Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | RW HOLDINGS NNN REIT, INC. | |
Entity Central Index Key | 1,645,873 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Common Class C [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,500,779 | |
Common Class S [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,144 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Real estate investments: | ||
Land | $ 31,264,818 | $ 21,878,768 |
Buildings and improvements | 147,963,976 | 108,590,813 |
Tenant origination and absorption costs | 14,152,327 | 8,340,774 |
Total investments in real estate property | 193,381,121 | 138,810,355 |
Accumulated depreciation and amortization | (8,463,133) | (3,574,739) |
Total investments in real estate property, net | 184,917,988 | 135,235,616 |
Investments in unconsolidated entities | 14,129,402 | 14,524,022 |
Real estate investments, net | 199,047,390 | 149,759,638 |
Cash and cash equivalents | 5,266,816 | 3,238,173 |
Restricted cash | 83,300 | 944,582 |
Tenant receivables, net | 2,780,283 | 1,263,095 |
Above-market lease intangibles, net | 608,509 | 681,293 |
Due from affiliates (Note 8) | 99,761 | 34,194 |
Purchase and other deposits | 500,000 | 40,000 |
Prepaid expenses and other assets | 1,263,995 | 1,104,573 |
Interest rate swap derivatives | 418,085 | 7,899 |
Total assets | 210,068,139 | 157,073,447 |
Liabilities and Stockholders' Equity | ||
Mortgage notes payable, net | 98,829,220 | 60,487,303 |
Unsecured credit facility, net | 0 | 12,000,000 |
Accounts payable, accrued and other liabilities | 2,829,554 | 2,411,484 |
Below-market lease intangibles, net | 2,713,981 | 1,584,229 |
Due to affiliates (Note 8) | 0 | 907,377 |
Share repurchases payable | 971,241 | 386,839 |
Interest rate swap derivatives | 4,163 | 0 |
Total liabilities | 105,348,159 | 77,777,232 |
Commitments and contingencies (Note 9) | ||
Redeemable common stock | 3,468,694 | 46,349 |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Additional paid-in-capital | 113,386,500 | 85,324,921 |
Cumulative distributions and net losses | (12,147,351) | (6,083,896) |
Total stockholders' equity | 101,251,286 | 79,249,866 |
Total liabilities and stockholders' equity | 210,068,139 | 157,073,447 |
Common Class C [Member] | ||
Liabilities and Stockholders' Equity | ||
Common Stock, Value, Issued | 12,134 | 8,838 |
Total stockholders' equity | 12,134 | 8,838 |
Common Class S [Member] | ||
Liabilities and Stockholders' Equity | ||
Common Stock, Value, Issued | 3 | 3 |
Total stockholders' equity | $ 3 | $ 3 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
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 Class C [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares, Issued | 12,134,327 | 8,838,002 |
Common Stock, Shares, Outstanding | 12,134,327 | 8,838,002 |
Common Class S [Member] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 3,132 | 3,032 |
Common Stock, Shares, Outstanding | 3,132 | 3,032 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Rental income | $ 3,910,063 | $ 1,926,722 | $ 10,490,488 | $ 3,990,317 |
Tenant reimbursements | 815,216 | 389,784 | 2,076,735 | 915,431 |
Total revenues | 4,725,279 | 2,316,506 | 12,567,223 | 4,905,748 |
Expenses: | ||||
Fees to affiliates (Note 8) | 532,355 | 264,927 | 1,411,585 | 573,081 |
General and administrative | 598,578 | 904,818 | 2,047,761 | 2,922,840 |
Depreciation and amortization | 1,861,649 | 921,692 | 4,888,394 | 2,077,970 |
Interest expense | 1,070,860 | 541,282 | 3,364,736 | 1,111,287 |
Property expenses | 772,394 | 413,161 | 1,966,616 | 968,902 |
Total expenses | 4,835,836 | 3,045,880 | 13,679,092 | 7,654,080 |
Less: Expenses reimbursed/fees waived by Sponsor or affiliates (Note 8) | (298,645) | (626,715) | (952,098) | (2,064,684) |
Net expenses | 4,537,191 | 2,419,165 | 12,726,994 | 5,589,396 |
Other income: | ||||
Interest income | 4,648 | 2,988 | 12,568 | 3,875 |
Income from investments in unconsolidated entities | 69,863 | 688 | 163,348 | 168,043 |
Total other income | 74,511 | 3,676 | 175,916 | 171,918 |
Net income (loss) | $ 262,599 | $ (98,983) | $ 16,145 | $ (511,730) |
Net income (loss) per share, basic and diluted (Note 2) | $ 0.02 | $ (0.01) | $ 0 | $ (0.10) |
Weighted-average number of common shares outstanding, basic and diluted | 11,611,906 | 6,873,249 | 10,578,708 | 5,220,371 |
Dividends declared per common share | $ 0.176 | $ 0.175 | $ 0.586 | $ 0.525 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 2018 - USD ($) | Total | Common Class C [Member] | Common Class S [Member] | Additional Paid-in Capital [Member] | Cumulative Distributions and Net Losses [Member] |
Balance at Dec. 31, 2017 | $ 79,249,866 | $ 8,838 | $ 3 | $ 85,324,921 | $ (6,083,896) |
Balance (in shares) at Dec. 31, 2017 | 8,838,002 | 3,032 | |||
Issuance of common stock | 38,825,442 | $ 3,865 | $ 0 | 38,821,577 | 0 |
Issuance of common stock (in shares) | 3,865,204 | 100 | |||
Stock compensation expense | 129,645 | $ 13 | $ 0 | 129,632 | 0 |
Stock compensation expense (in shares) | 12,900 | 0 | |||
Offering costs | (1,164,313) | $ 0 | $ 0 | (1,164,313) | 0 |
Reclassification to redeemable common stock | (4,006,747) | 0 | 0 | (4,006,747) | 0 |
Repurchase of common stock | (5,719,152) | $ (582) | $ 0 | (5,718,570) | 0 |
Repurchase of common stock (in shares) | (581,779) | 0 | |||
Distributions declared | (6,079,600) | 0 | (6,079,600) | ||
Net income | 16,145 | $ 0 | $ 0 | 0 | 16,145 |
Balance at Sep. 30, 2018 | $ 101,251,286 | $ 12,134 | $ 3 | $ 113,386,500 | $ (12,147,351) |
Balance (in shares) at Sep. 30, 2018 | 12,134,327 | 3,132 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ 16,145 | $ (511,730) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 4,888,394 | 2,077,970 |
Stock compensation expense | 129,645 | 125,000 |
Deferred rents | (910,390) | (620,748) |
Amortization of deferred financing costs | 654,146 | 89,645 |
Amortization of above-market lease | 72,784 | 59,509 |
Amortization of below-market leases | (287,732) | (37,213) |
Unrealized (gain) loss on interest rate swap valuation | (406,023) | 100,006 |
Income from investments in unconsolidated entities | (163,348) | (168,043) |
Distributions from investments in unconsolidated entities | 557,968 | 204,212 |
Change in operating assets and liabilities: | ||
Tenant receivables | (606,798) | (416,277) |
Prepaid expenses and other assets | (148,851) | (589,261) |
Accounts payable, accrued and other liabilities | (279,972) | 1,697,446 |
Due to affiliates | (959,979) | 535,856 |
Net cash provided by operating activities | 2,555,989 | 2,546,372 |
Cash Flows from Investing Activities: | ||
Acquisition of real estate investments | (50,863,080) | (62,245,697) |
Payment of acquisition fees to affiliate | (1,541,108) | (2,772,329) |
Refundable purchase deposit | (500,000) | 0 |
Investments in unconsolidated entities | 0 | (10,542,594) |
Fund held in trust for an unconsolidated entity | 0 | 363,168 |
Repayment of amounts due from affiliate | 0 | 28,571 |
Additions to real estate investments | (749,094) | (685,161) |
Net cash used in investing activities | (53,653,282) | (75,854,042) |
Cash Flows from Financing Activities: | ||
Borrowings from unsecured credit facility | 18,450,000 | 43,390,000 |
Repayments of unsecured credit facility | (30,450,000) | (46,428,064) |
Proceeds from mortgage notes payable | 51,587,500 | 36,904,988 |
Principal payments on mortgage notes payable | (12,664,740) | (218,599) |
Refundable loan deposits | 0 | (44,550) |
Payments of deferred financing costs | (996,010) | (920,699) |
Payments of financing fees to affiliates | (209,550) | (261,950) |
Proceeds from issuance of common stock and investor deposits | 34,616,876 | 50,500,102 |
Payments of offering costs | (1,177,728) | (1,675,149) |
Repurchase of common stock | (5,719,152) | (1,561,201) |
Distributions paid to common stockholders | (1,172,542) | (464,619) |
Net cash provided by financing activities | 52,264,654 | 79,220,259 |
Net increase in cash, cash equivalents and restricted cash | 1,167,361 | 5,912,589 |
Cash, cash equivalents and restricted cash, beginning of period | 4,182,755 | 3,677,373 |
Cash, cash equivalents and restricted cash, end of period | 5,350,116 | 9,589,962 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 2,940,543 | 756,783 |
Supplemental Schedule of Noncash Investing and Financing Activities: | ||
Reclassification to redeemable common stock | 4,006,747 | 214,642 |
Increase in share repurchases payable | 584,402 | 176,654 |
Purchase deposits applied to acquisition of real estate | 0 | 500,000 |
Accrued distributions | 698,492 | 0 |
Reinvested distributions from common stockholders | $ 4,208,566 | $ 1,967,325 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Business Description and Basis of Presentation [Text Block] | NOTE 1. BUSINESS AND ORGANIZATION RW Holdings NNN REIT, Inc. (the “Company”) was incorporated on May 14, 2015 as a Maryland corporation. The Company was originally incorporated under the name Rich Uncles Real Estate Investment Trust, Inc., but changed its name on October 19, 2015 to Rich Uncles NNN REIT, Inc. and again on August 14, 2017 to its present name RW Holdings NNN REIT, Inc. The Company has the authority to issue 450,000,000 shares of stock, consisting of 50,000,000 shares of preferred stock, $0.001 par value per share, 300,000,000 shares of Class C common stock, $0.001 par value per share, and 100,000,000 shares of Class S common stock, $0.001 par value per share. The Company was formed to primarily invest, directly or indirectly through investments in real estate owning entities, in single-tenant income-producing corporate properties located in the United States, which are leased to creditworthy tenants under long-term net leases. The Company’s goal is to generate current income for investors and long-term capital appreciation in the value of its properties. The Company holds its investments in real property through special purpose wholly-owned limited liability companies, which are wholly-owned subsidiaries of Rich Uncles NNN Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership) or through the Operating Partnership. The Operating Partnership was formed on January 28, 2016. The Company is the sole general partner of, and owns a 99% partnership interest in, the Operating Partnership. Rich Uncles NNN LP, LLC, a Delaware limited liability company formed on May 13, 2016 (“NNN LP”), owns the remaining 1% partnership interest in the Operating Partnership and is the sole limited partner. NNN LP is wholly-owned by the Company. The Company is externally managed by its advisor, Rich Uncles NNN REIT Operator, LLC (the “Advisor”), a Delaware limited liability company, pursuant to an advisory agreement, as amended (the “Advisory Agreement”). The Advisor is wholly-owned by the Company’s sponsor, BrixInvest, LLC (f/k/a Rich Uncles, LLC, the “Sponsor”), a Delaware limited liability company whose members include Harold Hofer and Ray Wirta, the Company’s Chief Executive Officer and Chairman, respectively. On each of June 24, 2015 and December 31, 2015, the Company issued 10,000 shares of its Class C common stock to the Sponsor for a purchase price of $10.00 per share. On July 15, 2015, the Company filed a registration statement on Form S-11 with the U.S. Securities and Exchange Commission (the “SEC”) to register an initial public offering of a maximum of 90,000,000 shares of common stock for sale to the public (the “Primary Offering”). The Company also registered a maximum of 10,000,000 shares of common stock pursuant to the Company’s distribution reinvestment plan (the “Registered DRP Offering” and, together with the Primary Offering, the “Registered Offering”). The SEC declared the Company’s registration statement effective on June 1, 2016 and on July 20, 2016, the Company began offering shares of common stock to the public. Pursuant to its securities offering registered with the SEC, the Company sells shares of its “Class C” common stock directly to investors, with a minimum investment in shares of $500. Commencing in August 2017, the Company began selling shares of its Class C common stock only to U.S. persons as defined under Rule 903 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). On August 11, 2017, the Company began offering up to 100,000,000 shares of its Class S common stock exclusively to non-U.S. Persons as defined under Rule 903 promulgated under the Securities Act pursuant to an exemption from the registration requirements of the Securities Act and in accordance with Regulation S of the Securities Act (the “Class S Offering” and, together with the Registered Offering, the “Offerings”). The Class S common stock has similar features and rights as the Class C common stock, including with respect to voting and liquidation except that the Class S common stock offered in the Class S offering may be sold through brokers or other persons who may be paid upfront and deferred selling commissions and fees. On January 18, 2018, the Company’s board of directors approved and established an estimated net asset value (“NAV”) per share of the Company’s common stock of $10.05. Effective January 19, 2018, the purchase price per share of the Company’s common stock in the Offerings increased from $10.00 to $10.05. Through September 30, 2018, the Company had sold 12,920,379 shares of Class C common stock in the Registered Offering, including 737,813 shares of Class C common stock sold under its Registered DRP Offering, for aggregate gross offering proceeds of $129,376,190, and 3,132 shares of Class S common stock in the Class S Offering, including 132 shares of Class S common stock sold under its dividend reinvestment plan applicable to Class S common stock, for aggregate gross offering proceeds of $31,320. As of September 30, 2018, the Company had invested in (i) 22 operating properties, comprised of: nine retail properties, eight office properties and five industrial properties; (ii) one parcel of land, which currently serves as an easement to one of the Company’s office properties; (iii) one tenant-in-common real estate investment in which the Company has an approximate 72.7% interest; and (iv) one real estate investment in an affiliated REIT in which it has an approximate 4.4% interest. The Company continues to offer shares of common stock under its Offerings. In some states, the Company is required to renew the registration statement for the Registered Offering annually or file a new registration statement to continue the Registered Offering. The Company may terminate the Registered Offering at any time. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and the rules and regulations of the SEC. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, which is responsible for their integrity and objectivity. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2017 audited consolidated financial statements included in the Company’s Form 10-K filed with the SEC on April 3, 2018. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state its financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The December 31, 2017 balance sheet included herein was derived from the audited financial statements but does not include all disclosures or notes required by GAAP for complete financial statements. Use of Estimates The preparation of the condensed 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 condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates. 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, tenant receivables, due from affiliates, purchase and other deposits, prepaid expenses and other assets, accounts payable, accrued and other liabilities and due to affiliates. Derivative Instruments Unsecured Credit Facility Mortgage notes payable: Restricted Cash Restricted cash is comprised of funds which are restricted for use as required by certain lenders in conjunction with an acquisition or debt financing and for on-site and tenant improvements. Pursuant to lease agreements, the Company has obligations to pay for $309,404 and $1,899,485 in site and tenant improvements to be incurred by tenants as of September 30, 2018 and December 31, 2017, respectively, including a 72.7% share of the tenant improvements for the Santa Clara property at both balance sheet dates. At September 30, 2018 and December 31, 2017, the Company had $83,300 and $944,582, respectively, of restricted cash held to fund the improvements. Other Comprehensive Income (Loss) For all periods presented, other comprehensive income (loss) is the same as net income (loss). 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 for the three and nine months ended September 30, 2018 and 2017. For the three and nine months ended September 30, 2018, the Company has presented net income (loss) per share amounts on the accompanying statements of operations for Class C and S share classes as a combined common share class. Application of the two-class method for allocating income (loss) in accordance with the provisions of Accounting Standards Codification (“ASC”) 260, Earnings per Share Since the Company’s board of directors declared distributions for four months (December 2017 through March 2018) during the three months ended March 31, 2018 in order to transition to a process of declaring dividends prior to the beginning of the month, the dividends declared per common share for the nine months ended September 30, 2018 reflects ten months of dividends rather than nine months of dividends. Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) New Accounting Standards Recently Issued and Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement |
CONDENSED CONSOLIDATED BALANC_3
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Text Block Supplement [Abstract] | |
Supplemental Balance Sheet Disclosures [Text Block] | NOTE 3. CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS Tenant Receivables, Net Tenant receivables consisted of the following: September 30, 2018 December 31, 2017 Straight-line rent $ 1,906,212 $ 995,822 Tenant rent 2,695 27,460 Tenant reimbursements 871,376 239,813 Total $ 2,780,283 $ 1,263,095 Accounts Payable, Accrued and Other Liabilities Accounts payable, accrued and other liabilities were comprised of the following: September 30, 2018 December 31, 2017 Accounts payable $ 40,514 $ 244,430 Accrued expenses 1,167,656 568,881 Accrued dividends 698,492 2,427 Accrued interest payable 351,833 186,841 Unearned rent 483,972 548,266 Deferred commission payable 1,800 2,250 Lease incentive obligation 85,287 858,389 Total $ 2,829,554 $ 2,411,484 |
REAL ESTATE INVESTMENTS
REAL ESTATE INVESTMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
Real Estate Disclosure [Text Block] | NOTE 4. REAL ESTATE INVESTMENTS As of September 30, 2018, the Company’s real estate investment portfolio consisted of 22 operating properties in 12 states, consisting of: (i) nine retail, (ii) eight office and (iii) five industrial properties and one parcel of land, which currently serves as an easement to one of the Company’s office properties. The following table provides summary information regarding the Company’s real estate investment portfolio as of September 30, 2018: Property Location Acquisition Date Property Type Land, Buildings and Improvements Tenant Origination and Absorption Costs Accumulated Depreciation and Amortization Total Investment in Real Estate Property, Net Accredo Health Orlando, FL 6/15/2016 Office $ 9,855,847 $ 1,053,637 $ (1,140,153 ) $ 9,769,331 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (751,571 ) 4,101,800 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (75,457 ) 1,322,657 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (96,569 ) 1,587,860 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (72,500 ) 1,234,090 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (69,511 ) 1,216,524 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (71,340 ) 1,142,389 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (69,315 ) 1,119,179 Dana Cedar Park, TX 12/27/2016 Industrial 8,392,906 1,210,874 (878,950 ) 8,724,830 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (1,207,170 ) 12,517,020 exp US Services Maitland, FL 3/27/2017 Office 5,920,121 388,248 (334,757 ) 5,973,612 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (476,346 ) 12,701,942 Wyndham Summerlin, NV 6/22/2017 Office 9,447,270 669,232 (375,285 ) 9,741,217 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (357,458 ) 8,272,640 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,746 281,442 (282,018 ) 7,262,170 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (200,625 ) 6,223,473 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,201 1,013,948 (310,379 ) 12,543,770 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (549,473 ) 26,808,427 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (674,563 ) 16,444,617 Cummins Nashville, TN 4/4/2018 Office 14,465,490 1,536,998 (364,174 ) 15,638,314 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness Las Vegas, NV 7/27/2018 Retail 11,453,338 1,204,973 (93,131 ) 12,565,180 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (12,388 ) 7,677,536 $ 179,228,794 $ 14,152,327 $ (8,463,133 ) $ 184,917,988 Current Year Acquisitions During the nine months ended September 30, 2018, the Company acquired the following properties: Property Acquisition Date Land Buildings and Improvements Tenant Origination and Absorption Costs Above- Market Lease Below- Market Lease Total 3M 3/29/2018 $ 758,780 $ 14,004,039 $ 2,356,361 $ — $ (1,417,483 ) $ 15,701,697 Cummins 4/4/2018 3,347,959 11,117,531 1,536,998 — — 16,002,488 Northrop Grumman Parcel 6/21/2018 329,410 — — — — 329,410 24 Hour Fitness 7/27/2018 3,121,985 8,331,352 1,204,974 — — 12,658,311 Texas Health 9/13/2018 1,827,914 5,148,789 713,221 — — 7,689,924 $ 9,386,048 $ 38,601,711 $ 5,811,554 $ — $ (1,417,483 ) $ 52,381,830 Purchase price $ 52,381,830 Acquisition fees to affiliates (1,518,750 ) Cash paid for acquisition of real estate investments $ 50,863,080 The non-cancellable lease terms of the properties acquired during the nine months ended September 30, 2018 are as follows: Property Lease Expiration 3M 7/31/2022 Cummins 2/28/2023 24 Hour Fitness 3/31/2030 Texas Health 12/31/2025 The purchase price allocations reflected in the condensed consolidated financial statements are based upon current estimates and assumptions that are subject to change which may impact the fair value of the assets and liabilities above (including real estate investments, other assets and accrued liabilities). Capitalized acquisition fees paid to the Advisor for properties acquired during the nine months ended September 30, 2018 are as follows: Property Amount 3M $ 456,000 Cummins $ 465,000 Northrop Grumman Parcel $ 9,000 24 Hour Fitness $ 366,000 Texas Health $ 222,750 Total $ 1,518,750 The Company also paid the Advisor capitalized acquisition fees of $22,238 primarily for the additions to real estate investments. During the three and nine months ended September 30, 2018, the Company recognized $1,192,671 and $2,121,798, respectively, of total revenue related to these recently-acquired properties. Operating Leases and Asset Concentration As of September 30, 2018, the Company’s portfolio’s asset concentration (greater than 10% of total assets) was as follows: Property and Location Net Carrying Value Percentage of Total Assets AvAir, Chandler, AZ $ 26,808,427 12.8 % The Company’s real estate properties are primarily 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 news 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, 2018, the future minimum contractual rent payments due to the Company under the Company’s non-cancelable operating leases, excluding any renewal periods, are as follows: October through December 2018 $ 3,634,070 2019 14,748,579 2020 14,902,133 2021 13,728,032 2022 12,402,776 2023 10,106,790 Thereafter 52,937,703 $ 122,460,083 Revenue Concentration The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three and nine months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Property and Location Revenue Percentage of Total Revenue Revenue Percentage of Total Revenue AvAir, Chandler, AZ $ 630,095 13.3 % $ 1,919,242 15.3 % 3M, DeKalb, IL $ 527,065 11.2 % $ — — Intangibles As of September 30, 2018, the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Leases Below-Market Leases Cost $ 14,152,327 $ 783,115 $ (3,071,254 ) Accumulated amortization (2,566,559 ) (174,606 ) 357,273 Net amount $ 11,585,768 $ 608,509 $ (2,713,981 ) The amortization of intangible assets over the next five years is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Leases Below-Market Leases October through December 2018 $ 567,988 $ 24,262 $ (118,600 ) 2019 2,271,956 97,045 (474,391 ) 2020 2,271,956 97,045 (474,391 ) 2021 1,855,696 78,994 (474,391 ) 2022 1,259,307 63,719 (306,829 ) 2023 633,543 63,719 (78,369 ) Thereafter 2,725,322 183,725 (787,010 ) $ 11,585,768 $ 608,509 $ (2,713,981 ) Weighted-average remaining amortization period 7.5 years 7.4 years 9.9 years |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Cost and Equity Method Investments Disclosure [Text Block] | NOTE 5. INVESTMENTS IN UNCONSOLIDATED ENTITIES The Company’s investments in unconsolidated entities are as follows: September 30, 2018 December 31, 2017 Santa Clara Property Tenant-in-Common Interest (“TIC Interest”) $ 10,940,251 $ 11,103,547 Rich Uncles Real Estate Investment Trust I (“REIT I”) 3,189,151 3,420,475 $ 14,129,402 $ 14,524,022 The Company’s income (loss) from investments in unconsolidated entities is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 REIT I $ 826 $ 688 $ (26,376 ) $ 168,043 TIC Interest (1) 69,037 — 189,724 — $ 69,863 $ 688 $ 163,348 $ 168,043 The Company’s TIC Interest in the Santa Clara property commenced on September 28, 2017. The Company’s share in income (loss) in the Santa Clara property for three days during the periods presented above was immaterial and was not recorded. TIC Interest On September 28, 2017, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired an approximate 72.7% TIC Interest in the Santa Clara property. The remaining approximate 27.3% of undivided interests in the Santa Clara property are held by Hagg Lane II, LLC (an approximate 23.4% interest) and Hagg Lane III, LLC (an approximate 3.9% interest). The manager of Hagg Lane II, LLC and Hagg Lane III, LLC is a board member of the Sponsor. The Santa Clara property does not qualify as a variable interest entity and consolidation is not required as the Company’s TIC Interest does not control the property. Therefore, the Company accounts for its TIC Interest in the Santa Clara property using the equity method. The Company receives approximately 72.7% of the cash flow distributions and recognizes approximately 72.7% of the results of operations. During the three and nine months ended September 30, 2018, the Company received $36,485 and $353,021 in cash distributions, respectively. The following is summarized financial information for the Santa Clara property: September 30, 2018 December 31, 2017 Assets: Real estate investments, net $ 31,916,437 $ 32,587,034 Cash and cash equivalents 436,106 615,436 Other assets 296,231 103,700 Total assets $ 32,648,774 $ 33,306,170 Liabilities: Mortgage notes payable $ 14,055,628 $ 14,235,256 Below-market lease, net 3,141,383 3,247,480 Other liabilities 99,000 246,085 Total liabilities 17,296,011 17,728,821 Total equity 15,352,763 15,577,349 Total liabilities and equity $ 32,648,774 $ 33,306,170 Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 (1) 2018 2017 (1) Total revenues $ 643,600 $ — $ 1,965,612 $ — Expenses: Interest expense 146,861 — 437,846 — Depreciation and amortization 248,136 — 743,485 — Other expenses 153,654 — 523,348 — Total expenses 548,652 — 1,704,679 — Net income $ 94,949 $ — $ 260,933 $ — (1) The Company’s TIC Interest in the Santa Clara property commenced on September 28, 2017. The results of operations for three days during the three and nine months ended September 30, 2017 were not material. REIT I The Company’s investment in REIT I represented an approximate 4.4% ownership interest as of September 30, 2018 and December 31, 2017, respectively. The Company recorded its share of income (loss) of REIT I based on REIT I’s results of operations for the three and nine months ended September 30, 2018. During the three and nine months ended September 30, 2018, the Company received $68,316 and $204,947 in cash distributions, respectively, related to its investment in REIT I. The following is summarized financial information for REIT I: September 30, 2018 December 31, 2017 Assets: Real estate investments, net $ 126,446,105 $ 131,166,670 Cash and cash equivalents and restricted cash 3,818,426 6,027,807 Other assets 3,329,008 2,658,777 Total assets $ 133,593,539 $ 139,853,254 Liabilities: Mortgage notes payable, net $ 61,635,433 $ 62,277,387 Below-market lease intangibles, net 3,320,885 3,966,008 Other liabilities 3,393,087 2,937,247 Total liabilities 68,349,405 69,180,642 Redeemable common stock 153,768 586,242 Total shareholders’ equity 65,090,366 70,086,370 Total liabilities and shareholders’ equity $ 133,593,539 $ 139,853,254 Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Total revenues $ 3,293,384 $ 3,299,149 $ 9,889,765 $ 9,533,366 Expenses: Depreciation and amortization 1,424,669 1,481,521 4,282,006 4,151,949 Interest expense 714,138 733,811 1,830,849 1,956,754 Impairment of real estate investment property (1) — — 862,190 — Other expenses 1,133,547 1,073,348 3,520,467 2,831,128 Total expenses 3,272,354 3,288,680 10,495,512 8,939,831 Other income: Other income — — — 748,795 Net income (loss) $ 21,030 $ 10,469 $ (605,747 ) $ 1,342,330 (1) During the second quarter of 2018, REIT I recorded an impairment charge of $862,190 related to its investment in a property in Antioch, California due to the expiration of the tenant’s lease term at December 31, 2017 and REIT I’s subsequent difficulties encountered during the second quarter in its efforts to re-lease the property at acceptable rent rates and without incurring substantial potential tenant improvement costs. The impairment charge represented less than 1% of REIT I’s total investments in real estate property and the book value of the property after the impairment charge represented less than 2.0% of REIT I’s total investments in real estate property as of June 30, 2018, when the impairment charge was incurred. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 6. DEBT Mortgage Notes Payable As of September 30, 2018 and December 31, 2017, the Company’s mortgage notes payable consisted of the following: September 30, 2018 December 31, 2017 Collateral Principal Amount Deferred Loan Costs, Net Net Balance Principal Amount Deferred Loan Costs, Net Net Balance Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreen properties $ 7,031,354 $ (98,685 ) $ 6,932,669 $ 7,133,966 $ (124,763 ) $ 7,009,203 3.95 % 3.95 % 7/1/2021 Dana property 4,652,250 (107,142 ) 4,545,108 4,709,889 (125,132 ) 4,584,757 4.56 % 4.56 % 4/1/2023 Six Dollar General properties 3,901,098 (126,831 ) 3,774,267 3,951,846 (153,290 ) 3,798,556 4.69 % 4.69 % 4/1/2022 Wyndham property (2) 5,846,100 (101,176 ) 5,744,924 5,920,800 (109,936 ) 5,810,864 One-month LIBOR+2.05 % 4.34 % 6/5/2027 Williams Sonoma property (2) 4,637,100 (72,142 ) 4,564,958 4,699,200 (85,227 ) 4,613,973 One-month LIBOR+2.05 % 4.05 % 6/5/2022 Omnicare property 4,368,797 (154,047 ) 4,214,750 4,423,574 (169,372 ) 4,254,202 4.36 % 4.36 % 5/1/2026 Harley property 6,897,709 (178,082 ) 6,719,627 6,983,418 (200,811 ) 6,782,607 4.25 % 4.25 % 9/1/2024 Northrop Grumman property 5,844,186 (166,051 ) 5,678,135 5,945,655 (217,584 ) 5,728,071 4.40 % 4.40 % 3/2/2021 EMCOR property 2,923,603 (74,651 ) 2,848,952 2,955,000 (83,743 ) 2,871,257 4.35 % 4.35 % 12/1/2024 exp US Services property 3,461,472 (126,739 ) 3,334,733 3,505,061 (140,382 ) 3,364,679 (4 ) 4.25 % 11/17/2024 Husqvarna property 6,380,000 (196,639 ) 6,183,361 — — — (5 ) 4.60 % 2/20/2028 AvAir property (3) 14,575,000 (340,655 ) 14,234,345 12,000,000 (330,866 ) 11,669,134 (6 ) 4.84 % 3/27/2028 3M property 8,360,000 (132,463 ) 8,227,537 — — — One-month LIBOR+2.25 % 5.09 % 3/29/2023 Cummins property 8,530,000 (153,712 ) 8,376,288 — — — One-month LIBOR+2.25 % 5.16 % 4/4/2023 24 Hour Fitness 8,900,000 (162,341 ) 8,737,659 — — — One-month LIBOR+4.30 % 6.56 % 3/17/2019 Texas Health 4,842,500 (130,593 ) 4,711,907 — — — One-month LIBOR+4.30 % 6.56 % 3/12/2019 $ 101,151,169 $ (2,321,949 ) $ 98,829,220 $ 62,228,409 $ (1,741,106 ) $ 60,487,303 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of September 30, 2018. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2018 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments (see Note 7). (2) The loans on each of the Williams Sonoma and Wyndham properties (collectively, the “Property”) located in Summerlin, Nevada were originated by Nevada State Bank (“Bank”). The loans are collateralized by a deed of trust and a security agreement with assignment of rents and fixture filing. In addition, the individual loans are subject to a cross collateralization and cross default agreement whereby any default under, or failure to comply with the terms of any one or both of the loans is an event of default under the terms of both loans. The value of the Property must be in an amount sufficient to maintain a loan to value ratio of no more than 60%. If the loan to value ratio is ever more than 60%, the borrower shall, upon the Bank’s written demand, reduce the principal balance of the loans so that the loan to value ratio is no more than 60%. (3) On March 27, 2018, the Company refinanced the mortgage loan payable as of December 31, 2017 with a new loan for $14,575,000 through a nonaffiliated lender. The loan is secured by the AvAir property and it matures on March 27, 2028. (4) The initial contractual interest rate is 4.25% and starting November 18, 2022, the interest rate is T-Bill index plus 3.25%. (5) The initial contractual interest rate is 4.60% for the first five years and the greater of 4.60% or five-year Treasury Constant Maturity (“TCM”) plus 2.45% for the second five years. (6) The initial contractual interest rate for the note payable outstanding as of September 30, 2018 is 4.84% for the first five-years and the greater of 4.60% or five-year TCM plus 2.45% for the second five-years. The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement): September 30, 2018 December 31, 2017 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 101,151,169 $ 98,829,220 $ 100,358,550 $ 62,228,409 $ 60,487,303 $ 62,363,284 Disclosures of the fair values of financial instruments are based on pertinent information available to the Company as of the period end and require a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value. Unsecured Credit Facility On February 28, 2018, the Company, together with the Operating Partnership and Rich Uncles NNN LP, LLC (“Borrowers”), entered into a Business Loan Agreement and Promissory Note (the “Unsecured Credit Facility”) with Pacific Mercantile Bank (“Lender”). The Unsecured Credit Facility replaced the $12,000,000 unsecured line of credit with Lender, which expired on January 26, 2018 (the “Former Credit Facility”). The Unsecured Credit Facility is a revolving unsecured line of credit for a maximum principal amount of $9,000,000 and matures on January 26, 2019, unless earlier terminated. Under the terms of the Unsecured Credit Facility, Borrowers pay a variable rate of interest on outstanding amounts equal to one (1) percentage point over an independent index published in The Wall Street Journal based on the highest rate on corporate loans posted by at least 75% of the largest banks (the “Index”). Based upon the Index as of the date of the Unsecured Credit Facility, the interest rate under the Unsecured Credit Facility was 5.50% and is 6.25% as of September 30, 2018. The Unsecured Credit Facility contains customary representations, warranties and covenants, which are substantially similar to those in the Former Credit Facility. The Company’s ability to borrow under the Unsecured Credit Facility will be subject to its ongoing compliance with various affirmative and negative covenants, including with respect to indebtedness, guaranties, mergers and asset sales, liens, dividends, corporate existence and financial reporting obligations. The Unsecured Credit Facility also contains customary events of default, including, without limitation, nonpayment of principal, interest, fees or other amounts when due, violation of covenants, breaches of representations or warranties and change of ownership. Upon the occurrence of an event of default, Lender may accelerate the repayment of amounts outstanding under the Unsecured Credit Facility and exercise other remedies subject, in certain instances, to the expiration of an applicable cure period. The Unsecured Credit Facility is secured by guaranties executed by Raymond E. Wirta, Chairman of the Board of the Company, a trust belonging to Mr. Wirta, Harold C. Hofer, President and Chief Executive Officer of the Company, and a trust belonging to Mr. Hofer, each in the amount of $9,000,000. Such guaranties become effective upon certain triggering events, including an event of default under the Unsecured Credit Facility and the failure by Borrowers to pay one or more subsequent advances within 90 days of disbursement. As of September 30, 2018, the Unsecured Credit Facility had no outstanding borrowings. On October 31, 2018, the Company borrowed the full $9,000,000 to fund the acquisition of the Bon Secours property in Richmond, Virginia, as more fully described in Note 10. As of December 31, 2017, the Company’s Former Credit Facility had total outstanding borrowings of $12,000,000. All Debt Agreements Pursuant to the terms of mortgage notes payable on certain of the Company’s properties and the Unsecured Credit Facility, the Company and/or the Borrowers are subject to certain financial loan covenants. The Company and/or the Borrowers were in compliance with all terms and conditions of the applicable loan agreements as of September 30, 2018. The following summarizes the future principal repayment of the Company’s mortgage notes payable and Unsecured Credit Facility as of September 30, 2018: Mortgage Note Payable Unsecured Credit Facility (1) Total October through December 2018 $ 227,926 $ — $ 227,926 2019 14,852,295 — 14,852,295 2020 1,365,125 — 1,365,125 2021 8,055,405 — 8,055,405 2022 14,436,354 — 14,436,354 2023 21,031,341 — 21,031,341 Thereafter 41,182,723 — 41,182,723 Total principal $ 101,151,169 $ — $ 101,151,169 (1) Any outstanding borrowings under the Unsecured Credit Facility will be due by January 26, 2019 unless the facility is extended. Interest Expense The following is a reconciliation of the components of interest expense for the three and nine months ended September 30, 2018 and 2017: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Mortgage notes payable Interest expense $ 1,050,813 $ 401,174 $ 2,880,471 $ 667,011 Amortization of deferred financing costs 127,182 53,141 632,717 88,526 Unrealized (gain) loss on interest rate swaps (see Note 7) (185,452 ) (4,627 ) (406,023 ) 100,006 Unsecured credit facility Interest expense 69,745 81,594 236,142 224,626 Amortization of deferred financing costs 8,572 — 21,429 1,118 Forfeited loan fee — 10,000 — 30,000 Total interest expense $ 1,070,860 $ 541,282 $ 3,364,736 $ 1,111,287 |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | NOTE 7. INTEREST RATE SWAP DERIVATIVES The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes. The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate mortgage notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the applicable instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. The Company (or wholly-owned limited liability company subsidiaries) has entered into interest rate swap agreements with amortizing notational amounts relating to four of its mortgage notes payable. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks. The following table summarizes the notional amount and other information related to the Company’s interest rate swaps: September 30, 2018 December 31, 2017 Derivative Instruments Number of Instru- ments Notional Amount (i) Reference Rate (ii) Weighted Average Fixed pay rate Weighted Average Remaining Term Number of Instru- ments Notional Amount (i) Reference Rate (iii) Weighted Average Fixed pay rate Weighted Average Remaining Term Interest Rate Swap Derivatives 4 $ 27,373,200 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.74 % 5.3 years 2 $ 10,620,000 One-month LIBOR + applicable spread/Fixed at 4.05%-4.34% 4.21 % 7.2 years (i) The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. As of September 30, 2018, the minimum notional amount (outstanding principal balance at the maturity date) was $24,936,799. (ii) The reference rate was September 30, 2018. (iii) The reference rate was December 31, 2017. The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement), as well as their classification in the condensed consolidated balance sheets: September 30, 2018 December 31, 2017 Derivative Instrument Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Asset - Interest rate swap derivatives, at fair value 3 $ 418,085 2 $ 7,899 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 1 $ (4,163 ) — $ — The change in fair value of a derivative instrument that is not designated as a cash flow hedge for financial accounting purposes is recorded as interest expense in the condensed consolidated statements of operations. None of the Company’s derivatives at September 30, 2018 or December 31, 2017 were designated as hedging instruments; therefore, the net unrealized (gains) losses recognized on interest rate swaps of $(185,453) and $(4,627) was recorded as a (decrease) increase in interest expense for the three months ended September 30, 2018 and 2017, respectively, and $(406,023) and $100,006 was recorded as a (decrease) increase in interest expense for the nine months ended September 30, 2018 and 2017, respectively (see Note 6). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 8. RELATED PARTY TRANSACTIONS The Company pays the members of its board of directors who are not executive officers for services rendered by issuing shares of Class C common stock to them. The total value of the shares issued was $48,240 and $60,000 for the three months ended September 30, 2018 and 2017, respectively, and $129,645 and $125,000 for the nine months ended September 30, 2018 and 2017, respectively, for which the Company issued 4,800 shares and 6,000 shares of Class C common stock during the three months ended September 30, 2018 and 2017, respectively, and 12,900 shares and 12,500 shares of Class C common stock during the nine months ended September 30, 2018 and 2017, respectively, to the directors in accordance with the terms of its director compensation program. The Company has entered into an agreement (the “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 Offerings, 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 and advisor for REIT I and Brix Student Housing REIT, Inc. During the three and nine months ended September 30, 2018 and 2017, no other business transactions occurred between the Company and REIT I, or Brix Student Housing REIT, Inc., other than as described below or elsewhere herein, and those relating to the Company’s investment in REIT I. Summarized below are the related party costs incurred by the Company, including those incurred pursuant to the Advisory Agreement, for the three and nine months ended September 30, 2018 and 2017, respectively: Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 September 30, 2017 December 31, 2017 Incurred Incurred Receivable Payable Incurred Incurred Receivable Payable Expensed Asset management fees (1) $ 532,355 $ 1,411,585 $ — $ 668 $ 264,927 $ 573,281 $ — $ 567,661 Subordinated participation fees — — — — — — — 315,802 Fees to affiliates 532,355 1,411,585 264,927 573,281 Property management fees* 22,503 54,654 — — 6,996 7,618 — 7,969 Directors and officers insurance and other reimbursements** 33,118 70,034 — 3,193 — — — — Expense reimbursements from (to) Sponsor (2) (298,645 ) (952,098 ) 106,602 — (584,230 ) (1,945,160 ) 34,194 — Waiver of asset management fees (1) — — — — (42,485 ) (119,524 ) — — Capitalized: Acquisition fees 588,750 1,518,750 — — 1,014,559 2,498,129 — — Financing coordination fees — 209,550 — — 174,500 261,950 — — Reimbursable organizational and offering expenses (3) 348,466 1,164,763 — 2,980 453,377 1,591,498 — 15,945 Other: Due to REIT I (4) — — — — 17,269 17,269 — — Payable to TIC (5) — — — — 363,168 363,168 — — $ 106,602 $ 6,841 $ 34,194 $ 907,377 * Property management fees are classified within property operating expenses on the condensed consolidated statements of operations. ** Directors and officers insurance and other reimbursements are classified within general and administrative expenses on the condensed consolidated statements of operations. (1) To the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Advisor will be deemed to have waived, not deferred, that portion up to 0.025% of the total investment value of the Company’s assets. For the three months ended September 30, 2018 and 2017, the Advisor waived zero and $42,485, respectively, of asset management fees, which are not subject to future recoupment by the Advisor and for the nine months ended September 30, 2018 and 2017, the Advisor waived zero and $119,524, respectively, of asset management fees, which are not subject to future recoupment by the Advisor. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $197,978 related to its TIC Interest in the Santa Clara property during the three and nine months ended September 30, 2018, respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities. (2) Includes payroll costs related to Company employees that answer questions from prospective stockholders. See “— Investor Relations Payroll Expense Reimbursement from Sponsor” below . 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. The expense reimbursements from the Sponsor for the three and nine months ended September 30, 2018 also include $125,181 and $225,126, respectively, of employment related legal fees which the Sponsor also agreed to reimburse the Company. The receivables related to these costs are reflected in “Due from affiliates” in the condensed consolidated balance sheets. (3) As of September 30, 2018, the Sponsor had incurred $8,156,345 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% of gross offering proceeds. Organizational and Offering Expenses The Company is obligated to reimburse the Sponsor or its affiliates for organizational and offering expenses (as defined in the Advisory Agreement) 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 organizational and offering expenses to the extent they exceed 3.0% of gross offering proceeds. As of September 30, 2018, the Sponsor has incurred organizational 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 stockholders, 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. As of September 30, 2018, the Company has reimbursed the Sponsor $3,879,246 in organizational and offering costs. The Company’s maximum liability for organizational and offering costs through September 30, 2018 was $3,882,226 of which $2,980 was payable as of September 30, 2018 and is included in “Due to affiliates” in the condensed consolidated balance sheet. Investor Relations Payroll Expense Reimbursement from Sponsor The Company employs investor personnel that answer inquiries from potential investors regarding the Company and/or its Registered Offering. 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 payroll expense reimbursements from the Sponsor for the three months ended September 30, 2018 and 2017 were $173,464 and $584,230, respectively, and for the nine months ended September 30, 2018 and 2017 were $726,972 and $1,945,160, respectively. The reduction in reimbursements during the 2018 periods corresponds primarily to a reduction in the number of investor relations personnel and related costs. Acquisition Fees The Company pays the Advisor a fee in an amount equal to 3.0% of the contract purchase price of the Company’s properties plus additions to real estate investments, as defined, 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. However, a majority of the directors (including a majority of the independent directors) not otherwise interested in the transaction may approve fees in excess of these limits if they determine the transaction to be commercially competitive, fair and reasonable to the Company. Asset Management Fee The Company pays the Advisor as compensation for the advisory services rendered to the Company, a monthly fee in an amount equal to 0.1% of the total investment value, as defined (the “Asset Management Fee”), as of the end of the preceding month plus the book value of any properties acquired during the month pro-rated based on the number of days owned. The Asset Management Fee is payable monthly on the last business day of such month. On August 2, 2018, the Conflicts Committee, which is comprised of all of the independent directors of the Company, approved, and on August 3, 2018 the board of directors approved, renewing the Advisory Agreement for an additional year, to August 11, 2019. At the same time, the board of directors also approved amendments to the Advisory Agreement which provide for (i) paying the Asset Management Fee for assets acquired during a month based on the pro-rated number of days following acquisition and (ii) paying the Asset Management Fee on the last business day of the month. The Asset Management Fee, which must be reasonable in the determination of the Company’s independent directors at least annually, may or may not be taken, in whole or in part as to any year, in the sole discretion of the Advisor. All or any portion of the Asset Management Fee not paid as to any fiscal year is deferred without interest and may be paid in such other fiscal year as the Advisor shall determine. Additionally, to the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly Asset Management Fee, the Advisor will be deemed to have waived, not deferred, that portion of its monthly Asset Management Fee that is up to 0.025% of the total investment value of the Company’s assets. The total amount of Asset Management Fees incurred in the three months ended September 30, 2018 and 2017 was $532,355 and $264,927 respectively, of which zero and $42,485, respectively, was waived. The total amount of Asset Management Fees incurred in the nine months ended September 30, 2018 and 2017 was $1,411,585 and $573,081 respectively, of which zero and $119,524, respectively, was waived. Asset Management Fees payable at September 30, 2018 and December 31, 2017 were zero and $567,661, respectively. Financing Coordination Fee Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if the Advisor or an affiliate provides a substantial amount of the services (as determined by a majority of the Company’s 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 pays to the Advisor or such affiliate a financing coordination fee equal to 1.0% of the amount of such financing. Property Management Fees If the Advisor or any of its affiliates provides a substantial amount of the property management services (as determined by a majority of the Company’s independent directors) for the Company’s properties, then the Company pays the Advisor or such affiliate a property management fee equal to 1.5% of gross revenues from the properties managed. The Company also reimburses 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. The Company currently provides property management services for six of the 22 real estate properties in its portfolio. Disposition Fees For substantial assistance in connection with the sale of properties, the Company pays the Advisor or one of its affiliates 3.0% of the contract sales price, as defined, of each property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with the Advisor or its affiliates, the disposition fees paid to the Advisor, the Sponsor, their affiliates and unaffiliated third parties may not exceed the lesser of the competitive real estate commission or 6% of the contract sales price. There were no disposition fees incurred during the three and nine months ended September 30, 2018 and 2017. Subordinated Participation Fees The Company pays the Advisor or an affiliate 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, as defined, is achieved and is equal to the sum of (using terms as defined in the Advisory Agreement): (i) 30% 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) 30% of the product of: (a) the amount by which aggregate 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. The Company calculated a subordinated participation fee of $315,802 which was accrued as of December 31, 2017 and paid in cash during the first quarter of 2018. Leasing Commission Fees If a property or properties of the Company becomes unleased and the Advisor or any of its affiliates provides a substantial amount of the services (as determined by a majority of the Company’s independent directors) in connection with the Company’s leasing of a property or properties to unaffiliated third parties, then the Company pays 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. There were no leasing commission fees incurred during the three and nine months ended September 30, 2018 and 2017. Operating Expenses Under the Company’s charter, total operating expenses of the Company are limited to the greater of 2% of average invested assets or 25% of net income for the four most recently completed fiscal quarters (the “2%/25% Limitation”). If the Company exceeds the 2%/25% Limitation, the Advisor must reimburse the Company the amount by which the aggregate total operating expenses exceeds the limitation, or the Company must obtain a waiver from the Company’s Conflicts Committee. For purposes of determining the 2%/25% Limitation amount, “average invested assets” means the average monthly book value of the Company’s assets invested directly or indirectly in equity interests and loans secured by real estate during the 12-month period before deducting depreciation, reserves for bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by the Company, as determined by GAAP, that are in any way related to the Company’s operation including asset management fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, listing and registration of shares of the Company’s common stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based upon increases in NAV per share; (f) acquisition fees and acquisition expenses (including expenses, relating to potential investments that the Company does not close); and (h) disposition fees on the sale of real property and other expenses connected with the acquisition, disposition and ownership of real estate interests or other property (other than disposition fees on the sale of assets other than real property), including the costs of insurance premiums, legal services, maintenance, repair and improvement of real property. The Company is in compliance with the 2/25% Limitation for operating expenses for the four fiscal quarters ended September 30, 2018. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 9. COMMITMENTS AND CONTINGENCIES Economic Dependency The Company depends on its Sponsor and its 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 properties, 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. Tenant Improvements Pursuant to lease agreements, as of September 30, 2018 and December 31, 2017, the Company has obligations to pay for $309,404 and $1,899,485, respectively, in site and tenant improvements to be incurred by tenants, including a 72.7% share of the tenant improvements for the Santa Clara property at both balance sheet dates. At September 30, 2018 and December 31, 2017, the Company had $83,300 and $944,582, respectively, of restricted cash held to fund the improvements. Redemption of Common Stock Following the Company’s board of directors’ determination of its NAV and NAV per share on January 18, 2018, the maximum amount that may be repurchased per month is limited to no more than 2% of the Company’s most recently determined aggregate NAV. Repurchases for any calendar quarter will be limited to no more than 5% of its most recently determined aggregate NAV. The foregoing repurchase limitations are based on “net repurchases” during a quarter or month, as applicable. Thus, for any given calendar quarter or month, the maximum amount of repurchases during that quarter or month will be equal to (1) 5% or 2% (as applicable) of the Company’s most recently determined aggregate NAV, plus (2) proceeds from sales of new shares in the Registered Offering and Class S Offering (including purchases pursuant to its Registered DRP Offering) since the beginning of a current calendar quarter or month, less (3) repurchase proceeds paid since the beginning of the current calendar quarter or month. The Company In addition, the Company’s board of directors may amend, suspend or terminate the share repurchase program without stockholder approval upon 30 days’ notice . The Company’s board of directors may also amend, suspend or terminate the share repurchase program due to changes in law or regulation, or if the board of directors becomes aware of undisclosed material information that the Company believes should be publicly disclosed before shares are repurchased. Legal Matters From time-to-time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Other than as discussed below, the Company is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that could have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. The SEC is conducting an investigation related to the advertising and sale of securities by the Company in connection with the Registered Offering. The investigation is a non-public fact-finding inquiry. It is neither an allegation of wrongdoing nor a finding that violations of law have occurred. In connection with the investigation, the Company and certain affiliates have received and responded to subpoenas from the SEC requesting documents and other information related to the Company and the Registered Offering. The SEC’s investigation is ongoing. The Company has cooperated and intends to continue to cooperate with the SEC in this matter. The Company is unable to predict the likely outcome of the investigation or determine its potential impact, if any, on the Company. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 10. SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued. Offering Status Through October 31, 2018, the Company had sold 13,385,609 shares of Class C common stock in the Registered Offering for aggregate gross offering proceeds of $134,051,756, including 791,993 shares of common stock sold under its Registered DRP Offering for aggregate gross offering proceeds of $7,943,572, and 3,144 shares of Class S common stock in the Class S Offering for aggregate gross offering proceeds of $31,445, including 144 shares of Class S common stock sold under its dividend reinvestment plan applicable to Class S common stock for aggregate gross offering proceeds of $1,445. Distributions On September 27, 2018, the Company’s board of directors declared distributions based on daily record dates for the period October 1, 2018 through October 31, 2018 at a rate of $0.0018911 per share per day on the outstanding shares of the Company’s Class C and Class S common stock, which the Company will pay on November 26, 2018 which is the first business day following the November 25, 2018 payment date . On October 29, 2018, the Company’s board of directors declared distributions based on daily record dates for the period November 1, 2018 through November 30, 2018 at a rate of $0.0019542 per share per day on the outstanding shares of the Company’s Class C and Class S common stock, which the Company will pay on December 26, 2018, which is the first business day following the December 25, 2018 payment date. Acquisition On October 31, 2018, the Company, through a wholly owned subsidiary of the Operating Partnership, completed the acquisition of a single-story office building with approximately 72,890 square feet located in Richmond, Virginia. This property is 100% leased to Bon Secours Mercy Health, Inc., which recently changed its name from Bon Secours Health System, Inc. after its merger with Mercy Health on September 1, 2018. Bon Secours Mercy Health, Inc. is a nonprofit corporation with 43 hospital locations, a presence in seven states and more than 57,000 employees. The property’s triple-net lease expires on August 31, 2026. The contract purchase price for the property was $10,516,000 which was funded with $1,516,000 in net proceeds from the Company’s Registered Offering and $9,000,000 drawn under the Unsecured Credit Facility. The seller of the property was not affiliated with the Company or its affiliates. The Company paid the Advisor an acquisition fee of $315,480 in connection with this acquisition. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements and the rules and regulations of the SEC. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, which is responsible for their integrity and objectivity. These unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2017 audited consolidated financial statements included in the Company’s Form 10-K filed with the SEC on April 3, 2018. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state its financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The December 31, 2017 balance sheet included herein was derived from the audited financial statements but does not include all disclosures or notes required by GAAP for complete financial statements. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of the condensed 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 condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates. |
Fair Value Measurement, Policy [Policy Text Block] | 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, tenant receivables, due from affiliates, purchase and other deposits, prepaid expenses and other assets, accounts payable, accrued and other liabilities and due to affiliates. Derivative Instruments Unsecured Credit Facility Mortgage notes payable: |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Restricted cash is comprised of funds which are restricted for use as required by certain lenders in conjunction with an acquisition or debt financing and for on-site and tenant improvements. Pursuant to lease agreements, the Company has obligations to pay for $309,404 and $1,899,485 in site and tenant improvements to be incurred by tenants as of September 30, 2018 and December 31, 2017, respectively, including a 72.7% share of the tenant improvements for the Santa Clara property at both balance sheet dates. At September 30, 2018 and December 31, 2017, the Company had $83,300 and $944,582, respectively, of restricted cash held to fund the improvements. |
Other Comprehensive Income Loss [Policy Text Block] | Other Comprehensive Income (Loss) For all periods presented, other comprehensive income (loss) is the same as net income (loss). |
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 for the three and nine months ended September 30, 2018 and 2017. For the three and nine months ended September 30, 2018, the Company has presented net income (loss) per share amounts on the accompanying statements of operations for Class C and S share classes as a combined common share class. Application of the two-class method for allocating income (loss) in accordance with the provisions of Accounting Standards Codification (“ASC”) 260, Earnings per Share Since the Company’s board of directors declared distributions for four months (December 2017 through March 2018) during the three months ended March 31, 2018 in order to transition to a process of declaring dividends prior to the beginning of the month, the dividends declared per common share for the nine months ended September 30, 2018 reflects ten months of dividends rather than nine months of dividends. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) New Accounting Standards Recently Issued and Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement |
CONDENSED CONSOLIDATED BALANC_4
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Text Block Supplement [Abstract] | |
Supplemental Detail Disclosures for Consolidate Balance Sheet [Table Text Block] | Tenant Receivables, Net Tenant receivables consisted of the following: September 30, 2018 December 31, 2017 Straight-line rent $ 1,906,212 $ 995,822 Tenant rent 2,695 27,460 Tenant reimbursements 871,376 239,813 Total $ 2,780,283 $ 1,263,095 Accounts Payable, Accrued and Other Liabilities Accounts payable, accrued and other liabilities were comprised of the following: September 30, 2018 December 31, 2017 Accounts payable $ 40,514 $ 244,430 Accrued expenses 1,167,656 568,881 Accrued dividends 698,492 2,427 Accrued interest payable 351,833 186,841 Unearned rent 483,972 548,266 Deferred commission payable 1,800 2,250 Lease incentive obligation 85,287 858,389 Total $ 2,829,554 $ 2,411,484 |
REAL ESTATE INVESTMENTS (Tables
REAL ESTATE INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties [Table Text Block] | As of September 30, 2018, the Company’s real estate investment portfolio consisted of 22 operating properties in 12 states, consisting of: (i) nine retail, (ii) eight office and (iii) five industrial properties and one parcel of land, which currently serves as an easement to one of the Company’s office properties. The following table provides summary information regarding the Company’s real estate investment portfolio as of September 30, 2018: Property Location Acquisition Date Property Type Land, Buildings and Improvements Tenant Origination and Absorption Costs Accumulated Depreciation and Amortization Total Investment in Real Estate Property, Net Accredo Health Orlando, FL 6/15/2016 Office $ 9,855,847 $ 1,053,637 $ (1,140,153 ) $ 9,769,331 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (751,571 ) 4,101,800 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (75,457 ) 1,322,657 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (96,569 ) 1,587,860 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (72,500 ) 1,234,090 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (69,511 ) 1,216,524 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (71,340 ) 1,142,389 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (69,315 ) 1,119,179 Dana Cedar Park, TX 12/27/2016 Industrial 8,392,906 1,210,874 (878,950 ) 8,724,830 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (1,207,170 ) 12,517,020 exp US Services Maitland, FL 3/27/2017 Office 5,920,121 388,248 (334,757 ) 5,973,612 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (476,346 ) 12,701,942 Wyndham Summerlin, NV 6/22/2017 Office 9,447,270 669,232 (375,285 ) 9,741,217 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (357,458 ) 8,272,640 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,746 281,442 (282,018 ) 7,262,170 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (200,625 ) 6,223,473 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,201 1,013,948 (310,379 ) 12,543,770 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (549,473 ) 26,808,427 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (674,563 ) 16,444,617 Cummins Nashville, TN 4/4/2018 Office 14,465,490 1,536,998 (364,174 ) 15,638,314 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness Las Vegas, NV 7/27/2018 Retail 11,453,338 1,204,973 (93,131 ) 12,565,180 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (12,388 ) 7,677,536 $ 179,228,794 $ 14,152,327 $ (8,463,133 ) $ 184,917,988 |
Schedule Of Real Estate Property Acquisitions [Table Text Block] | During the nine months ended September 30, 2018, the Company acquired the following properties: Property Acquisition Date Land Buildings and Improvements Tenant Origination and Absorption Costs Above- Market Lease Below- Market Lease Total 3M 3/29/2018 $ 758,780 $ 14,004,039 $ 2,356,361 $ — $ (1,417,483 ) $ 15,701,697 Cummins 4/4/2018 3,347,959 11,117,531 1,536,998 — — 16,002,488 Northrop Grumman Parcel 6/21/2018 329,410 — — — — 329,410 24 Hour Fitness 7/27/2018 3,121,985 8,331,352 1,204,974 — — 12,658,311 Texas Health 9/13/2018 1,827,914 5,148,789 713,221 — — 7,689,924 $ 9,386,048 $ 38,601,711 $ 5,811,554 $ — $ (1,417,483 ) $ 52,381,830 |
Schedule Of Real Estate Investment Property Purchase Price [Table Text Block] | Purchase price $ 52,381,830 Acquisition fees to affiliates (1,518,750 ) Cash paid for acquisition of real estate investments $ 50,863,080 |
Schedule Of Lease Expiration Date [Table Text Block] | The non-cancellable lease terms of the properties acquired during the nine months ended September 30, 2018 are as follows: Property Lease Expiration 3M 7/31/2022 Cummins 2/28/2023 24 Hour Fitness 3/31/2030 Texas Health 12/31/2025 |
Schedule of Capitalized Properties Acquisition [Table Text Block] | Capitalized acquisition fees paid to the Advisor for properties acquired during the nine months ended September 30, 2018 are as follows: Property Amount 3M $ 456,000 Cummins $ 465,000 Northrop Grumman Parcel $ 9,000 24 Hour Fitness $ 366,000 Texas Health $ 222,750 Total $ 1,518,750 |
Schedule Of Portfolios Asset Concentration [Table Text Block] | As of September 30, 2018, the Company’s portfolio’s asset concentration (greater than 10% of total assets) was as follows: Property and Location Net Carrying Value Percentage of Total Assets AvAir, Chandler, AZ $ 26,808,427 12.8 % |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | As of September 30, 2018, the future minimum contractual rent payments due to the Company under the Company’s non-cancelable operating leases, excluding any renewal periods, are as follows: October through December 2018 $ 3,634,070 2019 14,748,579 2020 14,902,133 2021 13,728,032 2022 12,402,776 2023 10,106,790 Thereafter 52,937,703 $ 122,460,083 |
Schedule Of Portfolios Revenue Concentration [Table Text Block] | The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three and nine months ended September 30, 2018 is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Property and Location Revenue Percentage of Total Revenue Revenue Percentage of Total Revenue AvAir, Chandler, AZ $ 630,095 13.3 % $ 1,919,242 15.3 % 3M, DeKalb, IL $ 527,065 11.2 % $ — — |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | As of September 30, 2018, the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Leases Below-Market Leases Cost $ 14,152,327 $ 783,115 $ (3,071,254 ) Accumulated amortization (2,566,559 ) (174,606 ) 357,273 Net amount $ 11,585,768 $ 608,509 $ (2,713,981 ) |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | The amortization of intangible assets over the next five years is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Leases Below-Market Leases October through December 2018 $ 567,988 $ 24,262 $ (118,600 ) 2019 2,271,956 97,045 (474,391 ) 2020 2,271,956 97,045 (474,391 ) 2021 1,855,696 78,994 (474,391 ) 2022 1,259,307 63,719 (306,829 ) 2023 633,543 63,719 (78,369 ) Thereafter 2,725,322 183,725 (787,010 ) $ 11,585,768 $ 608,509 $ (2,713,981 ) Weighted-average remaining amortization period 7.5 years 7.4 years 9.9 years |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments [Table Text Block] | The Company’s investments in unconsolidated entities are as follows: September 30, 2018 December 31, 2017 Santa Clara Property Tenant-in-Common Interest (“TIC Interest”) $ 10,940,251 $ 11,103,547 Rich Uncles Real Estate Investment Trust I (“REIT I”) 3,189,151 3,420,475 $ 14,129,402 $ 14,524,022 |
Equity Method Investments, Entities Equity In Earnings [Table Text Block] | The Company’s income (loss) from investments in unconsolidated entities is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 REIT I $ 826 $ 688 $ (26,376 ) $ 168,043 TIC Interest (1) 69,037 — 189,724 — $ 69,863 $ 688 $ 163,348 $ 168,043 |
Equity Method Investments, Summarized Financial Information [Table Text Block] | The following is summarized financial information for the Santa Clara property: September 30, 2018 December 31, 2017 Assets: Real estate investments, net $ 31,916,437 $ 32,587,034 Cash and cash equivalents 436,106 615,436 Other assets 296,231 103,700 Total assets $ 32,648,774 $ 33,306,170 Liabilities: Mortgage notes payable $ 14,055,628 $ 14,235,256 Below-market lease, net 3,141,383 3,247,480 Other liabilities 99,000 246,085 Total liabilities 17,296,011 17,728,821 Total equity 15,352,763 15,577,349 Total liabilities and equity $ 32,648,774 $ 33,306,170 Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 (1) 2018 2017 (1) Total revenues $ 643,600 $ — $ 1,965,612 $ — Expenses: Interest expense 146,861 — 437,846 — Depreciation and amortization 248,136 — 743,485 — Other expenses 153,654 — 523,348 — Total expenses 548,652 — 1,704,679 — Net income $ 94,949 $ — $ 260,933 $ — (1) The Company’s TIC Interest in the Santa Clara property commenced on September 28, 2017. The results of operations for three days during the three and nine months ended September 30, 2017 were not material. |
Rich Uncles Real Estate Investment Trust 1 [Member] | |
Equity Method Investments, Summarized Financial Information [Table Text Block] | The following is summarized financial information for REIT I: September 30, 2018 December 31, 2017 Assets: Real estate investments, net $ 126,446,105 $ 131,166,670 Cash and cash equivalents and restricted cash 3,818,426 6,027,807 Other assets 3,329,008 2,658,777 Total assets $ 133,593,539 $ 139,853,254 Liabilities: Mortgage notes payable, net $ 61,635,433 $ 62,277,387 Below-market lease intangibles, net 3,320,885 3,966,008 Other liabilities 3,393,087 2,937,247 Total liabilities 68,349,405 69,180,642 Redeemable common stock 153,768 586,242 Total shareholders’ equity 65,090,366 70,086,370 Total liabilities and shareholders’ equity $ 133,593,539 $ 139,853,254 Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Total revenues $ 3,293,384 $ 3,299,149 $ 9,889,765 $ 9,533,366 Expenses: Depreciation and amortization 1,424,669 1,481,521 4,282,006 4,151,949 Interest expense 714,138 733,811 1,830,849 1,956,754 Impairment of real estate investment property (1) — — 862,190 — Other expenses 1,133,547 1,073,348 3,520,467 2,831,128 Total expenses 3,272,354 3,288,680 10,495,512 8,939,831 Other income: Other income — — — 748,795 Net income (loss) $ 21,030 $ 10,469 $ (605,747 ) $ 1,342,330 (1) During the second quarter of 2018, REIT I recorded an impairment charge of $862,190 related to its investment in a property in Antioch, California due to the expiration of the tenant’s lease term at December 31, 2017 and REIT I’s subsequent difficulties encountered during the second quarter in its efforts to re-lease the property at acceptable rent rates and without incurring substantial potential tenant improvement costs. The impairment charge represented less than 1% of REIT I’s total investments in real estate property and the book value of the property after the impairment charge represented less than 2.0% of REIT I’s total investments in real estate property as of June 30, 2018, when the impairment charge was incurred. |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | As of September 30, 2018 and December 31, 2017, the Company’s mortgage notes payable consisted of the following: September 30, 2018 December 31, 2017 Collateral Principal Amount Deferred Loan Costs, Net Net Balance Principal Amount Deferred Loan Costs, Net Net Balance Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreen properties $ 7,031,354 $ (98,685 ) $ 6,932,669 $ 7,133,966 $ (124,763 ) $ 7,009,203 3.95 % 3.95 % 7/1/2021 Dana property 4,652,250 (107,142 ) 4,545,108 4,709,889 (125,132 ) 4,584,757 4.56 % 4.56 % 4/1/2023 Six Dollar General properties 3,901,098 (126,831 ) 3,774,267 3,951,846 (153,290 ) 3,798,556 4.69 % 4.69 % 4/1/2022 Wyndham property (2) 5,846,100 (101,176 ) 5,744,924 5,920,800 (109,936 ) 5,810,864 One-month LIBOR+2.05 % 4.34 % 6/5/2027 Williams Sonoma property (2) 4,637,100 (72,142 ) 4,564,958 4,699,200 (85,227 ) 4,613,973 One-month LIBOR+2.05 % 4.05 % 6/5/2022 Omnicare property 4,368,797 (154,047 ) 4,214,750 4,423,574 (169,372 ) 4,254,202 4.36 % 4.36 % 5/1/2026 Harley property 6,897,709 (178,082 ) 6,719,627 6,983,418 (200,811 ) 6,782,607 4.25 % 4.25 % 9/1/2024 Northrop Grumman property 5,844,186 (166,051 ) 5,678,135 5,945,655 (217,584 ) 5,728,071 4.40 % 4.40 % 3/2/2021 EMCOR property 2,923,603 (74,651 ) 2,848,952 2,955,000 (83,743 ) 2,871,257 4.35 % 4.35 % 12/1/2024 exp US Services property 3,461,472 (126,739 ) 3,334,733 3,505,061 (140,382 ) 3,364,679 (4 ) 4.25 % 11/17/2024 Husqvarna property 6,380,000 (196,639 ) 6,183,361 — — — (5 ) 4.60 % 2/20/2028 AvAir property (3) 14,575,000 (340,655 ) 14,234,345 12,000,000 (330,866 ) 11,669,134 (6 ) 4.84 % 3/27/2028 3M property 8,360,000 (132,463 ) 8,227,537 — — — One-month LIBOR+2.25 % 5.09 % 3/29/2023 Cummins property 8,530,000 (153,712 ) 8,376,288 — — — One-month LIBOR+2.25 % 5.16 % 4/4/2023 24 Hour Fitness 8,900,000 (162,341 ) 8,737,659 — — — One-month LIBOR+4.30 % 6.56 % 3/17/2019 Texas Health 4,842,500 (130,593 ) 4,711,907 — — — One-month LIBOR+4.30 % 6.56 % 3/12/2019 $ 101,151,169 $ (2,321,949 ) $ 98,829,220 $ 62,228,409 $ (1,741,106 ) $ 60,487,303 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of September 30, 2018. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2018 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments (see Note 7). (2) The loans on each of the Williams Sonoma and Wyndham properties (collectively, the “Property”) located in Summerlin, Nevada were originated by Nevada State Bank (“Bank”). The loans are collateralized by a deed of trust and a security agreement with assignment of rents and fixture filing. In addition, the individual loans are subject to a cross collateralization and cross default agreement whereby any default under, or failure to comply with the terms of any one or both of the loans is an event of default under the terms of both loans. The value of the Property must be in an amount sufficient to maintain a loan to value ratio of no more than 60%. If the loan to value ratio is ever more than 60%, the borrower shall, upon the Bank’s written demand, reduce the principal balance of the loans so that the loan to value ratio is no more than 60%. (3) On March 27, 2018, the Company refinanced the mortgage loan payable as of December 31, 2017 with a new loan for $14,575,000 through a nonaffiliated lender. The loan is secured by the AvAir property and it matures on March 27, 2028. (4) The initial contractual interest rate is 4.25% and starting November 18, 2022, the interest rate is T-Bill index plus 3.25%. (5) The initial contractual interest rate is 4.60% for the first five years and the greater of 4.60% or five-year Treasury Constant Maturity (“TCM”) plus 2.45% for the second five years. (6) The initial contractual interest rate for the note payable outstanding as of September 30, 2018 is 4.84% for the first five-years and the greater of 4.60% or five-year TCM plus 2.45% for the second five-years. |
Mortgage Loan Payable [Table Text Block] | The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement): September 30, 2018 December 31, 2017 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 101,151,169 $ 98,829,220 $ 100,358,550 $ 62,228,409 $ 60,487,303 $ 62,363,284 |
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, 2018: Mortgage Note Payable Unsecured Credit Facility (1) Total October through December 2018 $ 227,926 $ — $ 227,926 2019 14,852,295 — 14,852,295 2020 1,365,125 — 1,365,125 2021 8,055,405 — 8,055,405 2022 14,436,354 — 14,436,354 2023 21,031,341 — 21,031,341 Thereafter 41,182,723 — 41,182,723 Total principal $ 101,151,169 $ — $ 101,151,169 (1) Any outstanding borrowings under the Unsecured Credit Facility will be due by January 26, 2019 unless the facility is extended. |
Schedule Of Interest Expenses Reconciliation [Table Text Block] | The following is a reconciliation of the components of interest expense for the three and nine months ended September 30, 2018 and 2017: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Mortgage notes payable Interest expense $ 1,050,813 $ 401,174 $ 2,880,471 $ 667,011 Amortization of deferred financing costs 127,182 53,141 632,717 88,526 Unrealized (gain) loss on interest rate swaps (see Note 7) (185,452 ) (4,627 ) (406,023 ) 100,006 Unsecured credit facility Interest expense 69,745 81,594 236,142 224,626 Amortization of deferred financing costs 8,572 — 21,429 1,118 Forfeited loan fee — 10,000 — 30,000 Total interest expense $ 1,070,860 $ 541,282 $ 3,364,736 $ 1,111,287 |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments [Table Text Block] | The following table summarizes the notional amount and other information related to the Company’s interest rate swaps: September 30, 2018 December 31, 2017 Derivative Instruments Number of Instru- ments Notional Amount (i) Reference Rate (ii) Weighted Average Fixed pay rate Weighted Average Remaining Term Number of Instru- ments Notional Amount (i) Reference Rate (iii) Weighted Average Fixed pay rate Weighted Average Remaining Term Interest Rate Swap Derivatives 4 $ 27,373,200 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.74 % 5.3 years 2 $ 10,620,000 One-month LIBOR + applicable spread/Fixed at 4.05%-4.34% 4.21 % 7.2 years (i) The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. As of September 30, 2018, the minimum notional amount (outstanding principal balance at the maturity date) was $24,936,799. (ii) The reference rate was September 30, 2018. (iii) The reference rate was December 31, 2017. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement), as well as their classification in the condensed consolidated balance sheets: September 30, 2018 December 31, 2017 Derivative Instrument Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Asset - Interest rate swap derivatives, at fair value 3 $ 418,085 2 $ 7,899 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 1 $ (4,163 ) — $ — |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | Summarized below are the related party costs incurred by the Company, including those incurred pursuant to the Advisory Agreement, for the three and nine months ended September 30, 2018 and 2017, respectively: Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 September 30, 2017 December 31, 2017 Incurred Incurred Receivable Payable Incurred Incurred Receivable Payable Expensed Asset management fees (1) $ 532,355 $ 1,411,585 $ — $ 668 $ 264,927 $ 573,281 $ — $ 567,661 Subordinated participation fees — — — — — — — 315,802 Fees to affiliates 532,355 1,411,585 264,927 573,281 Property management fees* 22,503 54,654 — — 6,996 7,618 — 7,969 Directors and officers insurance and other reimbursements** 33,118 70,034 — 3,193 — — — — Expense reimbursements from (to) Sponsor (2) (298,645 ) (952,098 ) 106,602 — (584,230 ) (1,945,160 ) 34,194 — Waiver of asset management fees (1) — — — — (42,485 ) (119,524 ) — — Capitalized: Acquisition fees 588,750 1,518,750 — — 1,014,559 2,498,129 — — Financing coordination fees — 209,550 — — 174,500 261,950 — — Reimbursable organizational and offering expenses (3) 348,466 1,164,763 — 2,980 453,377 1,591,498 — 15,945 Other: Due to REIT I (4) — — — — 17,269 17,269 — — Payable to TIC (5) — — — — 363,168 363,168 — — $ 106,602 $ 6,841 $ 34,194 $ 907,377 * Property management fees are classified within property operating expenses on the condensed consolidated statements of operations. ** Directors and officers insurance and other reimbursements are classified within general and administrative expenses on the condensed consolidated statements of operations. (1) To the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Advisor will be deemed to have waived, not deferred, that portion up to 0.025% of the total investment value of the Company’s assets. For the three months ended September 30, 2018 and 2017, the Advisor waived zero and $42,485, respectively, of asset management fees, which are not subject to future recoupment by the Advisor and for the nine months ended September 30, 2018 and 2017, the Advisor waived zero and $119,524, respectively, of asset management fees, which are not subject to future recoupment by the Advisor. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $197,978 related to its TIC Interest in the Santa Clara property during the three and nine months ended September 30, 2018, respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities. (2) Includes payroll costs related to Company employees that answer questions from prospective stockholders. See “— Investor Relations Payroll Expense Reimbursement from Sponsor” below . 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. The expense reimbursements from the Sponsor for the three and nine months ended September 30, 2018 also include $125,181 and $225,126, respectively, of employment related legal fees which the Sponsor also agreed to reimburse the Company. The receivables related to these costs are reflected in “Due from affiliates” in the condensed consolidated balance sheets. (3) As of September 30, 2018, the Sponsor had incurred $8,156,345 of organizational and offering costs on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor for such organizational and offering expenses to the extent of 3% of gross offering proceeds. |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jun. 24, 2015 | Sep. 30, 2018 | Dec. 31, 2015 | Jan. 19, 2018 | Jan. 18, 2018 | Dec. 31, 2017 | Aug. 11, 2017 | Jul. 15, 2015 | |
Business And Organisation [Line Items] | ||||||||
Authority To Issue of Common Stock | 450,000,000 | |||||||
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 | ||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||||||
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest | 99.00% | |||||||
Stock Issued During Period, Value, New Issues | $ 38,825,442 | |||||||
NNN PL [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest | 1.00% | |||||||
Minimum [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Net Asset Value Per Share | $ 10 | |||||||
Maximum [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Net Asset Value Per Share | $ 10.05 | |||||||
Tenant-in-common [Member] | Real Estate Investment [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 72.70% | |||||||
Affiliated REIT [Member] | Real Estate Investment [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 4.40% | |||||||
Common Class S [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 | 10,000,000 | ||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||||||
Stock Issued During Period, Shares, New Issues | 100 | |||||||
Stock Issued During Period, Value, New Issues | $ 0 | |||||||
Net Asset Value Per Share | $ 10.05 | |||||||
Shares, Outstanding | 3,132 | 3,032 | ||||||
Common Class C [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||||||
Stock Issued During Period, Shares, New Issues | 3,865,204 | |||||||
Stock Issued During Period, Value, New Issues | $ 3,865 | |||||||
Shares, Outstanding | 12,134,327 | 8,838,002 | ||||||
Common Class C [Member] | Minimum [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 500 | |||||||
Preferred Stock [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Preferred Stock, Shares Authorized | 50,000,000 | |||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | |||||||
IPO [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Common Stock, Value, Subscriptions | $ 90,000,000 | |||||||
DRP Offering [Member] | Common Class S [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 132 | |||||||
Stock Issued During Period, Value, New Issues | $ 31,320 | |||||||
DRP Offering [Member] | Common Class C [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 12,920,379 | |||||||
Stock Issued During Period, Value, New Issues | $ 129,376,190 | |||||||
DRP Offering [Member] | Distribution Reinvestment Plan [Member] | Common Class C [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 737,813 | |||||||
Sponsor [Member] | ||||||||
Business And Organisation [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 10,000 | 10,000 | ||||||
Shares Issued, Price Per Share | $ 10 | $ 10 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Line Items] | |||||
Restricted Cash and Cash Equivalents | $ 83,300 | $ 83,300 | $ 944,582 | ||
Earnings Per Share, Basic and Diluted | $ 0.02 | $ (0.01) | $ 0 | $ (0.10) | |
Lease Agreements [Member] | |||||
Accounting Policies [Line Items] | |||||
Restricted Cash and Cash Equivalents | $ 83,300 | $ 83,300 | 944,582 | ||
Other Commitment | $ 309,404 | $ 309,404 | $ 1,899,485 | ||
Common Class C [Member] | |||||
Accounting Policies [Line Items] | |||||
Earnings Per Share, Basic and Diluted | $ 0.02 | (0.01) | $ 0 | (0.10) | |
Common Class S [Member] | |||||
Accounting Policies [Line Items] | |||||
Earnings Per Share, Basic and Diluted | $ (0.03) | $ (0.18) | $ (0.13) | $ (0.56) | |
Santa Clara Property [Member] | Lease Agreements [Member] | |||||
Accounting Policies [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 72.70% | 72.70% |
CONDENSED CONSOLIDATED BALANC_5
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Tenant receivables: | ||
Straight-line rent | $ 1,906,212 | $ 995,822 |
Tenant rent | 2,695 | 27,460 |
Tenant reimbursements | 871,376 | 239,813 |
Total | 2,780,283 | 1,263,095 |
Accounts payable, accrued and other liabilities: | ||
Accounts payable | 40,514 | 244,430 |
Accrued expenses | 1,167,656 | 568,881 |
Accrued dividends | 698,492 | 2,427 |
Accrued interest payable | 351,833 | 186,841 |
Unearned rent | 483,972 | 548,266 |
Deferred commission payable | 1,800 | 2,250 |
Lease incentive obligation | 85,287 | 858,389 |
Total | $ 2,829,554 | $ 2,411,484 |
REAL ESTATE INVESTMENTS (Detail
REAL ESTATE INVESTMENTS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Real Estate [Line Items] | ||
Land, building and improvements | $ 179,228,794 | |
Tenant origination and absorption costs | 14,152,327 | $ 8,340,774 |
Accumulated depreciation and amortization | (8,463,133) | (3,574,739) |
Total real estate investments, net | $ 184,917,988 | $ 135,235,616 |
Accredo Health [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Orlando, FL | |
Walgreens [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Stockbridge, GA | |
Dollar General One [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Litchfield, ME | |
Dollar General Two [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Wilton, ME | |
Dollar General Three [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Thompsontown, PA | |
Dollar General Four [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Mt. Gilead, OH | |
Dollar General Five [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Lakeside, OH | |
Dollar General Six [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Castalia, OH | |
Dana [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Cedar Park, TX | |
Northrop Grumman [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Melbourne, FL | |
Exp Us Services [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Maitland, FL | |
Harley [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Bedford, TX | |
Wyndham [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Summerlin, NV | |
Williams Sonoma [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Summerlin, NV | |
Omnicare [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Richmond, VA | |
EMCOR [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Cincinnati, OH | |
Husqvarna [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Charlotte, NC | |
AvAir [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Chandler, AZ | |
3M [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | DeKalb, IL | |
Cummins [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Nashville, TN | |
Northrop Grumman Parcel [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Melbourne, FL | |
Twenty Four Hours Fitness [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Las Vegas, NV | |
Texas Health [Member] | ||
Real Estate [Line Items] | ||
Real Estate, Acquisition, Property Location | Dallas, TX | |
Land [Member] | Northrop Grumman Parcel [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | $ 329,410 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | 0 | |
Total real estate investments, net | 329,410 | |
Office Building [Member] | Accredo Health [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 9,855,847 | |
Tenant origination and absorption costs | 1,053,637 | |
Accumulated depreciation and amortization | (1,140,153) | |
Total real estate investments, net | 9,769,331 | |
Office Building [Member] | Northrop Grumman [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 12,382,991 | |
Tenant origination and absorption costs | 1,341,199 | |
Accumulated depreciation and amortization | (1,207,170) | |
Total real estate investments, net | 12,517,020 | |
Office Building [Member] | Exp Us Services [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 5,920,121 | |
Tenant origination and absorption costs | 388,248 | |
Accumulated depreciation and amortization | (334,757) | |
Total real estate investments, net | 5,973,612 | |
Office Building [Member] | Wyndham [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 9,447,270 | |
Tenant origination and absorption costs | 669,232 | |
Accumulated depreciation and amortization | (375,285) | |
Total real estate investments, net | 9,741,217 | |
Office Building [Member] | Williams Sonoma [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 8,079,612 | |
Tenant origination and absorption costs | 550,486 | |
Accumulated depreciation and amortization | (357,458) | |
Total real estate investments, net | 8,272,640 | |
Office Building [Member] | EMCOR [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 5,960,610 | |
Tenant origination and absorption costs | 463,488 | |
Accumulated depreciation and amortization | (200,625) | |
Total real estate investments, net | 6,223,473 | |
Office Building [Member] | 3M [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 14,762,819 | |
Tenant origination and absorption costs | 2,356,361 | |
Accumulated depreciation and amortization | (674,563) | |
Total real estate investments, net | 16,444,617 | |
Office Building [Member] | Cummins [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 14,465,490 | |
Tenant origination and absorption costs | 1,536,998 | |
Accumulated depreciation and amortization | (364,174) | |
Total real estate investments, net | 15,638,314 | |
Office Building [Member] | Texas Health [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 6,976,703 | |
Tenant origination and absorption costs | 713,221 | |
Accumulated depreciation and amortization | (12,388) | |
Total real estate investments, net | 7,677,536 | |
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 | (751,571) | |
Total real estate investments, net | 4,101,800 | |
Retail Site [Member] | Dollar General One [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,281,812 | |
Tenant origination and absorption costs | 116,302 | |
Accumulated depreciation and amortization | (75,457) | |
Total real estate investments, net | 1,322,657 | |
Retail Site [Member] | Dollar General Two [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,543,776 | |
Tenant origination and absorption costs | 140,653 | |
Accumulated depreciation and amortization | (96,569) | |
Total real estate investments, net | 1,587,860 | |
Retail Site [Member] | Dollar General Three [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,199,860 | |
Tenant origination and absorption costs | 106,730 | |
Accumulated depreciation and amortization | (72,500) | |
Total real estate investments, net | 1,234,090 | |
Retail Site [Member] | Dollar General Four [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,174,188 | |
Tenant origination and absorption costs | 111,847 | |
Accumulated depreciation and amortization | (69,511) | |
Total real estate investments, net | 1,216,524 | |
Retail Site [Member] | Dollar General Five [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,112,872 | |
Tenant origination and absorption costs | 100,857 | |
Accumulated depreciation and amortization | (71,340) | |
Total real estate investments, net | 1,142,389 | |
Retail Site [Member] | Dollar General Six [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 1,102,086 | |
Tenant origination and absorption costs | 86,408 | |
Accumulated depreciation and amortization | (69,315) | |
Total real estate investments, net | 1,119,179 | |
Retail Site [Member] | Harley [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 13,178,288 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (476,346) | |
Total real estate investments, net | 12,701,942 | |
Retail Site [Member] | Twenty Four Hours Fitness [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 11,453,338 | |
Tenant origination and absorption costs | 1,204,973 | |
Accumulated depreciation and amortization | (93,131) | |
Total real estate investments, net | 12,565,180 | |
Industrial [Member] | Dana [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 8,392,906 | |
Tenant origination and absorption costs | 1,210,874 | |
Accumulated depreciation and amortization | (878,950) | |
Total real estate investments, net | 8,724,830 | |
Industrial [Member] | Omnicare [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 7,262,746 | |
Tenant origination and absorption costs | 281,442 | |
Accumulated depreciation and amortization | (282,018) | |
Total real estate investments, net | 7,262,170 | |
Industrial [Member] | Husqvarna [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 11,840,201 | |
Tenant origination and absorption costs | 1,013,948 | |
Accumulated depreciation and amortization | (310,379) | |
Total real estate investments, net | 12,543,770 | |
Industrial [Member] | AvAir [Member] | ||
Real Estate [Line Items] | ||
Land, building and improvements | 27,357,900 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (549,473) | |
Total real estate investments, net | $ 26,808,427 |
REAL ESTATE INVESTMENTS (Deta_2
REAL ESTATE INVESTMENTS (Details 1) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | $ 52,381,830 |
3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 15,701,697 |
Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 16,002,488 |
Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 329,410 |
Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 12,658,311 |
Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 7,689,924 |
Land [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 9,386,048 |
Land [Member] | 3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 758,780 |
Land [Member] | Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 3,347,959 |
Land [Member] | Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 329,410 |
Land [Member] | Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 3,121,985 |
Land [Member] | Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 1,827,914 |
Buildings and Improvements [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 38,601,711 |
Buildings and Improvements [Member] | 3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 14,004,039 |
Buildings and Improvements [Member] | Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 11,117,531 |
Buildings and Improvements [Member] | Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Buildings and Improvements [Member] | Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 8,331,352 |
Buildings and Improvements [Member] | Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 5,148,789 |
Tenant Origination and Absorption Costs [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 5,811,554 |
Tenant Origination and Absorption Costs [Member] | 3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 2,356,361 |
Tenant Origination and Absorption Costs [Member] | Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 1,536,998 |
Tenant Origination and Absorption Costs [Member] | Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Tenant Origination and Absorption Costs [Member] | Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 1,204,974 |
Tenant Origination and Absorption Costs [Member] | Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 713,221 |
Above Market Lease [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Above Market Lease [Member] | 3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Above Market Lease [Member] | Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Above Market Lease [Member] | Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Above Market Lease [Member] | Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Above Market Lease [Member] | Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Below Market Leases [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | (1,417,483) |
Below Market Leases [Member] | 3M [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | (1,417,483) |
Below Market Leases [Member] | Cummins [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Below Market Leases [Member] | Northrop Grumman Parcel [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Below Market Leases [Member] | Twenty Four Hours Fitness [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 0 |
Below Market Leases [Member] | Texas Health [Member] | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | $ 0 |
REAL ESTATE INVESTMENTS (Deta_3
REAL ESTATE INVESTMENTS (Details 2) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Real Estate Properties [Line Items] | |
Purchase price | $ 52,381,830 |
Acquisition fees to affiliates | (1,518,750) |
Cash paid for acquisition of real estate investments | $ 50,863,080 |
REAL ESTATE INVESTMENTS (Deta_4
REAL ESTATE INVESTMENTS (Details 3) | 9 Months Ended |
Sep. 30, 2018 | |
3M [Member] | |
Lease Expiration Date | Jul. 31, 2022 |
Cummins [Member] | |
Lease Expiration Date | Feb. 28, 2023 |
Twenty Four Hours Fitness [Member] | |
Lease Expiration Date | Mar. 31, 2030 |
Texas Health [Member] | |
Lease Expiration Date | Dec. 31, 2025 |
REAL ESTATE INVESTMENTS (Deta_5
REAL ESTATE INVESTMENTS (Details 4) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Combination, Acquisition Related Costs | $ 1,518,750 |
3M [Member] | |
Business Combination, Acquisition Related Costs | 456,000 |
Cummins [Member] | |
Business Combination, Acquisition Related Costs | 465,000 |
Northrop Grumman Parcel [Member] | |
Business Combination, Acquisition Related Costs | 9,000 |
24 Hour Fitness [Member] | |
Business Combination, Acquisition Related Costs | 366,000 |
Texas Health [Member] | |
Business Combination, Acquisition Related Costs | $ 222,750 |
REAL ESTATE INVESTMENTS (Deta_6
REAL ESTATE INVESTMENTS (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Real Estate Investments, Net | $ 199,047,390 | $ 199,047,390 | $ 149,759,638 | ||
Revenues | 4,725,279 | $ 2,316,506 | 12,567,223 | $ 4,905,748 | |
AvAir, Chandler, AZ [Member] | |||||
Revenues | $ 630,095 | $ 1,919,242 | |||
Concentration Risk, Percentage | 13.30% | 15.30% | |||
AvAir, Chandler, AZ [Member] | |||||
Real Estate Investments, Net | $ 26,808,427 | $ 26,808,427 | |||
Concentration Risk, Percentage | 12.80% | ||||
3M, DeKalb, IL [Member] | |||||
Revenues | $ 527,065 | $ 0 | |||
Concentration Risk, Percentage | 11.20% | 8212.00% |
REAL ESTATE INVESTMENTS (Deta_7
REAL ESTATE INVESTMENTS (Details 6) | Sep. 30, 2018USD ($) |
October through December 2018 | $ 3,634,070 |
2,019 | 14,748,579 |
2,020 | 14,902,133 |
2,021 | 13,728,032 |
2,022 | 12,402,776 |
2,023 | 10,106,790 |
Thereafter | 52,937,703 |
Operating Leases, Future Minimum Payments Receivable | $ 122,460,083 |
REAL ESTATE INVESTMENTS (Deta_8
REAL ESTATE INVESTMENTS (Details 7) | Sep. 30, 2018USD ($) |
Tenant origination and absorption costs [Member] | |
Cost | $ 14,152,327 |
Accumulated amortization | (2,566,559) |
Net amount | 11,585,768 |
Above-Market Leases [Member] | |
Cost | 783,115 |
Accumulated amortization | (174,606) |
Net amount | 608,509 |
Below-market lease [Member] | |
Cost | (3,071,254) |
Accumulated amortization | 357,273 |
Net amount | $ (2,713,981) |
REAL ESTATE INVESTMENTS (Deta_9
REAL ESTATE INVESTMENTS (Details 8) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Tenant Origination and Absorption Costs [Member] | |
Real Estate [Line Items] | |
October through December 2018 | $ 567,988 |
2,019 | 2,271,956 |
2,020 | 2,271,956 |
2,021 | 1,855,696 |
2,022 | 1,259,307 |
2,023 | 633,543 |
Thereafter | 2,725,322 |
Total | $ 11,585,768 |
Weighted-Average Remaining Amortization Period | 7 years 6 months |
Above-Market Leases [Member] | |
Real Estate [Line Items] | |
October through December 2018 | $ 24,262 |
2,019 | 97,045 |
2,020 | 97,045 |
2,021 | 78,994 |
2,022 | 63,719 |
2,023 | 63,719 |
Thereafter | 183,725 |
Total | $ 608,509 |
Weighted-Average Remaining Amortization Period | 7 years 4 months 24 days |
Below-market lease [Member] | |
Real Estate [Line Items] | |
October through December 2018 | $ (118,600) |
2,019 | (474,391) |
2,020 | (474,391) |
2,021 | (474,391) |
2,022 | (306,829) |
2,023 | (78,369) |
Thereafter | (787,010) |
Total | $ (2,713,981) |
Weighted-Average Remaining Amortization Period | 9 years 10 months 24 days |
REAL ESTATE INVESTMENTS (Det_10
REAL ESTATE INVESTMENTS (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Real Estate [Line Items] | ||
Business Combination, Acquisition Related Costs | $ 1,518,750 | |
Capitalized Acquisition Fees [Member] | ||
Real Estate [Line Items] | ||
Business Combination, Acquisition Related Costs | 22,238 | |
Fair Value of Assets Acquired | $ 1,192,671 | $ 2,121,798 |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Equity Method Investments | $ 14,129,402 | $ 14,524,022 |
Rich Uncles Real Estate Investment Trust 1 [Member] | ||
Equity Method Investments | 3,189,151 | 3,420,475 |
Santa Clara Property Tenant-in-Common Interest [Member] | ||
Equity Method Investments | $ 10,940,251 | $ 11,103,547 |
INVESTMENTS IN UNCONSOLIDATED_4
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Income (Loss) from Equity Method Investments | $ 69,863 | $ 688 | $ 163,348 | $ 168,043 | |
Santa Clara Property Tenant-in-Common Interest [Member] | |||||
Income (Loss) from Equity Method Investments | [1] | 69,037 | 0 | 189,724 | 0 |
Rich Uncles Real Estate Investment Trust 1 [Member] | |||||
Income (Loss) from Equity Method Investments | $ 826 | $ 688 | $ (26,376) | $ 168,043 | |
[1] | The Company’s TIC Interest in the Santa Clara property commenced on September 28, 2017. The results of operations for three days during the three and nine months ended September 30, 2017 were not material. |
INVESTMENTS IN UNCONSOLIDATED_5
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||||
Assets: | |||||||||||
Cash and cash equivalents and restricted cash | $ 5,350,116 | $ 9,589,962 | $ 5,350,116 | $ 9,589,962 | $ 4,182,755 | $ 3,677,373 | |||||
Santa Clara Property Tenant-in-Common Interest [Member] | |||||||||||
Assets: | |||||||||||
Real estate investments, net | 31,916,437 | 31,916,437 | 32,587,034 | ||||||||
Cash and cash equivalents | 436,106 | 436,106 | 615,436 | ||||||||
Other assets | 296,231 | 296,231 | 103,700 | ||||||||
Total assets | 32,648,774 | 32,648,774 | 33,306,170 | ||||||||
Liabilities: | |||||||||||
Mortgage notes payable | 14,055,628 | 14,055,628 | 14,235,256 | ||||||||
Below-market lease intangibles, net | 3,141,383 | 3,141,383 | 3,247,480 | ||||||||
Other liabilities | 99,000 | 99,000 | 246,085 | ||||||||
Total liabilities | 17,296,011 | 17,296,011 | 17,728,821 | ||||||||
Total shareholders' equity | 15,352,763 | 15,352,763 | 15,577,349 | ||||||||
Total liabilities and shareholders' equity | 32,648,774 | 32,648,774 | 33,306,170 | ||||||||
Total revenue | 643,600 | 0 | [1] | 1,965,612 | 0 | [1] | |||||
Expenses: | |||||||||||
Depreciation and amortization | 248,136 | 0 | [1] | 743,485 | 0 | [1] | |||||
Interest expense | 146,861 | 0 | [1] | 437,846 | 0 | [1] | |||||
Other expense | 153,654 | 0 | [1] | 523,348 | 0 | [1] | |||||
Total expenses | 548,652 | 0 | [1] | 1,704,679 | 0 | [1] | |||||
Net income | 94,949 | 0 | [1] | 260,933 | 0 | [1] | |||||
Other income: | |||||||||||
Net income | 94,949 | 0 | [1] | 260,933 | 0 | [1] | |||||
Rich Uncles Real Estate Investment Trust 1 [Member] | |||||||||||
Assets: | |||||||||||
Real estate investments, net | 126,446,105 | 126,446,105 | 131,166,670 | ||||||||
Cash and cash equivalents and restricted cash | 3,818,426 | 3,818,426 | 6,027,807 | ||||||||
Other assets | 3,329,008 | 3,329,008 | 2,658,777 | ||||||||
Total assets | 133,593,539 | 133,593,539 | 139,853,254 | ||||||||
Liabilities: | |||||||||||
Mortgage notes payable | 61,635,433 | 61,635,433 | 62,277,387 | ||||||||
Below-market lease intangibles, net | 3,320,885 | 3,320,885 | 3,966,008 | ||||||||
Other liabilities | 3,393,087 | 3,393,087 | 2,937,247 | ||||||||
Total liabilities | 68,349,405 | 68,349,405 | 69,180,642 | ||||||||
Redeemable common stock | 153,768 | 153,768 | 586,242 | ||||||||
Total shareholders' equity | 65,090,366 | 65,090,366 | 70,086,370 | ||||||||
Total liabilities and shareholders' equity | 133,593,539 | 133,593,539 | $ 139,853,254 | ||||||||
Total revenue | 3,293,384 | 3,299,149 | 9,889,765 | 9,533,366 | |||||||
Expenses: | |||||||||||
Depreciation and amortization | 1,424,669 | 1,481,521 | 4,282,006 | 4,151,949 | |||||||
Interest expense | 714,138 | 733,811 | 1,830,849 | 1,956,754 | |||||||
Impairment of real estate investment property | 0 | [2] | $ 862,190 | 0 | [2] | 862,190 | [2] | 0 | [2] | ||
Other expense | 1,133,547 | 1,073,348 | 3,520,467 | 2,831,128 | |||||||
Total expenses | 3,272,354 | 3,288,680 | 10,495,512 | 8,939,831 | |||||||
Net income | 21,030 | 10,469 | (605,747) | 1,342,330 | |||||||
Other income: | |||||||||||
Other income | 0 | 0 | 0 | 748,795 | |||||||
Net income | $ 21,030 | $ 10,469 | $ (605,747) | $ 1,342,330 | |||||||
[1] | The Company’s TIC Interest in the Santa Clara property commenced on September 28, 2017. The results of operations for three days during the three and nine months ended September 30, 2017 were not material. | ||||||||||
[2] | During the second quarter of 2018, REIT I recorded an impairment charge of $862,190 related to its investment in a property in Antioch, California due to the expiration of the tenant’s lease term at December 31, 2017 and REIT I’s subsequent difficulties encountered during the second quarter in its efforts to re-lease the property at acceptable rent rates and without incurring substantial potential tenant improvement costs. The impairment charge represented less than 1% of REIT I’s total investments in real estate property and the book value of the property after the impairment charge represented less than 2.0% of REIT I’s total investments in real estate property as of June 30, 2018, when the impairment charge was incurred. |
INVESTMENTS IN UNCONSOLIDATED_6
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | [1] | Sep. 30, 2018 | Sep. 30, 2017 | [1] | Dec. 31, 2017 | Sep. 28, 2017 | |||
Impairment Charge less than Percentage Of Investments In real estate property | 1.00% | ||||||||||
Book Value Of Property After Impairment Charge Is Less Than Investments In Real Estate Property | 2.00% | ||||||||||
Dividends, Cash | $ 68,316 | $ 204,947 | |||||||||
Rich Uncles Real Estate Investment Trust 1 [Member] | |||||||||||
Equity Method Investment, Ownership Percentage | 4.40% | 4.40% | 4.40% | 72.70% | |||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 27.30% | ||||||||||
Dividends | $ 36,485 | $ 353,021 | |||||||||
Equity Method Investment Summarized Financial Information Impairment Of Real Estate Investment Property | $ 0 | [1] | $ 862,190 | $ 0 | $ 862,190 | [1] | $ 0 | ||||
Rich Uncles Real Estate Investment Trust 1 [Member] | Hagg Lane II, LLC [Member] | |||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 23.40% | ||||||||||
Rich Uncles Real Estate Investment Trust 1 [Member] | Hagg Lane III, LLC [Member] | |||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 3.90% | ||||||||||
[1] | During the second quarter of 2018, REIT I recorded an impairment charge of $862,190 related to its investment in a property in Antioch, California due to the expiration of the tenant’s lease term at December 31, 2017 and REIT I’s subsequent difficulties encountered during the second quarter in its efforts to re-lease the property at acceptable rent rates and without incurring substantial potential tenant improvement costs. The impairment charge represented less than 1% of REIT I’s total investments in real estate property and the book value of the property after the impairment charge represented less than 2.0% of REIT I’s total investments in real estate property as of June 30, 2018, when the impairment charge was incurred. |
DEBT (Details)
DEBT (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Short Term Debt [LineItems] | |||
Principal Amount | $ 101,151,169 | $ 62,228,409 | |
Deferred Loan Costs, net | (2,321,949) | (1,741,106) | |
Net Balance | 98,829,220 | 60,487,303 | |
Accredo/Walgreen properties [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | 7,031,354 | 7,133,966 | |
Deferred Loan Costs, net | (98,685) | (124,763) | |
Net Balance | $ 6,932,669 | 7,009,203 | |
Contractual Interest Rate | [1] | 3.95% | |
Effective Interest Rate | [1] | 3.95% | |
Loan Maturity | Jul. 1, 2021 | ||
Dana property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 4,652,250 | 4,709,889 | |
Deferred Loan Costs, net | (107,142) | (125,132) | |
Net Balance | $ 4,545,108 | 4,584,757 | |
Contractual Interest Rate | [1] | 4.56% | |
Effective Interest Rate | [1] | 4.56% | |
Loan Maturity | Apr. 1, 2023 | ||
Six Dollar General properties [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 3,901,098 | 3,951,846 | |
Deferred Loan Costs, net | (126,831) | (153,290) | |
Net Balance | $ 3,774,267 | 3,798,556 | |
Contractual Interest Rate | [1] | 4.69% | |
Effective Interest Rate | [1] | 4.69% | |
Loan Maturity | Apr. 1, 2022 | ||
Wyndham property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | [2] | $ 5,846,100 | 5,920,800 |
Deferred Loan Costs, net | [2] | (101,176) | (109,936) |
Net Balance | [2] | $ 5,744,924 | 5,810,864 |
Debt Instrument, Description of Variable Rate Basis | [1],[2] | One-month LIBOR+2.05 % | |
Effective Interest Rate | [1],[2] | 4.34% | |
Loan Maturity | [2] | Jun. 5, 2027 | |
Williams Sonoma property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | [2] | $ 4,637,100 | 4,699,200 |
Deferred Loan Costs, net | [2] | (72,142) | (85,227) |
Net Balance | [2] | $ 4,564,958 | 4,613,973 |
Debt Instrument, Description of Variable Rate Basis | [1],[2] | One-month LIBOR+2.05 % | |
Effective Interest Rate | [1],[2] | 4.05% | |
Loan Maturity | [2] | Jun. 5, 2022 | |
Omnicare property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 4,368,797 | 4,423,574 | |
Deferred Loan Costs, net | (154,047) | (169,372) | |
Net Balance | $ 4,214,750 | 4,254,202 | |
Contractual Interest Rate | [1] | 4.36% | |
Effective Interest Rate | [1] | 4.36% | |
Loan Maturity | May 1, 2026 | ||
Harley property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 6,897,709 | 6,983,418 | |
Deferred Loan Costs, net | (178,082) | (200,811) | |
Net Balance | $ 6,719,627 | 6,782,607 | |
Contractual Interest Rate | [1] | 4.25% | |
Effective Interest Rate | [1] | 4.25% | |
Loan Maturity | Sep. 1, 2024 | ||
Northrop Grumman property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 5,844,186 | 5,945,655 | |
Deferred Loan Costs, net | (166,051) | (217,584) | |
Net Balance | $ 5,678,135 | 5,728,071 | |
Contractual Interest Rate | [1] | 4.40% | |
Effective Interest Rate | [1] | 4.40% | |
Loan Maturity | Mar. 2, 2021 | ||
EMCOR property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 2,923,603 | 2,955,000 | |
Deferred Loan Costs, net | (74,651) | (83,743) | |
Net Balance | $ 2,848,952 | 2,871,257 | |
Contractual Interest Rate | [1] | 4.35% | |
Effective Interest Rate | [1] | 4.35% | |
Loan Maturity | Dec. 1, 2024 | ||
exp US Services property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 3,461,472 | 3,505,061 | |
Deferred Loan Costs, net | (126,739) | (140,382) | |
Net Balance | $ 3,334,733 | 3,364,679 | |
Contractual Interest Rate | [1],[3] | ||
Effective Interest Rate | [1] | 4.25% | |
Loan Maturity | Nov. 17, 2024 | ||
Husqvarna property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 6,380,000 | 0 | |
Deferred Loan Costs, net | (196,639) | 0 | |
Net Balance | $ 6,183,361 | 0 | |
Contractual Interest Rate | [1],[4] | ||
Effective Interest Rate | [1] | 4.60% | |
Loan Maturity | Feb. 20, 2028 | ||
AvAir property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | [5] | $ 14,575,000 | 12,000,000 |
Deferred Loan Costs, net | [5] | (340,655) | (330,866) |
Net Balance | [5] | $ 14,234,345 | 11,669,134 |
Contractual Interest Rate | [1],[5],[6] | ||
Effective Interest Rate | [1],[5] | 4.84% | |
Loan Maturity | [5] | Mar. 27, 2028 | |
3M property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 8,360,000 | 0 | |
Deferred Loan Costs, net | (132,463) | 0 | |
Net Balance | $ 8,227,537 | 0 | |
Debt Instrument, Description of Variable Rate Basis | [1] | One-month LIBOR+2.25 % | |
Effective Interest Rate | [1] | 5.09% | |
Loan Maturity | Mar. 29, 2023 | ||
Cummins property [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 8,530,000 | 0 | |
Deferred Loan Costs, net | (153,712) | 0 | |
Net Balance | $ 8,376,288 | 0 | |
Debt Instrument, Description of Variable Rate Basis | [1] | One-month LIBOR+2.25 % | |
Effective Interest Rate | [1] | 5.16% | |
Loan Maturity | Apr. 4, 2023 | ||
Twenty Four Hours Fitness [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 8,900,000 | 0 | |
Deferred Loan Costs, net | (162,341) | 0 | |
Net Balance | $ 8,737,659 | 0 | |
Debt Instrument, Description of Variable Rate Basis | [1] | One-month LIBOR+4.30 % | |
Effective Interest Rate | [1] | 6.56% | |
Loan Maturity | Mar. 17, 2019 | ||
Texas Health [Member] | |||
Short Term Debt [LineItems] | |||
Principal Amount | $ 4,842,500 | 0 | |
Deferred Loan Costs, net | (130,593) | 0 | |
Net Balance | $ 4,711,907 | $ 0 | |
Debt Instrument, Description of Variable Rate Basis | [1] | One-month LIBOR+4.30 % | |
Effective Interest Rate | [1] | 6.56% | |
Loan Maturity | Mar. 12, 2019 | ||
[1] | Contractual interest rate represents the interest rate in effect under the mortgage note payable as of September 30, 2018. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2018 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments (see Note 7). | ||
[2] | The loans on each of the Williams Sonoma and Wyndham properties (collectively, the “Property”) located in Summerlin, Nevada were originated by Nevada State Bank (“Bank”). The loans are collateralized by a deed of trust and a security agreement with assignment of rents and fixture filing. In addition, the individual loans are subject to a cross collateralization and cross default agreement whereby any default under, or failure to comply with the terms of any one or both of the loans is an event of default under the terms of both loans. The value of the Property must be in an amount sufficient to maintain a loan to value ratio of no more than 60%. If the loan to value ratio is ever more than 60%, the borrower shall, upon the Bank’s written demand, reduce the principal balance of the loans so that the loan to value ratio is no more than 60%. | ||
[3] | The initial contractual interest rate is 4.25% and starting November 18, 2022, the interest rate is T-Bill index plus 3.25%. | ||
[4] | The initial contractual interest rate is 4.60% for the first five years and the greater of 4.60% or five-year Treasury Constant Maturity (“TCM”) plus 2.45% for the second five years. | ||
[5] | On March 27, 2018, the Company refinanced the mortgage loan payable as of December 31, 2017 with a new loan for $14,575,000 through a nonaffiliated lender. The loan is secured by the AvAir property and it matures on March 27, 2028. | ||
[6] | The initial contractual interest rate for the note payable outstanding as of September 30, 2018 is 4.84% for the first five-years and the greater of 4.60% or five-year TCM plus 2.45% for the second five-years. |
DEBT (Details 1)
DEBT (Details 1) - USD ($) | Sep. 30, 2018 | Mar. 27, 2018 | Dec. 31, 2017 |
Face Value | $ 101,151,169 | $ 62,228,409 | |
Carrying Value | 98,829,220 | $ 14,575,000 | 60,487,303 |
Fair Value | $ 100,358,550 | $ 62,363,284 |
DEBT (Details 2)
DEBT (Details 2) | Sep. 30, 2018USD ($) | |
Debt Instrument [Line Items] | ||
October through December 2018 | $ 227,926 | |
2,019 | 14,852,295 | |
2,020 | 1,365,125 | |
2,021 | 8,055,405 | |
2,022 | 14,436,354 | |
2,023 | 21,031,341 | |
Thereafter | 41,182,723 | |
Total principal | 101,151,169 | |
Mortgage Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
October through December 2018 | 227,926 | |
2,019 | 14,852,295 | |
2,020 | 1,365,125 | |
2,021 | 8,055,405 | |
2,022 | 14,436,354 | |
2,023 | 21,031,341 | |
Thereafter | 41,182,723 | |
Total principal | 101,151,169 | |
Unsecured Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
October through December 2018 | 0 | [1] |
2,019 | 0 | [1] |
2,020 | 0 | [1] |
2,021 | 0 | [1] |
2,022 | 0 | [1] |
2,023 | 0 | [1] |
Thereafter | 0 | [1] |
Total principal | $ 0 | [1] |
[1] | Any outstanding borrowings under the Unsecured Credit Facility will be due by January 26, 2019 unless the facility is extended. |
DEBT (Details 3)
DEBT (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | ||||
Interest expense | $ 1,070,860 | $ 541,282 | $ 3,364,736 | $ 1,111,287 |
Unrealized gain on interest rate swaps (see Note 7) | (185,453) | (4,627) | (406,023) | 100,006 |
Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense | 1,050,813 | 401,174 | 2,880,471 | 667,011 |
Amortization of deferred financing costs | 127,182 | 53,141 | 632,717 | 88,526 |
Unrealized gain on interest rate swaps (see Note 7) | (185,452) | (4,627) | (406,023) | 100,006 |
Unsecured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense | 69,745 | 81,594 | 236,142 | 224,626 |
Amortization of deferred financing costs | 8,572 | 0 | 21,429 | 1,118 |
Forfeited Loan Fee | $ 0 | $ 10,000 | $ 0 | $ 30,000 |
DEBT (Details Textual)
DEBT (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Oct. 31, 2018 | Feb. 28, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Mar. 27, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Interest Rate Description | Under the terms of the Unsecured Credit Facility, Borrowers pay a variable rate of interest on outstanding amounts equal to one (1) percentage point over an independent index published in The Wall Street Journal based on the highest rate on corporate loans posted by at least 75% of the largest banks (the “Index”). | |||||
Unsecured Debt | $ 0 | $ 12,000,000 | ||||
Proceeds from Unsecured Lines of Credit | 18,450,000 | $ 43,390,000 | ||||
Carrying Value Of Mortgage Loan | 98,829,220 | $ 14,575,000 | $ 60,487,303 | |||
Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from Unsecured Lines of Credit | $ 9,000,000 | |||||
Unsecured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from Unsecured Lines of Credit | $ 9,000,000 | |||||
New Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 12,000,000 | |||||
Line of Credit Facility, Expiration Date | Jan. 26, 2018 | |||||
New Credit Facility [Member] | Unsecured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 9,000,000 | |||||
Line of Credit Facility, Interest Rate at Period End | 6.25% | |||||
Line of Credit Facility, Expiration Date | Jan. 26, 2019 | |||||
Line of Credit Facility, Interest Rate at Period Start | 5.50% | |||||
Initial Contractual Interest One [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Interest Rate at Period Start | 4.25% | |||||
Initial Contractual Interest Two [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Interest Rate at Period Start | 4.60% |
INTEREST RATE SWAP DERIVATIVE_2
INTEREST RATE SWAP DERIVATIVES (Details) - Interest Rate Swap [Member] | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | ||||
Derivatives, Fair Value [Line Items] | |||||
Derivative, Number of Instruments Held | 4 | 2 | |||
Derivative Liability, Notional Amount | [1] | $ 27,373,200 | $ 10,620,000 | ||
Derivative Variable Interest Rate Description | One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% | [2] | One-month LIBOR + applicable spread/Fixed at 4.05%-4.34% | [3] | |
Derivative, Average Fixed Interest Rate | 4.74% | 4.21% | |||
Derivative, Remaining Maturity | 5 years 3 months 18 days | 7 years 2 months 12 days | |||
[1] | The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. As of September 30, 2018, the minimum notional amount (outstanding principal balance at the maturity date) was $24,936,799. | ||||
[2] | The reference rate was September 30, 2018. | ||||
[3] | The reference rate was December 31, 2017. |
INTEREST RATE SWAP DERIVATIVE_3
INTEREST RATE SWAP DERIVATIVES (Details 1) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Derivatives, Fair Value [Line Items] | ||
Derivative Asset | $ 418,085 | $ 7,899 |
Derivative Liability | $ (4,163) | $ 0 |
Interest Rate Swap [Member] | Fair Value, derivative instruments Level 2 measurement [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Number of Instruments Held | 3 | 2 |
Derivative Liability, Number of Instruments Held | 1 | 0 |
Derivative Asset | $ 418,085 | $ 7,899 |
Derivative Liability | $ (4,163) | $ 0 |
Description of Location of Interest Rate Fair Value Hedge Derivative on Balance Sheet | Asset - Interest rate swap derivatives, at fair value | Liability - Interest rate swap derivatives, at fair value |
INTEREST RATE SWAP DERIVATIVE_4
INTEREST RATE SWAP DERIVATIVES (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivatives, Fair Value [Line Items] | ||||
Unrealized (Gain) Loss on Derivatives | $ (185,453) | $ (4,627) | $ (406,023) | $ 100,006 |
Minimum [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative Liability, Notional Amount | $ 24,936,799 | $ 24,936,799 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Related Party Transaction [Line Items] | ||||||
Due from Related Parties | $ 106,602 | $ 106,602 | $ 34,194 | |||
Due to Affiliates | 6,841 | 6,841 | 907,377 | |||
Asset Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [1] | 532,355 | $ 264,927 | 1,411,585 | $ 573,281 | |
Due from Related Parties | [1] | 0 | 0 | 0 | ||
Due to Affiliates | [1] | 668 | 668 | 567,661 | ||
Fees to affiliates [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 532,355 | 264,927 | 1,411,585 | 573,281 | ||
Reimbursable organizational and offering expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [2] | 348,466 | 453,377 | 1,164,763 | 1,591,498 | |
Due from Related Parties | [2] | 0 | 0 | 0 | ||
Due to Affiliates | [2] | 2,980 | 2,980 | 15,945 | ||
Expense reimbursements from Sponsor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [3] | (298,645) | (584,230) | (952,098) | (1,945,160) | |
Due from Related Parties | [3] | 106,602 | 106,602 | 34,194 | ||
Due to Affiliates | [3] | 0 | 0 | 0 | ||
Waiver of Assets Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [1] | 0 | (42,485) | 0 | (119,524) | |
Due from Related Parties | [1] | 0 | 0 | 0 | ||
Due to Affiliates | [1] | 0 | 0 | 0 | ||
Capitalized Acquisition Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 588,750 | 1,014,559 | 1,518,750 | 2,498,129 | ||
Due from Related Parties | 0 | 0 | 0 | |||
Due to Affiliates | 0 | 0 | 0 | |||
Subordinated participation fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 0 | 0 | 0 | 0 | ||
Due from Related Parties | 0 | 0 | 0 | |||
Due to Affiliates | 0 | 0 | 315,802 | |||
Property management fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [4] | 22,503 | 6,996 | 54,654 | 7,618 | |
Due from Related Parties | [4] | 0 | 0 | 0 | ||
Due to Affiliates | [4] | 0 | 0 | 7,969 | ||
Capitalized Financing coordination fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 0 | 174,500 | 209,550 | 261,950 | ||
Due from Related Parties | 0 | 0 | 0 | |||
Due to Affiliates | 0 | 0 | 0 | |||
Director and Officer Insurance Reimbursements [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | [5] | 33,118 | 0 | 70,034 | 0 | |
Due from Related Parties | [5] | 0 | 0 | 0 | ||
Due to Affiliates | [5] | 3,193 | 3,193 | 0 | ||
Due to REIT I [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 0 | 17,269 | 0 | 17,269 | ||
Due from Related Parties | 0 | 0 | 0 | |||
Due to Affiliates | 0 | 0 | 0 | |||
Payable to TIC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred To Related Parties | 0 | $ 363,168 | 0 | $ 363,168 | ||
Due from Related Parties | 0 | 0 | 0 | |||
Due to Affiliates | $ 0 | $ 0 | $ 0 | |||
[1] | To the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Advisor will be deemed to have waived, not deferred, that portion up to 0.025% of the total investment value of the Company’s assets. For the three months ended September 30, 2018 and 2017, the Advisor waived zero and $42,485, respectively, of asset management fees, which are not subject to future recoupment by the Advisor and for the nine months ended September 30, 2018 and 2017, the Advisor waived zero and $119,524, respectively, of asset management fees, which are not subject to future recoupment by the Advisor. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $197,978 related to its TIC Interest in the Santa Clara property during the three and nine months ended September 30, 2018, respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities. | |||||
[2] | As of September 30, 2018, the Sponsor had incurred $8,156,345 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% of gross offering proceeds. | |||||
[3] | Includes payroll costs related to Company employees that answer questions from prospective stockholders. See “—Investor Relations Payroll Expense Reimbursement from Sponsor” below. 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. The expense reimbursements from the Sponsor for the three and nine months ended September 30, 2018 also include $125,181 and $225,126, respectively, of employment related legal fees which the Sponsor also agreed to reimburse the Company. The receivables related to these costs are reflected in “Due from affiliates” in the condensed consolidated balance sheets. | |||||
[4] | Property management fees are classified within property operating expenses on the condensed consolidated statements of operations. | |||||
[5] | Directors and officers insurance and other reimbursements are classified within general and administrative expenses on the condensed consolidated statements of operations. |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | $ 6,841 | $ 6,841 | $ 907,377 | |||
Acquisition Fees Description | The Company pays the Advisor a fee in an amount equal to 3.0% of the contract purchase price of the Company’s properties, as defined, 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. | |||||
Property Management Fees Percentage | 1.50% | |||||
Operating Expenses Reimbursement, Maximum Limit Reimbursements | Under the Company’s charter, total operating expenses of the Company are limited to the greater of 2% of average invested assets or 25% of net income for the four most recently completed fiscal quarters (the “2%/25% Limitation”). | |||||
Revenue from Contract with Customer, Including Assessed Tax | 3,910,063 | $ 1,926,722 | $ 10,490,488 | $ 3,990,317 | ||
Common Class C [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Stock Issued During Period, Value, Issued for Services | $ 48,240 | $ 60,000 | $ 129,645 | $ 125,000 | ||
Stock Issued During Period, Shares, Issued for Services | 4,800 | 6,000 | 12,900 | 12,500 | ||
Sponsor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Reimbursements Expense | $ 125,181 | $ 225,126 | ||||
Organizational And Offering Costs Incurred | $ 8,156,345 | |||||
Advisor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Financing Coordination Fees Percentage | 1.00% | |||||
Disposition Fees Description | the Company pays the Advisor or one of its affiliates 3.0% of the contract sales price, as defined, of each property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with the Advisor or its affiliates, the disposition fees paid to the Advisor, the Sponsor, 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 pays 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. | |||||
Reimbursable Organizational and Offering Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | [1] | 2,980 | $ 2,980 | 15,945 | ||
Accrual organization and offering cost | 3,879,246 | $ 3,879,246 | ||||
Reimbursable Organizational and Offering Expenses [Member] | Sponsor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Gross Offering Proceeds Percentage | 3.00% | |||||
Reimbursable Organizational and Offering Expenses [Member] | Due to Affiliates [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 3,882,226 | |||||
Waiver Of Assets Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | [2] | 0 | $ 0 | 0 | ||
Monthly Asset Management Fees Waive Percentage | 0.025% | |||||
Related Party Transaction, Other Revenues from Transactions with Related Party | $ 0 | $ 119,524 | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | $ 42,485 | ||||
Waiver Of Assets Management Fees [Member] | Advisor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Revenue from Contract with Customer, Including Assessed Tax | 65,993 | 197,978 | ||||
Asset Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | [2] | 668 | 668 | 567,661 | ||
Related Party Transaction, Other Revenues from Transactions with Related Party | 1,411,585 | 573,081 | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 532,355 | 264,927 | ||||
Subordinated participation fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to Related Parties | 0 | 0 | $ 315,802 | |||
Sponsor reimbursement [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Other Revenues from Transactions with Related Party | $ 173,464 | $ 584,230 | $ 726,972 | $ 1,945,160 | ||
[1] | As of September 30, 2018, the Sponsor had incurred $8,156,345 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% of gross offering proceeds. | |||||
[2] | To the extent the Advisor elects, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Advisor will be deemed to have waived, not deferred, that portion up to 0.025% of the total investment value of the Company’s assets. For the three months ended September 30, 2018 and 2017, the Advisor waived zero and $42,485, respectively, of asset management fees, which are not subject to future recoupment by the Advisor and for the nine months ended September 30, 2018 and 2017, the Advisor waived zero and $119,524, respectively, of asset management fees, which are not subject to future recoupment by the Advisor. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $197,978 related to its TIC Interest in the Santa Clara property during the three and nine months ended September 30, 2018, respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
COMMITMENTS AND CONTINGENCIES [Line Items] | ||
Restricted Cash and Cash Equivalents | $ 83,300 | $ 944,582 |
Lease Agreements [Member] | ||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||
Other Commitment | 309,404 | 1,899,485 |
Restricted Cash and Cash Equivalents | $ 83,300 | $ 944,582 |
Lease Agreements [Member] | Santa Clara Property [Member] | ||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||
Equity Method Investment, Ownership Percentage | 72.70% |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) | 1 Months Ended | 9 Months Ended | |||
Oct. 31, 2018USD ($)a$ / sharesshares | Oct. 29, 2018$ / shares | Sep. 27, 2018 | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | |
Subsequent Event [Line Items] | |||||
Stock Issued During Period, Value, New Issues | $ 38,825,442 | ||||
Payments to Acquire Real Estate | 50,863,080 | $ 62,245,697 | |||
Dividends Payable, Date to be Paid | Nov. 26, 2018 | ||||
Proceeds from Unsecured Lines of Credit | $ 18,450,000 | $ 43,390,000 | |||
Common Class C [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | shares | 3,865,204 | ||||
Stock Issued During Period, Value, New Issues | $ 3,865 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Payments to Acquire Real Estate | $ 10,516,000 | ||||
Dividends Payable, Amount Per Share Per Day | $ / shares | $ 0.0018911 | $ 0.0019542 | |||
Dividends Payable, Date to be Paid | Dec. 26, 2018 | ||||
Area of Land | a | 72,890 | ||||
Proceeds from Issuance Initial Public Offering | $ 1,516,000 | ||||
Proceeds from Unsecured Lines of Credit | 9,000,000 | ||||
Acquisition Fees | $ 315,480 | ||||
Subsequent Event [Member] | Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock Issued During Period, Shares, Dividend Reinvestment Plan | shares | 791,993 | ||||
Stock Issued During Period, Value, Dividend Reinvestment Plan | $ 7,943,572 | ||||
Subsequent Event [Member] | Common Class C [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | shares | 13,385,609 | ||||
Stock Issued During Period, Value, New Issues | $ 134,051,756 | ||||
Subsequent Event [Member] | Class S Common stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | shares | 3,144 | ||||
Stock Issued During Period, Value, New Issues | $ 31,445 | ||||
Stock Issued During Period, Shares, Dividend Reinvestment Plan | shares | 144 | ||||
Stock Issued During Period, Value, Dividend Reinvestment Plan | $ 1,445 |