Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | RW HOLDINGS NNN REIT, INC. | |
Entity Central Index Key | 0001645873 | |
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 | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 14,539,924 | |
Common Class S | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 146,967 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Real estate investments: | ||
Land | $ 41,126,392 | $ 41,126,392 |
Buildings and improvements | 176,367,798 | 176,367,798 |
Tenant origination and absorption costs | 17,717,819 | 17,717,819 |
Total investments in real estate property | 235,212,009 | 235,212,009 |
Accumulated depreciation and amortization | (12,955,159) | (10,563,664) |
Total Investment in Real Estate Property, Net | 222,256,850 | 224,648,345 |
Investments in unconsolidated entities (Note 5) | 14,116,583 | 14,275,815 |
Total real estate investments, net | 236,373,433 | 238,924,160 |
Cash and cash equivalents | 4,415,108 | 5,252,686 |
Restricted cash | 3,523,493 | 3,503,242 |
Tenant receivables | 4,031,069 | 3,659,114 |
Above-market lease intangibles, net | 559,986 | 584,248 |
Due from affiliates (Note 8) | 0 | 16,838 |
Purchase and other deposits | 100,000 | 100,000 |
Prepaid expenses and other assets | 386,689 | 234,399 |
Interest rate swap derivatives | 21,517 | 151,215 |
Total assets | 249,411,295 | 252,425,902 |
Liabilities and Stockholders' Equity | ||
Mortgage notes payable, net | 115,189,028 | 122,709,308 |
Unsecured credit facility, net | 4,069,000 | 8,998,000 |
Accounts payable, accrued and other liabilities | 7,258,533 | 7,164,713 |
Share repurchases payable | 1,181,133 | 584,676 |
Below-market lease intangibles, net | 2,476,784 | 2,595,382 |
Due to affiliates (Note 8) | 52,996 | 979,174 |
Interest rate swap derivatives | 491,757 | 300,929 |
Total liabilities | 130,719,231 | 143,332,182 |
Commitments and contingencies (Note 9) | ||
Redeemable common stock | 5,404,494 | 6,000,951 |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Additional paid-in-capital | 132,742,525 | 119,247,245 |
Cumulative distributions and net losses | (19,469,289) | (16,167,437) |
Total stockholders' equity | 113,287,570 | 103,092,769 |
Total liabilities and stockholders' equity | 249,411,295 | 252,425,902 |
Common Class C | ||
Liabilities and Stockholders' Equity | ||
Common Stock, Value, Issued | 14,201 | 12,943 |
Common Class S | ||
Liabilities and Stockholders' Equity | ||
Common Stock, Value, Issued | $ 133 | $ 18 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Preferred Stock | ||
Par Value (USD Per Share) | $ 0.001 | $ 0.001 |
Shares Authorized ( in shares ) | 50,000,000 | 50,000,000 |
Shares Issued ( In shares ) | 0 | 0 |
Shares Outstanding ( In shares ) | 0 | 0 |
Common Class C | ||
Common Stock | ||
Par Value ( usd per share ) | $ 0.001 | $ 0.001 |
Shares Authorized ( in shares ) | 300,000,000 | 300,000,000 |
Shares Issued ( In shares ) | 14,201,229 | 12,943,294 |
Shares Outstanding ( In shares ) | 14,201,229 | 12,943,294 |
Common Class S | ||
Common Stock | ||
Par Value ( usd per share ) | $ 0.001 | $ 0.001 |
Shares Authorized ( in shares ) | 100,000,000 | 100,000,000 |
Shares Issued ( In shares ) | 132,517 | 17,594 |
Shares Outstanding ( In shares ) | 132,517 | 17,594 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Rental income | $ 5,885,445 | $ 3,457,978 |
Expenses: | ||
Fees to affiliates (Note 8) | 812,018 | 401,315 |
General and administrative | 539,505 | 612,187 |
Depreciation and amortization | 2,391,496 | 1,314,276 |
Interest expense | 2,160,350 | 1,090,616 |
Property expenses | 1,062,652 | 492,978 |
Total expenses | 6,966,021 | 3,911,372 |
Less: Expenses reimbursed by Sponsor or affiliates (Note 8) | (87,999) | (359,514) |
Net expenses | 6,878,022 | 3,551,858 |
Other income: | ||
Interest income | 5,386 | 3,676 |
Income from investments in unconsolidated entities, net | 74,033 | 54,879 |
Total other income | 79,419 | 58,555 |
Net loss | $ (913,158) | $ (35,325) |
Net loss per share, basic and diluted ( in USD per share ) | $ (0.07) | $ 0 |
Weighted-average number of common shares outstanding, basic and diluted ( in shares ) | 13,503,650 | 9,499,257 |
Dividends declared per common share ( in USD per share ) | $ 0.1778 | $ 0.234 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity - USD ($) | Total | Common Class S | Additional Paid-in Capital | Cumulative Distributions and Net Losses | Common StockCommon Class C | Common StockCommon Class S |
Balance (in shares) at Dec. 31, 2017 | 8,838,002 | 3,032 | ||||
Balance at Dec. 31, 2017 | $ 79,249,866 | $ 85,324,921 | $ (6,083,896) | $ 8,838 | $ 3 | |
Issuance of common stock (in shares) | 1,429,021 | 33 | ||||
Issuance of common stock | 14,341,117 | 14,339,699 | $ 1,418 | |||
Stock compensation expense (in shares) | 3,800 | |||||
Stock compensation expense | 38,190 | 38,186 | $ 4 | |||
Offering costs | (430,094) | (430,094) | ||||
Reclassification to redeemable common stock | (4,006,748) | (4,006,748) | ||||
Repurchase of common stock (in shares) | (172,469) | |||||
Repurchase of common stock | (1,683,343) | (1,683,170) | $ (173) | |||
Distributions declared | (2,173,195) | (2,173,195) | ||||
Net income | (35,325) | (35,325) | ||||
Balance (in shares) at Mar. 31, 2018 | 10,098,354 | 3,065 | ||||
Balance at Mar. 31, 2018 | 85,300,468 | 93,582,794 | (8,292,416) | $ 10,087 | $ 3 | |
Balance (in shares) at Dec. 31, 2017 | 8,838,002 | 3,032 | ||||
Balance at Dec. 31, 2017 | 79,249,866 | 85,324,921 | (6,083,896) | $ 8,838 | $ 3 | |
Balance (in shares) at Dec. 31, 2018 | 12,943,294 | 17,594 | ||||
Balance at Dec. 31, 2018 | 103,092,769 | 119,247,245 | (16,167,437) | $ 12,943 | $ 18 | |
Issuance of common stock (in shares) | 1,477,902 | 114,923 | ||||
Issuance of common stock | 16,157,204 | 16,155,611 | $ 1,478 | $ 115 | ||
Stock compensation expense (in shares) | 4,921 | |||||
Stock compensation expense | 50,000 | 49,995 | $ 5 | |||
Offering costs | (484,564) | (484,564) | ||||
Repurchase of common stock (in shares) | (224,888) | |||||
Repurchase of common stock | (2,225,987) | (2,225,762) | $ (225) | |||
Distributions declared | (2,388,694) | (2,388,694) | ||||
Net income | (913,158) | (913,158) | ||||
Balance (in shares) at Mar. 31, 2019 | 132,517 | 14,201,229 | 132,517 | |||
Balance at Mar. 31, 2019 | $ 113,287,570 | $ 132,742,525 | $ (19,469,289) | $ 14,201 | $ 133 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (913,158) | $ (35,325) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,391,496 | 1,314,276 |
Stock compensation expense | 100,000 | 38,190 |
Deferred rents | (347,684) | (303,476) |
Amortization of deferred lease incentives | 15,301 | 0 |
Amortization of deferred financing costs | 272,522 | 411,173 |
Amortization of above-market lease intangibles | 24,261 | 24,261 |
Amortization of below-market lease intangibles | (118,598) | (50,536) |
Unrealized loss (gain) on interest rate swap valuation | 320,526 | (226,806) |
Income from investments in unconsolidated entities | (74,033) | (54,879) |
Distributions from investments in unconsolidated entities | 233,265 | 248,002 |
Change in operating assets and liabilities: | ||
Increase in tenant receivables | (24,271) | (64,852) |
Decrease (increase) in due from affiliates | 16,838 | (175,682) |
Increase in prepaid and other assets | (167,592) | (86,098) |
Decrease in accounts payable, accrued and other liabilities | (28,809) | (585,695) |
Decrease in due to affiliate | (926,328) | (414,409) |
Net cash provided by operating activities | 773,736 | 38,144 |
Cash Flows from Investing Activities: | ||
Acquisition of real estate investments | 0 | (15,245,676) |
Additions to existing real estate investments | 0 | (3,831) |
Payment of acquisition fees to affiliate | 0 | (456,000) |
Purchase deposits and other acquisition costs | 0 | (617,707) |
Net cash used in investing activities | 0 | (16,323,214) |
Cash Flows from Financing Activities: | ||
Borrowings from unsecured credit facility | 4,869,000 | 9,000,000 |
Repayments of unsecured credit facility | (9,800,000) | (12,000,000) |
Proceeds from mortgage notes payable | 6,350,000 | 29,315,000 |
Principal payments on mortgage notes payable | (13,976,246) | (12,225,822) |
Refundable loan deposits | 0 | (35,000) |
Payments of deferred financing costs to third parties | (101,056) | (499,748) |
Payments of financing fees to affiliates | (63,500) | (209,550) |
Proceeds from issuance of common stock and investor deposits | 14,393,574 | 13,080,885 |
Payments of offering costs | (484,564) | (429,297) |
Payments of commissions to Class S distributor | (150) | (150) |
Repurchase of common stock | (2,225,987) | (1,683,343) |
Distributions paid to common stockholders | (552,134) | (335,216) |
Net cash (used in) provided by financing activities | (1,591,063) | 23,977,759 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (817,327) | 7,692,689 |
Cash, cash equivalents and restricted cash, beginning of period | 8,755,928 | 4,182,755 |
Cash, cash equivalents and restricted cash, end of period | 7,938,601 | 11,875,444 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 1,582,395 | 887,530 |
Supplemental Schedule of Noncash Investing and Financing Activities: | ||
Reclassification to redeemable common stock | 0 | 4,006,748 |
Reinvested distributions from common stockholders | 1,763,630 | 1,260,232 |
Increase in share repurchases payable | 596,457 | 473,076 |
Decrease in deferred commission payable to Class S common stock distributor | 0 | (150) |
Accrued dividends | 821,300 | 579,368 |
Withholding tax on distributions | 0 | 204 |
Increase in other offering costs due to affiliates | $ 0 | $ 947 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Business And Organization | BUSINESS AND ORGANIZATION RW Holdings NNN REIT, Inc. (the "Company") was incorporated on May 14, 2015 as a Maryland corporation. 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 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 Aaron S. Halfacre and Raymond Wirta, the Company’s Chief Executive Officer and Chairman of the Board of Directors, 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 total of 20,000 shares of Class C common stock, at a purchase price of $10.00 per share. As of March 31, 2019 and December 31, 2018 , the Sponsor held 10,740 shares of the Company’s Class C common stock. 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 in 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"). Under applicable SEC rules, the Registered Offering will terminate on June 1, 2019, unless terminated earlier by the Company’s board of directors. Under applicable SEC rules, the Company is also permitted to file a new registration statement on Form S-11 with the SEC to extend the Registered Offering in accordance with Rule 415 of the Securities Act so that the Company may continue to offer shares of its Class C common stock after June 1, 2019. The board of directors expects to extend the offering in accordance with Rule 415 of the Securities Act, and the Company will notify stockholders by filing a supplement to the prospectus for the Registered Offering with the SEC when its board of directors has determined to continue the Registered Offering beyond June 1, 2019. In some states, the Company is also required to renew the registration statement for the Registered Offering annually or file a new registration statement to continue the Registered Offering. 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 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/or deferred selling commissions and fees. On January 11, 2019, the Company’s board of directors approved and established an estimated net asset value ("NAV") per share of the Company’s common stock of $10.16 (unaudited). Effective January 14, 2019, the purchase price per share of the Company’s common stock in the Offerings and share repurchase program increased from $10.05 to $10.16 (unaudited). Through March 31, 2019 , the Company had sold 15,505,870 shares of Class C common stock in the Registered Offering, including 1,077,230 shares of Class C common stock sold under its Registered DRP Offering, for aggregate gross offering proceeds of $155,496,984 , and 132,517 shares of Class S common stock in the Class S Offering, including 503 shares of Class S common stock sold under its dividend reinvestment plan applicable to Class S common stock, for aggregate gross offering proceeds of $1,344,284 . As of March 31, 2019 , the Company had invested in (i) 24 operating properties, comprised of: nine retail properties, 10 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) an approximate 72.7% tenant-in-common interest in a Santa Clara office property (the "TIC interest"); and (iv) an approximate 4.8% interest in Rich Uncles Real Estate Investment Trust I ("REIT I"), an affiliated REIT. On January 14, 2019, REIT I announced that it had retained a real estate financial advisor to assist it in evaluating strategic alternatives, which includes marketing its entire real estate properties portfolio (the "REIT I Portfolio") for disposition by sale, merger or other transaction structure. In connection with REIT I’s announcement, on March 19, 2019, the Company announced that it intends to explore a potential acquisition of REIT I or the REIT I Portfolio and that the Company’s board of directors has formed a special committee of the board of directors (the "Special Committee"), consisting solely of independent directors, that is evaluating the potential for a transaction with REIT I. The members of the Special Committee, comprised of four of the Company’s six directors, have no affiliation with REIT I or the Sponsor. The special committee has engaged UBS Investment Bank as its financial advisor and Morris Manning and Martin, LLP as its legal advisor to assist the Special Committee as it conducts a review of a potential acquisition of REIT I or the REIT I Portfolio. The Special Committee has not set a definitive timetable for completion of its evaluation, and there can be no assurances that any offer for REIT I or the REIT I Portfolio would be accepted by REIT I or that we would be able to enter into any transaction with REIT I on terms acceptable to us or at all |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | 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, 2018 audited consolidated financial statements included in the Company’s Form 10-K filed with the SEC on March 29, 2019. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated 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, 2018 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 Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an existing price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 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. These balances approximate their fair values due to the short maturities of these items. Derivative Instruments : The Company’s derivative instruments are presented at fair value in the accompanying condensed consolidated balance sheet. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk. Unsecured Credit Facility : The fair value of the Company’s Unsecured Credit Facility (as defined in Note 6) approximates its carrying value as the interest rates and other terms are comparable to those available in the market place for a similar credit facility. Mortgage notes payable: The fair value of the Company’s mortgage notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. 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. Restricted cash as of March 31, 2019 and December 31, 2018 amounted to $3,523,493 and $3,503,242 , respectively. Pursuant to lease agreements, the Company has obligations to pay for $3,535,163 and $3,535,163 in site and tenant improvements to be incurred by tenants as of March 31, 2019 and December 31, 2018 , respectively, including a 72.7% share of tenant improvements for the Santa Clara property at both balance sheet dates. At March 31, 2019 and December 31, 2018 , the Company's restricted cash held to fund the improvements totaled $3,486,927 . As of March 31, 2019 and December 31, 2018 , the Company also held restricted cash to fund an impounded property tax. In April 2019, $3,177,343 of restricted cash was released to the tenant to reimburse it for tenant improvement costs under the terms of its lease agreement. Other Comprehensive Loss For all periods presented, other comprehensive loss is the same as net loss. Reclassifications Certain prior year revenue account balances in the statement of operations have been reclassified to conform with the current year presentation. The reclassifications had no impact on net 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 during the three months ended March 31, 2019 and 2018 . For the three months ended March 31, 2019 and 2018 , the Company has presented net 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 , would have resulted in a net income (loss) per share of $(0.07) and $0.00 for Class C shares for the three months ended March 31, 2019 and 2018 , respectively, and $(0.07) and $(0.05) for Class S shares for the three months ended March 31, 2019 and 2018 , respectively. The differences in net loss per share if allocated under this method primarily reflects the lower effective dividends per share for Class S shareholders as a result of the payment of the deferred commission to the Class S distributor of these shares, and also reflects the impact of the timing of the declaration of the dividends relative to the time the shares were outstanding. Distributions The Company’s board of directors declares distributions in advance of the periods to which they relate. Distributions to stockholders for the period April 1, 2019 through June 30, 2019 were declared on February 28, 2019, to be paid on or about the 25th of May through July. Because these distributions relate to operations and cash available for distributions to be produced in future periods, they are not included in distributions recorded in the current period for the three months ended March 31, 2019 . The following are the Company’s updated significant accounting policies that have been affected by the adoption of Topic 842 as discussed below in New Accounting Standards Issued and Adopted: Revenue Recognition The Company recognizes rental income, tenant reimbursements and other lease-related revenue when all of the following criteria are met: (i) the agreement has been fully executed and delivered, (ii) services have been rendered, (iii) the amount is fixed or determinable and (iv) payment has been received or the collectability of the amount due is probable. Lease termination fees are amortized over the remaining lease term, if applicable. If there is no remaining lease term, they are recognized when received and realized. Minimum annual rental revenues are recognized in rental income on a straight-line basis over the non-cancellable term of the related lease. The recognition of rental income commences when the tenant takes possession or controls the physical use of the leased property. In order for the tenant to take possession, the leased property must be substantially complete and ready for its intended use. In order to determine whether the leased property is substantially complete and ready for its intended use, the Company begins by determining whether the Company or the tenant owns the tenant improvements, if the lease agreement provides for tenant improvements. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general-purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. When the Company concludes that it is the owner of tenant improvements, rental income recognition begins when the tenant takes possession of the completed property, which is generally when Company-owned tenant improvements are substantially complete. In addition, when the Company concludes that it is the owner of tenant improvements, the Company records the costs to construct the tenant improvements, including costs paid for or reimbursed by the tenants, as a capital asset. For these tenant improvements, the Company records the amount funded by or reimbursed by the tenants as deferred revenue, which is amortized on a straight-line basis as additional rental income over the term of the related lease. When the Company concludes that the tenant is the owner of tenant improvements, rental income recognition begins when the tenant takes possession or controls the physical use of the leased property. Any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. In addition, when the Company concludes that the tenant is the owner of tenant improvements for accounting purposes, the Company records its contribution towards such improvements as a lease incentive, which is included in deferred leasing costs and acquisition-related intangible assets, net in its consolidated balance sheets and amortized as a reduction to rental income on a straight-line basis over the term of the related lease. Tenant Reimbursements Tenant reimbursements, consisting of amounts due from tenants for common area maintenance, property taxes and other recoverable costs, are recognized in rental income subsequent to the adoption of Topic 842 in the period the recoverable costs are incurred. Tenant reimbursements where the Company pays the associated costs directly to third-party vendors and are reimbursed by the tenants are recognized and recorded on a gross basis. Allowances for Tenant and Deferred Rent Receivables The Company carries its tenant and deferred rent receivables net of allowances for amounts that may not be collected. Prior to the Company’s adoption of Topic 842 on January 1, 2019, the allowances are increased or decreased through provision for bad debts in the Company’s consolidated statement of operations. Upon the adoption of Topic 842 on January 1, 2019, the determination of the adequacy of the Company's allowances for tenant and deferred rent receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any current and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. Recent Accounting Pronouncements New Accounting Standards Issued and Adopted Effective January 1, 2019, the Company adopted Financial Accounting Standards Board ("FASB") ASU No. 2016-02 "Leases (Topic 842)" and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01, which provide practical expedients, technical corrections and improvements for certain aspects of ASU 2016-02, on a modified retrospective basis (collectively "Topic 842"). Topic 842 establishes a single comprehensive model for entities to use in accounting for leases and supersedes the existing leasing guidance. Topic 842 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. The Company currently does not have any exposure to Topic 842 from the perspective of a lessee as the operating lease is borne by the Sponsor. The Company's exposure to Topic 842 is primarily as a lessor. The Company has elected to apply the applicable practical expedients provided by Topic 842. Lessor Accounting As a lessor, the Company’s leases with tenants generally provide for the lease of real estate properties, as well as common area maintenance, property taxes and other recoverable costs. Under Topic 842, the lease of space is considered a lease component while the common area maintenance, property taxes and other recoverable costs billings are considered nonlease components, which fall under revenue recognition guidance in Topic 606. However, upon adopting the guidance in Topic 842, the Company determined that its tenant leases met the criteria to apply the practical expedient provided by ASU 2018-11 to recognize the lease and non-lease components together as one single component. This conclusion was based on the consideration that 1) the timing and pattern of transfer of the nonlease components and associated lease component are the same, and 2) the lease component, if accounted for separately, would be classified as an operating lease. As the lease of properties is the predominant component of the Company’s leasing arrangements, the Company accounted for all lease and nonlease components as one-single component under Topic 842. As a result, the adoption of Topic 842 did not have any impact on the Company’s timing or pattern of recognition of rental revenues as compared to previous guidance. To reflect recognition as one lease component, rental income and tenant reimbursements and other lease related property income that meet the requirements of the practical expedient provided by ASU 2018-11 have been combined under rental income subsequent to the adoption of Topic 842 for the three months ended March 31, 2019 and 2018 in the Company’s consolidated statements of operations. The Company also made a conforming reclassification for the prior year’s tenant reimbursements. For the three months period ended March 31, 2019 and 2018, tenant reimbursements included in rental income amounted to $1,087,860 and $528,585 , respectively. Prior to the adoption of Topic 842, lessor costs for certain services directly reimbursed by tenants have already been presented by the Company on a gross basis in revenues and expenses. Leasing Costs Upon adoption of Topic 842, the Company elected to apply the package of practical expedients provided and did not reassess the following as of January 1, 2019: 1) whether any expired or existing contracts are leases or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. Under Topic 842, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, beginning January 1, 2019, the Company will no longer capitalize internal leasing costs and third-party legal leasing costs and will instead expense these costs as incurred. These expenses will be included in legal leasing costs under general and administrative expenses in our consolidated statements of operations. During the three months ended March 31, 2019, the Company did not incur any indirect leasing costs which would have been capitalized prior to the adoption of Topic 842. The election of the package of practical expedients described above permits us to continue to account for our leases that commenced before January 1, 2019 under the previously existing lease accounting guidance for the remainder of their lease terms, and to apply the new lease accounting guidance to leases commencing or modified after January 1, 2019. Allowances for Tenant and Deferred Rent Receivables Upon the adoption of Topic 842 on January 1, 2019, the Company’s determination of the adequacy of its allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. In addition, for tenant and deferred rent receivables deemed probable of collection the Company also may record an allowance under other authoritative GAAP depending upon the Company’s evaluation of the individual receivables, specific credit enhancements, current economic conditions, and other relevant factors. Such allowances are recorded as increases or decreases through rental income in the Company’s consolidated statements of operations. New Accounting Standards Recently Issued and Not Yet Adopted 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 ("ASU No. 2018-13"). ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurement. In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU 2016-02 is effective for the Company beginning January 1, 2020. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its consolidated financial statements. |
CONDENSED CONSOLIDATED BALANC_3
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Condensed Consolidated Balance Sheets Details | CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS Tenant Receivables Tenant receivables consisted of the following: March 31, December 31, Straight-line rent $ 2,579,651 $ 2,231,966 Tenant rent 147,513 312,171 Tenant reimbursements 1,146,028 1,019,355 Tenant other 157,877 95,622 Total $ 4,031,069 $ 3,659,114 Accounts Payable, Accrued and Other Liabilities Accounts payable, accrued and other liabilities were comprised of the following: March 31, December 31, Accounts payable $ 207,867 $ 227,793 Accrued expenses 1,462,885 1,421,197 Accrued dividends 821,300 749,170 Accrued interest payable 428,691 445,481 Unearned rent 844,206 827,338 Deferred commission payable 1,500 1,650 Lease incentive obligation 3,492,084 3,492,084 Total $ 7,258,533 $ 7,164,713 |
REAL ESTATE INVESTMENTS
REAL ESTATE INVESTMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Real Estate Investments, Net | REAL ESTATE INVESTMENTS, NET As of March 31, 2019 , the Company’s real estate investment portfolio consisted of 24 operating properties in 13 states, consisting of: (i) nine retail, (ii) 10 office and (iii) five industrial properties and (iv) 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 March 31, 2019 : 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 $ (1,391,204 ) $ 9,518,280 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (915,551 ) 3,937,820 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (95,579 ) 1,302,535 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (122,320 ) 1,562,109 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (91,834 ) 1,214,756 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (88,048 ) 1,197,987 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (90,365 ) 1,123,364 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (87,798 ) 1,100,696 Dana Cedar Park, TX 12/27/2016 Industrial 8,392,906 1,210,874 (1,124,239 ) 8,479,541 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (1,598,684 ) 12,125,506 exp US Services Maitland, FL 3/27/2017 Office 5,920,121 388,248 (443,327 ) 5,865,042 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (648,700 ) 12,529,588 Wyndham Summerlin, NV 6/22/2017 Office 10,406,483 669,232 (549,863 ) 10,525,852 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (513,235 ) 8,116,863 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,747 281,442 (404,425 ) 7,139,764 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (290,280 ) 6,133,818 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,200 1,013,948 (488,850 ) 12,365,298 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (896,509 ) 26,461,391 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (1,297,236 ) 15,821,944 Cummins Nashville, TN 4/4/2018 Office 14,465,491 1,536,998 (761,455 ) 15,241,034 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness Las Vegas, NV 7/27/2018 Retail 11,453,337 1,204,973 (316,644 ) 12,341,666 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (161,044 ) 7,528,880 Bon Secours Richmond, VA 10/31/2018 Office 10,042,551 800,356 (199,607 ) 10,643,300 Costco Issaquah, WA 12/20/2018 Office 27,263,632 2,765,136 (378,362 ) 29,650,406 $ 217,494,190 $ 17,717,819 $ (12,955,159 ) $ 222,256,850 Current Year Acquisition or Disposition The Company did not acquire or dispose of any property during the three months ended March 31, 2019 . Prior Year Acquisition During the three months ended March 31, 2018 , the Company acquired the following property: Property Acquisition Date Land Buildings and Improvements Tenant Origination and Absorption Costs Below- Market Lease Intangibles Total 3M 3/29/2018 $ 758,780 $ 14,004,018 $ 2,356,361 $ (1,417,483 ) $ 15,701,676 Purchase price $ 15,701,676 Acquisition fees to affiliates (456,000 ) Cash paid for acquisition of real estate investments $ 15,245,676 The non-cancelable lease terms of the properties acquired during the three months ended March 31, 2018 are as follows: Property Lease Expiration 3M 7/31/2022 The purchase price allocations reflected in the condensed consolidated financial statements are based upon estimates and assumptions at the time of acquisition 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). The capitalized acquisition fee paid to the Advisor for the 3M property acquired during the three months ended March 31, 2018 is as follows: Property Amount 3M $ 456,000 Other costs incurred in conjunction with acquisition of the property totaled $49,507 . During the three months ended March 31, 2018 , the Company recognized $22,972 of total revenue related to the acquired property. Prior Year Disposition The Company did not dispose of any property during the three months ended March 31, 2018 . Operating Leases 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 March 31, 2019 , 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: April through December 2019 $ 13,219,313 2020 17,834,035 2021 16,752,518 2022 15,520,338 2023 13,317,933 2024 12,958,858 Thereafter 46,224,832 $ 135,827,827 Revenue Concentration The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three months ended March 31, 2019 and 2018 is as follows: Three Months Ended Three Months Ended Property and Location Revenue Percentage of Total Revenue Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 678,503 11.5 % $ — — % AvAir, Chandler, AZ $ 666,774 11.3 % $ 635,572 18.4 % Northrop Grumman, FL $ — — % $ 353,558 10.2 % Asset Concentration As of March 31, 2019 and 2018 , the Company’s portfolio’s asset concentration (greater than 10% of total assets) was as follows: March 31, 2019 March 31, 2018 Property and Location Net Carrying Value Percentage of Total Assets Net Carrying Value Percentage of Total Assets Costco, Issaquah, WA $ 29,650,406 11.9 % $ — — % AvAir, Chandler, AZ $ 26,461,391 10.6 % $ 27,155,463 14.9 % Intangibles As of March 31, 2019 , the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 17,717,819 $ 783,115 $ (3,071,253 ) Accumulated amortization (3,871,306 ) (223,129 ) 594,469 Net amount $ 13,846,513 $ 559,986 $ (2,476,784 ) The intangible assets acquired in connection with these acquisitions have a weighted average amortization period of approximately 6.4 years as of March 31, 2019 . The amortization of intangible assets over the next five years is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles April through December 2019 $ 2,094,157 $ 72,784 $ (355,793 ) 2020 2,792,209 97,045 (474,391 ) 2021 2,375,949 78,994 (474,391 ) 2022 1,839,880 63,720 (306,829 ) 2023 1,214,116 63,719 (78,369 ) 2024 1,066,544 63,719 (67,420 ) Thereafter 2,463,658 120,005 (719,591 ) $ 13,846,513 $ 559,986 $ (2,476,784 ) Weighted-average remaining amortization period 7.1 years 7.0 years 9.8 years |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments In Unconsolidated Entities | INVESTMENTS IN UNCONSOLIDATED ENTITIES The Company’s investments in unconsolidated entities are as follows: March 31, December 31, The TIC Interest $ 10,665,793 $ 10,749,332 REIT I 3,450,790 3,526,483 $ 14,116,583 $ 14,275,815 The Company’s income from investments in unconsolidated entities, net is as follows: Three Months Ended 2019 2018 The TIC Interest $ 80,360 $ 49,780 REIT I (6,327 ) 5,099 $ 74,033 $ 54,879 TIC Interest On September 28, 2017, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired an approximate 72.7% interest in an office property in San Clara, California. The remaining approximate 27.3% of undivided interest in the Santa Clara property is held by Hagg Lane II, LLC (an approximate 23.4% ) and Hagg Lane III, LLC (an approximate 3.9% ). 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 the TIC Interest 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 months ended March 31, 2019 and 2018 , the Company received $163,899 and $179,686 in cash distributions, respectively. The following is summarized financial information for the Santa Clara property: March 31, December 31, Assets: Real estate investments, net $ 31,420,164 $ 31,668,300 Cash and cash equivalents 550,367 466,379 Other assets 214,846 117,075 Total assets $ 32,185,377 $ 32,251,754 Liabilities: Mortgage notes payable $ 13,931,904 $ 13,994,844 Below-market lease, net 3,066,174 3,103,778 Other liabilities 210,247 61,188 Total liabilities 17,208,325 17,159,810 Total equity 14,977,052 15,091,944 Total liabilities and equity $ 32,185,377 $ 32,251,754 Three Months Ended 2019 2018 Total revenues $ 666,421 $ 608,794 Expenses: Interest expense 142,520 145,025 Depreciation and amortization 248,136 247,213 Other expenses 165,245 146,336 Total expenses 555,901 538,574 Net income $ 110,520 $ 70,220 REIT I The Company’s investment in REIT I represented an approximate 4.8% ownership interest as of March 31, 2019 and December 31, 2018 . The Company recorded its share of (loss) income of REIT I based on REIT I’s results of operations for the three months ended March 31, 2019 and 2018 . During the three months ended March 31, 2019 and 2018 , the Company received $69,366 and $68,316 in cash distributions, respectively, related to its investment in REIT I. The following is summarized financial information for REIT I: March 31, December 31, Assets: Real estate investments, net $ 121,980,189 $ 125,075,537 Cash and cash equivalents and restricted cash 3,022,357 3,376,145 Other assets 2,820,477 3,070,475 Total assets $ 127,823,023 $ 131,522,157 Liabilities: Mortgage notes payable, net $ 59,360,813 $ 61,446,068 Below-market lease intangibles, net 2,890,802 3,105,843 Other liabilities 3,436,686 3,359,618 Total liabilities 65,688,301 67,911,529 Redeemable common stock — 163,572 Total shareholders’ equity 62,134,722 63,447,056 Total liabilities and shareholders’ equity $ 127,823,023 $ 131,522,157 Three Months Ended 2019 2018 Total revenues $ 3,288,644 $ 3,231,218 Expenses: Depreciation and amortization 1,442,060 1,448,244 Interest expense 863,173 484,873 Other expenses 1,228,863 1,180,037 Total expenses 3,534,096 3,113,154 Other income: Other income 113,773 — Net (loss) income $ (131,679 ) $ 118,064 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Mortgage Notes Payable As of March 31, 2019 and December 31, 2018 , the Company’s mortgage notes payable consisted of the following: Collateral 2019 Principal Amount 2018 Principal Amount Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreen properties $ 6,961,240 $ 6,996,469 3.95% 3.95 % 7/1/2021 Dana property 4,611,738 4,632,398 4.56% 4.56 % 4/1/2023 Six Dollar General properties 3,868,367 3,885,334 4.69% 4.69 % 4/1/2022 Wyndham property (2) 5,795,100 5,820,600 One-month LIBOR+2.05% 4.34 % 6/5/2027 Williams Sonoma property (2) 4,594,500 4,615,800 One-month LIBOR+2.05% 4.05 % 6/5/2022 Omnicare property 4,330,401 4,349,963 4.36% 4.36 % 5/1/2026 Harley property 6,837,682 6,868,254 4.25% 4.25 % 9/1/2024 Northrop Grumman property 5,773,460 5,809,367 4.40% 4.40 % 3/2/2021 EMCOR property 2,899,072 2,911,577 4.35% 4.35 % 12/1/2024 exp US Services property 3,430,950 3,446,493 (3) 4.25 % 11/17/2024 Husqvarna property 6,379,182 6,379,182 (4) 4.60 % 2/20/2028 AvAir property 14,575,000 14,575,000 (5) 4.84 % 3/27/2028 3M property 8,360,000 8,360,000 One-month LIBOR+2.25% 5.09 % 3/29/2023 Cummins property 8,530,000 8,530,000 One-month LIBOR+2.25% 5.16 % 4/4/2023 24 Hour Fitness property (6) 6,350,000 8,900,000 4.64% 4.64 % 4/1/2049 Texas Health property (7) — 4,842,500 One-month LIBOR+4.30% 6.56 % 3/13/2019 Bon Secours property 5,250,000 5,250,000 5.41% 5.41 % 9/15/2026 Costco property 18,850,000 18,850,000 4.85% 4.85 % 1/1/2030 Total mortgage notes payable 117,396,692 125,022,937 Less unamortized deferred financing costs (2,207,664 ) (2,313,629 ) $ 115,189,028 $ 122,709,308 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of March 31, 2019 . Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2019 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 starting February 21, 2023, the interest rate is the greater of 4.60% or five-year Treasury Constant Maturity ("TCM") plus 2.45% % for the second five years. (5) The initial contractual interest rate is 4.84% for the first five-years and and starting March 28, 2023, the interest rate is the greater of 4.60% or five-year TCM plus 2.45% for the second five-years. (6) The loan refinancing on March 7, 2019 reduced the principal amount outstanding and the rate and extended the maturity. The interest rate for the note payable outstanding as of March 31, 2019 adjusts in the 133rd, 253rd and 313th months. (7) The loan was fully repaid on the March 13, 2019 maturity date. The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement): March 31, 2019 December 31, 2018 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 117,396,692 $ 115,189,028 $ 120,382,023 $ 125,022,937 $ 122,709,308 $ 123,821,490 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 The Company, together with the Operating Partnership and NNN LP ("Borrowers"), has a Business Loan Agreement and Promissory Note (the"Unsecured Credit Facility") with Pacific Mercantile Bank ("Lender"). The Unsecured Credit Facility is a revolving unsecured line of credit for a maximum principal amount of $9,000,000 and was scheduled to mature on January 26, 2019 , unless earlier terminated. The Borrowers received extensions of the Unsecured Credit Facility through April 30, 2019 (see below for additional information). 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% . The interest rate was 6.50% as of March 31, 2019 and December 31, 2018 . The Unsecured Credit Facility contains customary representations, warranties and covenants. The Company’s ability to borrow under the Unsecured Credit Facility was 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 was 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 the failure by Borrowers to pay one or more subsequent advances within 90 days of disbursement or an event of default under the Unsecured Credit Facility. As of March 31, 2019 and December 31, 2018 the Unsecured Credit Facility had $4,069,000 and $9,000,000 outstanding borrowings, respectively. On October 31, 2018, the Company borrowed the full $9,000,000 to fund the acquisition of the Bon Secours property in Richmond, Virginia, and repaid $4,931,000 , net during the three months ended March 31, 2019 . On April 30, 2019 , the Company entered into a loan agreement for a new revolving credit facility with the Lender for a maximum principal amount of $10,000,000 , maturing on October 1, 2020 on similar terms to the expiring facility, with guaranties by the Sponsor and Advisor and Mr. Wirta and his trust (see Note 10). 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 March 31, 2019 . The following summarizes the future principal repayments of the Company’s mortgage notes payable and Unsecured Credit Facility as of March 31, 2019 : Mortgage Note Payable Unsecured Credit Facility (1) Total April through December 2019 $ 933,483 $ 4,069,000 $ 5,002,483 2020 1,527,408 — 1,527,408 2021 8,227,794 — 8,227,794 2022 14,620,133 — 14,620,133 2023 21,222,330 — 21,222,330 2024 12,971,626 — 12,971,626 Thereafter 57,893,918 — 57,893,918 Total principal $ 117,396,692 $ 4,069,000 $ 121,465,692 (1) The maturity date of the outstanding borrowings under the Company's Unsecured Credit Facility was extended to April 30, 2019 and rolled into a new credit facility maturing October 1, 2020 (see Note 10). Interest Expense The following is a reconciliation of the components of interest expense for the three months ended March 31, 2019 and 2018 : Three Months Ended 2019 2018 Mortgage notes payable: Interest expense $ 1,476,496 $ 825,720 Amortization of deferred financing costs 270,522 406,887 Loss (gain) on interest rate swaps (1) 327,814 (229,266 ) Unsecured credit facility: Interest expense 83,518 82,989 Amortization of deferred financing costs 2,000 4,286 Total interest expense $ 2,160,350 $ 1,090,616 (1) Includes unrealized loss (gain) on interest rate swaps of $320,526 and $(226,806) for the three months ended March 31, 2019 and 2018 , respectively, (see Note 7). Accrued interest payable, net of $3,192 and $5,950 at March 31, 2019 and December 31, 2018 , respectively, represents the unsettled portion of the interest rate swaps for the period from origination of the interest rate swap through the respective balance sheet dates. |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swap Derivatives | INTEREST RATE SWAP DERIVATIVES The Company, through its wholly-owned limited liability company subsidiaries, has entered into interest rate swap agreements with amortizing notional 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: March 31, 2019 December 31, 2018 Derivative Instruments Number of Instruments Notional Amount (i) Reference Rate (ii) Weighted Average Fixed Pay Rate Weighted Average Remaining Term Number of Instruments Notional Amount (i) Reference Rate (iii) Weighted Average Fixed Pay Rate Weighted Average Remaining Term Interest Rate Swap Derivatives 4 $ 27,279,600 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.72 % 4.8 years 4 $ 27,346,400 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.73 % 5.1 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 minimum notional amount (outstanding principal balance at the maturity date) as of March 31, 2019 was $24,936,799 . (ii) The reference rate was March 31, 2019 . (iii) The reference rate was December 31, 2018 . 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: March 31, 2019 December 31, 2018 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 2 $ 21,517 2 $ 151,215 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 2 $ (491,757 ) 2 $ (300,929 ) 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 March 31, 2019 or December 31, 2018 were designated as hedging instruments; therefore, the net unrealized loss (gain) recognized on interest rate swaps of $320,526 and $(226,806) was recorded as an increase (decrease) in interest expense for the three months ended March 31, 2019 and 2018 , respectively (see Note 6). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 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 amount paid was $50,000 and $38,190 for the three months ended March 31, 2019 and 2018 , respectively, for which the Company issued 4,921 and 3,800 shares, respectively. The Company has entered into an agreement (as amended the "Advisory Agreement") with the Advisor. 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. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to investments in real estate and the management of those investments, among other services, and the disposition of investments, as well as entitling the Advisor to reimbursement of organizational 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 for REIT I and BRIX REIT, Inc. ("BRIX REIT"). During the three months ended March 31, 2019 and 2018 , no other business transactions occurred between the Company and REIT I, or BRIX 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 months ended March 31, 2019 and 2018 : Three Months Ended Three Months Ended March 31, 2019 March 31, 2019 March 31, 2018 December 31, 2018 Incurred Receivable Payable Incurred Receivable Payable Expensed: Asset management fees (1) $ 680,018 $ — $ — $ 401,315 $ — $ — Subordinated participation fees — — — — — 839,050 Operating expense reimbursements 132,000 — — — — — Fees to affiliates 812,018 401,315 Property management fees* 55,950 — 23,912 12,939 — 96,792 Directors and officers insurance and other reimbursements** 66,870 — — 16,634 — 30,164 Expense reimbursements (from) to Sponsor (2) (87,999 ) — — (359,514 ) 16,838 — Capitalized: Acquisition fees — — — 456,000 — — Financing coordination fees 63,500 — — 209,550 — — Reimbursable organizational and offering expenses (3) 484,714 — 29,084 430,244 — 13,168 $ — $ 52,996 $ 16,838 $ 979,174 * 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 March 31, 2019 and 2018 , the Advisor did not waive any of the asset management fees. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $65,993 related to the TIC Interest during the three months ended March 31, 2019 and 2018 , respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities (see Note 5). (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 months ended March 31, 2019 and 2018 also include $(40,915) of refund to the Sponsor and $48,422 of employment related legal fees, respectively, which the Sponsor 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 March 31, 2019 , the Sponsor had incurred $8,565,661 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% of gross offering proceeds. The Sponsor and affiliates will be responsible for any organizational and offering expenses to the extent they exceed 3% of gross offering proceeds. As of March 31, 2019 , the Sponsor has incurred organizational and offering expenses in excess of 3% 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 March 31, 2019 , the Company has reimbursed the Sponsor $4,664,910 in organizational and offering costs. The Company’s maximum liability for organizational and offering costs through March 31, 2019 was $4,705,238 of which $29,084 was payable as of March 31, 2019 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 March 31, 2019 and 2018 were $128,914 and $311,092 , respectively. The reduction in reimbursements during the 2019 period 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% 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% 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. 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 March 31, 2019 and 2018 was $680,018 and $401,315 respectively, of which $0 was waived. There were $0 Asset Management Fees payable at March 31, 2019 and December 31, 2018 . 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% of the amount of such financing. The Company paid $63,500 and $209,550 of financing coordination fees during the three months ended March 31, 2019 and 2018 related to one and three loans, respectively. 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 tenant pays or incurs to the Company, including salaries, bonuses and benefits of persons employed by the Advisor, except for the salaries, bonuses and benefits of persons who also serve as one of the Company’s executive officers or as an executive officer of such person. The Advisor or its affiliate may subcontract the performance of its property management duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services. Disposition Fees For substantial assistance in connection with the sale of properties, the Company pays the Advisor or one of its affiliates 3% 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 months ended March 31, 2019 and 2018 . 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 owed) 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 $839,050 and $315,802 which was accrued as of December 31, 2018 and 2017 , respectively, and paid in cash during the first quarter of 2019 and 2018 , respectively. 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% 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% in lieu of the aforementioned 6% commission. There were no leasing commission fees incurred during the three months ended March 31, 2019 and 2018 . 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 March 31, 2019 . |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 March 31, 2019 and December 31, 2018 , the Company had obligations to pay for $3,789,091 , 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 March 31, 2019 and December 31, 2018 , the Company had $3,486,927 of restricted cash held to fund the improvements. In April 2019, $3,177,343 of restricted cash was released to the tenant to reimburse it for tenant improvement costs under the terms of the lease agreement. Redemption of Common Stock 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 has the discretion to repurchase fewer shares than have been requested to be repurchased in a particular month or quarter, or to repurchase no shares at all, in the event that it lacks readily available funds to do so due to market conditions beyond the Company’s control, its need to main liquidity for its operations or because the Company determines that investing in real property or other illiquid investments is a better use of its capital than repurchasing its shares. In the event that the Company repurchases some but not all of the shares submitted for repurchase in a given period, shares submitted for repurchase during such period will be repurchased on a pro-rata basis. In addition, the Company’s board of directors may amend, suspend or terminate the share repurchase program without stockholder approval upon 30 days’ notice if its directors believe such action is in the Company and its stockholders’ best interests. 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 described 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, among other things, the advertising and sale of securities in connection with the Registered Offering and compliance with broker-dealer regulations. The investigation is a non-public fact-finding inquiry. At this stage of the investigation, the SEC has not made an allegation of wrongdoing nor a finding that violations of law have occurred. In connection with the investigation, the Company and certain associates have received and responded to subpoenas from the SEC, including requests for various documents related to the Company, the Sponsor, 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 presently in discussion with the SEC about potential outcomes resulting from the investigation. The Company is unable to predict whether the SEC will commence any legal actions or launch additional investigations, inquiries or other actions related thereto. The Company generally does not require collateral or other security from tenants, other than security deposits or letters of credit. However, since concentration of rental revenue from certain tenants exists, the inability of those tenants to make their payments could have an adverse effect on the Company. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 10. SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued. Offering Status Through April 30, 2019, the Company had sold 13,385,609 shares of Class C common stock in the Offering, for aggregate gross offering proceeds of $134,051,756 , which included 1,138,268 shares of Class C common stock sold under its distribution reinvestment plan, for gross proceeds of $11,449,412 . As of April 30, 2019, the Company has sold 146,967 shares of Class S common stock in the Offering, for aggregate gross offering proceeds of $1,491,103 , which included 690 shares of Class S common stock sold under its dividend reinvestment plan for gross proceeds of $6,987 . Distributions On February 28, 2019, the Company’s board of directors declared distributions based on daily record dates for the periods April 1 through April 30, 2019 , May 1 through May 31, 2019 and June 1 through June 30, 2019 at the rate of 0.00192740 per share per day on the outstanding shares of its common stock, which the Company will pay on May 28, 2019 , June 25 and July 25, 2019 , respectively. Redeemable Common Stock Subsequent to March 31, 2019 , the Company redeemed 98,514 shares of Class C common stock for $1,000,905 . Unsecured Credit Facility On April 30, 2019, the Company, along with the Operating Partnership and NNN LP (together with the Company and the Operating Partnership, "Borrowers"), entered into a Loan Agreement (the "New Credit Facility") with Pacific Mercantile Bank ("Lender"). The New Credit Facility replaces a $9,000,000 unsecured line of credit with Lender, which expired on April 30, 2019 (the "Former Credit Facility"). The New Credit Facility is a revolving unsecured line of credit for a maximum principal amount of $10,000,000 and matures on October 1, 2020, unless earlier terminated. The New Credit Facility has similar terms to the expiring facility. The New Credit Facility is secured by a continuing guaranty executed by the Company’s Sponsor and Advisor, along with springing guaranties executed by Raymond E. Wirta, Chairman of the Board of the Company, and a trust belonging to Mr. Wirta, each in the amount of $10,000,000 . Mr. Wirta’s guaranties become effective upon certain triggering events, including the failure by Borrowers to pay one or more subsequent advances within 90 days of disbursement or an event of default under the New Credit Facility. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis Of Presentation And Principles Of Consolidation | 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, 2018 audited consolidated financial statements included in the Company’s Form 10-K filed with the SEC on March 29, 2019. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated 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, 2018 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 | 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 | Fair Value Disclosures Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an existing price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 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. These balances approximate their fair values due to the short maturities of these items. Derivative Instruments : The Company’s derivative instruments are presented at fair value in the accompanying condensed consolidated balance sheet. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk. Unsecured Credit Facility : The fair value of the Company’s Unsecured Credit Facility (as defined in Note 6) approximates its carrying value as the interest rates and other terms are comparable to those available in the market place for a similar credit facility. Mortgage notes payable: The fair value of the Company’s mortgage notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. |
Restricted Cash | 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. |
Other Comprehensive Loss | Other Comprehensive Loss For all periods presented, other comprehensive loss is the same as net loss. |
Reclassifications | Reclassifications Certain prior year revenue account balances in the statement of operations have been reclassified to conform with the current year presentation. The reclassifications had no impact on net loss. |
Per Share Data | Per Share Data Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock equals basic earnings per share of common stock as there were no potentially dilutive securities outstanding during the three months ended March 31, 2019 and 2018 . For the three months ended March 31, 2019 and 2018 , the Company has presented net 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 , would have resulted in a net income (loss) per share of $(0.07) and $0.00 for Class C shares for the three months ended March 31, 2019 and 2018 , respectively, and $(0.07) and $(0.05) for Class S shares for the three months ended March 31, 2019 and 2018 , respectively. The differences in net loss per share if allocated under this method primarily reflects the lower effective dividends per share for Class S shareholders as a result of the payment of the deferred commission to the Class S distributor of these shares, and also reflects the impact of the timing of the declaration of the dividends relative to the time the shares were outstanding. |
Distributions | Distributions The Company’s board of directors declares distributions in advance of the periods to which they relate. Distributions to stockholders for the period April 1, 2019 through June 30, 2019 were declared on February 28, 2019, to be paid on or about the 25th of May through July. Because these distributions relate to operations and cash available for distributions to be produced in future periods, they are not included in distributions recorded in the current period for the three months ended March 31, 2019 . The following are the Company’s updated significant accounting policies that have been affected by the adoption of Topic 842 as discussed below in New Accounting Standards Issued and Adopted: |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards Issued and Adopted Effective January 1, 2019, the Company adopted Financial Accounting Standards Board ("FASB") ASU No. 2016-02 "Leases (Topic 842)" and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01, which provide practical expedients, technical corrections and improvements for certain aspects of ASU 2016-02, on a modified retrospective basis (collectively "Topic 842"). Topic 842 establishes a single comprehensive model for entities to use in accounting for leases and supersedes the existing leasing guidance. Topic 842 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. The Company currently does not have any exposure to Topic 842 from the perspective of a lessee as the operating lease is borne by the Sponsor. The Company's exposure to Topic 842 is primarily as a lessor. The Company has elected to apply the applicable practical expedients provided by Topic 842. Lessor Accounting As a lessor, the Company’s leases with tenants generally provide for the lease of real estate properties, as well as common area maintenance, property taxes and other recoverable costs. Under Topic 842, the lease of space is considered a lease component while the common area maintenance, property taxes and other recoverable costs billings are considered nonlease components, which fall under revenue recognition guidance in Topic 606. However, upon adopting the guidance in Topic 842, the Company determined that its tenant leases met the criteria to apply the practical expedient provided by ASU 2018-11 to recognize the lease and non-lease components together as one single component. This conclusion was based on the consideration that 1) the timing and pattern of transfer of the nonlease components and associated lease component are the same, and 2) the lease component, if accounted for separately, would be classified as an operating lease. As the lease of properties is the predominant component of the Company’s leasing arrangements, the Company accounted for all lease and nonlease components as one-single component under Topic 842. As a result, the adoption of Topic 842 did not have any impact on the Company’s timing or pattern of recognition of rental revenues as compared to previous guidance. To reflect recognition as one lease component, rental income and tenant reimbursements and other lease related property income that meet the requirements of the practical expedient provided by ASU 2018-11 have been combined under rental income subsequent to the adoption of Topic 842 for the three months ended March 31, 2019 and 2018 in the Company’s consolidated statements of operations. The Company also made a conforming reclassification for the prior year’s tenant reimbursements. For the three months period ended March 31, 2019 and 2018, tenant reimbursements included in rental income amounted to $1,087,860 and $528,585 , respectively. Prior to the adoption of Topic 842, lessor costs for certain services directly reimbursed by tenants have already been presented by the Company on a gross basis in revenues and expenses. Leasing Costs Upon adoption of Topic 842, the Company elected to apply the package of practical expedients provided and did not reassess the following as of January 1, 2019: 1) whether any expired or existing contracts are leases or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. Under Topic 842, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, beginning January 1, 2019, the Company will no longer capitalize internal leasing costs and third-party legal leasing costs and will instead expense these costs as incurred. These expenses will be included in legal leasing costs under general and administrative expenses in our consolidated statements of operations. During the three months ended March 31, 2019, the Company did not incur any indirect leasing costs which would have been capitalized prior to the adoption of Topic 842. The election of the package of practical expedients described above permits us to continue to account for our leases that commenced before January 1, 2019 under the previously existing lease accounting guidance for the remainder of their lease terms, and to apply the new lease accounting guidance to leases commencing or modified after January 1, 2019. Allowances for Tenant and Deferred Rent Receivables Upon the adoption of Topic 842 on January 1, 2019, the Company’s determination of the adequacy of its allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. In addition, for tenant and deferred rent receivables deemed probable of collection the Company also may record an allowance under other authoritative GAAP depending upon the Company’s evaluation of the individual receivables, specific credit enhancements, current economic conditions, and other relevant factors. Such allowances are recorded as increases or decreases through rental income in the Company’s consolidated statements of operations. New Accounting Standards Recently Issued and Not Yet Adopted 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 ("ASU No. 2018-13"). ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurement. In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU 2016-02 is effective for the Company beginning January 1, 2020. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its consolidated financial statements. |
CONDENSED CONSOLIDATED BALANC_4
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Consolidated Balance Sheets | Tenant receivables consisted of the following: March 31, December 31, Straight-line rent $ 2,579,651 $ 2,231,966 Tenant rent 147,513 312,171 Tenant reimbursements 1,146,028 1,019,355 Tenant other 157,877 95,622 Total $ 4,031,069 $ 3,659,114 Accounts Payable, Accrued and Other Liabilities Accounts payable, accrued and other liabilities were comprised of the following: March 31, December 31, Accounts payable $ 207,867 $ 227,793 Accrued expenses 1,462,885 1,421,197 Accrued dividends 821,300 749,170 Accrued interest payable 428,691 445,481 Unearned rent 844,206 827,338 Deferred commission payable 1,500 1,650 Lease incentive obligation 3,492,084 3,492,084 Total $ 7,258,533 $ 7,164,713 |
REAL ESTATE INVESTMENTS (Tables
REAL ESTATE INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Properties | As of March 31, 2019 , the Company’s real estate investment portfolio consisted of 24 operating properties in 13 states, consisting of: (i) nine retail, (ii) 10 office and (iii) five industrial properties and (iv) 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 March 31, 2019 : 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 $ (1,391,204 ) $ 9,518,280 Walgreens Stockbridge, GA 6/21/2016 Retail 4,147,948 705,423 (915,551 ) 3,937,820 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (95,579 ) 1,302,535 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (122,320 ) 1,562,109 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (91,834 ) 1,214,756 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (88,048 ) 1,197,987 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (90,365 ) 1,123,364 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (87,798 ) 1,100,696 Dana Cedar Park, TX 12/27/2016 Industrial 8,392,906 1,210,874 (1,124,239 ) 8,479,541 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (1,598,684 ) 12,125,506 exp US Services Maitland, FL 3/27/2017 Office 5,920,121 388,248 (443,327 ) 5,865,042 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (648,700 ) 12,529,588 Wyndham Summerlin, NV 6/22/2017 Office 10,406,483 669,232 (549,863 ) 10,525,852 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (513,235 ) 8,116,863 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,747 281,442 (404,425 ) 7,139,764 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (290,280 ) 6,133,818 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,200 1,013,948 (488,850 ) 12,365,298 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (896,509 ) 26,461,391 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (1,297,236 ) 15,821,944 Cummins Nashville, TN 4/4/2018 Office 14,465,491 1,536,998 (761,455 ) 15,241,034 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness Las Vegas, NV 7/27/2018 Retail 11,453,337 1,204,973 (316,644 ) 12,341,666 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (161,044 ) 7,528,880 Bon Secours Richmond, VA 10/31/2018 Office 10,042,551 800,356 (199,607 ) 10,643,300 Costco Issaquah, WA 12/20/2018 Office 27,263,632 2,765,136 (378,362 ) 29,650,406 $ 217,494,190 $ 17,717,819 $ (12,955,159 ) $ 222,256,850 |
Acquisitions | During the three months ended March 31, 2018 , the Company acquired the following property: Property Acquisition Date Land Buildings and Improvements Tenant Origination and Absorption Costs Below- Market Lease Intangibles Total 3M 3/29/2018 $ 758,780 $ 14,004,018 $ 2,356,361 $ (1,417,483 ) $ 15,701,676 |
Purchase Price | Purchase price $ 15,701,676 Acquisition fees to affiliates (456,000 ) Cash paid for acquisition of real estate investments $ 15,245,676 |
Lease Expiration Date | The non-cancelable lease terms of the properties acquired during the three months ended March 31, 2018 are as follows: Property Lease Expiration 3M 7/31/2022 |
Acquisition Fees | The capitalized acquisition fee paid to the Advisor for the 3M property acquired during the three months ended March 31, 2018 is as follows: Property Amount 3M $ 456,000 |
Rental Payments for Operating Leases | As of March 31, 2019 , 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: April through December 2019 $ 13,219,313 2020 17,834,035 2021 16,752,518 2022 15,520,338 2023 13,317,933 2024 12,958,858 Thereafter 46,224,832 $ 135,827,827 |
Revenue Concentration | The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three months ended March 31, 2019 and 2018 is as follows: Three Months Ended Three Months Ended Property and Location Revenue Percentage of Total Revenue Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 678,503 11.5 % $ — — % AvAir, Chandler, AZ $ 666,774 11.3 % $ 635,572 18.4 % Northrop Grumman, FL $ — — % $ 353,558 10.2 % |
Asset Concentration | As of March 31, 2019 and 2018 , the Company’s portfolio’s asset concentration (greater than 10% of total assets) was as follows: March 31, 2019 March 31, 2018 Property and Location Net Carrying Value Percentage of Total Assets Net Carrying Value Percentage of Total Assets Costco, Issaquah, WA $ 29,650,406 11.9 % $ — — % AvAir, Chandler, AZ $ 26,461,391 10.6 % $ 27,155,463 14.9 % |
Intangible Assets | As of March 31, 2019 , the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 17,717,819 $ 783,115 $ (3,071,253 ) Accumulated amortization (3,871,306 ) (223,129 ) 594,469 Net amount $ 13,846,513 $ 559,986 $ (2,476,784 ) |
Intangible Assets Amortization | The amortization of intangible assets over the next five years is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles April through December 2019 $ 2,094,157 $ 72,784 $ (355,793 ) 2020 2,792,209 97,045 (474,391 ) 2021 2,375,949 78,994 (474,391 ) 2022 1,839,880 63,720 (306,829 ) 2023 1,214,116 63,719 (78,369 ) 2024 1,066,544 63,719 (67,420 ) Thereafter 2,463,658 120,005 (719,591 ) $ 13,846,513 $ 559,986 $ (2,476,784 ) Weighted-average remaining amortization period 7.1 years 7.0 years 9.8 years |
INVESTMENTS IN UNCONSOLIDATED_2
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments | The Company’s investments in unconsolidated entities are as follows: March 31, December 31, The TIC Interest $ 10,665,793 $ 10,749,332 REIT I 3,450,790 3,526,483 $ 14,116,583 $ 14,275,815 |
Entities Equity In Earnings | The Company’s income from investments in unconsolidated entities, net is as follows: Three Months Ended 2019 2018 The TIC Interest $ 80,360 $ 49,780 REIT I (6,327 ) 5,099 $ 74,033 $ 54,879 |
Summarized Financial Information | The following is summarized financial information for the Santa Clara property: March 31, December 31, Assets: Real estate investments, net $ 31,420,164 $ 31,668,300 Cash and cash equivalents 550,367 466,379 Other assets 214,846 117,075 Total assets $ 32,185,377 $ 32,251,754 Liabilities: Mortgage notes payable $ 13,931,904 $ 13,994,844 Below-market lease, net 3,066,174 3,103,778 Other liabilities 210,247 61,188 Total liabilities 17,208,325 17,159,810 Total equity 14,977,052 15,091,944 Total liabilities and equity $ 32,185,377 $ 32,251,754 Three Months Ended 2019 2018 Total revenues $ 666,421 $ 608,794 Expenses: Interest expense 142,520 145,025 Depreciation and amortization 248,136 247,213 Other expenses 165,245 146,336 Total expenses 555,901 538,574 Net income $ 110,520 $ 70,220 |
Rich Uncles Real Estate Investment Trust 1 | |
Summarized Financial Information | The following is summarized financial information for REIT I: March 31, December 31, Assets: Real estate investments, net $ 121,980,189 $ 125,075,537 Cash and cash equivalents and restricted cash 3,022,357 3,376,145 Other assets 2,820,477 3,070,475 Total assets $ 127,823,023 $ 131,522,157 Liabilities: Mortgage notes payable, net $ 59,360,813 $ 61,446,068 Below-market lease intangibles, net 2,890,802 3,105,843 Other liabilities 3,436,686 3,359,618 Total liabilities 65,688,301 67,911,529 Redeemable common stock — 163,572 Total shareholders’ equity 62,134,722 63,447,056 Total liabilities and shareholders’ equity $ 127,823,023 $ 131,522,157 Three Months Ended 2019 2018 Total revenues $ 3,288,644 $ 3,231,218 Expenses: Depreciation and amortization 1,442,060 1,448,244 Interest expense 863,173 484,873 Other expenses 1,228,863 1,180,037 Total expenses 3,534,096 3,113,154 Other income: Other income 113,773 — Net (loss) income $ (131,679 ) $ 118,064 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | As of March 31, 2019 and December 31, 2018 , the Company’s mortgage notes payable consisted of the following: Collateral 2019 Principal Amount 2018 Principal Amount Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreen properties $ 6,961,240 $ 6,996,469 3.95% 3.95 % 7/1/2021 Dana property 4,611,738 4,632,398 4.56% 4.56 % 4/1/2023 Six Dollar General properties 3,868,367 3,885,334 4.69% 4.69 % 4/1/2022 Wyndham property (2) 5,795,100 5,820,600 One-month LIBOR+2.05% 4.34 % 6/5/2027 Williams Sonoma property (2) 4,594,500 4,615,800 One-month LIBOR+2.05% 4.05 % 6/5/2022 Omnicare property 4,330,401 4,349,963 4.36% 4.36 % 5/1/2026 Harley property 6,837,682 6,868,254 4.25% 4.25 % 9/1/2024 Northrop Grumman property 5,773,460 5,809,367 4.40% 4.40 % 3/2/2021 EMCOR property 2,899,072 2,911,577 4.35% 4.35 % 12/1/2024 exp US Services property 3,430,950 3,446,493 (3) 4.25 % 11/17/2024 Husqvarna property 6,379,182 6,379,182 (4) 4.60 % 2/20/2028 AvAir property 14,575,000 14,575,000 (5) 4.84 % 3/27/2028 3M property 8,360,000 8,360,000 One-month LIBOR+2.25% 5.09 % 3/29/2023 Cummins property 8,530,000 8,530,000 One-month LIBOR+2.25% 5.16 % 4/4/2023 24 Hour Fitness property (6) 6,350,000 8,900,000 4.64% 4.64 % 4/1/2049 Texas Health property (7) — 4,842,500 One-month LIBOR+4.30% 6.56 % 3/13/2019 Bon Secours property 5,250,000 5,250,000 5.41% 5.41 % 9/15/2026 Costco property 18,850,000 18,850,000 4.85% 4.85 % 1/1/2030 Total mortgage notes payable 117,396,692 125,022,937 Less unamortized deferred financing costs (2,207,664 ) (2,313,629 ) $ 115,189,028 $ 122,709,308 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of March 31, 2019 . Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2019 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 starting February 21, 2023, the interest rate is the greater of 4.60% or five-year Treasury Constant Maturity ("TCM") plus 2.45% % for the second five years. (5) The initial contractual interest rate is 4.84% for the first five-years and and starting March 28, 2023, the interest rate is the greater of 4.60% or five-year TCM plus 2.45% for the second five-years. (6) The loan refinancing on March 7, 2019 reduced the principal amount outstanding and the rate and extended the maturity. The interest rate for the note payable outstanding as of March 31, 2019 adjusts in the 133rd, 253rd and 313th months. (7) The loan was fully repaid on the March 13, 2019 maturity date. T |
Mortgage Loan Payable | The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement): March 31, 2019 December 31, 2018 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 117,396,692 $ 115,189,028 $ 120,382,023 $ 125,022,937 $ 122,709,308 $ 123,821,490 |
Maturities of Long-term Debt | The following summarizes the future principal repayments of the Company’s mortgage notes payable and Unsecured Credit Facility as of March 31, 2019 : Mortgage Note Payable Unsecured Credit Facility (1) Total April through December 2019 $ 933,483 $ 4,069,000 $ 5,002,483 2020 1,527,408 — 1,527,408 2021 8,227,794 — 8,227,794 2022 14,620,133 — 14,620,133 2023 21,222,330 — 21,222,330 2024 12,971,626 — 12,971,626 Thereafter 57,893,918 — 57,893,918 Total principal $ 117,396,692 $ 4,069,000 $ 121,465,692 (1) The maturity date of the outstanding borrowings under the Company's Unsecured Credit Facility was extended to April 30, 2019 and rolled into a new credit facility maturing October 1, 2020 (see Note 10). |
Interest Expenses | The following is a reconciliation of the components of interest expense for the three months ended March 31, 2019 and 2018 : Three Months Ended 2019 2018 Mortgage notes payable: Interest expense $ 1,476,496 $ 825,720 Amortization of deferred financing costs 270,522 406,887 Loss (gain) on interest rate swaps (1) 327,814 (229,266 ) Unsecured credit facility: Interest expense 83,518 82,989 Amortization of deferred financing costs 2,000 4,286 Total interest expense $ 2,160,350 $ 1,090,616 (1) Includes unrealized loss (gain) on interest rate swaps of $320,526 and $(226,806) for the three months ended March 31, 2019 and 2018 , respectively, (see Note 7). Accrued interest payable, net of $3,192 and $5,950 at March 31, 2019 and December 31, 2018 , respectively, represents the unsettled portion of the interest rate swaps for the period from origination of the interest rate swap through the respective balance sheet dates. |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | The following table summarizes the notional amount and other information related to the Company’s interest rate swaps: March 31, 2019 December 31, 2018 Derivative Instruments Number of Instruments Notional Amount (i) Reference Rate (ii) Weighted Average Fixed Pay Rate Weighted Average Remaining Term Number of Instruments Notional Amount (i) Reference Rate (iii) Weighted Average Fixed Pay Rate Weighted Average Remaining Term Interest Rate Swap Derivatives 4 $ 27,279,600 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.72 % 4.8 years 4 $ 27,346,400 One-month LIBOR + applicable spread/Fixed at 4.05%-5.16% 4.73 % 5.1 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 minimum notional amount (outstanding principal balance at the maturity date) as of March 31, 2019 was $24,936,799 . (ii) The reference rate was March 31, 2019 . (iii) The reference rate was December 31, 2018 . |
Statement of Financial Position | 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: March 31, 2019 December 31, 2018 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 2 $ 21,517 2 $ 151,215 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 2 $ (491,757 ) 2 $ (300,929 ) |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Summarized below are the related party costs incurred by the Company, including those incurred pursuant to the Advisory Agreement, for the three months ended March 31, 2019 and 2018 : Three Months Ended Three Months Ended March 31, 2019 March 31, 2019 March 31, 2018 December 31, 2018 Incurred Receivable Payable Incurred Receivable Payable Expensed: Asset management fees (1) $ 680,018 $ — $ — $ 401,315 $ — $ — Subordinated participation fees — — — — — 839,050 Operating expense reimbursements 132,000 — — — — — Fees to affiliates 812,018 401,315 Property management fees* 55,950 — 23,912 12,939 — 96,792 Directors and officers insurance and other reimbursements** 66,870 — — 16,634 — 30,164 Expense reimbursements (from) to Sponsor (2) (87,999 ) — — (359,514 ) 16,838 — Capitalized: Acquisition fees — — — 456,000 — — Financing coordination fees 63,500 — — 209,550 — — Reimbursable organizational and offering expenses (3) 484,714 — 29,084 430,244 — 13,168 $ — $ 52,996 $ 16,838 $ 979,174 * 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 March 31, 2019 and 2018 , the Advisor did not waive any of the asset management fees. In addition to amounts presented in this table, the Company also incurred asset management fees to the Advisor of $65,993 and $65,993 related to the TIC Interest during the three months ended March 31, 2019 and 2018 , respectively, which amounts are reflected as a reduction of income recognized from investments in unconsolidated entities (see Note 5). (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 months ended March 31, 2019 and 2018 also include $(40,915) of refund to the Sponsor and $48,422 of employment related legal fees, respectively, which the Sponsor 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 March 31, 2019 , the Sponsor had incurred $8,565,661 of organizational and offering costs on behalf of the Company. However, the Company is only obligated to reimburse the Sponsor for such organizational and offering expenses to the extent of 3% of gross offering proceeds. |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details) | Dec. 31, 2015$ / sharesshares | Jun. 24, 2015$ / sharesshares | Mar. 31, 2019USD ($)properties$ / sharesshares | Mar. 31, 2018USD ($) | Dec. 31, 2018$ / sharesshares | Dec. 31, 2015$ / sharesshares | Jan. 19, 2018$ / shares | Jan. 18, 2018$ / shares | Aug. 11, 2017shares | Jul. 15, 2015USD ($)shares |
Business And Organisation [Line Items] | ||||||||||
Authority To Issue of Common Stock (in shares) | 450,000,000 | |||||||||
Shares Authorized ( in shares ) | 50,000,000 | 50,000,000 | ||||||||
Par Value (USD Per Share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Ownership Interest (as a percent) | 99.00% | |||||||||
Issuance of common stock | $ | $ 16,157,204 | $ 14,341,117 | ||||||||
Number of Real Estate Properties | properties | 24 | |||||||||
NNN PL | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Ownership Interest (as a percent) | 1.00% | |||||||||
Minimum | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Net Asset Value (in USD per share) | $ / shares | $ 10.05 | |||||||||
Maximum | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Net Asset Value (in USD per share) | $ / shares | $ 10.16 | |||||||||
Tenant-in-common | Real Estate Investment | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Ownership Percentage ( as a percent ) | 72.70% | |||||||||
Affiliated REIT [Member] | Real Estate Investment | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Ownership Percentage ( as a percent ) | 4.80% | |||||||||
Common Class C | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Authority To Issue of Common Stock (in shares) | 300,000,000 | |||||||||
Shares Authorized ( in shares ) | 300,000,000 | 300,000,000 | ||||||||
Par Value ( usd per share ) | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Common Class C | Minimum | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 500 | |||||||||
Common Class S | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Authority To Issue of Common Stock (in shares) | 100,000,000 | |||||||||
Shares Authorized ( in shares ) | 100,000,000 | 100,000,000 | 100,000,000 | 10,000,000 | ||||||
Par Value ( usd per share ) | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Net Asset Value (in USD per share) | $ / shares | $ 10.16 | |||||||||
Outstanding Shares (in shares) | 132,517 | |||||||||
Preferred Stock | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Shares Authorized ( in shares ) | 50,000,000 | |||||||||
Par Value (USD Per Share) | $ / shares | $ 0.001 | |||||||||
IPO | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Common Stock | $ | $ 90,000,000 | |||||||||
DRP Offering | Common Class C | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 15,505,870 | |||||||||
Issuance of common stock | $ | $ 155,496,984 | |||||||||
DRP Offering | Common Class S | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 503 | |||||||||
Issuance of common stock | $ | $ 1,344,284 | |||||||||
DRP Offering | Distribution Reinvestment Plan | Common Class C | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 1,077,230 | |||||||||
Sponsor | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 10,000 | 10,000 | ||||||||
Shares Issued (in USD per share) | $ / shares | $ 10 | $ 10 | $ 10 | |||||||
Sponsor | Common Class C | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Issuance of common stock (in shares) | 10,740 | 10,740 | 20,000 | |||||||
Retail | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Number of Real Estate Properties | properties | 9 | |||||||||
Office | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Number of Real Estate Properties | properties | 10 | |||||||||
Industrial Property [Member] | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Number of Real Estate Properties | properties | 5 | |||||||||
Land | ||||||||||
Business And Organisation [Line Items] | ||||||||||
Number of Real Estate Properties | properties | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Accounting Policies [Line Items] | ||||
Restricted Cash | $ 3,523,493 | $ 3,503,242 | ||
Tenant Reimbursement | 3,535,163 | 3,535,163 | ||
Payments for Tenant Improvements | 1,087,860 | $ 528,585 | ||
Restricted Cash and Cash Equivalents | $ 3,523,493 | $ 3,503,242 | ||
Net loss per share, basic and diluted ( in USD per share ) | $ (0.07) | $ 0 | ||
Lease Agreements | ||||
Accounting Policies [Line Items] | ||||
Restricted Cash and Cash Equivalents | $ 3,486,927 | |||
Other Commitment | $ 3,789,091 | |||
Subsequent Event | ||||
Accounting Policies [Line Items] | ||||
Release Of Restricted Cash | $ 3,177,343 | |||
Common Class C | ||||
Accounting Policies [Line Items] | ||||
Net loss per share, basic and diluted ( in USD per share ) | $ (0.07) | 0 | ||
Common Class S | ||||
Accounting Policies [Line Items] | ||||
Net loss per share, basic and diluted ( in USD per share ) | $ (0.07) | $ (0.05) | ||
Santa Clara Property | Lease Agreements | ||||
Accounting Policies [Line Items] | ||||
Ownership Percentage ( as a percent ) | 72.70% | 72.70% |
CONDENSED CONSOLIDATED BALANC_5
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Tenant receivables: | ||
Straight-line rent | $ 2,579,651 | $ 2,231,966 |
Tenant rent | 147,513 | 312,171 |
Tenant reimbursements | 1,146,028 | 1,019,355 |
Tenant other | 157,877 | 95,622 |
Total | 4,031,069 | 3,659,114 |
Accounts payable, accrued and other liabilities: | ||
Accounts payable | 207,867 | 227,793 |
Accrued expenses | 1,462,885 | 1,421,197 |
Accrued dividends | 821,300 | 749,170 |
Accrued interest payable | 428,691 | 445,481 |
Unearned rent | 844,206 | 827,338 |
Deferred commission payable | 1,500 | 1,650 |
Lease incentive obligation | 3,492,084 | 3,492,084 |
Total | $ 7,258,533 | $ 7,164,713 |
Property (Details)
Property (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Real Estate [Line Items] | ||
Land, Buildings and Improvements | $ 217,494,190 | |
Tenant origination and absorption costs | 17,717,819 | $ 17,717,819 |
Accumulated Depreciation and Amortization | (12,955,159) | (10,563,664) |
Total Investment in Real Estate Property, Net | 222,256,850 | $ 224,648,345 |
Land | Northrop Grumman Parcel | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 329,410 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | 0 | |
Total Investment in Real Estate Property, Net | 329,410 | |
Office | Accredo Health | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 9,855,847 | |
Tenant origination and absorption costs | 1,053,637 | |
Accumulated Depreciation and Amortization | (1,391,204) | |
Total Investment in Real Estate Property, Net | 9,518,280 | |
Office | Northrop Grumman | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 12,382,991 | |
Tenant origination and absorption costs | 1,341,199 | |
Accumulated Depreciation and Amortization | (1,598,684) | |
Total Investment in Real Estate Property, Net | 12,125,506 | |
Office | exp US Services | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,920,121 | |
Tenant origination and absorption costs | 388,248 | |
Accumulated Depreciation and Amortization | (443,327) | |
Total Investment in Real Estate Property, Net | 5,865,042 | |
Office | Wyndham | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 10,406,483 | |
Tenant origination and absorption costs | 669,232 | |
Accumulated Depreciation and Amortization | (549,863) | |
Total Investment in Real Estate Property, Net | 10,525,852 | |
Office | Williams Sonoma | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 8,079,612 | |
Tenant origination and absorption costs | 550,486 | |
Accumulated Depreciation and Amortization | (513,235) | |
Total Investment in Real Estate Property, Net | 8,116,863 | |
Office | EMCOR | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,960,610 | |
Tenant origination and absorption costs | 463,488 | |
Accumulated Depreciation and Amortization | (290,280) | |
Total Investment in Real Estate Property, Net | 6,133,818 | |
Office | 3M | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 14,762,819 | |
Tenant origination and absorption costs | 2,356,361 | |
Accumulated Depreciation and Amortization | (1,297,236) | |
Total Investment in Real Estate Property, Net | 15,821,944 | |
Office | Cummins | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 14,465,491 | |
Tenant origination and absorption costs | 1,536,998 | |
Accumulated Depreciation and Amortization | (761,455) | |
Total Investment in Real Estate Property, Net | 15,241,034 | |
Office | Texas Health | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,976,703 | |
Tenant origination and absorption costs | 713,221 | |
Accumulated Depreciation and Amortization | (161,044) | |
Total Investment in Real Estate Property, Net | 7,528,880 | |
Office | Bon Secours | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 10,042,551 | |
Tenant origination and absorption costs | 800,356 | |
Accumulated Depreciation and Amortization | (199,607) | |
Total Investment in Real Estate Property, Net | 10,643,300 | |
Office | Costco | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 27,263,632 | |
Tenant origination and absorption costs | 2,765,136 | |
Accumulated Depreciation and Amortization | (378,362) | |
Total Investment in Real Estate Property, Net | 29,650,406 | |
Retail | Walgreens | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,147,948 | |
Tenant origination and absorption costs | 705,423 | |
Accumulated Depreciation and Amortization | (915,551) | |
Total Investment in Real Estate Property, Net | 3,937,820 | |
Retail | Dollar General One | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,281,812 | |
Tenant origination and absorption costs | 116,302 | |
Accumulated Depreciation and Amortization | (95,579) | |
Total Investment in Real Estate Property, Net | 1,302,535 | |
Retail | Dollar General Two | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,543,776 | |
Tenant origination and absorption costs | 140,653 | |
Accumulated Depreciation and Amortization | (122,320) | |
Total Investment in Real Estate Property, Net | 1,562,109 | |
Retail | Dollar General Three | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,199,860 | |
Tenant origination and absorption costs | 106,730 | |
Accumulated Depreciation and Amortization | (91,834) | |
Total Investment in Real Estate Property, Net | 1,214,756 | |
Retail | Dollar General Four | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,174,188 | |
Tenant origination and absorption costs | 111,847 | |
Accumulated Depreciation and Amortization | (88,048) | |
Total Investment in Real Estate Property, Net | 1,197,987 | |
Retail | Dollar General Five | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,112,872 | |
Tenant origination and absorption costs | 100,857 | |
Accumulated Depreciation and Amortization | (90,365) | |
Total Investment in Real Estate Property, Net | 1,123,364 | |
Retail | Dollar General Six | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,102,086 | |
Tenant origination and absorption costs | 86,408 | |
Accumulated Depreciation and Amortization | (87,798) | |
Total Investment in Real Estate Property, Net | 1,100,696 | |
Retail | Harley | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 13,178,288 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | (648,700) | |
Total Investment in Real Estate Property, Net | 12,529,588 | |
Retail | 24 Hour Fitness | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 11,453,337 | |
Tenant origination and absorption costs | 1,204,973 | |
Accumulated Depreciation and Amortization | (316,644) | |
Total Investment in Real Estate Property, Net | 12,341,666 | |
Industrial | Dana | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 8,392,906 | |
Tenant origination and absorption costs | 1,210,874 | |
Accumulated Depreciation and Amortization | (1,124,239) | |
Total Investment in Real Estate Property, Net | 8,479,541 | |
Industrial | Omnicare | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,262,747 | |
Tenant origination and absorption costs | 281,442 | |
Accumulated Depreciation and Amortization | (404,425) | |
Total Investment in Real Estate Property, Net | 7,139,764 | |
Industrial | Husqvarna | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 11,840,200 | |
Tenant origination and absorption costs | 1,013,948 | |
Accumulated Depreciation and Amortization | (488,850) | |
Total Investment in Real Estate Property, Net | 12,365,298 | |
Industrial | AvAir | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 27,357,900 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | (896,509) | |
Total Investment in Real Estate Property, Net | $ 26,461,391 |
Acquisitions (Details)
Acquisitions (Details) - 3M | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | $ 15,701,676 |
Land | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 758,780 |
Buildings and Improvements | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 14,004,018 |
Tenant Origination and Absorption Costs | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | 2,356,361 |
Below- Market Lease Intangibles | |
Real Estate [Line Items] | |
Payments to Acquire Real Estate | $ (1,417,483) |
Purchase Price (Details)
Purchase Price (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Purchase price | $ 15,701,676 |
Acquisition fees to affiliates | (456,000) |
Cash paid for acquisition of real estate investments | $ 15,245,676 |
Acquisition Fees (Details)
Acquisition Fees (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
3M | |
Real Estate [Line Items] | |
Acquisition Related Costs | $ 456,000 |
Rental Payments for Operating L
Rental Payments for Operating Leases (Details) | Mar. 31, 2019USD ($) |
Real Estate [Abstract] | |
April through December 2019 | $ 13,219,313 |
2020 | 17,834,035 |
2021 | 16,752,518 |
2022 | 15,520,338 |
2023 | 13,317,933 |
2024 | 12,958,858 |
Thereafter | 46,224,832 |
Total | $ 135,827,827 |
Revenue Concentration (Details)
Revenue Concentration (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Costco | ||
Real Estate [Line Items] | ||
Revenues | $ 678,503 | $ 0 |
Percent of total | 11.50% | 0.00% |
AvAir, AZ [Member] | ||
Real Estate [Line Items] | ||
Revenues | $ 666,774 | $ 635,572 |
Percent of total | 11.30% | 18.40% |
Northrop Grumman, FL [Member] | ||
Real Estate [Line Items] | ||
Revenues | $ 0 | $ 353,558 |
Percent of total | 0.00% | 10.20% |
REAL ESTATE INVESTMENTS Asset C
REAL ESTATE INVESTMENTS Asset Concentration (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Real Estate [Line Items] | |||
Total Investment in Real Estate Property, Net | $ 222,256,850 | $ 224,648,345 | |
Costco | Assets | |||
Real Estate [Line Items] | |||
Total Investment in Real Estate Property, Net | $ 29,650,406 | $ 0 | |
Percent of total | 11.90% | 0.00% | |
AvAir, Chandler, AZ | Assets | |||
Real Estate [Line Items] | |||
Total Investment in Real Estate Property, Net | $ 26,461,391 | $ 27,155,463 | |
Percent of total | 10.60% | 14.90% |
REAL ESTATE INVESTMENTS Intangi
REAL ESTATE INVESTMENTS Intangible Assets (Details) | Mar. 31, 2019USD ($) |
Tenant Origination and Absorption Costs | |
Real Estate [Line Items] | |
Cost | $ 17,717,819 |
Accumulated amortization | (3,871,306) |
Net amount | 13,846,513 |
Above-Market Lease Intangibles | |
Real Estate [Line Items] | |
Cost | 783,115 |
Accumulated amortization | (223,129) |
Net amount | 559,986 |
Below-Market Lease Intangibles | |
Below-Market Lease Intangibles | |
Cost | (3,071,253) |
Accumulated amortization | 594,469 |
Net amount | $ (2,476,784) |
Intangible Assets Amortization
Intangible Assets Amortization (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Below-Market Lease Intangibles | |
Weighted-Average Remaining Amortization Period ( in years ) | 6 years 6 months |
Tenant Origination and Absorption Costs | |
Real Estate [Line Items] | |
April through December 2019 | $ 2,094,157 |
2020 | 2,792,209 |
2021 | 2,375,949 |
2022 | 1,839,880 |
2023 | 1,214,116 |
2024 | 1,066,544 |
Thereafter | 2,463,658 |
Total | $ 13,846,513 |
Below-Market Lease Intangibles | |
Weighted-Average Remaining Amortization Period ( in years ) | 7 years 1 month |
Above-Market Lease Intangibles | |
Real Estate [Line Items] | |
April through December 2019 | $ 72,784 |
2020 | 97,045 |
2021 | 78,994 |
2022 | 63,720 |
2023 | 63,719 |
2024 | 63,719 |
Thereafter | 120,005 |
Total | $ 559,986 |
Below-Market Lease Intangibles | |
Weighted-Average Remaining Amortization Period ( in years ) | 6 years 11 months 24 days |
Below-Market Lease Intangibles | |
Below-Market Lease Intangibles | |
April through December 2019 | $ (355,793) |
2020 | (474,391) |
2021 | (474,391) |
2022 | (306,829) |
2023 | (78,369) |
2024 | (67,420) |
Thereafter | (719,591) |
Total | $ 2,476,784 |
Weighted-Average Remaining Amortization Period ( in years ) | 9 years 9 months 5 days |
REAL ESTATE INVESTMENTS Narativ
REAL ESTATE INVESTMENTS Narative (Details) | 3 Months Ended |
Mar. 31, 2019USD ($)propertiesStates | |
Real Estate [Line Items] | |
Number of Real Estate Properties | 24 |
Number of States in which Entity Operates | States | 13 |
Weighted-Average Remaining Amortization Period ( in years ) | 6 years 6 months |
Acquisition fees | |
Real Estate [Line Items] | |
Fair Value of Assets Acquired | $ | $ 22,972 |
Retail | |
Real Estate [Line Items] | |
Number of Real Estate Properties | 9 |
Office | |
Real Estate [Line Items] | |
Number of Real Estate Properties | 10 |
Industrial Property [Member] | |
Real Estate [Line Items] | |
Number of Real Estate Properties | 5 |
Land | |
Real Estate [Line Items] | |
Number of Real Estate Properties | 1 |
Three M [Member] | |
Real Estate [Line Items] | |
Acquisition Related Costs | $ | $ 49,507 |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Investment [Line Items] | ||
Equity Method Investments | $ 14,116,583 | $ 14,275,815 |
RuMartin Street Santa Clara | ||
Investment [Line Items] | ||
Equity Method Investments | 10,665,793 | 10,749,332 |
Rich Uncles Real Estate Investment Trust 1 | ||
Investment [Line Items] | ||
Equity Method Investments | $ 3,450,790 | $ 3,526,483 |
Entities Equity In Earnings (De
Entities Equity In Earnings (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Investment [Line Items] | ||
Income from investments in unconsolidated entities, net | $ 74,033 | $ 54,879 |
RuMartin Street Santa Clara | ||
Investment [Line Items] | ||
Income from investments in unconsolidated entities, net | 80,360 | 49,780 |
Rich Uncles Real Estate Investment Trust 1 | ||
Investment [Line Items] | ||
Income from investments in unconsolidated entities, net | $ (6,327) | $ 5,099 |
Summarized Financial Informatio
Summarized Financial Information (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Assets: | ||||
Cash and cash equivalents and restricted cash | $ 7,938,601 | $ 11,875,444 | $ 8,755,928 | $ 4,182,755 |
RuMartin Street Santa Clara | ||||
Assets: | ||||
Real estate investments, net | 31,420,164 | 31,668,300 | ||
Cash and cash equivalents | 550,367 | 466,379 | ||
Other assets | 214,846 | 117,075 | ||
Total assets | 32,185,377 | 32,251,754 | ||
Liabilities: | ||||
Mortgage notes payable | 13,931,904 | 13,994,844 | ||
Below-market lease, net | 3,066,174 | 3,103,778 | ||
Other liabilities | 210,247 | 61,188 | ||
Total liabilities | 17,208,325 | 17,159,810 | ||
Total equity | 14,977,052 | 15,091,944 | ||
Total liabilities and equity | 32,185,377 | 32,251,754 | ||
Total revenues | 666,421 | 608,794 | ||
Expenses: | ||||
Interest expense | 142,520 | 145,025 | ||
Depreciation and amortization | 248,136 | 247,213 | ||
Other expenses | 165,245 | 146,336 | ||
Total expenses | 555,901 | 538,574 | ||
Net income | 110,520 | 70,220 | ||
Other income: | ||||
Net (loss) income | 110,520 | 70,220 | ||
Rich Uncles Real Estate Investment Trust 1 | ||||
Assets: | ||||
Real estate investments, net | 121,980,189 | 125,075,537 | ||
Cash and cash equivalents and restricted cash | 3,022,357 | 3,376,145 | ||
Other assets | 2,820,477 | 3,070,475 | ||
Total assets | 127,823,023 | 131,522,157 | ||
Liabilities: | ||||
Mortgage notes payable | 59,360,813 | 61,446,068 | ||
Below-market lease, net | 2,890,802 | 3,105,843 | ||
Other liabilities | 3,436,686 | 3,359,618 | ||
Total liabilities | 65,688,301 | 67,911,529 | ||
Redeemable common stock | 0 | 163,572 | ||
Total equity | 62,134,722 | 63,447,056 | ||
Total liabilities and equity | 127,823,023 | $ 131,522,157 | ||
Total revenues | 3,288,644 | 3,231,218 | ||
Expenses: | ||||
Interest expense | 863,173 | 484,873 | ||
Depreciation and amortization | 1,442,060 | 1,448,244 | ||
Other expenses | 1,228,863 | 1,180,037 | ||
Total expenses | 3,534,096 | 3,113,154 | ||
Net income | (131,679) | 118,064 | ||
Other income: | ||||
Other income | 113,773 | 0 | ||
Net (loss) income | $ (131,679) | $ 118,064 |
INVESTMENTS IN UNCONSOLIDATED_3
INVESTMENTS IN UNCONSOLIDATED ENTITIES Narative (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Sep. 28, 2017 | |
Investment [Line Items] | ||||
Distributions | $ 69,366 | $ 68,316 | ||
Rich Uncles Real Estate Investment Trust 1 | ||||
Investment [Line Items] | ||||
Ownership Percentage ( as a percent ) | 4.80% | 4.80% | 72.70% | |
Ownership Percentage by Noncontrolling Owners | 27.30% | |||
Dividends | $ 163,899 | $ 179,686 | ||
Hagg Lane II, LLC | Rich Uncles Real Estate Investment Trust 1 | ||||
Investment [Line Items] | ||||
Ownership Percentage by Noncontrolling Owners | 23.40% | |||
Hagg Lane III, LLC | Rich Uncles Real Estate Investment Trust 1 | ||||
Investment [Line Items] | ||||
Ownership Percentage by Noncontrolling Owners | 3.90% |
Schedule of Debt (Details)
Schedule of Debt (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Short Term Debt [LineItems] | ||
Face Value | $ 121,465,692 | $ 125,022,937 |
Deferred Loan Costs, net | (2,313,629) | |
Loans To Assets Ratio (as a percent) | 60.00% | |
Long-term Debt | 122,709,308 | |
Accredo/Walgreen properties | ||
Short Term Debt [LineItems] | ||
Face Value | $ 6,961,240 | 6,996,469 |
Contractual Interest Rate | 3.95% | |
Effective Interest Rate | 3.95% | |
Dana property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 4,611,738 | 4,632,398 |
Contractual Interest Rate | 4.56% | |
Effective Interest Rate | 4.56% | |
Six Dollar General properties | ||
Short Term Debt [LineItems] | ||
Face Value | $ 3,868,367 | 3,885,334 |
Contractual Interest Rate | 4.69% | |
Effective Interest Rate | 4.69% | |
Wyndham property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 5,795,100 | 5,820,600 |
Effective Interest Rate | 4.34% | |
Williams Sonoma property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 4,594,500 | 4,615,800 |
Effective Interest Rate | 4.05% | |
Omnicare property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 4,330,401 | 4,349,963 |
Contractual Interest Rate | 4.36% | |
Effective Interest Rate | 4.36% | |
Harley property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 6,837,682 | 6,868,254 |
Contractual Interest Rate | 4.25% | |
Effective Interest Rate | 4.25% | |
Northrop Grumman property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 5,773,460 | 5,809,367 |
Contractual Interest Rate | 4.40% | |
Effective Interest Rate | 4.40% | |
EMCOR property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 2,899,072 | 2,911,577 |
Contractual Interest Rate | 4.35% | |
Effective Interest Rate | 4.35% | |
exp US Services property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 3,430,950 | 3,446,493 |
Effective Interest Rate | 4.25% | |
Husqvarna property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 6,379,182 | 6,379,182 |
Effective Interest Rate | 4.60% | |
AvAir property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 14,575,000 | 14,575,000 |
Effective Interest Rate | 4.84% | |
3M property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 8,360,000 | 8,360,000 |
Effective Interest Rate | 5.09% | |
Cummins property | ||
Short Term Debt [LineItems] | ||
Face Value | $ 8,530,000 | 8,530,000 |
Effective Interest Rate | 5.16% | |
24 Hour Fitness | ||
Short Term Debt [LineItems] | ||
Face Value | $ 6,350,000 | 8,900,000 |
Contractual Interest Rate | 4.64% | |
Effective Interest Rate | 4.64% | |
Texas Health | ||
Short Term Debt [LineItems] | ||
Face Value | $ 0 | 4,842,500 |
Effective Interest Rate | 6.56% | |
Bon Secours | ||
Short Term Debt [LineItems] | ||
Face Value | $ 5,250,000 | 5,250,000 |
Contractual Interest Rate | 5.41% | |
Effective Interest Rate | 5.41% | |
Costco | ||
Short Term Debt [LineItems] | ||
Face Value | $ 18,850,000 | 18,850,000 |
Contractual Interest Rate | 4.85% | |
Effective Interest Rate | 4.85% | |
Husqvarna | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 4.60% | |
AvAir | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 4.84% | |
Treasury Bill Index | exp US Services property | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 3.25% | |
Minimum | Treasury Bill Index | AvAir | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 4.60% | |
Maximum | Treasury Bill Index | Husqvarna | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 2.45% | |
Maximum | Treasury Bill Index | AvAir | ||
Short Term Debt [LineItems] | ||
Contractual Interest Rate | 2.45% | |
Mortgages | ||
Short Term Debt [LineItems] | ||
Face Value | $ 117,396,692 | $ 125,022,937 |
Deferred Loan Costs, net | (2,207,664) | |
Long-term Debt | $ 115,189,028 |
Mortgage Loan Payable (Details)
Mortgage Loan Payable (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Face Value | $ 121,465,692 | $ 125,022,937 |
Carrying Value | 115,189,028 | 122,709,308 |
Fair Value | 120,382,023 | 123,821,490 |
Mortgages | ||
Debt Instrument [Line Items] | ||
Face Value | $ 117,396,692 | $ 125,022,937 |
Maturities of Long-term Debt (D
Maturities of Long-term Debt (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
April through December 2019 | $ 5,002,483 | |
2020 | 1,527,408 | |
2021 | 8,227,794 | |
2022 | 14,620,133 | |
2023 | 21,222,330 | |
2024 | 12,971,626 | |
Thereafter | 57,893,918 | |
Total principal | 121,465,692 | $ 125,022,937 |
Mortgage Note Payable | ||
Debt Instrument [Line Items] | ||
April through December 2019 | 933,483 | |
2020 | 1,527,408 | |
2021 | 8,227,794 | |
2022 | 14,620,133 | |
2023 | 21,222,330 | |
2024 | 12,971,626 | |
Thereafter | 57,893,918 | |
Total principal | 117,396,692 | |
Unsecured Credit Facility | ||
Debt Instrument [Line Items] | ||
April through December 2019 | 4,069,000 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total principal | $ 4,069,000 |
Interest Expenses (Details)
Interest Expenses (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Interest expense | $ 2,160,350 | $ 1,090,616 | |
Loss (gain) on interest rate swaps | 320,526 | (226,806) | |
Liabilities Accrued Interest Payable (Receivable) | 3,192 | $ 5,950 | |
Mortgage Note Payable | |||
Debt Instrument [Line Items] | |||
Interest expense | 1,476,496 | 825,720 | |
Amortization of deferred financing costs | 270,522 | 406,887 | |
Loss (gain) on interest rate swaps | (327,814) | 229,266 | |
Unsecured Credit Facility | |||
Debt Instrument [Line Items] | |||
Interest expense | 83,518 | 82,989 | |
Amortization of deferred financing costs | $ 2,000 | $ 4,286 |
DEBT Narative (Details)
DEBT Narative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Oct. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Apr. 30, 2019 | Apr. 29, 2019 | Feb. 28, 2018 | |
Debt Instrument [Line Items] | |||||||
Unsecured Debt | $ 4,069,000 | $ 8,998,000 | |||||
Proceeds from Unsecured Lines of Credit | $ 9,000,000 | 4,869,000 | $ 9,000,000 | ||||
Carrying Value Of Mortgage Loan | 115,189,028 | 122,709,308 | |||||
Repayments of Lines of Credit | 9,800,000 | $ 12,000,000 | |||||
Unsecured Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from Unsecured Lines of Credit | $ 4,069,000 | $ 9,000,000 | |||||
New Credit Facility | Unsecured Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum Borrowing Capacity | $ 9,000,000 | ||||||
Line of Credit Facility, Interest Rate at Period End | 6.50% | ||||||
Line of Credit Facility, Interest Rate at Period Start | 5.50% | ||||||
exp US Services property | Initial Contractual Interest One | |||||||
Debt Instrument [Line Items] | |||||||
Line of Credit Facility, Interest Rate at Period Start | 4.25% | ||||||
AvAir | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.84% | ||||||
Bon Secours | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.41% | ||||||
Repayments of Lines of Credit | $ (4,931,000) | ||||||
Treasury Bill Index | exp US Services property | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | ||||||
Minimum | Treasury Bill Index | AvAir | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.60% | ||||||
Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Maximum Borrowing Capacity | $ 10,000,000 | $ 9,000,000 |
Derivative Instruments (Details
Derivative Instruments (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($)Instrument | Dec. 31, 2018USD ($)Instrument | |
Interest Rate Swap | ||
Receivables with Imputed Interest [Line Items] | ||
Number of Instruments | Instrument | 4 | 4 |
Notional Amount | $ 27,279,600 | $ 27,346,400 |
Fixed Interest Rate ( as a percent ) | 4.72% | 4.73% |
Remaining Maturity ( in years ) | 4 years 9 months 18 days | 5 years 1 month 12 days |
Minimum | ||
Receivables with Imputed Interest [Line Items] | ||
Notional Amount | $ 24,936,799 | |
(LIBOR) | Maximum | Interest Rate Swap | ||
Receivables with Imputed Interest [Line Items] | ||
Fixed Interest Rate ( as a percent ) | 5.16% | 4.34% |
(LIBOR) | Minimum | Interest Rate Swap | ||
Receivables with Imputed Interest [Line Items] | ||
Fixed Interest Rate ( as a percent ) | 4.05% | 4.05% |
Statement of FInancial Position
Statement of FInancial Position (Details) | Mar. 31, 2019USD ($)Instrument | Dec. 31, 2018USD ($)Instrument |
Derivatives, Fair Value [Line Items] | ||
Fair Value | $ 491,757 | $ 300,929 |
Fair Value | $ 21,517 | $ 151,215 |
Interest Rate Swap | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | Instrument | 4 | 4 |
Assets | Interest Rate Swap | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | Instrument | 2 | 2 |
Fair Value | $ 21,517 | $ 151,215 |
Liability | Interest Rate Swap | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | Instrument | 2 | 2 |
Fair Value | $ (491,757) | $ (300,929) |
INTEREST RATE SWAP DERIVATIVE_2
INTEREST RATE SWAP DERIVATIVES Narative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Loss (gain) on interest rate swaps | $ 320,526 | $ (226,806) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||||
Expense Reimbursement Percentage to Average Invested Assets | 2.00% | |||
Expense Reimbursement Percentage to Net Income | 25.00% | |||
Rental income | $ 5,885,445 | $ 3,457,978 | ||
Receivable | 0 | $ 16,838 | ||
Payable | 52,996 | 979,174 | ||
Asset Management Fees | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 680,018 | 401,315 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 0 | ||
Subordinated participation fees | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 0 | 0 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 839,050 | $ 315,802 | |
Operating expense reimbursements | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 132,000 | 0 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 0 | ||
Fees to affiliates | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 812,018 | 401,315 | ||
Property management fees | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 55,950 | 12,939 | ||
Receivable | 0 | 0 | ||
Payable | 23,912 | 96,792 | ||
Directors and officers insurance and other reimbursements | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 66,870 | 16,634 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 30,164 | ||
Expense reimbursements (from) to Sponsor | ||||
Related Party Transaction [Line Items] | ||||
Incurred | (87,999) | (359,514) | ||
Receivable | 0 | 16,838 | ||
Payable | 0 | 0 | ||
Acquisition fees | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 0 | 456,000 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 0 | ||
Financing coordination fees | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 63,500 | 209,550 | ||
Receivable | 0 | 0 | ||
Payable | 0 | 0 | ||
Reimbursable organizational and offering expenses | ||||
Related Party Transaction [Line Items] | ||||
Incurred | 484,714 | 430,244 | ||
Receivable | 0 | 0 | ||
Payable | 29,084 | $ 13,168 | ||
Advisor | Waiver of Assets Management Fees | ||||
Related Party Transaction [Line Items] | ||||
Rental income | 65,993 | $ 65,993 | ||
Sponsor | ||||
Related Party Transaction [Line Items] | ||||
Reimbursements Expense | $ (40,915) |
RELATED PARTY TRANSACTIONS Nara
RELATED PARTY TRANSACTIONS Narative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Due to Related Parties | $ 52,996 | $ 979,174 | |||
Property Management Fees (as a percent) | 1.50% | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 5,885,445 | $ 3,457,978 | |||
Leasing Commissions And Fees, Percentage | 6.00% | ||||
Leasing Commission Fee, Renewal Rate | 3.00% | ||||
Common Class C | |||||
Related Party Transaction [Line Items] | |||||
Stock Issued During Period | $ 50,000 | $ 38,190 | |||
Stock Issued During Period (in shares) | 4,921 | 3,800 | |||
Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Reimbursements Expense | $ (40,915) | ||||
Organizational And Offering Costs Incurred | 8,565,661 | ||||
Employment Contracts | |||||
Related Party Transaction [Line Items] | |||||
Reimbursements Expense | $ 48,422 | ||||
Advisor | |||||
Related Party Transaction [Line Items] | |||||
Financing Coordination Fees Percentage (as a percent) | 1.00% | ||||
Reimbursable organizational and offering expenses | |||||
Related Party Transaction [Line Items] | |||||
Accrual organization and offering cost | $ 4,664,910 | ||||
Maximum liability for organizational and offering costs | 4,705,238 | ||||
Due to Related Parties | 29,084 | 13,168 | |||
Related Party Transaction Expenses | $ 484,714 | $ 430,244 | |||
Reimbursable organizational and offering expenses | Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Gross Offering Proceeds Percentage | 3.00% | ||||
Waiver of Assets Management Fees | |||||
Related Party Transaction [Line Items] | |||||
Payroll expense reimbursements with Related Party | 0 | ||||
Management Fees Waive Percentage (as a percent) | 0.025% | ||||
Waiver of Assets Management Fees | Advisor | |||||
Related Party Transaction [Line Items] | |||||
Revenue from Contract with Customer, Including Assessed Tax | $ 65,993 | 65,993 | |||
Financing coordination fees | |||||
Related Party Transaction [Line Items] | |||||
Due to Related Parties | 0 | 0 | |||
Related Party Transaction Expenses | 63,500 | 209,550 | |||
Asset Management Fees | |||||
Related Party Transaction [Line Items] | |||||
Due to Related Parties | 0 | 0 | |||
Payroll expense reimbursements with Related Party | 680,018 | 401,315 | |||
Related Party Transaction Expenses | 680,018 | 401,315 | |||
Subordinated participation fees | |||||
Related Party Transaction [Line Items] | |||||
Due to Related Parties | 0 | $ 839,050 | $ 315,802 | ||
Related Party Transaction Expenses | 0 | 0 | |||
Sponsor reimbursement | |||||
Related Party Transaction [Line Items] | |||||
Payroll expense reimbursements with Related Party | $ 128,914 | $ 311,092 | |||
Advisor fees, Acquisition fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related Party Transaction, Rate | 0.10% | 3.00% | |||
Property Selling Fee [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related Party Transaction, Rate | 3.00% | ||||
Disposition Fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related Party Transaction, Rate | 6.00% | ||||
Maximum | Advisor fees, Acquisition fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related Party Transaction, Rate | 6.00% |
COMMITMENTS AND CONTINGENCIES N
COMMITMENTS AND CONTINGENCIES Narative (Details) - USD ($) | 1 Months Ended | ||
Apr. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES [Line Items] | |||
Restricted Cash and Cash Equivalents | $ 3,523,493 | $ 3,503,242 | |
Lease Agreements | |||
COMMITMENTS AND CONTINGENCIES [Line Items] | |||
Other Commitment | 3,789,091 | ||
Restricted Cash and Cash Equivalents | $ 3,486,927 | ||
Lease Agreements | Santa Clara Property | |||
COMMITMENTS AND CONTINGENCIES [Line Items] | |||
Ownership Percentage ( as a percent ) | 72.70% | ||
Subsequent Event | |||
COMMITMENTS AND CONTINGENCIES [Line Items] | |||
Release Of Restricted Cash | $ 3,177,343 |
SUBSEQUENT EVENTS Narative (Det
SUBSEQUENT EVENTS Narative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 33 Months Ended | |||||
May 15, 2019 | Oct. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Apr. 30, 2019 | Jun. 30, 2019 | May 31, 2019 | Apr. 29, 2019 | |
Subsequent Event [Line Items] | ||||||||
Issuance of common stock | $ 16,157,204 | $ 14,341,117 | ||||||
Payments to Acquire Real Estate | 0 | 15,245,676 | ||||||
Proceeds from Unsecured Lines of Credit | $ 9,000,000 | $ 4,869,000 | $ 9,000,000 | |||||
Common Class C | Common Stock | ||||||||
Subsequent Event [Line Items] | ||||||||
Issuance of common stock (in shares) | 1,477,902 | 1,429,021 | ||||||
Issuance of common stock | $ 1,478 | $ 1,418 | ||||||
Subsequent Event | ||||||||
Subsequent Event [Line Items] | ||||||||
Dividends Payable (in USD per share) | $ 0.0019274 | $ 0.00192740 | $ 0.00192740 | |||||
Maximum Borrowing Capacity | $ 10,000,000 | $ 9,000,000 | ||||||
Subsequent Event | Common Stock | ||||||||
Subsequent Event [Line Items] | ||||||||
Stock Issued During Period (in shares) | 1,138,268 | |||||||
Stock Issued During Period | $ 11,449,412 | |||||||
Subsequent Event | Common Class C | ||||||||
Subsequent Event [Line Items] | ||||||||
Issuance of common stock (in shares) | 13,385,609 | |||||||
Issuance of common stock | $ 134,051,756 | |||||||
Stock Redeemed (in shares) | 98,514 | |||||||
Stock Redeemed or Called During Period, Value | $ 1,000,905 | |||||||
Subsequent Event | Class S Common stock | ||||||||
Subsequent Event [Line Items] | ||||||||
Issuance of common stock (in shares) | 146,967 | |||||||
Issuance of common stock | $ 1,491,103 | |||||||
Stock Issued During Period (in shares) | 690 | |||||||
Stock Issued During Period | $ 6,987 |