'reasonable best efforts' offering | $ 190,000,000 | $ 190,000,000 |
ACQUISITIONS (Narrative) (Detai
ACQUISITIONS (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2016Unit | |
Business Combinations [Abstract] | |
Real estate property acquisition, total number of units acquired | 0 |
ACQUISITIONS (Schedule of Pro F
ACQUISITIONS (Schedule of Pro Forma Financial Information for Acquisitions) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | ||
Business Combinations [Abstract] | |||
Pro forma total income | $ 942,920 | $ 2,631,014 | |
Pro forma net loss | $ (1,685,660) | $ (2,679,865) | |
Loss per share | [1] | $ (1.58) | $ (2.51) |
[1] | Based on number of common shares outstanding as of September 30, 2016 |
MORTGAGES PAYABLE (Narrative) (
MORTGAGES PAYABLE (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Debt Instrument [Line Items] | |
Monthly interest payments for initial number of years | 5 years |
Monthly interest payments for number of years, thereafter | 30 years |
Interest rate on mortgage loan if maturity date is extended | 3.95% |
Interest rate on mortgage loan if maturity date is extended, reduced to | 3.64% |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Loan payment until it achieves specific percentage | 60.00% |
Mortgage Payable [Member] | |
Debt Instrument [Line Items] | |
Principal payment of outstanding mortgage payable | $ 18,300,000 |
MORTGAGES PAYABLE (Details)
MORTGAGES PAYABLE (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | ||
Mortgage payable, Principal amount | $ 27,450,000 | $ 45,750,000 |
Unamortized debt issuance costs | (677) | (103,046) |
Total debt | $ 27,449,323 | $ 45,646,954 |
Mortgage payable, Interest rate | 3.64% | 3.95% |
EQUITY-BASED COMPENSATION (Narr
EQUITY-BASED COMPENSATION (Narrative) (Details) - Restricted Stock [Member] | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($)shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Unrecognized compensation cost related to the unvested restricted share awards | $ 19,392 | $ 19,392 |
Weighted average remaining contractual term related to non-vested restricted shares | 1 year 7 months 28 days | |
Director [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation expense | $ 4,844 | $ 10,920 |
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 | |
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 | |
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 | shares | 1 |
EQUITY-BASED COMPENSATION (Summ
EQUITY-BASED COMPENSATION (Summary of the Restricted Shares) (Details) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Shares | |
Outstanding, Shares | shares | 822 |
Granted, Shares | shares | 658 |
Vested, Shares | shares | (55) |
Outstanding, Shares | shares | 1,425 |
Weighted Average Grant Date Fair Value | |
Grant Date | $ / shares | $ 18,750 |
Fair Value | $ / shares | 15,000 |
Fair Value | $ / shares | (1,250) |
Outstanding, Weighted Average Grant Date Fair Value | $ / shares | $ 32,500 |
Aggregate Intrinsic Value | |
Outstanding, Aggregate Intrinsic Value | $ | $ 18,750 |
Granted, Aggregate Intrinsic Value | $ | 15,000 |
Outstanding, Aggregate Intrinsic Value | $ | $ 33,750 |
SEGMENT REPORTING (Narrative) (
SEGMENT REPORTING (Narrative) (Details) - Segment | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 1 | 1 |
TRANSACTIONS WITH RELATED PAR32
TRANSACTIONS WITH RELATED PARTIES (Narrative) (Details) - USD ($) | Aug. 07, 2016 | Sep. 09, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Related Party Transaction [Line Items] | ||||
Advances from sponsor | $ 2,650,000 | |||
Class T Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of distribution and stockholder servicing fee | 1.00% | |||
Unpaid fee under distribution and servicing | $ 171,444 | |||
Sponsor [Member] | ||||
Related Party Transaction [Line Items] | ||||
Capital invested by Sponsor for common stock shares | $ 200,000 | |||
Number of common shares Sponsor purchased, subsequently converted in Class A Shares | 8,000 | |||
Number of Class A shares issued as result of Sponsor converting common shares | 8,000 | |||
Cash advances provided by Sponsor since Company inception | $ 2,950,000 | |||
Sponsor [Member] | Class A Shares [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 | |||
Business Manager [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock shares sold to affiliates during period | 8,838 | 3,683 | ||
Price per share of common stock sold to affiliates during period | $ 22.81 | |||
Fee required to pay the 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 required to pay Business Manager or its affiliates expressed as a percentage of the amount available or borrowed under financing or assumed debt | 0.25% | |||
Real Estate Manager Or Affiliates [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Property management fee percentage | 4.00% |
TRANSACTIONS WITH RELATED PAR33
TRANSACTIONS WITH RELATED PARTIES (Schedule of Transactions with Related Parties) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | ||
Related Party Transaction [Line Items] | ||||||
Due to related parties | $ 5,571,599 | $ 5,571,599 | $ 5,064,415 | |||
Acquisition Related Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [1] | $ 719,148 | $ 719,148 | |||
Due to related parties | [1] | 686,250 | 686,250 | 690,485 | ||
General and Administrative Reimbursements [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | [2] | 100,288 | 100,288 | 95,239 | ||
Offering Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [3] | 622,450 | 25,278 | 1,897,066 | 145,958 | |
Due to related parties | [3] | 1,402,963 | 1,402,963 | 1,104,314 | ||
Business Management Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [4] | 68,665 | 22,864 | 205,850 | 22,864 | |
Due to related parties | [4] | 297,305 | 297,305 | 91,455 | ||
Mortgage Financing Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [5] | 114,375 | 114,375 | |||
Due to related parties | [5] | 114,375 | 114,375 | 114,375 | ||
Sponsor Non-interest Bearing Advances [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses with related parties | [6] | 450,000 | 2,650,000 | |||
Due to related parties | [6] | 2,950,000 | 2,950,000 | 2,950,000 | ||
Property Operating Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 20,418 | 20,418 | 18,547 | |||
Total General and Administrative Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 100,288 | 100,288 | 95,239 | |||
Real Estate Manager Or Affiliates [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | [7] | 20,418 | 20,418 | $ 18,547 | ||
Total General and Administrative Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | 61,837 | 69,233 | 334,175 | 155,613 | ||
Total General and Administrative Expenses [Member] | General and Administrative Reimbursements [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | [2] | 57,023 | 61,168 | 314,819 | 147,548 | |
Total General and Administrative Expenses [Member] | Affiliate Share Purchase Discounts [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | [8] | 4,814 | $ 8,065 | 19,356 | $ 8,065 | |
Total Property Operating Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Operating property expenses | [7] | 126,344 | 372,062 | |||
Total Property Operating Expenses [Member] | Real Estate Management Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Operating property expenses | 40,987 | 117,715 | ||||
Total Property Operating Expenses [Member] | Property Operating Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Operating property expenses | $ 85,357 | $ 254,347 | ||||
[1] | Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay the Business Manager or its affiliates an acquisition fee equal to 1.5% of the “contract purchase price,” as defined in that agreement, of each property and real estate-related asset acquired. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions. The Business Manager and its affiliates continue to be reimbursed for acquisition and transaction related costs of the Business Manager and its affiliates relating to the Company’s acquisition of properties and real estate assets, regardless of whether the Company acquires the properties or real estate assets, subject to the limits provided in the amended agreement. When such costs are incurred, they are included in acquisition related costs in the accompanying consolidated statements of operations. Acquisition fees earned prior to August 8, 2016, which have been previously accrued for and are owed to the Business Manager, are expected to be paid in the future and 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 incurred 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 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. 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 the Company’s estimated value per share) for each Class T Share sold in the Offering. The fee is not paid at the time of purchase. The Company accounts for the total fee as a charge to equity at the time each Class T Share is sold in the Offering and records a corresponding payable in due to related parties. The distribution and stockholder servicing fee is payable monthly in arrears as it becomes contractually due. At September 30, 2016, the unpaid fee equals $171,444. | |||||
[4] | The Company pays the Business Manager an annual business management fee equal to 0.6% of its “average invested assets.” The fee is 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. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||
[5] | Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay 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. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to future transactions. Mortgage financing fees earned prior to August 8, 2016, which have been previously accrued for and are owed to the Business Manager, are expected to be paid in the future and are included in due to related parties in the accompanying consolidated balance sheets. | |||||
[6] | This amount represents non-interest bearing advances made by the Sponsor which the Company intends to repay. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||
[7] | The Company pays Inland Residential Real Estate Services, LLC (the “Real Estate Manager”) a monthly property 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). | |||||
[8] | The Company established a discount stock purchase policy for affiliates and affiliates of the Business Manager that enable them to purchase shares of common stock at $22.81 per share. The Company sold 8,838 shares and 3,683 shares to affiliates during the nine months ended September 30, 2016 and 2015, respectively. |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - $ / shares | Nov. 07, 2016 | Mar. 31, 2017 | Sep. 30, 2016 | Oct. 31, 2016 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||||
Termination date of reasonable best effort offerings | Feb. 17, 2017 | ||||
Maximum [Member] | Scenario Forecast [Member] | Class A Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Mar. 31, 2017 | ||||
Maximum [Member] | Scenario Forecast [Member] | Class T Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Mar. 31, 2017 | ||||
Cash Distributions [Member] | Scenario Forecast [Member] | Class A Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Amount per share of distributions | $ 0.003424658 | $ 0.003415301 | |||
Cash Distributions [Member] | Scenario Forecast [Member] | Class T Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Amount per share of distributions | $ 0.002768493 | $ 0.002760929 | |||
Cash Distributions [Member] | Minimum [Member] | Scenario Forecast [Member] | Class A Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Oct. 1, 2016 | ||||
Cash Distributions [Member] | Minimum [Member] | Scenario Forecast [Member] | Class T Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Oct. 1, 2016 | ||||
Cash Distributions [Member] | Maximum [Member] | Scenario Forecast [Member] | Class A Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Mar. 31, 2017 | ||||
Cash Distributions [Member] | Maximum [Member] | Scenario Forecast [Member] | Class T Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Mar. 31, 2017 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Termination date of reasonable best effort offerings | Feb. 16, 2018 | ||||
Subsequent Event [Member] | Class A Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Amount per share of distributions | $ 0.000833333 | ||||
Subsequent Event [Member] | Class T Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Amount per share of distributions | $ 0.000833333 | ||||
Subsequent Event [Member] | Minimum [Member] | Class A Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Oct. 31, 2016 | ||||
Subsequent Event [Member] | Minimum [Member] | Class T Common Stock [Member] | Stock Dividend [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends payable, record date | Oct. 31, 2016 |
SUBSEQUENT EVENTS (Schedule of
SUBSEQUENT EVENTS (Schedule of Dividends Distributions) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | |
Subsequent Event [Line Items] | |||
Distribution reinvested through distribution reinvestment plan | $ 56,250 | $ 256,050 | |
Shares Issued | 892 | ||
Net Cash Distribution | $ 47,104 | ||
Stock Dividend [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Month | 2016-09 | 2016-09 | |
Month Distribution Paid | 2016-10 | 2016-10 | |
Cash Distributions [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Month | 2016-09 | 2016-09 | |
Month Distribution Paid | 2016-10 | 2016-10 | |
Gross Amount of Distribution Paid | $ 103,354 | ||
Shares Issued | 2,381 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Distribution reinvested through distribution reinvestment plan | $ 62,428 | ||
Shares Issued | 984 | ||
Net Cash Distribution | $ 53,484 | ||
Subsequent Event [Member] | Stock Dividend [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Month | 2016-10 | ||
Month Distribution Paid | 2016-11 | ||
Subsequent Event [Member] | Cash Distributions [Member] | |||
Subsequent Event [Line Items] | |||
Distribution Month | 2016-10 | ||
Month Distribution Paid | 2016-11 | ||
Gross Amount of Distribution Paid | $ 115,912 | ||
Shares Issued | 2,643 |