Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 10, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Rich Uncles NNN REIT, Inc. | |
Entity Central Index Key | 1,645,873 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,327,759 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Real estate investments: | ||
Land | $ 2,739,744 | $ 0 |
Building and improvements | 11,065,066 | 0 |
Tenant origination and absorption costs | 1,759,061 | 0 |
Total real estate investments, cost | 15,563,871 | 0 |
Accumulated depreciation and amortization | (238,232) | 0 |
Total real estate investments, net | 15,325,639 | 0 |
Cash and cash equivalents | 1,987,743 | 200,815 |
Restricted cash | 390,672 | 0 |
Above-market lease intangible, net | 156,909 | 0 |
Investment in Rich Uncles REIT I | 1,995,700 | 0 |
Other assets | 683,331 | 0 |
TOTAL ASSETS | 20,539,994 | 200,815 |
LIABILITIES & STOCKHOLDERS’ EQUITY | ||
Unsecured credit facility, net | 6,961,745 | 0 |
Mortgage note payable, net | 7,134,713 | 0 |
Accounts payable and accrued liabilities | 1,105,251 | 0 |
Due to affiliates | 8,649 | 7,000 |
TOTAL LIABILITIES | 15,210,358 | 7,000 |
Commitments and contingencies (Note 8) | ||
Redeemable common stock | 24,996 | 0 |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 200,000,000 shares authorized, 643,671 shares issued and outstanding as of September 30, 2016 and 20,000 shares issued and outstanding as of December 31, 2015 | 644 | 20 |
Additional paid-in capital | 6,215,652 | 199,980 |
Cumulative distributions and net losses | (911,656) | (6,185) |
TOTAL STOCKHOLDERS' EQUITY | 5,304,640 | 193,815 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ 20,539,994 | $ 200,815 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Preferred Stock, Par or Stated Value Per Share | $ 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 or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 643,671 | 20,000 |
Common Stock, Shares, Outstanding | 643,671 | 20,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | |
Revenues: | ||||
Rental income | $ 286,576 | $ 0 | $ 0 | $ 328,041 |
Tenant reimbursements | 72,968 | 0 | 0 | 72,968 |
Total revenues | 359,544 | 0 | 0 | 401,009 |
Expenses: | ||||
Fees to affiliates (Note 7) | 46,575 | 0 | 0 | 528,262 |
General and administrative | 584,488 | 36 | 3,036 | 590,867 |
Depreciation and amortization | 204,743 | 0 | 0 | 238,232 |
Interest expense | 174,271 | 0 | 0 | 214,921 |
Property expenses | 91,541 | 0 | 0 | 91,541 |
Acquisition costs | 0 | 0 | 0 | 73,028 |
Total expenses | 1,101,618 | 0 | 3,036 | 1,736,851 |
Less: Expenses reimbursed/fees waived by Sponsor or affiliates (Note 7) | (446,130) | 0 | 0 | (446,130) |
Net expenses | 655,488 | 36 | 3,036 | 1,290,721 |
Other income (loss): | ||||
Interest income | 619 | 0 | 0 | 619 |
Equity in losses from investment in Rich Uncles REIT I | (4,300) | 0 | 0 | (4,300) |
Total other income (loss) | (3,681) | (36) | 0 | (3,681) |
Net loss | $ (299,625) | $ (36) | $ (3,036) | $ (893,393) |
Net loss per share, basic and diluted | $ (1.39) | $ 0 | $ (2.43) | $ (10.44) |
Weighted-average number of common shares outstanding, basic and diluted | 215,369 | 10,000 | 1,250 | 85,598 |
Dividends declared per common share | $ 0.14 | $ 0 | $ 0 | $ 0.14 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] |
Balance at May. 13, 2015 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Balance (in shares) at May. 13, 2015 | 0 | 0 | |||
Issuance of common stock | 200,000 | $ 0 | $ 20 | 199,980 | 0 |
Issuance of common stock (in shares) | 0 | 20,000 | |||
Net loss | (6,185) | $ 0 | $ 0 | 0 | (6,185) |
Balance at Dec. 31, 2015 | 193,815 | $ 0 | $ 20 | 199,980 | (6,185) |
Balance (in shares) at Dec. 31, 2015 | 0 | 20,000 | |||
Issuance of common stock | 6,168,708 | $ 0 | $ 617 | 6,168,091 | 0 |
Issuance of common stock (in shares) | 0 | 616,871 | |||
Distributions declared | (12,078) | $ 0 | $ 0 | 0 | (12,078) |
Stock compensation expense | 68,000 | $ 0 | $ 7 | 67,993 | 0 |
Stock compensation expense (in shares) | 0 | 6,800 | |||
Offering costs | (187,101) | $ 0 | $ 0 | (187,101) | 0 |
Net loss | (893,393) | 0 | 0 | 0 | (893,393) |
Transfers to redeemable common stock | (33,311) | 0 | 0 | (33,311) | 0 |
Balance at Sep. 30, 2016 | $ 5,304,640 | $ 0 | $ 644 | $ 6,215,652 | $ (911,656) |
Balance (in shares) at Sep. 30, 2016 | 0 | 643,671 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 5 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,036) | $ (893,393) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 0 | 238,232 |
Stock compensation expense | 0 | 68,000 |
Deferred rent | 0 | 15,682 |
Amortization of deferred financing costs | 0 | 10,637 |
Amortization of above-market lease intangible | 0 | 9,720 |
Equity in losses from investment in Rich Uncles REIT I | 0 | 4,300 |
Changes in operating assets and liabilities: | ||
Other assets | 0 | (63,513) |
Accounts payable and accrued liabilities | 0 | 561,436 |
Due to affiliates | 4,000 | 1,649 |
Net cash (used in) provided by operating activities | 964 | (47,250) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of real estate investments | 0 | (15,730,500) |
Investment in Rich Uncles REIT I | 0 | (2,000,000) |
Escrow deposits for future real estate purchases | 0 | (100,000) |
Net cash used in investing activities | 0 | (17,830,500) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings from unsecured credit facility | 0 | 11,000,000 |
Payments on unsecured credit facility | 0 | (4,036,500) |
Proceeds from mortgage note payable | 0 | 7,319,700 |
Principal payments on mortgage note payable | 0 | (21,316) |
Payments of deferred financing costs | 0 | (176,063) |
Payment of offering costs | 0 | (187,101) |
Proceeds from issuance of common stock | 100,000 | 6,161,482 |
Distributions paid to common stockholders | 0 | (4,852) |
Restricted cash for financing activities | 0 | (390,672) |
Net cash provided by financing activities | 100,000 | 19,664,678 |
Net increase in cash and cash equivalents | 100,964 | 1,786,928 |
Cash and cash equivalents at beginning of period | 0 | 200,815 |
Cash and cash equivalents at end of period | 100,964 | 1,987,743 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 0 | 192,327 |
Supplemental disclosure of noncash investing and financing activities: | ||
Transfers to redeemable common stock | 0 | 33,311 |
Increase in redeemable common stock payable | 0 | 8,315 |
Increase in lease incentive payable | 0 | 535,500 |
Reinvested distribution to investment in Rich Uncles REIT I | 0 | 2,885 |
Distributions paid to common stockholders through common stock issuance pursuant to the dividend reinvestment plan | $ 0 | $ 7,226 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Business Description and Basis of Presentation [Text Block] | NOTE 1. BUSINESS AND ORGANIZATION Rich Uncles NNN REIT, Inc. (the “Company”) was incorporated on May 14, 2015 as a Maryland corporation that expects to elect to qualify as a real estate investment trust (“REIT”) for the year ending December 31, 2016. The Company was originally incorporated under the name Rich Uncles Real Estate Investment Trust, Inc., but amended its name on October 19, 2015 to Rich Uncles NNN REIT, Inc. The Company has the authority to issue 250,000,000 200,000,000 0.001 50,000,000 0.001 10.00 500 The Company will hold its investments through special purpose wholly owned limited liability companies or through Rich Uncles NNN Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership was formed on January 28, 2016. The Company is the sole general partner of, and owns a 99 1 The Company is externally managed by its advisor, Rich Uncles NNN REIT Operator, LLC (the “Advisor”), a Delaware limited liability company wholly owned by the Company’s sponsor, Rich Uncles, LLC (the “Sponsor”), a Delaware limited liability company whose members include Harold Hofer, Howard Makler, and Ray Wirta. On June 24, 2015 and December 31, 2015, the Company issued 10,000 10.00 On July 15, 2015, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to register an initial public offering of its common stock to offer a maximum of $ 900,000,000 100,000,000 On July 20, 2016, the Company began offering shares to the public and through September 30, 2016, the Company had sold 616,871 6,168,708 723 7,226 |
SUMMARY OF SIGNIFICANT ACOUNTIN
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 2. SUMMARY OF SIGNIFICANT ACOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. The consolidated financial statements include the accounts of the Company, the Operating Partnership, and directly wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance may exceed federally insurable limits. The Company intends to mitigate this risk by depositing funds with major financial institutions; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. Restricted cash is comprised of funds which are held in escrow or are otherwise restricted for use as required by certain lenders conjunction with an acquisition or debt financing. As of September 30, 2016, the Company had restricted cash in the amount of $ 390,672 Real Estate Acquisition Valuation The Company records the acquisition of income-producing real estate with one or more leases in place at time of acquisition or which otherwise meets the definition of a business as a business combination. If the acquisition does not meet the definition of a business, the Company records the acquisition as an asset acquisition. Under both methods, all assets acquired and liabilities assumed are measured at their acquisition-date fair values. Transaction costs that are related to a business combination are charged to expense as incurred. Transaction costs that are related to an asset acquisition are capitalized as incurred. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles, and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining noncancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining noncancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining noncancelable term of the respective lease. Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income (loss). Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset and are expensed as incurred. Significant replacements and betterments are capitalized. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: · Buildings 35 40 · Site improvements 15 · Tenant improvements 15 · Tenant origination and absorption costs The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate and related intangible assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate and related intangible assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company will record an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset. As of September 30, 2016, the Company did not record any impairment charges related to its real estate assets or intangible assets. The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectibility of such amounts is reasonable assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or by us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: ⋅ whether the lease stipulates how a tenant improvement allowance may be spent; ⋅ whether the amount of a tenant improvement allowance is in excess of market rates; ⋅ whether the tenant or landlord retains legal title to the improvements at the end of the lease term; ⋅ whether the tenant improvements are unique to the tenant or general-purpose in nature; and ⋅ whether the tenant improvements are expected to have any residual value at the end of the lease. Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expense are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. The Company evaluates the collectibility of rents and other receivables on a regular basis based on factors including, among others, payment history, the operations, the asset type and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides a reserve against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Unamortized deferred financing costs related to revolving credit facilities are reclassified to presentation as an asset in periods where there are no outstanding borrowings under the facility. Unconsolidated Investments The Company accounts for investments that do not have a readily determinable fair value and over which the Company does not have the ability to exercise significant influence and has virtually no influence over operating and financial policies using the cost method of accounting. Under the cost method of accounting, dividends from the investments are recognized as dividend income when received to the extent they represent net accumulated earnings of the investee since the initial recognition of the investment. Dividends received in excess of net accumulated earnings are recognized as a reduction in the carrying amount of the investment as such dividends represent a return of investment. Cost method investments are evaluated on a quarterly basis to determine whether there are declines in fair value of the cost method investment which are determined to be other-than-temporary. Other-than-temporary declines in fair value are recognized as impairment charges through earnings. The Company accounts for investments in entities over which it has the ability to exercise significant influence under the equity method of accounting. Under the equity method of accounting, an investment is initially recognized at cost and is subsequently adjusted to reflect the Company’s share of earnings or losses of the investee. The investment is also increased for additional amounts invested and decreased for any distributions received from the investee. Equity method investments are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the investment might not be recoverable. If an equity method investment is determined to be other-than-temporarily impaired, the investment is reduced to fair value and an impairment charge is recorded through earnings. Under GAAP, the Company is required to measure certain financial statements at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal or external valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. The Company intends to elect to be treated as a REIT beginning with the taxable year ending December 31, 2016. In order to qualify as a REIT for federal income tax purposes, the Company must distribute at least 90% of its taxable income (excluding capital gains) to its shareholders and meet certain other requirements. The Company intends, although is not legally obligated, to continue to make regular quarterly distributions to holders of its shares at least at the level required to maintain REIT status unless the results of operations, general financial condition, general economic conditions or other factors inhibits the Company from doing so. Distributions are authorized at the discretion of the Company’s board of directors, which is directed, in substantial part, by its obligation to cause the Company to comply with the REIT requirements of the Internal Revenue Code. The Company intends to make monthly distributions payable on the 10 th th The Company has adopted a distribution reinvestment plan (“DRP”) through which common stockholders may elect to reinvest any amount up to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. Participants in the dividend reinvestment plan will acquire common stock at a price per share equal to the price to acquire a share of common stock in the Primary Offering. The initial price per share in the Offering, and as of the date of these financial statements, is $10.00 per share. The price may be adjusted during the course of the Offering on an annual basis to equal the estimated Net Asset Value (“NAV”) per share commencing January 1, 2017. Redeemable Common Stock The Company has adopted a share repurchase program (“SRP”) that enables stockholders to sell their stock to the Company in limited circumstances. The share repurchase price at any given time will equal the most recently published NAV (and if none, then $10.00 per share) less an administrative charge of 3% of the share repurchase price proceeds if the shares are owned for less than one year, 2% if the shares are owned less than two years but greater than one year, and 1% if the shares are owned for less than three years but greater than two years. There is no administrative charge for shares held at least three years. Stockholders who wish to avail themselves of the SRP must notify the Company by three business days before the end of the month for their shares to be repurchased by the third business day of the following month. The share repurchase program provides that share repurchases may be funded by (a) distribution reinvestment proceeds, (b) the prior or future sale of shares, (c) indebtedness, including a line of credit and traditional mortgage financing, and (d) asset sales. Shares will be repurchased if, in the opinion of the Advisor, there are sufficient reserves with which to repurchase shares and at the same time maintain the then-current plan of operation. The board may amend, suspend or terminate the share repurchase program upon 30 days’ notice to stockholders, provided that the Company may increase the funding available for the repurchase of shares pursuant to the share repurchase program upon ten business days’ notice to the stockholders. To the extent the board of directors determines that there is sufficient available cash for redemption, the shares will be repurchased subject to the limit that, during any 12-month period, redemptions will not exceed 5% of the weighted-average number of shares outstanding during the prior 12 months. As of September 30, 2016, 851 8,315 The Company intends to elect to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and intends to operate as such beginning with its taxable year ended December 31, 2016. The Company expects to have little or no taxable income prior to electing REIT status. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90 The Company has invested in single-tenant income-producing corporate properties. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. As of September 30, 2016, the Company aggregated its investments in real estate into one reportable segment. Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock equals basic earnings per share of common stock as there were no potentially dilutive securities outstanding during the three and nine months ended September 30, 2016 and 2015. Any references to the number of buildings, square footage, number of leases, occupancy, and any amounts derived from these values in the notes to the consolidated financial statements are presented on an unaudited basis. In April 2015, the FASB issued Accounting Standard Update (“ASU”) No. 2015-03, Interest Imputation of Interest (Subtopic 835-30) Interest - Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) Leases (Topic 840). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
REAL ESTATE
REAL ESTATE | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
Real Estate Disclosure [Text Block] | NOTE 3. REAL ESTATE Tenant origination Accumulated Total real Land, and depreciation estate Acquisition Property building and absorption and investments, Property Location Date type improvements costs amortization net Accredo Orlando, FL 6/15/2016 Office $ 9,656,862 $ 1,053,638 $ (142,578) $ 10,567,922 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (95,654) 4,757,717 $ 13,804,810 $ 1,759,061 $ (238,232) $ 15,325,639 Current Period Acquisitions Tenant origination Buildings Above- and Acquisition and market absorption Property Location Date Land Improvements lease costs Total Accredo Orlando, FL 6/15/2016 $ 1,706,640 $ 7,950,222 $ $ 1,053,638 $ 10,710,500 Walgreens Stockbridge, GA 6/21/2016 1,033,104 3,114,844 166,629 705,423 5,020,000 $ 2,739,744 $ 11,065,066 $ 166,629 $ 1,759,061 $ 15,730,500 The intangible assets acquired in connection with these acquisitions have a weighted average amortization period as of the date of the acquisition of approximately five years. The purchase price accounting reflected in the accompanying financial statements is preliminary and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date pursuant to ASC 805) that may impact the fair value of the assets and liabilities above (including real estate investments, other assets and accrued liabilities). The Company recorded both acquisitions as business combinations and expensed $ 0 547,149 359,544 401,009 Operating Leases The Company’s real estate properties are leased to tenants under triple-net leases for which terms and expirations vary. The Company monitors the credit of all tenants to stay abreast of any material changes in credit quality. The Company monitors tenant credit by (1) reviewing the credit ratings of tenants (or their parent companies or lease guarantors) that are rated by national recognized rating agencies; (2) reviewing financial statements and related metrics and information that are publicly available or that are required to be provided pursuant to the lease; (3) monitoring new reports and press releases regarding the tenants (or their parent companies or lease guarantors), and their underlying business and industry; and (4) monitoring the timeliness of rent collections. As of September 30, 2016, each of the Company’s tenants is considered to be a major tenant concentration. The Company’s real estate properties are leased to Accredo Health Group, Inc. (“Accredo”) and Walgreen Company (“Walgreens”). The obligations under these two leases are guaranteed by Express Scripts Holding Company for Accredo and Walgreens Boots Alliance for Walgreens. Accredo and Walgreens each lease one of the Company’s real estate properties, which are located in Florida and Georgia, respectively. Express Scripts Holding Company’s financial statements can be found at http://www.express-scripts.com Walgreens Boots Alliance’s financial statements can be found at http://www.walgreensbootsalliance.com Total October 1, 2016 through December 31, 2016 $ 308,138 2017 1,246,956 2018 1,273,759 2019 1,301,192 2020 1,329,255 2021 507,433 $ 5,966,733 Intangibles Above-market lease $ 166,629 Above-market lease - accumulated amortization (9,720) Above-market lease, net 156,909 Tenant origination and absorption costs 1,759,061 Tenant origination and absorption costs - accumulated amortization (106,419) Tenant origination and absorption costs, net 1,652,642 Total intangibles $ 1,809,551 Tenant origination and Above-market absorption lease costs Remaining 2016 amortization $ 8,331 $ 91,217 2017 amortization 33,326 364,866 2018 amortization 33,326 364,866 2019 amortization 33,326 364,866 2020 amortization 33,326 364,866 2021 amortization 15,274 101,961 $ 156,909 $ 1,652,642 Decreases in net income (loss) as a result of amortization of the Company’s tenant origination and absorption costs for the three and nine months ended September 30, 2016 were $ 91,760 106,419 8,331 9,720 |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Schedule of Investments [Abstract] | |
Investment Holdings [Text Block] | NOTE 4. INVESTMENTS Investment in Rich Uncles REIT I On June 28, 2016, the Company invested $ 2,000,000 200,000 2.4 As of September 30, 2016, the book value of the Company’s investment in Rich Uncles REIT I was $ 1,995,700 4,300 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 5. DEBT Mortgage Notes Payable Deferred Principal Financing Contractual Amount Costs, Net Net Balance Interest Rate Loan Maturity Accredo/Walgreens loan $ 7,298,384 $ (163,671) $ 7,134,713 3.95 % 7/1/2021 Unsecured Credit Facility On June 7, 2016, the Company, through the Operating Partnership, entered into a credit agreement (the “Unsecured Credit Agreement”) with Pacific Mercantile Bank. Pursuant to the Unsecured Credit Agreement, the Company was provided with a $ 12,000,000 4.5 th June 15, 2017 11,000,000 2,547 792 6,963,500 Pursuant to the terms of the mortgage note payable and the Unsecured Credit Facility, the Company and/or the Operating Partnership is subject to certain financial loan covenants. The Company was in compliance with all of its financial debt covenants as of September 30, 2016. Mortgage Note Unsecured Payable Credit Facility Total Remaining 2016 $ 32,239 $ $ 32,239 2017 132,180 6,963,500 7,095,680 2018 137,496 137,496 2019 143,027 143,027 2020 148,780 148,780 2021 6,704,662 6,704,662 Total principal 7,298,384 6,963,500 14,261,884 Deferred financing costs, net (163,671) (1,755) (165,426) Total $ 7,134,713 $ 6,961,745 $ 14,096,458 During the three and nine months ended September 30, 2016, the Company incurred $ 174,271 214,921 11,957 9,452 10,637 |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | NOTE 6. FAIR VALUE DISCLOSURES The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value: Cash and cash equivalents, restricted cash, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. Unsecured credit facility Mortgage note payable: The fair value of the Company’s mortgage note payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. Face value Carrying value Fair value $ 7,298,384 $ 7,134,713 $ 7,134,713 Disclosures of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 7. RELATED PARTY TRANSACTIONS The Company has entered into an Advisory Agreement with the Advisor. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate investments, the management of those investments, among other services, and the disposition of investments, as well as entitles the Advisor to reimbursement of organization and offering costs incurred by the Advisor or Sponsor on behalf of the Company, such as expenses related to the Offering, and certain costs incurred by the Advisor or Sponsor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Sponsor also serves as the sponsor for Rich Uncles REIT I. During the three and nine months ended September 30, 2016, no other business transactions occurred between the Company and Rich Uncles REIT I, other than described below and in Note 4. For the period Three months ended Nine months ended May 14, 2015 to September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Incurred Incurred Advisor fees: Acquisition fees $ $ $ 474,121 $ Asset management fees (4) 46,575 54,141 Fees to affiliates $ 46,575 $ $ 528,262 $ Costs advanced by Sponsor (1) 1,000 Reimbursable organizational and offering expenses (2) 187,101 187,101 6,000 Expenses reimbursed/fees waived by Sponsor or affiliates: Expense reimbursement from Sponsor (3) (434,332) (434,332) Waiver of asset management fees (4) (11,798) (11,798) $ (446,130) $ $ (446,130) $ $ (212,454) $ $ 269,233 $ 7,000 (1) The Sponsor advanced $1,000 to the Company related to the opening of a bank account, which is reflected in “Due to affiliates” on the consolidated balance sheet. (2) As of September 30, 2016, the Sponsor had incurred $1,160,923 of organizational and offering costs on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor for such organizational and offering expenses to the extent of 3 (3) The Company records payroll costs related to Company employees that answer questions from prospective shareholders. The Sponsor has agreed to reimburse the Company for these investor relations payroll costs which the Sponsor considers to be offering expenses in accordance with the Advisory Agreement. (4) To the extent the Advisor elects, in its sole discretion to defer and waive a portion of the monthly asset management fee, the Advisor may waive up to an amount equal to 0.025 11,798 As of September 30, 2016 and December 31, 2015, the Company had net amounts of $ 8,649 7,000 Organization and Offering Costs During the Offering, pursuant to the Advisory Agreement, the Company is obligated to reimburse the Sponsor or its affiliates for organization and offering costs (as defined by the Sponsor) paid by the Sponsor on behalf of the Company. The Company will reimburse the Sponsor for organizational and offering expenses up to 3.0% of gross offering proceeds. The Sponsor and affiliates will be responsible for any organization and offering costs related to the Offering to the extent they exceed 3.0% of gross offering proceeds from the Offering. As of September 30, 2016, the Sponsor has incurred organization and offering expenses in excess of 3.0% of the gross offering proceeds received by the Company. To the extent the Company has more gross offering proceeds from future shareholders, the Company will be obligated to reimburse the Sponsor. As the amount of future gross offering proceeds is uncertain, the amount the Company is obligated to reimburse to the Sponsor is uncertain. Through September 30, 2016, the Sponsor and its affiliates had incurred organization and offering costs on the Company’s behalf in connection with the Offering of $ 1,160,923 187,101 Investor relations payroll expense reimbursement from Sponsor The Company has investor personnel that answer potential investor inquiries regarding the Company and/or its prospectus. The payroll expense associated with the investor relations personnel is reimbursed by the Sponsor. The Sponsor considers these payroll costs to be offering expenses. The total amount of such payroll reimbursements were $ 434,332 434,322 Acquisition Fees The Company shall pay the Advisor a fee in the amount equal 3.0% of Company’s Contract Purchase Price of its Properties, as Acquisition Fees. The total of all Acquisition Fees and Acquisition Expenses shall be reasonable, and shall not exceed 6.0% of the contract price of the property. Asset Management Fee The Company shall pay to the Advisor as compensation for the advisory services rendered to the Company, a monthly fee in an amount equal to 0.1 Additionally, to the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly asset management fee (which is payable in the amount equal to 0.1% of the total investment value of the Company’s assets), the Advisor will be deemed to have waived, not deferred, that portion of its monthly asset management fee that is up to 0.025 Financing Coordination Fee Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if an Advisor or an Affiliate provides a substantial amount of the services (as determined by a majority of the Independent Directors) in connection with the post-acquisition financing or refinancing of any debt that the Company obtains relative to a Property, then the Company shall pay to the Advisor or such Affiliate a financing coordination fee equal to 1.0 Property Management Fees If an Advisor or an Affiliate provides a substantial amount of the property management services (as determined by a majority of the Independent Directors) for the Company’s Properties, then Company shall pay to the Advisor or such Affiliate a property management fee equal to 1.5% of gross revenues from the properties managed. The Company also will reimburse the Advisor and any of its Affiliates for property-level expenses that such Person pays or incurs on behalf of the Company, including salaries, bonuses and benefits of Persons employed by such Person, except for the salaries, bonuses and benefits of Persons who also serve as one of the Company’s executive officers or as an executive officer of such Person. The Advisor or its Affiliate may subcontract the performance of its property management duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services. Disposition Fees For substantial assistance in connection with the sale of Properties, the Company shall pay to its Advisor or one of its Affiliates 3.0% of the Contract Sales Price of each Property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with our advisor or its affiliates, the disposition fees paid to our advisor, our sponsors, their affiliates and unaffiliated third parties may not exceed the lesser of the Competitive Real Estate Commission or 6% of the Contract Sales Price. Leasing Commission Fees If an Advisor or an Affiliate provides a substantial amount of the services (as determined by a majority of the Independent Directors) in connection with the Company’s leasing of a Property or Properties to unaffiliated third parties, then the Company shall pay to the Advisor or such Affiliate leasing commissions equal to 6.0% of the rents due pursuant to such lease for the first ten years of the lease term; provided, however (i) if the term of the lease is less than ten years, such commission percentage will apply to the full term of the lease and (ii) any rents due under a renewal of a lease of an existing tenant upon expiration of the initial lease agreement (including any extensions provided for thereunder) shall accrue a commission of 3.0% in lieu of the aforementioned 6.0% commission. Operating Expenses Unless its trust managers make a finding, based on non-recurring and unusual factors which they deem sufficient, that a higher level of expenses is justified for a period, the Company will reimburse the Advisor’s costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which its operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (i) 2% of average invested assets and (ii) 25% of net income other than any additions to reserves for depreciation, bad debt or other similar noncash reserves and excluding any gain from the sale of assets for that period. In the event that annual operating expenses exceed these limits as of the end of any fiscal quarter (for the 12 months then ended) the board of directors must within 60 days after the end of such quarter inform the shareholders of the factors the board of directors considered in arriving at the conclusion that such higher operating expenses were justified. Subordinated Participation Fee The Company shall pay to the Advisor or one of its affiliates a subordinated participation fee calculated as of December 31 of each year and paid (if at all) in the immediately following January. The subordinated participation fee is only due if the Preferred Return is achieved and is equal to the sum of: (i) 40% of the product of (a) the difference of (x) the Preliminary NAV per share minus multiplied by plus (ii) 40% of the product of: (a) the amount by which aggregate cash distributions to stockholders during the annual period, excluding return of capital distributions, divided by the weighted average number of shares outstanding for the annual period, exceed the Preferred Return, multiplied by First revaluation of NAV is scheduled to occur at December 31, 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 8. COMMITMENTS AND CONTINGENCIES Economic Dependency The Company depends on the Sponsor and the Advisor for certain services that are essential to the Company, including the sale of the Company’s shares of common stock, the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other sources. Environmental As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities. Legal Matters From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. The Company is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Dividends On October 7, 2016, the Company’s board of directors declared dividends based on daily record dates for the period September 1, 2016 through September 30, 2016 at a rate of $ 0.00194444 23,942 On November 9, 2016, the Company’s board of directors declared dividends based on daily record dates for the period October 1, 2016 through October 31, 2016 at a rate of $ 0.00188172 49,273 Offering Status Through November 10, 2016, the Company had sold 1,318,551 13,185,513 6,305 63,055 Acquisitions On November 4, 2016, the Company acquired a portfolio of six retail properties (“Dollar General Portfolio”), totaling 53,323 7,713,600 Investments In October 2016, the Company acquired an additional investment of 175,261 1,752,609 4.57 Redeemable common stock Through November 10, 4,091 39,682 |
SUMMARY OF SIGNIFICANT ACOUNT16
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES(Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for the interim period presented. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. The consolidated financial statements include the accounts of the Company, the Operating Partnership, and directly wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance may exceed federally insurable limits. The Company intends to mitigate this risk by depositing funds with major financial institutions; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. |
Real Estate, Policy [Policy Text Block] | Restricted Cash Restricted cash is comprised of funds which are held in escrow or are otherwise restricted for use as required by certain lenders conjunction with an acquisition or debt financing. As of September 30, 2016, the Company had restricted cash in the amount of $ 390,672 |
Real Estate Acquisition Valuation [Policy Text Block] | Real Estate Real Estate Acquisition Valuation The Company records the acquisition of income-producing real estate with one or more leases in place at time of acquisition or which otherwise meets the definition of a business as a business combination. If the acquisition does not meet the definition of a business, the Company records the acquisition as an asset acquisition. Under both methods, all assets acquired and liabilities assumed are measured at their acquisition-date fair values. Transaction costs that are related to a business combination are charged to expense as incurred. Transaction costs that are related to an asset acquisition are capitalized as incurred. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles, and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining noncancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining noncancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining noncancelable term of the respective lease. Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income (loss). |
Depreciation, Depletion, and Amortization [Policy Text Block] | Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset and are expensed as incurred. Significant replacements and betterments are capitalized. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: · Buildings 35 40 · Site improvements 15 · Tenant improvements 15 · Tenant origination and absorption costs |
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment of Real Estate and Related Intangible Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate and related intangible assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate and related intangible assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company will record an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset. As of September 30, 2016, the Company did not record any impairment charges related to its real estate assets or intangible assets. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectibility of such amounts is reasonable assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or by us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: ⋅ whether the lease stipulates how a tenant improvement allowance may be spent; ⋅ whether the amount of a tenant improvement allowance is in excess of market rates; ⋅ whether the tenant or landlord retains legal title to the improvements at the end of the lease term; ⋅ whether the tenant improvements are unique to the tenant or general-purpose in nature; and ⋅ whether the tenant improvements are expected to have any residual value at the end of the lease. Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expense are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. The Company evaluates the collectibility of rents and other receivables on a regular basis based on factors including, among others, payment history, the operations, the asset type and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides a reserve against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. |
Deferred Charges, Policy [Policy Text Block] | Deferred Financing Costs Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Unamortized deferred financing costs related to revolving credit facilities are reclassified to presentation as an asset in periods where there are no outstanding borrowings under the facility. |
Unconsolidated Investments [Policy Text Block] | The Company accounts for investments that do not have a readily determinable fair value and over which the Company does not have the ability to exercise significant influence and has virtually no influence over operating and financial policies using the cost method of accounting. Under the cost method of accounting, dividends from the investments are recognized as dividend income when received to the extent they represent net accumulated earnings of the investee since the initial recognition of the investment. Dividends received in excess of net accumulated earnings are recognized as a reduction in the carrying amount of the investment as such dividends represent a return of investment. Cost method investments are evaluated on a quarterly basis to determine whether there are declines in fair value of the cost method investment which are determined to be other-than-temporary. Other-than-temporary declines in fair value are recognized as impairment charges through earnings. The Company accounts for investments in entities over which it has the ability to exercise significant influence under the equity method of accounting. Under the equity method of accounting, an investment is initially recognized at cost and is subsequently adjusted to reflect the Company’s share of earnings or losses of the investee. The investment is also increased for additional amounts invested and decreased for any distributions received from the investee. Equity method investments are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the investment might not be recoverable. If an equity method investment is determined to be other-than-temporarily impaired, the investment is reduced to fair value and an impairment charge is recorded through earnings. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments Under GAAP, the Company is required to measure certain financial statements at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal or external valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. |
Distributions [Policy Text Block] | Distributions The Company intends to elect to be treated as a REIT beginning with the taxable year ending December 31, 2016. In order to qualify as a REIT for federal income tax purposes, the Company must distribute at least 90% of its taxable income (excluding capital gains) to its shareholders and meet certain other requirements. The Company intends, although is not legally obligated, to continue to make regular quarterly distributions to holders of its shares at least at the level required to maintain REIT status unless the results of operations, general financial condition, general economic conditions or other factors inhibits the Company from doing so. Distributions are authorized at the discretion of the Company’s board of directors, which is directed, in substantial part, by its obligation to cause the Company to comply with the REIT requirements of the Internal Revenue Code. |
Declaration Of Distributions [Policy Text Block] | Declaration of Distributions The Company intends to make monthly distributions payable on the 10 th th |
Distribution Reinvestment Plan [Policy Text Block] | Distribution Reinvestment Plan The Company has adopted a distribution reinvestment plan (“DRP”) through which common stockholders may elect to reinvest any amount up to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. Participants in the dividend reinvestment plan will acquire common stock at a price per share equal to the price to acquire a share of common stock in the Primary Offering. The initial price per share in the Offering, and as of the date of these financial statements, is $10.00 per share. The price may be adjusted during the course of the Offering on an annual basis to equal the estimated Net Asset Value (“NAV”) per share commencing January 1, 2017. |
Redeemable Common Stock [Policy Text Block] | Redeemable Common Stock The Company has adopted a share repurchase program (“SRP”) that enables stockholders to sell their stock to the Company in limited circumstances. The share repurchase price at any given time will equal the most recently published NAV (and if none, then $10.00 per share) less an administrative charge of 3% of the share repurchase price proceeds if the shares are owned for less than one year, 2% if the shares are owned less than two years but greater than one year, and 1% if the shares are owned for less than three years but greater than two years. There is no administrative charge for shares held at least three years. Stockholders who wish to avail themselves of the SRP must notify the Company by three business days before the end of the month for their shares to be repurchased by the third business day of the following month. The share repurchase program provides that share repurchases may be funded by (a) distribution reinvestment proceeds, (b) the prior or future sale of shares, (c) indebtedness, including a line of credit and traditional mortgage financing, and (d) asset sales. Shares will be repurchased if, in the opinion of the Advisor, there are sufficient reserves with which to repurchase shares and at the same time maintain the then-current plan of operation. The board may amend, suspend or terminate the share repurchase program upon 30 days’ notice to stockholders, provided that the Company may increase the funding available for the repurchase of shares pursuant to the share repurchase program upon ten business days’ notice to the stockholders. To the extent the board of directors determines that there is sufficient available cash for redemption, the shares will be repurchased subject to the limit that, during any 12-month period, redemptions will not exceed 5% of the weighted-average number of shares outstanding during the prior 12 months. As of September 30, 2016, 851 8,315 |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company intends to elect to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and intends to operate as such beginning with its taxable year ended December 31, 2016. The Company expects to have little or no taxable income prior to electing REIT status. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90 |
Segment Reporting, Policy [Policy Text Block] | Segment Disclosures The Company has invested in single-tenant income-producing corporate properties. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. As of September 30, 2016, the Company aggregated its investments in real estate into one reportable segment. |
Earnings Per Share, Policy [Policy Text Block] | Per Share Data Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock equals basic earnings per share of common stock as there were no potentially dilutive securities outstanding during the three and nine months ended September 30, 2016 and 2015. |
Unaudited Data [Policy Text Block] | Unaudited Data Any references to the number of buildings, square footage, number of leases, occupancy, and any amounts derived from these values in the notes to the consolidated financial statements are presented on an unaudited basis. |
New Accounting Pronouncements, Policy [Policy Text Block] | In April 2015, the FASB issued Accounting Standard Update (“ASU”) No. 2015-03, Interest Imputation of Interest (Subtopic 835-30) Interest - Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) Leases (Topic 840). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties [Table Text Block] | As of September 30, 2016, the Company’s real estate portfolio consisted of two properties in two states consisting of retail and office properties. The following table provides summary information regarding the Company’s real estate as of September 30, 2016: Tenant origination Accumulated Total real Land, and depreciation estate Acquisition Property building and absorption and investments, Property Location Date type improvements costs amortization net Accredo Orlando, FL 6/15/2016 Office $ 9,656,862 $ 1,053,638 $ (142,578) $ 10,567,922 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (95,654) 4,757,717 $ 13,804,810 $ 1,759,061 $ (238,232) $ 15,325,639 |
Schedule Of Acquisition Of Property [Table Text Block] | During the nine months ended September 30, 2016, the Company acquired the following properties: Tenant origination Buildings Above- and Acquisition and market absorption Property Location Date Land Improvements lease costs Total Accredo Orlando, FL 6/15/2016 $ 1,706,640 $ 7,950,222 $ $ 1,053,638 $ 10,710,500 Walgreens Stockbridge, GA 6/21/2016 1,033,104 3,114,844 166,629 705,423 5,020,000 $ 2,739,744 $ 11,065,066 $ 166,629 $ 1,759,061 $ 15,730,500 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The future minimum contractual rent payments are shown in the table below. Both leases on the two properties owned by the Company expire in 2021. Total October 1, 2016 through December 31, 2016 $ 308,138 2017 1,246,956 2018 1,273,759 2019 1,301,192 2020 1,329,255 2021 507,433 $ 5,966,733 |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | As of September 30, 2016, the Company’s intangibles were as follows: Above-market lease $ 166,629 Above-market lease - accumulated amortization (9,720) Above-market lease, net 156,909 Tenant origination and absorption costs 1,759,061 Tenant origination and absorption costs - accumulated amortization (106,419) Tenant origination and absorption costs, net 1,652,642 Total intangibles $ 1,809,551 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The intangible assets are amortized over the respective lease terms, which was approximately five years as of September 30, 2016. Amortization of intangible assets over the next five years is expected to be as follows: Tenant origination and Above-market absorption lease costs Remaining 2016 amortization $ 8,331 $ 91,217 2017 amortization 33,326 364,866 2018 amortization 33,326 364,866 2019 amortization 33,326 364,866 2020 amortization 33,326 364,866 2021 amortization 15,274 101,961 $ 156,909 $ 1,652,642 |
DEBT(Tables)
DEBT(Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | As of September 30, 2016, the Company’s mortgage notes payable consisted of the following: Deferred Principal Financing Contractual Amount Costs, Net Net Balance Interest Rate Loan Maturity Accredo/Walgreens loan $ 7,298,384 $ (163,671) $ 7,134,713 3.95 % 7/1/2021 |
Schedule of Maturities of Long-term Debt [Table Text Block] | The following summarizes the future principal repayment of the Company’s mortgage notes payable and Unsecured Credit Facility as of September 30, 2016: Mortgage Note Unsecured Payable Credit Facility Total Remaining 2016 $ 32,239 $ $ 32,239 2017 132,180 6,963,500 7,095,680 2018 137,496 137,496 2019 143,027 143,027 2020 148,780 148,780 2021 6,704,662 6,704,662 Total principal 7,298,384 6,963,500 14,261,884 Deferred financing costs, net (163,671) (1,755) (165,426) Total $ 7,134,713 $ 6,961,745 $ 14,096,458 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | The following were the face value, carrying amount and fair value of the Company’s mortgage note payable as of September 30, 2016: Face value Carrying value Fair value $ 7,298,384 $ 7,134,713 $ 7,134,713 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | Pursuant to the terms of these agreements, summarized below are the related party costs incurred by the Company for the three and nine months ended September 30, 2016, for the three months ended September 30, 2015, and for the period May 14, 2015 to September 30, 2015: For the period Three months ended Nine months ended May 14, 2015 to September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Incurred Incurred Advisor fees: Acquisition fees $ $ $ 474,121 $ Asset management fees (4) 46,575 54,141 Fees to affiliates $ 46,575 $ $ 528,262 $ Costs advanced by Sponsor (1) 1,000 Reimbursable organizational and offering expenses (2) 187,101 187,101 6,000 Expenses reimbursed/fees waived by Sponsor or affiliates: Expense reimbursement from Sponsor (3) (434,332) (434,332) Waiver of asset management fees (4) (11,798) (11,798) $ (446,130) $ $ (446,130) $ $ (212,454) $ $ 269,233 $ 7,000 (1) The Sponsor advanced $1,000 to the Company related to the opening of a bank account, which is reflected in “Due to affiliates” on the consolidated balance sheet. (2) As of September 30, 2016, the Sponsor had incurred $1,160,923 of organizational and offering costs on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor for such organizational and offering expenses to the extent of 3 (3) The Company records payroll costs related to Company employees that answer questions from prospective shareholders. The Sponsor has agreed to reimburse the Company for these investor relations payroll costs which the Sponsor considers to be offering expenses in accordance with the Advisory Agreement. (4) To the extent the Advisor elects, in its sole discretion to defer and waive a portion of the monthly asset management fee, the Advisor may waive up to an amount equal to 0.025 11,798 |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details Textual) - USD ($) | 1 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Nov. 10, 2016 | Jul. 20, 2016 | Oct. 19, 2015 | Jun. 24, 2015 | Dec. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Jul. 15, 2015 | |
Business And Organisation [Line Items] | ||||||||
Authority To Issue of Common Stock | 250,000,000 | |||||||
Minimum Investment in Shares Value | $ 500 | |||||||
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | ||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Share Price | $ 10 | |||||||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 99.00% | |||||||
Limited Liability Company (LLC) or Limited Partnership (LP), Members or Limited Partners, Ownership Interest | 1.00% | |||||||
Stock Issued During Period, Shares, New Issues | 1,318,551 | 616,871 | ||||||
Stock Issued During Period, Value, New Issues | $ 13,185,513 | $ 6,168,708 | $ 200,000 | $ 6,168,708 | ||||
Distribution Reinvestment Plan [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 723 | |||||||
Stock Issued During Period, Value, New Issues | $ 7,226 | |||||||
IPO [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Common Stock, Value, Subscriptions | $ 900,000,000 | |||||||
DRP Offering [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Common Stock, Value, Subscriptions | $ 100,000,000 | |||||||
Sponsor [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 10,000 | 10,000 | ||||||
Shares Issued, Price Per Share | $ 10 |
SUMMARY OF SIGNIFICANT ACOUNT22
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounting Policies [Line Items] | ||
Restricted Cash and Cash Equivalents | $ 390,672 | $ 0 |
Description of Share Repurchase Program | The share repurchase price at any given time will equal the most recently published NAV (and if none, then $10.00 per share) less an administrative charge of 3% of the share repurchase price proceeds if the shares are owned for less than one year, 2% if the shares are owned less than two years but greater than one year, and 1% if the shares are owned for less than three years but greater than two years. There is no administrative charge for shares held at least three years. | |
Minimum Percentage Distribute of Taxable Income To Shareholders | 90.00% | |
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 851 | |
Stock Repurchase Program, Authorized Amount | $ 8,315 | |
Site Improvement [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 15 years | |
Property, Plant and Equipment, Estimated Useful Lives | Shorter of 15 years or remaining contractual lease term | |
Tanent Improvement [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 15 years | |
Property, Plant and Equipment, Estimated Useful Lives | Shorter of 15 years or remaining contractual lease term | |
Tenant Origination And Absorption Costs [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | Remaining contractual lease term with consideration as to below-market extension options for below-market leases | |
Building [Member] | Minimum [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 35 years | |
Building [Member] | Maximum [Member] | ||
Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 40 years |
REAL ESTATE (Details)
REAL ESTATE (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Real Estate [Line Items] | ||
Land, building and improvements | $ 13,804,810 | |
Tenant origination and absorption costs | 1,759,061 | $ 0 |
Accumulated depreciation and amortization | (238,232) | 0 |
Total real estate investments, net | 15,325,639 | $ 0 |
Office Building [Member] | Accredo [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 9,656,862 | |
Tenant origination and absorption costs | 1,053,638 | |
Accumulated depreciation and amortization | (142,578) | |
Total real estate investments, net | 10,567,922 | |
Retail Site [Member] | Walgreens [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 4,147,948 | |
Tenant origination and absorption costs | 705,423 | |
Accumulated depreciation and amortization | (95,654) | |
Total real estate investments, net | $ 4,757,717 |
REAL ESTATE (Details 1)
REAL ESTATE (Details 1) - USD ($) | 5 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2016 | |
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | $ 0 | $ 15,730,500 |
Accredo [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 10,710,500 | |
Walgreens [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 5,020,000 | |
Land [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 2,739,744 | |
Land [Member] | Accredo [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 1,706,640 | |
Land [Member] | Walgreens [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 1,033,104 | |
Buildings and Improvements [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 11,065,066 | |
Buildings and Improvements [Member] | Accredo [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 7,950,222 | |
Buildings and Improvements [Member] | Walgreens [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 3,114,844 | |
Above Market Leases [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 166,629 | |
Above Market Leases [Member] | Accredo [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 0 | |
Above Market Leases [Member] | Walgreens [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 166,629 | |
Tenant origination and absorption costs [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 1,759,061 | |
Tenant origination and absorption costs [Member] | Accredo [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | 1,053,638 | |
Tenant origination and absorption costs [Member] | Walgreens [Member] | ||
Real Estate [Line Items] | ||
Payments to Acquire Real Estate | $ 705,423 |
REAL ESTATE (Details 2)
REAL ESTATE (Details 2) | Sep. 30, 2016USD ($) |
October 1, 2016 through December 31, 2016 | $ 308,138 |
2,017 | 1,246,956 |
2,018 | 1,273,759 |
2,019 | 1,301,192 |
2,020 | 1,329,255 |
2,021 | 507,433 |
Operating Leases, Future Minimum Payments Receivable | $ 5,966,733 |
REAL ESTATE (Details 3)
REAL ESTATE (Details 3) | Sep. 30, 2016USD ($) |
Finite-Lived Intangible Assets, Net | $ 1,809,551 |
Above market lease [Member] | |
Finite-Lived Intangible Assets, Gross | 166,629 |
Accumulated Amortization | (9,720) |
Finite-Lived Intangible Assets, Net | 156,909 |
Tenant origination and absorption costs [Member] | |
Finite-Lived Intangible Assets, Gross | 1,759,061 |
Accumulated Amortization | (106,419) |
Finite-Lived Intangible Assets, Net | $ 1,652,642 |
REAL ESTATE (Details 4)
REAL ESTATE (Details 4) | Sep. 30, 2016USD ($) |
Real Estate [Line Items] | |
Finite-Lived Intangible Assets, Net | $ 1,809,551 |
Tenant origination and absorption costs [Member] | |
Real Estate [Line Items] | |
Remaining 2016 amortization | 91,217 |
2017 amortization | 364,866 |
2018 amortization | 364,866 |
2019 amortization | 364,866 |
2020 amortization | 364,866 |
2021 amortization | 101,961 |
Finite-Lived Intangible Assets, Net | 1,652,642 |
Above market lease [Member] | |
Real Estate [Line Items] | |
Remaining 2016 amortization | 8,331 |
2017 amortization | 33,326 |
2018 amortization | 33,326 |
2019 amortization | 33,326 |
2020 amortization | 33,326 |
2021 amortization | 15,274 |
Finite-Lived Intangible Assets, Net | $ 156,909 |
REAL ESTATE (Details Textual)
REAL ESTATE (Details Textual) - USD ($) | 3 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | |
Real Estate [Line Items] | ||||
Acquisition Costs, Period Cost | $ 0 | $ 0 | $ 0 | $ 73,028 |
Real Estate Revenue, Net | 286,576 | $ 0 | $ 0 | 328,041 |
Tenant Origination And Absorption Costs [Member] | ||||
Real Estate [Line Items] | ||||
Amortization of Intangible Assets | 91,760 | 106,419 | ||
Above Market Leases [Member] | ||||
Real Estate [Line Items] | ||||
Amortization of Intangible Assets | $ 8,331 | $ 9,720 |
INVESTMENTS (Details Textual)
INVESTMENTS (Details Textual) - USD ($) | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Jun. 28, 2016 | |
Investment Holdings [Line Items] | |||||
Income (Loss) from Equity Method Investments | $ (4,300) | $ 0 | $ 0 | $ (4,300) | |
Rich Uncles Real Estate Investment Trust 1 [Member] | |||||
Investment Holdings [Line Items] | |||||
Investment In Shares Affiliate | $ 200,000 | ||||
Percentage of Ownership Interest | 2.40% | ||||
Real Estate Investments, Unconsolidated Real Estate and Other Joint Ventures | 1,995,700 | $ 1,995,700 | $ 2,000,000 | ||
Income (Loss) from Equity Method Investments | $ 4,300 | $ 4,300 |
DEBT (Details)
DEBT (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Short Term Debt [LineItems] | |
Deferred Financing Costs, Net | $ (165,426) |
Net Balance | 14,096,458 |
Mortgage Note Payable [Member] | |
Short Term Debt [LineItems] | |
Principal Amount | 7,298,384 |
Deferred Financing Costs, Net | (163,671) |
Net Balance | $ 7,134,713 |
Contractual Interest Rate | 3.95% |
Loan Maturity | Jul. 1, 2021 |
DEBT (Details 1)
DEBT (Details 1) | Sep. 30, 2016USD ($) |
Debt Instrument [Line Items] | |
Remaining 2,016 | $ 32,239 |
2,017 | 7,095,680 |
2,018 | 137,496 |
2,019 | 143,027 |
2,020 | 148,780 |
2,021 | 6,704,662 |
Total principal | 14,261,884 |
Deferred financing costs, net | (165,426) |
Total | 14,096,458 |
Mortgage note payable [Member] | |
Debt Instrument [Line Items] | |
Remaining 2,016 | 32,239 |
2,017 | 132,180 |
2,018 | 137,496 |
2,019 | 143,027 |
2,020 | 148,780 |
2,021 | 6,704,662 |
Total principal | 7,298,384 |
Deferred financing costs, net | (163,671) |
Total | 7,134,713 |
Unsecured Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Remaining 2,016 | 0 |
2,017 | 6,963,500 |
2,018 | 0 |
2,019 | 0 |
2,020 | 0 |
2,021 | 0 |
Total principal | 6,963,500 |
Deferred financing costs, net | (1,755) |
Total | $ 6,961,745 |
DEBT (Details Textual)
DEBT (Details Textual) - USD ($) | Jun. 07, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 |
Debt Instrument [Line Items] | |||||
Debt Issuance Costs, Net | $ 165,426 | $ 165,426 | |||
Interest Expense | 174,271 | $ 0 | $ 0 | 214,921 | |
Interest Payable | 11,957 | 11,957 | |||
Amortization of Debt Issuance Costs | 9,452 | 10,637 | |||
Unsecured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Issuance Costs, Net | $ 1,755 | $ 1,755 | |||
Pacific Mercantile Bank [Member] | Unsecured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 12,000,000 | ||||
Unsecured Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Interest Rate Description | an interest rate equal to 1% over an independent index which is the highest rate on corporate loans, which had posted by at least 75% of the USA’s thirty (30) largest banks known as The Wall Street Journal Prime Rate as published in the Wall Street Journal (the “Index”), which had an initial rate of 4.5%. | ||||
Line of Credit Facility, Interest Rate at Period End | 4.50% | 4.50% | |||
Line of Credit Facility, Expiration Date | Jun. 15, 2017 | ||||
Proceeds from Lines of Credit | $ 11,000,000 | ||||
Debt Issuance Costs, Net | $ 2,547 | 2,547 | |||
Long-term Line of Credit | $ 6,963,500 | 6,963,500 | |||
Amortization of Debt Issuance Costs | $ 792 |
FAIR VALUE DISCLOSURES (Details
FAIR VALUE DISCLOSURES (Details) | Sep. 30, 2016USD ($) |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Net Balance | $ 14,096,458 |
Mortgage note payable [Member] | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Face value | 7,298,384 |
Net Balance | 7,134,713 |
Fair value | $ 7,134,713 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | ||
Related Party Transaction [Line Items] | |||||
Reimbursable Expenses | $ (446,130) | $ 0 | $ 0 | $ (446,130) | |
(Income) Expenses incurred To Related Parties | (212,454) | 0 | 7,000 | 269,233 | |
Acquisition Fee [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | 0 | 0 | 0 | 474,121 | |
Asset Management Fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | [1] | 46,575 | 0 | 0 | 54,141 |
Fees to affiliates [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | 46,575 | 0 | 0 | 528,262 | |
Costs Advanced By The Sponsor [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | [2] | 0 | 0 | 1,000 | 0 |
Reimbursable Organizational and Offering Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | [3] | 187,101 | 0 | 6,000 | 187,101 |
Expense reimbursement from Sponsor [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred To Related Parties | 434,332 | 434,322 | |||
(Income) incurred To Related Parties | [4] | (434,332) | 0 | 0 | (434,332) |
Waiver Of Assets Management Fees [Member] [Member] | |||||
Related Party Transaction [Line Items] | |||||
(Income) incurred To Related Parties | [1] | $ (11,798) | $ 0 | $ 0 | $ (11,798) |
[1] | To the extent the Advisor elects, in its sole discretion to defer and waive a portion of the monthly asset management fee, the Advisor may waive up to an amount equal to 0.025% of the total investment value of the Company’s assets. For the three and nine months ended September 30, 2016, the Advisor waived $11,798 of asset management fees, which are not subject to future recoupment by the Advisor. | ||||
[2] | The Sponsor advanced $1,000 to the Company related to the opening of a bank account, which is reflected in “Due to affiliates” on the consolidated balance sheet. | ||||
[3] | As of September 30, 2016, the Sponsor had incurred $1,160,923 of organizational and offering expenses on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor to the extent of 3% of gross offering proceeds. The payable related to this obligation is reflected in “Due to affiliates” on the consolidated balance sheets. | ||||
[4] | The Company records payroll costs related to Company employees that answer questions from prospective shareholders. The Sponsor has agreed to reimburse the Company for these investor relations payroll costs which the Sponsor considers to be offering expenses in accordance with the Advisory Agreement. |
RELATED PARTY TRANSACTIONS (D35
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 3 Months Ended | 5 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | ||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | $ 8,649 | $ 8,649 | $ 7,000 | |||
Advisor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Acquisition Fees Description | The Company shall pay the Advisor a fee in the amount equal 3.0% of Companys Contract Purchase Price of its Properties, as Acquisition Fees. The total of all Acquisition Fees and Acquisition Expenses shall be reasonable, and shall not exceed 6.0% of the contract price of the property. | |||||
Asset Management Fees Percentage | 0.10% | |||||
Financing Coordination Fees Percentage | 1.00% | |||||
Disposition Fees Description | the Company shall pay to its Advisor or one of its Affiliates 3.0% of the Contract Sales Price of each Property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with our advisor or its affiliates, the disposition fees paid to our advisor, our sponsors, their affiliates and unaffiliated third parties may not exceed the lesser of the Competitive Real Estate Commission or 6% of the Contract Sales Price. | |||||
Leasing Commission Fees Description | the Company shall pay to the Advisor or such Affiliate leasing commissions equal to 6.0% of the rents due pursuant to such lease for the first ten years of the lease term; provided, however (i) if the term of the lease is less than ten years, such commission percentage will apply to the full term of the lease and (ii) any rents due under a renewal of a lease of an existing tenant upon expiration of the initial lease agreement (including any extensions provided for thereunder) shall accrue a commission of 3.0% in lieu of the aforementioned 6.0% commission. | |||||
Operating Expenses Description | the Company will reimburse the Advisors costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which its operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (i) 2% of average invested assets and (ii) 25% of net income other than any additions to reserves for depreciation, bad debt or other similar noncash reserves and excluding any gain from the sale of assets for that period. In the event that annual operating expenses exceed these limits as of the end of any fiscal quarter (for the 12 months then ended) the board of directors must within 60 days after the end of such quarter inform the shareholders of the factors the board of directors considered in arriving at the conclusion that such higher operating expenses were justified. | |||||
Subordinated Participation Fees Description | The subordinated participation fee is only due if the Preferred Return is achieved and is equal to the sum of: (i) 40% of the product of (a) the difference of (x) the Preliminary NAV per share minus (y) the Highest Prior NAV per share, multiplied by (b) the number of shares outstanding as of December 31 of the relevant annual period, but only if this results in a positive number, plus (ii) 40% of the product of: (a) the amount by which aggregate cash distributions to stockholders during the annual period, excluding return of capital distributions, divided by the weighted average number of shares outstanding for the annual period, exceed the Preferred Return, multiplied by (b) the weighted average number of shares outstanding for the annual period calculated on a monthly basis. | |||||
Reimbursable Organizational and Offering Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Accrual organization and offering cost | 187,101 | $ 187,101 | ||||
Related Party Transaction, Expenses from Transactions with Related Party | [1] | 187,101 | $ 0 | $ 6,000 | $ 187,101 | |
Reimbursable Organizational and Offering Expenses [Member] | Sponsor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Gross Offering Proceeds Percentage | 3.00% | |||||
Accrual organization and offering cost, Related Party | $ 1,160,923 | $ 1,160,923 | ||||
Waiver Of Assets Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Asset Management Fees Waive Percentage | 0.025% | |||||
Assets Management Fees Waived | $ 11,798 | $ 11,798 | $ 11,798 | 11,798 | ||
Monthly Asset Management Fees Waive Percentage | 0.025% | |||||
Sponsor Reimbursement [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 434,332 | $ 434,322 | ||||
[1] | As of September 30, 2016, the Sponsor had incurred $1,160,923 of organizational and offering expenses on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor to the extent of 3% of gross offering proceeds. The payable related to this obligation is reflected in “Due to affiliates” on the consolidated balance sheets. |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) | Nov. 10, 2016USD ($)shares | Nov. 09, 2016$ / shares | Nov. 04, 2016USD ($)ft² | Oct. 11, 2016USD ($) | Oct. 07, 2016$ / shares | Nov. 10, 2016USD ($)shares | Oct. 31, 2016USD ($)shares | Jul. 20, 2016USD ($)shares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Nov. 11, 2016 |
Subsequent Event [Line Items] | ||||||||||||
Dividends | $ 12,078 | |||||||||||
Stock Issued During Period, Shares, New Issues | shares | 1,318,551 | 616,871 | ||||||||||
Stock Issued During Period, Value, New Issues | $ 13,185,513 | $ 6,168,708 | $ 200,000 | 6,168,708 | ||||||||
Payments to Acquire Real Estate | $ 0 | $ 15,730,500 | ||||||||||
Stock Issued During Period, Shares, Dividend Reinvestment Plan | shares | 6,305 | |||||||||||
Stock Issued During Period, Value, Dividend Reinvestment Plan | $ 63,055 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Dividends Declared Per Share Per Day | $ / shares | $ 0.00188172 | $ 0.00194444 | ||||||||||
Dividends | $ 49,273 | $ 23,942 | ||||||||||
Number Of Additional Shares Acquired In Affiliates | shares | 175,261 | |||||||||||
Area of Real Estate Property | ft² | 53,323 | |||||||||||
Payments to Acquire Real Estate | $ 7,713,600 | |||||||||||
Payments to Acquire Real Estate and Real Estate Joint Ventures | $ 1,752,609 | |||||||||||
Equity Method Investment, Ownership Percentage | 4.57% | |||||||||||
Subsequent Event [Member] | Redeemable Common Stock [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Stock Redeemed or Called During Period, Shares | shares | 4,091 | |||||||||||
Stock Redeemed or Called During Period, Value | $ 39,682 |