Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
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 | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Class C | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 24,150,873 | |
Class S | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 187,900 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Real estate investments: | ||
Land | $ 76,912,859 | $ 86,775,988 |
Buildings and improvements | 294,123,745 | 309,904,890 |
Tenant origination and absorption costs | 24,450,830 | 27,266,610 |
Total investments in real estate property | 395,487,434 | 423,947,488 |
Accumulated depreciation and amortization | (27,050,943) | (20,411,794) |
Total investments in real estate property, net | 368,436,491 | 403,535,694 |
Investment in unconsolidated entity | 10,200,810 | 10,388,588 |
Total real estate investments, net | 378,637,301 | 413,924,282 |
Real estate investments held for sale, net | 17,926,407 | 0 |
Total real estate investments | 396,563,708 | 413,924,282 |
Cash and cash equivalents | 3,820,375 | 6,823,568 |
Restricted cash | 258,493 | 113,362 |
Tenant receivables, net | 6,845,034 | 6,224,764 |
Above-market lease intangibles, net | 945,947 | 1,251,734 |
Due from affiliates | 3,214 | 2,332 |
Prepaid expenses and other assets | 2,433,871 | 1,867,777 |
Interest rate swap derivatives | 0 | 34,567 |
Assets related to real estate investments held for sale | 725,990 | 0 |
Operating lease right-of-use asset | 2,139,520 | 2,386,877 |
Goodwill | 17,320,857 | 50,588,000 |
Intangible assets, net | 6,001,792 | 7,700,000 |
Total assets | 437,058,801 | 490,917,263 |
Liabilities and Equity | ||
Mortgage notes payable, net | 186,677,129 | 194,039,207 |
Mortgage notes payable related to real estate investments held for sale, net | 9,549,467 | 0 |
Total mortgage notes payable, net | 196,226,596 | 194,039,207 |
Unsecured credit facility, net | 11,960,200 | 7,649,861 |
Short-term notes payable | 0 | 4,800,000 |
Economic relief notes payable | 527,000 | 0 |
Accounts payable, accrued and other liabilities | 10,718,686 | 11,555,161 |
Share repurchases payable | 750,684 | 0 |
Below-market lease intangibles, net | 13,658,195 | 14,591,359 |
Due to affiliates | 0 | 630,820 |
Interest rate swap derivatives | 2,279,909 | 1,021,724 |
Liabilities related to real estate investments held for sale | 196,938 | 0 |
Operating lease liability | 2,152,919 | 2,386,877 |
Total liabilities | 238,471,127 | 236,675,009 |
Commitments and contingencies | ||
Redeemable common stock | 8,925,145 | 14,069,692 |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Additional paid-in-capital | 228,696,741 | 220,714,676 |
Cumulative distributions and net losses | (89,661,537) | (31,168,948) |
Total RW Holdings NNN REIT, Inc. equity | 139,059,529 | 189,569,562 |
Noncontrolling interests in the Operating Partnership | 50,603,000 | 50,603,000 |
Total equity | 189,662,529 | 240,172,562 |
Total liabilities and equity | 437,058,801 | 490,917,263 |
Class C | ||
Liabilities and Equity | ||
Common stock, value issued | 24,137 | 23,647 |
Class S | ||
Liabilities and Equity | ||
Common stock, value issued | $ 188 | $ 187 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Shares Issued ( In shares ) | 0 | 0 |
Shares Outstanding ( In shares ) | 0 | 0 |
Class C | ||
Common Stock | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Shares Issued ( In shares ) | 24,137,134 | 23,647,466 |
Shares Outstanding ( In shares ) | 24,137,134 | 23,647,466 |
Class S | ||
Common Stock | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Shares Issued ( In shares ) | 187,648 | 186,606 |
Shares Outstanding ( In shares ) | 187,648 | 186,606 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Rental income | $ 9,277,020 | $ 5,896,266 | $ 20,331,429 | $ 11,781,711 |
Expenses: | ||||
Fees to affiliates (Note 9) | 0 | 812,019 | 0 | 1,624,037 |
General and administrative | 2,369,358 | 853,940 | 4,924,363 | 1,393,445 |
Depreciation and amortization | 4,480,262 | 2,391,495 | 9,115,786 | 4,782,991 |
Interest expense | 2,558,877 | 2,076,725 | 6,463,533 | 4,237,075 |
Property expenses | 1,854,637 | 1,111,936 | 3,803,356 | 2,174,588 |
Impairment of real estate investment properties | 349,457 | 0 | 9,506,525 | 0 |
Impairment of goodwill and intangible assets | 0 | 0 | 34,572,403 | 0 |
Reserve for loan guarantee | (4,253) | 0 | 3,125,037 | 0 |
Total expenses | 11,608,338 | 7,246,115 | 71,511,003 | 14,212,136 |
Less: Expenses reimbursed by Former Sponsor | 0 | (148,233) | 0 | (236,232) |
Expenses, net | 11,608,338 | 7,097,882 | 71,511,003 | 13,975,904 |
Other income (expense): | ||||
Interest income | 605 | 5,645 | 4,822 | 11,031 |
Income from investments in unconsolidated entities, net | 125,658 | 55,955 | 146,411 | 129,988 |
Other | (4,855) | 0 | (4,855) | 0 |
Total other income, net | 121,408 | 61,600 | 146,378 | 141,019 |
Net loss | $ (2,209,910) | $ (1,140,016) | $ (51,033,196) | $ (2,053,174) |
Net loss per share, basic and diluted (in usd per share) | $ (0.09) | $ (0.08) | $ (2.13) | $ (0.14) |
Weighted-average number of common shares outstanding, basic and diluted ( in shares ) | 24,097,402 | 14,846,259 | 23,976,325 | 14,218,770 |
Distributions declared per common share (in usd per share) | $ 0.136 | $ 0.175 | $ 0.311 | $ 0.035 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity - USD ($) | Total | Common StockClass C | Common StockClass S | Additional Paid-in Capital | Cumulative Distributions and Net Losses | Total Stockholders' Equity | Noncontrolling Interests in the Operating Partnership |
Beginning balance at Dec. 31, 2018 | $ 103,092,769 | $ 12,943 | $ 18 | $ 119,247,245 | $ (16,167,437) | $ 103,092,769 | $ 0 |
Beginning balance (in shares) at Dec. 31, 2018 | 12,943,294 | 17,594 | |||||
Issuance of common stock (in shares) | 2,806,991 | 148,854 | |||||
Issuance of common stock | 30,005,491 | $ 2,807 | $ 148 | 30,002,536 | 30,005,491 | ||
Stock compensation expense (in shares) | 10,335 | ||||||
Stock compensation expense | 105,000 | $ 10 | 104,990 | 105,000 | |||
Offering costs | (899,863) | (899,863) | (899,863) | ||||
Reclassification to redeemable common stock | (238,153) | ||||||
Repurchase of common stock (in shares) | (447,449) | ||||||
Repurchase of common stock | (4,443,653) | $ (447) | (4,443,206) | (4,443,653) | |||
Distributions declared | (4,993,962) | (4,993,962) | (4,993,962) | ||||
Net loss | (2,053,174) | (2,053,174) | (2,053,174) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 15,313,171 | 166,448 | |||||
Ending balance at Jun. 30, 2019 | 120,812,608 | $ 15,313 | $ 166 | 144,011,702 | (23,214,573) | 120,812,608 | 0 |
Beginning balance at Dec. 31, 2018 | 103,092,769 | $ 12,943 | $ 18 | 119,247,245 | (16,167,437) | 103,092,769 | 0 |
Beginning balance (in shares) at Dec. 31, 2018 | 12,943,294 | 17,594 | |||||
Ending balance (in shares) at Dec. 31, 2019 | 23,647,466 | 186,606 | |||||
Ending balance at Dec. 31, 2019 | 240,172,562 | $ 23,647 | $ 187 | 220,714,676 | (31,168,948) | 189,569,562 | 50,603,000 |
Beginning balance at Mar. 31, 2019 | 113,287,570 | $ 14,201 | $ 133 | 132,742,525 | (19,469,289) | 113,287,570 | 0 |
Beginning balance (in shares) at Mar. 31, 2019 | 14,201,229 | 132,517 | |||||
Issuance of common stock (in shares) | 1,329,089 | 33,931 | |||||
Issuance of common stock | 13,848,287 | $ 1,329 | $ 33 | 13,846,925 | 13,848,287 | ||
Stock compensation expense (in shares) | 5,414 | ||||||
Stock compensation expense | 55,000 | $ 5 | 54,995 | 55,000 | |||
Offering costs | (415,299) | (415,299) | (415,299) | ||||
Repurchase of common stock (in shares) | (222,561) | ||||||
Repurchase of common stock | (2,217,666) | $ (222) | (2,217,444) | (2,217,666) | |||
Distributions declared | (2,605,268) | (2,605,268) | (2,605,268) | ||||
Net loss | (1,140,016) | (1,140,016) | (1,140,016) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 15,313,171 | 166,448 | |||||
Ending balance at Jun. 30, 2019 | 120,812,608 | $ 15,313 | $ 166 | 144,011,702 | (23,214,573) | 120,812,608 | 0 |
Beginning balance at Dec. 31, 2019 | 240,172,562 | $ 23,647 | $ 187 | 220,714,676 | (31,168,948) | 189,569,562 | 50,603,000 |
Beginning balance (in shares) at Dec. 31, 2019 | 23,647,466 | 186,606 | |||||
Issuance of common stock (in shares) | 1,458,128 | 2,979 | |||||
Issuance of common stock | 14,092,239 | $ 1,458 | $ 3 | 14,090,778 | 14,092,239 | ||
Stock compensation expense (in shares) | 12,680 | ||||||
Stock compensation expense | 129,583 | $ 13 | 129,570 | 129,583 | |||
Class P OP Units compensation expense | 177,567 | 177,567 | 177,567 | ||||
Offering costs | (822,921) | (822,921) | (822,921) | ||||
Reclassification to redeemable common stock | 4,393,863 | 4,393,863 | 4,393,863 | ||||
Repurchase of common stock (in shares) | (981,140) | (1,936) | |||||
Repurchase of common stock | (9,987,775) | $ (981) | $ (2) | (9,986,792) | (9,987,775) | ||
Distributions declared | (7,459,393) | (7,459,393) | (7,459,393) | ||||
Net loss | (51,033,196) | (51,033,196) | (51,033,196) | ||||
Ending balance (in shares) at Jun. 30, 2020 | 24,137,134 | 187,649 | |||||
Ending balance at Jun. 30, 2020 | 189,662,529 | $ 24,137 | $ 188 | 228,696,741 | (89,661,537) | 139,059,529 | 50,603,000 |
Beginning balance at Mar. 31, 2020 | 191,294,801 | $ 23,661 | $ 188 | 224,849,288 | (84,181,336) | 140,691,801 | 50,603,000 |
Beginning balance (in shares) at Mar. 31, 2020 | 23,660,697 | 187,640 | |||||
Issuance of common stock (in shares) | 555,545 | 1,945 | |||||
Issuance of common stock | 4,851,043 | $ 555 | $ 2 | 4,850,486 | 4,851,043 | ||
Stock compensation expense (in shares) | 6,816 | ||||||
Stock compensation expense | 70,000 | $ 7 | 69,993 | 70,000 | |||
Class P OP Units compensation expense | 88,784 | 88,784 | 88,784 | ||||
Offering costs | (265,270) | (265,270) | (265,270) | ||||
Reclassification to redeemable common stock | 0 | 0 | |||||
Repurchase of common stock (in shares) | (85,924) | (1,936) | |||||
Repurchase of common stock | (896,628) | $ (86) | $ (2) | (896,540) | (896,628) | ||
Distributions declared | (3,270,291) | (3,270,291) | (3,270,291) | ||||
Net loss | (2,209,910) | (2,209,910) | (2,209,910) | ||||
Ending balance (in shares) at Jun. 30, 2020 | 24,137,134 | 187,649 | |||||
Ending balance at Jun. 30, 2020 | $ 189,662,529 | $ 24,137 | $ 188 | $ 228,696,741 | $ (89,661,537) | $ 139,059,529 | $ 50,603,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (51,033,196) | $ (2,053,174) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 9,115,786 | 4,782,991 |
Stock compensation expense | 350,900 | 176,667 |
Deferred rents | (631,054) | (683,886) |
Amortization of deferred lease incentives | 30,602 | 30,602 |
Amortization of deferred financing costs and premium | 298,283 | 390,096 |
Amortization of above-market lease intangibles | 98,966 | 48,523 |
Amortization of below-market lease intangibles | (774,589) | (237,196) |
Impairment of real estate investment properties | 9,506,525 | 0 |
Impairment of goodwill and intangible assets | 34,572,403 | 0 |
Reserve for loan guarantee | 3,125,037 | 0 |
Unrealized loss on interest rate swap valuation | 1,292,752 | 874,016 |
Income from investments in unconsolidated entities | (146,411) | (129,988) |
Distributions from investments in unconsolidated entities | 334,189 | 418,730 |
Change in operating assets and liabilities: | ||
(Increase) decrease in tenant receivables | (16,688) | 196,660 |
Increase in prepaid and other assets | (606,696) | (311,094) |
(Decrease) increase in accounts payable, accrued and other liabilities | (1,515,624) | 319,774 |
Decrease in due to affiliate | (631,702) | (936,590) |
Decrease in operating lease right-of-use asset, net of decrease in operating lease liability | 13,399 | 0 |
Net cash provided by operating activities | 3,382,882 | 2,886,131 |
Cash Flows from Investing Activities: | ||
Additions to existing real estate investments | (2,170,913) | 0 |
Additions to intangible assets | (533,041) | 0 |
Payment of tenant improvements | 0 | (3,387,699) |
Additions to lease incentives | (990,000) | 0 |
Refundable purchase deposit | 0 | (100,000) |
Net cash used in investing activities | (3,693,954) | (3,487,699) |
Cash Flows from Financing Activities: | ||
Borrowings from unsecured credit facility | 4,260,000 | 4,869,000 |
Repayments of unsecured credit facility | 0 | (13,869,000) |
Proceeds from mortgage notes payable | 4,000,000 | 6,350,000 |
Principal payments on mortgage notes payable | (2,003,558) | (14,240,853) |
Proceeds from economic relief notes payable | 527,000 | 0 |
Principal payments on short-term notes payable | (4,800,000) | 0 |
Payments of deferred financing costs to third parties | (56,997) | (172,797) |
Payments of financing fees to affiliates | 0 | (63,500) |
Proceeds from issuance of common stock and investor deposits | 9,427,526 | 26,340,968 |
Payments of offering costs | (822,921) | (899,863) |
Payments of selling commissions on Class S common stock | 0 | (51,044) |
Repurchases of common stock | (9,987,775) | (4,443,653) |
Distributions paid to common stockholders | (3,090,265) | (1,182,318) |
Net cash (used in) provided by financing activities | (2,546,990) | 2,636,940 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (2,858,062) | 2,035,372 |
Cash, cash equivalents and restricted cash, beginning of period | 6,936,930 | 8,755,928 |
Cash, cash equivalents and restricted cash, end of period | 4,078,868 | 10,791,300 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 3,367,143 | 2,979,031 |
Supplemental Schedule of Noncash Investing and Financing Activities: | ||
Reclassification from (to) redeemable common stock | 4,393,863 | (238,153) |
Reinvested distributions from common stockholders | 4,664,713 | 3,664,523 |
Real estate investments held for sale, net | 17,926,407 | 0 |
Assets related to real estate investments held for sale | 725,990 | 0 |
Mortgage notes payable related to real estate investments held for sale, net | 9,549,467 | 0 |
Liabilities related to real estate investments held for sale | 196,938 | 0 |
Increase in share repurchases payable | 750,684 | 238,153 |
Accrued distributions | $ 295,585 | $ 896,291 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [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, in real estate owning entities which own 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 limited liability companies which are wholly-owned subsidiaries of RW Holdings NNN REIT Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), or Katana Merger Sub, LP (“Merger Sub”), which is described below. The Operating Partnership was formed on January 28, 2016. The Company is the sole general partner of and owned a 99% partnership interest in the Operating Partnership prior to the completion of the Self-Management Transaction (defined below) on December 31, 2019. The Company's wholly-owned subsidiary, Rich Uncles NNN LP, LLC, a Delaware limited liability company formed on May 13, 2016 (“NNN LP”), owned the remaining 1% partnership interest in the Operating Partnership and was the sole limited partner of the Operating Partnership prior to the completion of the Self-Management Transaction on December 31, 2019. Following completion of the Self-Management Transaction, the Company, including NNN LP, owns an approximately 87% partnership interest in the Operating Partnership. Daisho OP Holdings, LLC, a formerly wholly-owned subsidiary of BrixInvest (defined below) (“Daisho”) which was spun off from BrixInvest on December 31, 2019, was issued and held 657,949.5 units of Class M limited partnership interest (the “Class M OP Units”), or an approximate 12% limited partnership interest, in the Operating Partnership as of December 31, 2019 . Daisho is managed by Messrs. Aaron S. Halfacre, Raymond J. Pacini and Raymond Wirta, the Company’s Chief Executive Officer, Chief Financial Officer and Chairman, respectively. The Class M OP Units were distributed to the members of Daisho during 2020. In connection with the Self-Management Transaction, the Company's Chief Executive Officer and Chief Financial Officer were issued an aggregate of 56,029 units of Class P limited partnership interest (the “Class P OP Units”) in the Operating Partnership and thereby own the remaining approximate 1% limited partnership interest in the Operating Partnership. The Company was externally managed by its former advisor, Rich Uncles NNN REIT Operator, LLC (the “Former Advisor”), a Delaware limited liability company, pursuant to the Second Amended and Restated Advisory Agreement dated August 11, 2017, as amended (the “Advisory Agreement”), through December 31, 2019. The Former Advisor was wholly-owned by the Company’s former sponsor, BrixInvest, LLC (f/k/a Rich Uncles, LLC) (“BrixInvest” or the “Former Sponsor”), a Delaware limited liability company, whose members include Messrs. Halfacre and Wirta. On each of June 24, 2015 and December 31, 2015, the Company issued 10,000 shares of its Class C common stock to the Former Sponsor, for a total of 20,000 shares of Class C common stock, at a purchase price of $10.00 per share. Upon completing the Self-Management Transaction, the Former Sponsor's previously held 10,740 shares of the Company’s Class C common stock were canceled. On December 31, 2019, pursuant to an Agreement and Plan of Merger dated September 19, 2019 (the “Merger Agreement”), Rich Uncles Real Estate Investment Trust I (“REIT I”) merged with and into Merger Sub, a Delaware limited partnership and wholly-owned subsidiary of the Company, with Merger Sub surviving as a direct, wholly-owned subsidiary of the Company (the “Merger”). At such time, the separate existence of REIT I ceased. As a result, the Company issued 8,042,221.6 shares of its Class C common stock to former shareholders of REIT I. In addition, on December 31, 2019, a self-management transaction was completed, whereby the Company, the Operating Partnership, BrixInvest and Daisho effectuated a Contribution Agreement (the “Contribution Agreement”) pursuant to which the Company acquired substantially all of the assets and assumed certain liabilities of BrixInvest in exchange for 657,949.5 Class M OP Units in the Operating Partnership (the “Self-Management Transaction”). As a result of the completion of the Merger and the Self-Management Transaction, the Company became self-managed (see Note 3 ). On July 15, 2015, the Company filed a registration statement on Form S-11 (File No. 333-205684) with the Securities and Exchange Commission (the “SEC”) to register an initial public offering of a maximum of 90,000,000 of its shares of common stock for sale to the public (the “Primary Offering”). The Company also registered a maximum of 10,000,000 of its 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 the Registered Offering, the Company sold shares of 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”), and began selling shares of its Class S common stock as a result of the commencement of the Class S Offering (as defined below) to non-U.S. Persons. On August 11, 2017, the Company began offering up to 100,000,000 shares of 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 and the Follow-on Offering (as defined below), the “Offerings”). The Class S common stock has similar features and rights as the Class C common stock, including with respect to voting and liquidation, except that the Class S common stock offered in the Class S Offering may be sold only to non-U.S. Persons and may be sold through brokers or other persons who may be paid upfront and deferred selling commissions and fees. On December 23, 2019, the Company commenced a follow-on offering pursuant to a new registration statement on Form S-11 (File No. 333-231724) (the “Follow-on Offering” and, together with the Registered Offering, the “Registered Offerings”), which registered the offer and sale of up to $800,000,000 in share value of Class C common stock, including $725,000,000 in share value of Class C common stock pursuant to the primary portion of the Follow-on Offering and $75,000,000 in share value of Class C common stock pursuant to the Company's distribution reinvestment plan. The Company ceased offering shares pursuant to the Registered Offering concurrently with the commencement of the Follow-on Offering. On January 31, 2020, the Company’s board of directors approved and established an estimated net asset value (“NAV”) per share of the Company’s common stock of $10.27 (unaudited). Effective February 1, 2020, the purchase price per share of the Company’s common stock in the primary portion of the Follow-on Offering and the distribution reinvestment plans was increased from $10.16 (unaudited) to $10.27 (unaudited). Also, commencing February 1, 2020, the purchase price per share in the primary portion of the Class S Offering was increased to $10.27 (unaudited) plus the amount of any applicable upfront commissions and fees, and the NAV per share used for purposes of the share repurchase programs was increased to $10.27 (unaudited). In response to the significant economic impacts of the COVID-19 pandemic, effective as of the close of business on May 7, 2020, the Company’s board of directors temporarily suspended the primary portion of the Company’s Follow-on Offering and Class S Offering until such time as the board of directors approved and established an updated estimated NAV per share of the Company’s common stock and determined to resume such primary offerings. On May 20, 2020, the Company’s board of directors approved and established an updated estimated NAV per share of the Company’s common stock of $7.00 (unaudited) to reflect the Company's most recent valuation of the Company’s real estate assets, debt and other assets and liabilities. Additional information on the determination of the Company's estimated NAV per share, including the process used to determine its estimated NAV per share, can be found in the Company's Current Report on Form 8-K filed with the SEC on May 22, 2020. With respect to distributions paid to stockholders on May 26, 2020, the purchase price per share of the Company’s common stock in the distribution reinvestment plans was decreased from $10.27 to $7.00 . Commencing on June 1, 2020, the Company’s board of directors resumed the primary portions of the Follow-on Offering and the Class S Offering. The purchase price per share in the primary portion of the Follow-on Offering was decreased from $10.27 to $7.00 , and the purchase price per share in the primary portion of the Class S Offering was decreased to $7.00 plus the amount of any applicable upfront commissions and fees. The NAV per share used for purposes of future repurchases pursuant to the share repurchase programs was also decreased from $10.27 (unaudited) to $7.00 (unaudited). Through June 30, 2020 , the Company had sold 19,346,077 shares of Class C common stock in the Registered Offerings, including 2,045,330 shares of Class C common stock sold under its registered distribution reinvestment plan, for aggregate gross offering proceeds of $193,763,736 , and 189,585 shares of Class S common stock in the Class S Offering, including 4,621 shares of Class S common stock sold under its distribution reinvestment plan, for aggregate gross offering proceeds of $1,921,229 . As of June 30, 2020 , the Company had invested in (i) 45 operating properties, comprised of: 20 retail properties, 16 office properties and nine industrial properties (including 20 operating properties which were acquired through the Merger on December 31, 2019 and are comprised of: (a) 11 retail properties, (b) six office properties and (c) three industrial properties); (ii) one parcel of land, which currently serves as an easement to one of the Company’s office properties; and (iii) an approximate 72.7% tenant-in-common interest in a Santa Clara office property (the “TIC Interest”). During the second quarter of 2020, the Company determined to sell four of its operating properties, including three retail properties and one industrial property, and classified them as real estate investments held for sale as of June 30, 2020. See Note 4 for additional discussion. The Company continues to offer shares of common stock under its Offerings. In some states, the Company is required to renew the registration statement for the Follow-on Offering annually or file a new registration statement to continue the Follow-on Offering. The Company may terminate the Offerings at any time. |
SUMMARY OF SIGNIFICANT ACOUNTIN
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACOUNTING 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 audited consolidated financial statements as of December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 6, 2020. 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 the Company's financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements. The condensed consolidated financial statements do 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. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations related to the COVID-19 pandemic (see Notes 3 and 4 for impairment charges related primarily to COVID-19). Actual results may differ from those estimates. Noncontrolling Interests in Consolidated Entities The Company accounts for the noncontrolling interests in its Operating Partnership in accordance with the related accounting guidance. Due to the Company's control of the Operating Partnership through its general partnership interest therein and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company, and the limited partner interests are reflected as noncontrolling interests in the accompanying condensed consolidated balance sheets. The noncontrolling interests were issued on December 31, 2019 and represent non-voting, non-dividend accruing interests with no allocation of profits or losses. As described in Note 3 , the interests are not able to be converted or exchanged prior to (i) December 31, 2020, the one-year anniversary of the closing of the Self-Management Transaction (in the case of the Class M OP Units), or (ii) the expiration of the Lockup Period (as defined below) (in the case of the Class P OP Units). Business Combinations The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) and applicable Accounting Standard Updates, whereby the total consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to any non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination. ASC 805 defines a business as an integrated set of activities and assets (collectively, a “set”) that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASC 805 provides a practical screen to determine when a set would not be considered a business. If the screen is not met and further assessment determines that the set is not a business, then the set is an asset acquisition. The primary difference between a business combination and an asset acquisition is that an asset acquisition requires cost accumulation and allocation at relative fair value. Acquisition costs are capitalized for an asset acquisition and expensed for a business combination (see Note 3 for a description of the Merger and Self-Management Transaction). Revenue Recognition The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606 ) (“ASU No. 2014-09”), effective January 1, 2018. The Company’s revenue impacted by ASU No. 2014-09 included revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenues are recognized when the services are provided and the performance obligations are satisfied. 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, as discussed below, in the period the recoverable costs are incurred. Tenant reimbursements, for which the Company pays the associated costs directly to third-party vendors and is reimbursed by the tenants, are recognized and recorded on a gross basis. The Company adopted FASB ASU No. 2016-02, Leases (Topic 842), and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01 effective January 1, 2019, 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. Topic 842 impacts the Company's accounting for leases primarily as a lessor. However, Topic 842 also impacts the Company's accounting as a lessee for an operating lease assumed as a result of the Self-Management Transaction, which was completed on December 31, 2019. 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 ASU No. 2014-09. 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 No. 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 components 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 No. 2018-11 have been combined under rental income subsequent to the adoption of Topic 842 in the Company's consolidated statements of operations. For the three months ended June 30, 2020 and 2019 , tenant reimbursements included in rental income amounted to $1,538,586 and $1,098,603 , respectively, and for the six months ended June 30, 2020 and 2019 , tenant reimbursements included in rental income amounted to $3,899,505 and $2,186,463 , respectively. The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectability of such amounts is reasonably assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, management of the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general-purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. In instances where the operating lease agreement has an early termination option, the termination penalty is based on a predetermined termination fee or based on the unamortized tenant improvements and leasing commissions. The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, credit rating, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides an allowance against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. Bad Debts and Allowances for Tenant and Deferred Rent Receivables Since 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. With respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt allowance for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments. 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, since January 1, 2019, the Company no longer capitalizes internal leasing costs and third-party legal leasing costs and instead charges these costs to expense as incurred. These expenses are included in legal leasing costs under property expenses in the Company's condensed consolidated statements of operations. The election of the package of practical expedients described above permits the Company to continue to account for its 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 entered into or acquired commencing or modified after January 1, 2019. Impairment of Investment in Real Estate Properties The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset. As more fully discussed in Note 4 , the Company recorded impairment charges of $349,457 and $9,506,525 related to one and four of its properties, respectively, during the three and six months ended June 30, 2020 , respectively. Other Comprehensive Loss For all periods presented, other comprehensive loss is the same as net loss. Per Share Data The Company reports a dual presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted EPS uses the treasury stock method or the if-converted method, where applicable, to compute for the potential dilution that would occur if dilutive securities or commitments to issue common stock were exercised. Diluted EPS is the same as Basic EPS for the three and six months ended June 30, 2020 and 2019 as the Company had a net loss for all reported periods. As of June 30, 2020 , there were 657,949.5 Class M OP Units and 56,029 Class P OP Units that are convertible to Class C OP Units (defined below) at a conversion ratio of five Class C OP Units for each one Class M OP Unit or Class P OP Unit, as applicable, after a specified period of time (see Note 3 ). The holders of Class C OP Units may exchange such Class C OP Units for shares of the Company's Class C common stock on a 1- for-1 basis or, at the Company’s sole and absolute discretion, for cash. The Class M OP Units and Class P OP Units, and the shares of Class C common stock into which they may ultimately be converted, were excluded from the computation of Diluted EPS because their effect would not be dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended. The Company has presented the basic and diluted net loss per share amounts on the accompanying condensed consolidated statements of operations for Class C and S share classes as a combined common share class. Application of the two-class method for allocating net loss in accordance with the provisions of ASC 260, Earnings per Share , would have resulted in a net loss of $(0.09) and $(0.06) per share for Class C shares for the three months ended June 30, 2020 and 2019 , respectively, and a net loss of $(0.09) and $(0.10) per share for Class S shares for the three months ended June 30, 2020 and 2019 , respectively. The two-class method would have resulted in a net loss per share of $(2.13) and $(0.13) for Class C shares for the six months ended June 30, 2020 and 2019 , respectively, and $(2.13) and $(0.18) for Class S shares for the six months ended June 30, 2020 and 2019 , respectively. The differences in net loss per share if allocated under this method primarily reflects the lower effective distributions 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 distributions relative to the time the shares were outstanding. 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, 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 sheets. 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. Goodwill and Intangible Assets: The fair value measurements of goodwill and intangible assets are considered Level 3 nonrecurring fair value measurements. For goodwill, fair value measurement involves the determination of fair value of a reporting unit. The Company uses a Monte Carlo simulation model to estimate future performance, generating the fair value of the reporting unit's business. For intangible assets, fair value measurements include assumptions with inherent uncertainty, including projected Offerings volumes and related projected revenues and long-term growth rates, among others. The carrying value of intangible assets is at risk of impairment if future projected Offerings proceeds, revenues or long-term growth rates are lower than those currently projected. Unsecured credit facility and short-term notes payable: The fair values of the Company’s unsecured credit facility and short-term notes payable approximate the carrying values of the unsecured credit facility and short-term notes payable as their interest rates and other terms are comparable to those available in the market place for a similar credit facility and short-term note, respectively. 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 or modification and for on-site and tenant improvements or property taxes. Restricted cash as of June 30, 2020 and December 31, 2019 amounted to $258,493 and $113,362 , respectively. Pursuant to lease agreements, the Company has obligations to pay for $60,598 and $98,329 in site and tenant improvements to be incurred by tenants as of June 30, 2020 and December 31, 2019 , respectively, including a 72.7% share of tenant improvements for the Santa Clara property at both balance sheet dates. At both June 30, 2020 and December 31, 2019 , the Company's restricted cash held to fund the improvements totaled $92,684 . As of June 30, 2020 and December 31, 2019 , the Company also held restricted cash of $165,809 and $20,678 , respectively, for lender reserves. Real Estate Investments Held for Sale The Company generally considers a real estate investment to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate investment held for sale, net” and “assets related to real estate investment held for sale,” respectively, in the accompanying condensed consolidated balance sheets. Mortgage note payable and other liabilities related to a real estate investment held for sale are classified as “mortgage notes payable related to real estate investments held for sale, net” and “liabilities related to real estate investment held for sale,” respectively, in the accompanying condensed consolidated balance sheets. Real estate investment classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties that were classified as held for sale in the ordinary course of business are included in continuing operations in the Company’s accompanying condensed consolidated statements of operations. Goodwill and Other Intangible Assets The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. The Company evaluates goodwill for possible impairment in accordance with ASC 350, Intangibles–Goodwill and Other on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit has declined below its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized. Due to the impacts of the COVID-19 pandemic, the Company performed an impairment test of goodwill for the quarter ended March 31, 2020. Since the Company is a single reporting unit, the Company performed a quantitative analysis to compare the estimated fair value of the Company’s net tangible and intangible assets to the preliminary carrying value of its net tangible and intangible assets as of March 31, 2020. The recorded goodwill impairment charge of $33,267,143 represents the excess of the Company’s net book value over its estimated fair value as of March 31, 2020. No goodwill impairment charges were recorded during the three months ended June 30, 2020 . Intangible assets consist of purchased customer-related intangible assets, marketing-related intangible assets, developed technology and other intangible assets. Intangible assets are amortized over their estimated useful lives using the straight-line method ranging from three years to five years . No significant residual value is estimated for intangible assets. An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. The Company evaluates long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. Due to the impacts of the COVID-19 pandemic, the Company evaluated its intangible assets for impairment and recorded an impairment charge of $1,305,260 for the three months ended March 31, 2020. No impairment charges on intangible assets were recorded during the three months ended June 30, 2020 . See Note 3 for additional information related to goodwill and other intangible assets acquired in connection with the Self-Management Transaction and impairments recorded. Reclassifications Certain prior period cash flows from operations account grouping in the condensed consolidated statement of cash flows has been reclassified to conform with the current year presentation. The reclassifications had no impact on net loss. Restricted Stock Units and Restricted Stock Unit Awards The fair values of the Operating Partnership's units or restricted stock unit awards issued or granted by the Company are based on the most recent NAV per share of the Company’s common stock on the date of issuance or grant. Operating Partnership units issued as purchase consideration in connection with the Self-Management Transaction discussed in Note 3 are recorded in equity under noncontrolling interests in the Operating Partnership in the Company's condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 and condensed consolidated statement of equity for the three and six months ended June 30, 2020 . For units granted to employees of the Company that are not included in the purchase consideration, the fair value of the award is amortized using the straight-line method over the requisite service period of the award, which is generally the vesting period (see Note 3 ). The Company determines the accounting classification of equity instruments (e.g. restricted stock units) that are issued as purchase consideration or part of the purchase consideration in a business combination, as either liability or equity, by first assessing whether the equity instruments meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, equity instruments are classified as liabilities if the equity instruments are mandatorily redeemable, obligate the issuer to settle the equity instruments or the underlying shares by paying cash or other assets, or must or may require an unconditional obligation that must be settled by issuing a variable number of shares. If equity instruments do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the equity instruments do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the equity instruments are indexed to its common stock and whether the equity instruments are classified as equity under ASC 815-40 or other applicable GAAP guidance. After all relevant assessments are made, the Company concludes whether the equity instruments are classified as liability or eq |
MERGER AND SELF-MANAGEMENT TRAN
MERGER AND SELF-MANAGEMENT TRANSACTION | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
MERGER AND SELF-MANAGEMENT TRANSACTION | MERGER AND SELF-MANAGEMENT TRANSACTION REIT I Merger Transaction On December 31, 2019, pursuant to the Merger Agreement, the Company completed the acquisition of REIT I. The Company's stockholders approved the Merger contemplated by the Merger Agreement at the Annual Meeting of Stockholders held on December 17, 2019 (the “Annual Meeting”). The shareholders of REIT I approved the Merger contemplated by the Merger Agreement at REIT I’s Special Meeting of Shareholders, also held on December 17, 2019. On December 31, 2019, REIT I merged with and into Merger Sub, which survived the Merger as the Company's direct, wholly-owned subsidiary. At such time, the separate existence of REIT I ceased. The acquisition primarily included 20 single-tenant commercial properties and related tenant receivables, mortgage notes payable and accounts payable, in exchange for Merger consideration for each of REIT I's common shares (the “REIT I Common Shares”) issued and outstanding immediately prior to the Merger, other than the REIT I Common Shares owned by the Company, which were automatically canceled and retired, and converted into the right to receive one share of the Company's Class C common stock, with any fractional REIT I Common Shares converted into a corresponding number of fractional shares of the Company’s Class C common stock. As a result, the Company issued 8,042,221.6 shares of its Class C common stock to former shareholders of REIT I. As further discussed in Note 5 , prior to the merger of REIT I with and into Merger Sub on December 31, 2019, the Company had an approximate 4.8% ownership interest in REIT I. Accounting Treatment While the Merger transaction was treated legally as a merger of the two entities, for accounting purposes, the transaction was treated as an asset acquisition under GAAP because REIT I did not possess the capability to operate its properties to generate revenue since it had no workforce. It was dependent on its advisor and did not possess the processes to perform asset management, property purchase and sale transactions or the resulting revenue generation on a stand-alone basis. The real estate assets acquired are similar in nature to each other and represent substantially all of the fair value of the assets acquired. While there are some dissimilarities including the nature of the use (retail, industrial and office), each of the properties is subject to a multi-year lease with a single creditworthy tenant and the properties have similar risk profiles, generally including a mortgage secured only by the property. In addition, 17 of the 20 properties (approximately 93% by value as of the transaction date) are located in California and therefore subject to California law and all properties are managed without on-site offices. Merger Sub, not REIT I, was the surviving entity, there was no entity level debt and there was no contingent consideration paid, as would be typical in the purchase of an operating business. The assets and liabilities acquired in the Merger were recorded at fair value as determined as of December 31, 2019, including normal adjustments for the values of lease-in-place and above/below market leases and premium/discount on outstanding mortgage notes payable. The Company incurred approximately $3,044,000 of acquisition-related transaction costs during 2019. These acquisition-related transaction costs were capitalized to the acquired real estate assets. As the transaction closed on the final day of the year, the Merger did not have an impact on the Company's consolidated statement of operations for the year ended December 31, 2019 (see Unaudited Pro Forma Financial Information Reflecting both the Merger and Self-Management Transaction below). Purchase Price Allocation The Company accounted for the Merger in accordance with the accounting standards codification guidance for business combinations, whereby the total purchase price was allocated to the acquired net tangible and intangible assets based on their estimated fair values as of the closing date. As of December 31, 2019, the Company had substantially completed its process for measuring the fair values of the assets acquired and liabilities assumed based on information available as of the closing date. The following table summarizes the allocation of the purchase price to the fair values assigned to the REIT I assets acquired and liabilities assumed as of December 31, 2019, the Merger closing date. These fair values were based on internal Company and independent external third-party valuations: Fair Values Assigned December 31, Assets: Real estate property, including above/below lease intangibles $ 151,099,097 Cash and cash equivalents 1,612,331 Tenant receivable 310,169 Prepaid expenses and other assets 51,924 Liabilities: Mortgage notes payable, net (62,985,425 ) Accounts payable and other liabilities (2,243,156 ) Net 87,844,940 Less: Cancellation of investment in REIT I (Note 5) (3,091,489 ) Capitalized transaction-related costs (3,044,480 ) Net Assets Acquired $ 81,708,971 Self-Management Transaction On September 19, 2019, the Company, the Operating Partnership, BrixInvest and Daisho entered into the Contribution Agreement pursuant to which the Company agreed to acquire substantially all of the net assets of BrixInvest in exchange for 657,949.5 Class M OP Units in the Operating Partnership and assumed certain liabilities. On December 31, 2019, the Self-Management Transaction was completed. Prior to the closing of the Self-Management Transaction: (i) substantially all of BrixInvest’s assets and liabilities were contributed to Daisho’s wholly-owned subsidiary, modiv, LLC, a Delaware limited liability company ("modiv, LLC"); and (ii) BrixInvest spun off Daisho to the BrixInvest members (the “Spin Off”). Pursuant to the Self-Management Transaction, Daisho contributed to the Operating Partnership all of the membership interests in modiv, LLC in exchange for the Class M OP Units. As a result of the Self-Management Transaction, BrixInvest, through its subsidiary, Daisho, transferred all of its operating assets, including but not limited to: (i) all personal property used in or necessary for the conduct of BrixInvest’s business; (ii) intellectual property, goodwill, licenses and sublicenses granted and obtained with respect thereto and certain domain names; (iii) all continuing employees and (iv) certain other assets and liabilities, to modiv, LLC and distributed 100% of the ownership interests in Daisho to the members of BrixInvest in the Spin Off. BrixInvest had been engaged in the business of serving as the sponsor platform supporting the operations of the Company, REIT I and, prior to October 28, 2019, BRIX REIT, Inc. (“BRIX REIT”), including serving, directly or indirectly, as advisor and asset manager to the Company, REIT I and, until October 28, 2019, BRIX REIT. As a result of the Merger and the Self-Management Transaction, effective December 31, 2019, the Company, its Former Advisor and BrixInvest, which wholly owned the Company's Former Advisor, mutually agreed to terminate the Advisory Agreement, and the Company became self-managed. Accordingly, disclosures with regard to the Advisory Agreement elsewhere in this Quarterly Report on Form 10-Q pertain only to transactions with the Company's Former Advisor through December 31, 2019. Amendments to Operating Partnership Agreement On December 31, 2019, the Company, the Operating Partnership and NNN LP entered into the Second Amended and Restated Agreement of Limited Partnership (the “Amended OP Agreement”), which amended the Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated August 11, 2017. The amendments included amending the name of the Operating Partnership from “Rich Uncles NNN Operating Partnership, LP” to “RW Holdings NNN REIT Operating Partnership, LP” and providing the terms of the Class M OP Units and Class P OP Units issued in connection with the Self-Management Transaction and further described below. The Class M OP Units were issued to Daisho on December 31, 2019 in connection with the Self-Management Transaction and are non-voting, non-dividend accruing, and are not able to be converted or exchanged prior to the one-year anniversary of the completion of the Self-Management Transaction. Investors holding units in BrixInvest received Daisho units in a ratio of 1 :1 for an aggregate of 657,949.5 Daisho units. During 2020, Daisho distributed the Class M OP Units to its members and the Class M OP Units will become convertible into units of Class C limited partnership interest in the Operating Partnership (“Class C OP Units”) at a conversion ratio of five Class C OP Units for each one Class M OP Unit, subject to a reduction in the conversion ratio (which reduction will vary depending upon the amount of time held) if the exchange occurs prior to the four-year anniversary of the completion of the Self-Management Transaction. In the event that the Class M OP Units are converted into Class C OP Units prior to December 31, 2023, such Class M OP Units shall be exchanged at the rate indicated below: Date of Exchange Early Conversion Rate From December 31, 2020 to December 30, 2021 50% of the Class M conversion ratio From December 31, 2021 to December 30, 2022 60% of the Class M conversion ratio From December 31, 2022 to December 30, 2023 70% of the Class M conversion ratio The Class M OP Units are eligible for an increase in the conversion ratio (conversion ratio enhancement) if the Company achieves both of the targets for assets under management (“AUM”) and adjusted funds from operations (“AFFO”) in a given year as set forth below: Hurdles AUM AFFO Per Share Class M ($ in billions) ($) Conversion Ratio Initial Conversion Ratio 1:5.00 Fiscal Year 2021 $ 0.860 $ 0.59 1:5.75 Fiscal Year 2022 $ 1.175 $ 0.65 1:7.50 Fiscal Year 2023 $ 1.551 $ 0.70 1:9.00 Based on the current conversion ratio of five Class C OP Units for each one Class M OP Unit, if a Class M OP Unit is converted on or after December 31, 2023, and based on the current NAV per share of $7.00 , a Class M OP Unit would be valued at $35.00 . The current NAV does not impact the early conversion rate or the future conversion enhancement ratio of the Class M and Class P OP Units. The Company also issued a portion of the Class P OP Units described below in connection with the Self-Management Transaction. The Class P OP Units are intended to be treated as “profits interests” in the Operating Partnership, which are non-voting, non-dividend accruing, and are not able to be transferred or exchanged prior to the earlier of (1) March 31, 2024, (2) a change of control (as defined in the Amended OP Agreement), or (3) the date of the recipient's involuntary termination (as defined in the relevant award agreement for the Class P OP Units) (collectively, the “Lockup Period”). Following the expiration of the Lockup Period, the Class P OP Units are convertible into Class C OP Units at a conversion ratio of five Class C OP Units for each one Class P OP Unit; provided, however, that the foregoing conversion ratio shall be subject to increase on generally the same terms and conditions as the Class M OP Units, as set forth above. The Company issued a total of 56,029 Class P OP Units to Messrs. Halfacre and Pacini, including 26,318 Class P OP Units issued in exchange for Messrs. Halfacre's and Pacini's agreements to forfeit a similar number of restricted units in BrixInvest in connection with the Self-Management Transaction. The remaining 29,711 Class P OP Units were issued to these executives as a portion of their incentive compensation for 2020 in connection with their entry into restrictive covenant agreements. The 29,711 Class P OP Units were valued based on the estimated NAV per share of $10.16 when issued on December 31, 2019 and the expected minimum conversion ratio of five Class C OP Units for each one Class P OP Unit, which resulted in a valuation of $1,509,319 . This amount is amortized on a straight-line basis over 51 months through March 31, 2024, the expected vesting date of the units, as a periodic charge to stock compensation expense. During the three and six months ended June 30, 2020 , the Company amortized and charged $88,784 and $177,567 , respectively, to stock compensation expense. The unamortized value of these units was $1,331,752 as of June 30, 2020 . Under the Amended OP Agreement, once the Class M OP Units or Class P OP Units are converted into Class C OP Units, they will be exchangeable for the Company’s shares of Class C common stock on a 1- for-1 basis, or for cash at the sole and absolute discretion of the Company. The Company recorded the ownership interest of the Class M OP Units and Class P OP Units as noncontrolling interests in the Operating Partnership representing a combined total of approximately 13% of equity in the Operating Partnership. Registration Rights Agreement On December 31, 2019, the Company, the Operating Partnership and Daisho entered into a Registration Rights Agreement pursuant to which Daisho (or any successor holder) has the right, after one year from the date of the Self-Management Transaction, to request that the Company register for resale, under the Securities Act, shares of the Company's Class C common stock issued or issuable to such holder in exchange for the Class C OP Units as described above. Accounting Treatment In accordance with GAAP, the Company accounted for the Self-Management Transaction as an acquisition of a business in accordance with the accounting standards codification guidance for business combinations because the parties to the transaction were not under common control and the acquisition was for an integrated set of activities and assets, consisting of inputs (executives and staff with knowledge and experience) and processes (operating a real estate investment trust and online investor website platform) that contribute to the creation of outputs (real estate transactions, asset management and generation of investors). Therefore, the total consideration transferred was allocated to the acquired net tangible and intangible assets based on their estimated fair values at December 31, 2019. The fair value measurement of the consideration transferred was based on significant inputs not observable in the market and thus represent a Level 3 measurement as discussed in Note 2 . The key assumptions used in estimating the fair value of the Class M OP Units and the Class P OP Units included projections for (i) property acquisitions and changes in property values, (ii) new investors, and (iii) follow on investments by existing stockholders. The consideration transferred in the Self-Management Transaction was determined to have a fair value of $50,603,000 based on a probability weighted analysis of achieving the requisite AUM and AFFO hurdles. The Class M OP Units and the 26,318 Class P OP Units issued in connection with the Self-Management Transaction were treated as permanent equity of the Company for accounting purposes because the Class M OP Units and the Class P OP Units are not mandatorily redeemable by the Company. In addition, there is no unconditional obligation to issue a variable number of shares; the Class M OP Units and the Class P OP Units are issued in the form of shares and as such would not represent a financial instrument other than an outstanding share that embodies a conditional obligation, and they do not possess the characteristics of freestanding derivatives. Moreover, they are not redeemable for cash or other assets at the option of the holder or upon the occurrence of an event that is not solely within the control of the Company. The Class M OP Units and the Class P OP Units are a single financial instrument, including the conversion ratio enhancement, which cannot be detached and is not separately exercisable. As of December 31, 2019, the Company had substantially completed its process for measuring the fair values of the assets acquired and liabilities assumed based on information available as of the closing date. The Company incurred $1,468,913 in costs in connection with the Self-Management Transaction, which were included in the consolidated statement of operations for the year ended December 31, 2019 and an additional $8,460 and $201,920 in post-closing costs during the three and six months ended June 30, 2020 , respectively. Purchase Price Allocation The following table summarizes the allocation of the purchase price to the fair values assigned to the BrixInvest assets acquired and liabilities assumed as of December 31, 2019, the closing date of the Self-Management Transaction. These fair values were based on internal Company and independent external third-party valuations: Fair Values Assigned December 31, 2019 Assets: Cash and cash equivalents $ (204,176 ) Prepaid expenses and other assets (305,212 ) Operating lease right-of-use asset (2,386,877 ) Intangible assets (7,700,000 ) Liabilities: Short-term notes payable 4,800,000 Due to affiliates 630,820 Bank line of credit 800,000 Accounts payable and other liabilities 2,070,968 Operating lease liability 2,386,877 Net liabilities assumed 92,400 Less: Cancellation of investment in the Company (107,400 ) Add: Contribution of Class M OP Units and Class P OP Units 50,603,000 Goodwill $ 50,588,000 Prior to the closing of the Self-Management Transaction, BrixInvest held 10,740 shares of Class C common stock in the Company, purchased at $10.00 per share. These shares were canceled in connection with the Self-Management Transaction. Goodwill The goodwill recognized was primarily attributable to the Company's ability to be self-managed, the value of the workforce which includes growth opportunities, from both existing and new investment, income streams and the ability to offer new products, the investor platform acquired from BrixInvest and its expected synergies resulting from the Self-Management Transaction and the Merger. Key areas of expected cost synergies include increased purchasing power for acquiring properties, lower financing costs and administrative efficiencies. Goodwill is expected to be mostly non-deductible for tax purposes. As permitted under ASC 805 for business combinations, the Company recorded goodwill because the purchase price of the Self-Management Transaction exceeded the estimated fair value of net identified tangible and intangible assets acquired. The current COVID-19 pandemic in the United States and globally, and the magnitude and uncertain duration of the economic impacts have resulted in challenges in attracting investor equity during this period of economic weakness and volatility. The disruption in the Company's Offerings is expected to have a protracted impact on capital raising, and the recessionary pressures on the economy have resulted in real estate market uncertainty and an approximate 14% decrease in the estimated fair value of the Company’s real estate properties as of April 30, 2020 as compared with the estimated fair value of the Company’s real estate properties as of December 31, 2019 (see discussion of the Company's updated estimated NAV per share approved on May 20, 2020 above in Note 1 ). Given these circumstances, the Company has revised its capital raise projections, its projections of new investment and other factors contributing to the Company's analysis of estimated fair value of its consolidated business operations. Since the Company is a single reporting unit, the Company performed a quantitative analysis to compare the estimated fair value of the Company’s net tangible and intangible assets, including the estimated fair value of the business acquired from its Former Sponsor, to the carrying value of its net tangible and intangible assets as of March 31, 2020. Since the estimated fair value of the Company’s net tangible and intangible assets was less than the carrying amount of its net tangible and intangible assets, the Company recorded a goodwill impairment charge of $33,267,143 for the quarter ended March 31, 2020 which is reflected in the Company’s net loss for the six months ended June 30, 2020 . The net carrying amount of goodwill as of June 30, 2020 and December 31, 2019 is as follows: June 30, December 31, Goodwill $ 17,320,857 $ 50,588,000 Intangible Assets Acquired The allocation of the purchase price to the net assets acquired resulted in the recognition of $7,700,000 of intangible assets as of the closing date. The fair values of the acquired investor lists and developed technology assets, primarily the investor online platform, were determined using the adjusted cost approach, which approximates fair value. The useful lives of the intangible assets were determined based on the period of expected cash flows used to measure the fair value of the intangible assets adjusted as appropriate for entity-specific factors including legal, regulatory, contractual, competitive, economic, and/or other factors that may limit the useful life of the respective intangible asset. Intangible assets, net as of June 30, 2020 and December 31, 2019 and related useful lives are as follows: Intangible Assets Weighted-Average Useful Life June 30, December 31, Investor list, net 5.0 years $ 3,494,740 $ 4,800,000 Web services technology, domains and licenses 3.0 years 3,433,041 2,900,000 6,927,781 7,700,000 Accumulated amortization (925,989 ) — Net $ 6,001,792 $ 7,700,000 During the three and six months ended June 30, 2020 , the Company acquired additional web services technology intangible assets of $209,351 and $533,041 , respectively. Amortization expense for the three and six months ended June 30, 2020 amounted to $438,770 and $925,989 , respectively. As discussed previously, the COVID-19 pandemic has caused significant disruptions in the economy and uncertainties in the investment markets. Based on the impacts on the Company's investors and the economy, the Company evaluated the fair value of intangibles to determine if they exceeded the respective carrying values and determined that a portion of the investor list would no longer be viable and, therefore, an impairment charge of $1,305,260 was recorded for the quarter ended March 31, 2020 which is reflected in the Company’s net loss for the six months ended June 30, 2020 . The estimated amortization expense for the succeeding fiscal years is as follows: July to December 2020, $921,648 ; 2021, $1,843,295 ; 2022, $1,843,295 ; 2023, $756,434 ; and 2024, $637,120 . |
REAL ESTATE INVESTMENTS, NET
REAL ESTATE INVESTMENTS, NET | 6 Months Ended |
Jun. 30, 2020 | |
Real Estate [Abstract] | |
REAL ESTATE INVESTMENTS, NET | REAL ESTATE INVESTMENTS, NET As of June 30, 2020 , the Company’s real estate investment portfolio consisted of (i) 41 operating properties (including 17 operating properties acquired in connection with the Merger on December 31, 2019 ) located in 14 states including: 17 retail properties, 16 office properties and eight industrial properties, (ii) one parcel of land, which currently serves as an easement to one of the Company’s office properties and (iii) a 72.7% undivided TIC Interest in an office property in Santa Clara, CA, as discussed in Note 5 . The following table provides summary information regarding the Company’s real estate portfolio as of June 30, 2020 : 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 $ 1,269,349 $ (1,988,113 ) $ 9,137,083 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (145,884 ) 1,252,230 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (186,700 ) 1,497,729 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (140,168 ) 1,166,422 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (134,389 ) 1,151,646 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (137,925 ) 1,075,804 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (134,008 ) 1,054,486 Dana (1) Cedar Park, TX 12/27/2016 Industrial 6,802,876 531,439 (1,688,477 ) 5,645,838 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (2,577,470 ) 11,146,720 exp US Services Maitland, FL 3/27/2017 Office 6,056,668 388,248 (721,294 ) 5,723,622 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (1,080,657 ) 12,097,631 Wyndham Summerlin, NV 6/22/2017 Office 10,406,483 669,232 (992,977 ) 10,082,738 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (902,677 ) 7,727,421 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,747 281,442 (710,174 ) 6,834,015 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (514,464 ) 5,909,634 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,200 1,013,948 (935,104 ) 11,919,044 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (1,764,098 ) 25,593,802 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (2,853,917 ) 14,265,263 Cummins Nashville, TN 4/4/2018 Office 14,465,491 1,536,998 (1,754,657 ) 14,247,832 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness (1) Las Vegas, NV 7/27/2018 Retail 6,848,966 176,275 (825,644 ) 6,199,597 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (532,685 ) 7,157,239 Bon Secours Richmond, VA 10/31/2018 Office 10,388,751 800,356 (751,926 ) 10,437,181 Costco Issaquah, WA 12/20/2018 Office 27,330,797 2,765,136 (2,002,991 ) 28,092,942 Taylor Fresh Foods Yuma, AZ 10/24/2019 Industrial 34,194,370 2,894,017 (936,185 ) 36,152,202 Chevron Gas Station San Jose, CA 12/31/2019 Retail 4,054,759 145,577 (30,317 ) 4,170,019 Levins Sacramento, CA 12/31/2019 Industrial 4,429,390 221,927 (110,304 ) 4,541,013 Chevron Gas Station Roseville, CA 12/31/2019 Retail 3,648,571 136,415 (59,513 ) 3,725,473 Dollar General Bakersfield, CA 12/31/2019 Retail 4,899,714 261,630 (73,566 ) 5,087,778 PMI Preclinical San Carlos, CA 12/31/2019 Office 9,672,174 408,225 (102,161 ) 9,978,238 EcoThrift Sacramento, CA 12/31/2019 Retail 5,550,226 273,846 (148,740 ) 5,675,332 GSA (MSHA) Vacaville, CA 12/31/2019 Office 3,112,076 243,307 (69,257 ) 3,286,126 PreK Education San Antonio, TX 12/31/2019 Retail 12,447,287 447,927 (299,714 ) 12,595,500 Dollar Tree Morrow, GA 12/31/2019 Retail 1,320,367 73,298 (35,455 ) 1,358,210 Solar Turbines San Diego, CA 12/31/2019 Office 7,133,241 284,026 (602,129 ) 6,815,138 Wood Group San Diego, CA 12/31/2019 Office 9,731,220 392,955 — 10,124,175 ITW Rippey El Dorado, CA 12/31/2019 Industrial 7,071,143 304,387 — 7,375,530 Dollar General Big Spring, TX 12/31/2019 Retail 1,281,683 76,351 (25,484 ) 1,332,550 Gap Rocklin, CA 12/31/2019 Office 8,378,276 360,377 (239,653 ) 8,499,000 L-3 Communications San Diego, CA 12/31/2019 Office 11,631,857 454,035 (235,412 ) 11,850,480 Sutter Health Rancho Cordova, CA 12/31/2019 Office 29,555,055 1,616,610 (540,174 ) 30,631,491 Walgreens Santa Maria, CA 12/31/2019 Retail 5,223,442 335,945 (66,480 ) 5,492,907 $ 371,036,604 $ 24,450,830 $ (27,050,943 ) $ 368,436,491 (1) See impairment charges discussion below. Impairment Charges During late March 2020, the Company learned that there would be a substantial impact on the commercial real estate market and specifically on fitness centers due to the COVID-19 pandemic and the requirement of an indefinite and potentially extended period of store closures. We expected that 24 Hour Fitness USA, Inc. (“24 Hour Fitness”) would have significant difficulty in making rent payments. On March 31, 2020, the Company received written notice that due to circumstances beyond their control, including the response to the COVID-19 pandemic and directives and mandates of various governmental authorities, the Las Vegas, NV 24 Hour Fitness store leased from the Company had been closed on or about March 17, 2020 and remained closed as of the date of the tenant's notice. The tenant's notice stated that it would not make the April 2020 rent payment. The Company's special purpose subsidiary, which owns the property, immediately initiated negotiations with the tenant; however, no further rent payments were received and on June 15, 2020, the Company received written notice that the lease was formally rejected in connection with 24 Hour Fitness' Chapter 11 bankruptcy proceeding and the premises were surrendered to the Company's subsidiary. On April 1, 2020, the Company’s special purpose subsidiary initiated negotiations with the lender on the property regarding the special purpose subsidiary's request for a deferral of mortgage payments until the tenant resumed paying rent. The lender on this property did not agree to provide any substantial mortgage relief to the Company's special purpose subsidiary, but rather agreed to only temporarily reduce its $32,000 monthly mortgage payment by $8,000 for the next four monthly payments. If the Company's special purpose subsidiary cannot find a replacement tenant, then the Company's special purpose subsidiary may allow the lender to foreclose on the property and take possession. As such, the Company concluded that it was necessary to record an impairment charge to reduce the net book value of the property to its estimated fair value. In addition, the Company determined that the effects of the COVID-19 pandemic on the overall economy and commercial real estate market would have negative impacts on the Company's ability to re-lease two vacant properties, the property formerly leased to Dinan Cars located in Morgan Hill, CA through January 31, 2020 and the property leased to Dana, but currently unoccupied, located in Cedar Park, TX. Based on an evaluation of the value of these two properties, the Company determined that impairment charges were required to reflect the reduction in value due to the uncertainty regarding leasing or sale prospects. During the three months ended March 31, 2020, the Company recorded impairment charges aggregating $9,157,068 based on the estimated fair value of the real estate properties, as discussed above, and during the three months ended June 30, 2020, the Company recorded an additional impairment charge of $349,457 related to its property located in Lake Elsinore, CA and leased to Rite Aid through February 29, 2028. The Company determined that an impairment charge of $349,457 was required, which represents the excess of the property's carrying value over the property's sale price less estimated selling costs (see Note 11. Subsequent Events for the sale of the property). The aggregate impairment charges of $9,157,068 represented approximately 2.2% of the Company’s total investments in real estate property before impairments as of March 31, 2020 and the impairment charge of $349,457 represented approximately 0.1% of the Company’s total investments in real estate property before impairments as of June 30, 2020. The details of the Company's real estate impairment charges for the three and six months ended June 30, 2020 are as follows: Property Location Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Rite Aid Lake Elsinore, CA $ 349,457 $ 349,457 Dana Cedar Park, TX — 2,184,395 24 Hour Fitness Las Vegas, NV — 5,664,517 Dinan Cars Morgan Hill, CA — 1,308,156 $ 349,457 $ 9,506,525 Acquisitions or Dispositions The Company did not acquire or dispose of any real estate property during the six months ended June 30, 2020 and 2019 . See Note 11. Subsequent Events for a description of recently completed and pending asset dispositions. Asset Concentration The Company does not have any real estate property with a net book value that is greater than 10% of its total assets as of June 30, 2020 and December 31, 2019 . Revenue Concentration No tenants represented the source of 10% of total revenues during the three or six months ended June 30, 2020 . The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three and six months ended June 30, 2019 was as follows. Three Months Ended Property and Location Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 697,522 11.8 % AvAir, Chandler, AZ $ 666,774 11.3 % Six Months Ended Property and Location Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 1,376,025 11.7 % AvAir, Chandler, AZ $ 1,333,549 11.3 % Operating Leases The Company’s real estate properties are primarily leased to tenants under 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. During the first four months of 2020, the Company paid an aggregate of $990,000 in lease incentives to cancel certain termination options related to two leases with Walgreens for its Santa Maria, California and Stockbridge, Georgia properties, resulting in extension of the leases for approximately seven and six years , respectively. The Stockbridge property is held for sale as of June 30, 2020 as further discussed below. As of June 30, 2020 , the future minimum contractual rent payments due to the Company under the Company’s non-cancellable operating leases, excluding any rents from 24 Hour Fitness due to its rejection of the lease in connection with its bankruptcy proceeding and excluding rents due related to real estate investments held for sale, are as follows: July through December 2020 $ 13,567,979 2021 25,932,970 2022 23,666,227 2023 20,401,395 2024 19,832,230 2025 16,029,926 Thereafter 49,126,171 $ 168,556,898 Intangibles As of June 30, 2020 , the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 24,450,830 $ 1,194,720 $ (15,552,554 ) Accumulated amortization (7,764,826 ) (248,773 ) 1,894,359 Net amount $ 16,686,004 $ 945,947 $ (13,658,195 ) The intangible assets acquired in connection with these acquisitions have a weighted average amortization period of approximately 9.3 years as of June 30, 2020 . As of June 30, 2020 , the amortization of intangible assets for the six months ending December 31, 2020 and for each year of the next five years and thereafter is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles July through December 2020 $ 2,213,836 $ 70,890 $ (766,689 ) 2021 3,692,924 141,779 (1,525,877 ) 2022 2,709,181 141,780 (1,280,240 ) 2023 1,832,039 139,131 (984,317 ) 2024 1,715,028 134,500 (980,897 ) 2025 1,316,375 122,383 (980,897 ) Thereafter 3,206,621 195,484 (7,139,278 ) $ 16,686,004 $ 945,947 $ (13,658,195 ) Weighted-average remaining amortization period 7.0 years 7.5 years 12.3 years Real Estate Investments Held For Sale As a result of the COVID-19 pandemic discussed in Note 1 , the Company may not generate sufficient cash flows from operations to pay distributions to stockholders at expected levels, or at all, or service its debt obligations. To generate funds for distributions and service debt obligations, the Company deemed it necessary to sell certain of its real estate investment properties. As of June 30, 2020, the Company has identified four real estate investment properties as held for sale. The Company's four properties consisting of three retail properties (the property leased to Island Pacific Supermarket through May 30, 2033 located in Elk Grove, CA, the property leased to Rite Aid through February 29, 2028 located in Lake Elsinore, CA and the property leased to Walgreens through February 28, 2031 located in Stockbridge, GA) and one industrial property previously leased to Dinan Cars located in Morgan Hill, CA are classified as real estate investments held for sale, net in the Company's condensed consolidated balance sheet as of June 30, 2020 . The following table summarizes the major components of assets and liabilities related to real estate investments held for sale as of June 30, 2020 : June 30, 2020 Assets related to real estate investments held for sale: Land, buildings and improvements $ 18,172,435 Tenant origination and absorption costs 1,304,620 Accumulated depreciation and amortization (1,550,648 ) Real estate investments held for sale, net 17,926,407 Other assets, net 725,990 Total assets related to real estate investments held for sale: $ 18,652,397 Liabilities related to real estate investments held for sale: Mortgage notes payable, net $ 9,549,467 Other liabilities, net 196,938 Total liabilities related to real estate investments held for sale: $ 9,746,405 The following table summarizes the major components of rental income, expenses and impairment related to real estate investments held for sale as of June 30, 2020 , which were included in continuing operations for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Total revenues $ 312,060 $ 98,800 $ 1,480,909 $ 192,452 Expenses: Interest expense 83,658 25,182 221,022 50,472 Depreciation and amortization 185,368 81,990 375,575 163,979 Other expenses 101,131 34,029 221,811 65,689 Impairment of real estate properties 349,457 — 1,657,613 — Total expenses 719,614 141,201 2,476,021 280,140 Net loss $ (407,554 ) $ (42,401 ) $ (995,112 ) $ (87,688 ) As discussed in Note 3 , the properties located in Elk Grove, Lake Elsinore and Morgan Hill, CA were acquired in the Merger on December 31, 2019 and therefore did not contribute to the Company's rental income or net loss for the three and six months ended June 30, 2019 . |
INVESTMENT IN UNCONSOLIDATED EN
INVESTMENT IN UNCONSOLIDATED ENTITY | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENT IN UNCONSOLIDATED ENTITY | INVESTMENT IN UNCONSOLIDATED ENTITY The Company’s investment in unconsolidated entity as of June 30, 2020 and December 31, 2019 is as follows: June 30, December 31, The TIC Interest $ 10,200,810 $ 10,388,588 As discussed in Note 3 , REIT I merged with and into the Company on December 31, 2019. The Company’s income (loss) from investments in unconsolidated entities for the three and six months ended June 30, 2020 and 2019 , is as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 The TIC Interest $ 125,658 $ 71,703 $ 146,411 $ 152,063 REIT I — (15,748 ) — (22,075 ) $ 125,658 $ 55,955 $ 146,411 $ 129,988 TIC Interest During 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% interest) and Hagg Lane III, LLC (an approximate 3.9% interest). The manager of Hagg Lane II, LLC and Hagg Lane III, LLC became a member of the Company's board of directors in December 2019. 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 June 30, 2020 and 2019 , the Company received $169,158 and $109,719 in cash distributions, respectively, and during the six months ended June 30, 2020 and 2019 , the Company received $334,189 and $273,618 in cash distributions, respectively. The following is summarized financial information for the Santa Clara property as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 : June 30, December 31, Assets: Real estate investments, net $ 30,406,177 $ 30,858,240 Cash and cash equivalents 254,083 275,760 Other assets 237,428 228,770 Total assets $ 30,897,688 $ 31,362,770 Liabilities: Mortgage notes payable $ 13,619,257 $ 13,746,635 Below-market lease, net 2,880,167 2,953,360 Other liabilities 62,333 68,587 Total liabilities 16,561,757 16,768,582 Total equity 14,335,931 14,594,188 Total liabilities and equity $ 30,897,688 $ 31,362,770 Three Months Ended Six Months Ended 2020 2019 2020 2019 Total revenues $ 751,653 $ 693,571 $ 1,349,573 $ 1,359,992 Expenses: Interest expense 140,906 143,367 282,609 285,886 Depreciation and amortization 250,680 248,136 499,898 496,272 Other expenses 187,246 203,452 365,703 368,697 Total expenses 578,832 594,955 1,148,210 1,150,855 Net income $ 172,821 $ 98,616 $ 201,363 $ 209,137 REIT I Prior to the Merger on December 31, 2019, the Company had an approximate 4.8% ownership interest in REIT I. The Company recorded its share of loss of REIT I based on REIT I’s results of operations for the three and six months ended June 30, 2019 . During the three and six months ended June 30, 2019 , the Company received $75,746 and $145,112 , respectively, in cash distributions related to its interest in REIT I. The following is REIT I's summarized results of operations for the three and six months ended June 30, 2019 : Three Months Ended Six Months Ended Total revenues $ 3,277,710 $ 6,566,354 Expenses: Depreciation and amortization 1,444,354 2,886,414 Interest expense 982,223 1,845,396 Other expenses 1,175,029 2,403,892 Total expenses 3,601,606 7,135,702 Other income: Other income (1) — 113,773 Net loss $ (323,896 ) $ (455,575 ) (1) The gain on disposal of real estate investment property of $113,773 during the six months ended June 30, 2019 was due to the higher mortgage loan balance and related interest payable for the Antioch, California Chase property compared to its net book value when it was relinquished in a foreclosure sale on March 13, 2019. |
CONDENSED CONSOLIDATED BALANC_3
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Balance Sheet Disclsoure [Abstract] | |
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS | CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS Tenant Receivables, Net Tenant receivables consisted of the following: June 30, December 31, Straight-line rent $ 4,160,873 $ 3,541,238 Tenant rent 301,040 420,959 Tenant reimbursements 1,746,212 1,854,883 Tenant other 636,909 407,684 Total $ 6,845,034 $ 6,224,764 Accounts Payable, Accrued and Other Liabilities Accounts payable, accrued and other liabilities were comprised of the following: June 30, December 31, Accounts payable $ 1,839,013 $ 660,111 Accrued expenses (a) 2,375,452 5,773,214 Accrued distributions 697,350 962,615 Accrued interest payable 736,582 1,690,168 Unearned rent 1,940,095 1,963,896 Reserve for loan guarantee (b) 3,125,037 — Lease incentive obligation 5,157 505,157 Total $ 10,718,686 $ 11,555,161 (a) Includes accrued Merger expenses of $486,354 and $1,570,622 as of June 30, 2020 and December 31, 2019 , respectively. (b) Represents the estimated liability for a loan guarantee related to the secured mortgage for the Las Vegas, Nevada 24 Hour Fitness property, as a result of the evaluation of the impact of the COVID-19 pandemic on the tenant's business and the risk that the lender could foreclose on the property. See Note 4 for additional information. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Mortgage Notes Payable, Net As of June 30, 2020 and December 31, 2019 , the Company’s mortgage notes payable consisted of the following: Collateral 2020 Principal Amount 2019 Principal Amount Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreens property (10)(11) $ 4,687,414 $ 6,853,442 3.95% 3.95% 7/1/2021 Six Dollar General properties 3,782,573 3,819,264 4.69% 4.69% 4/1/2022 Dana property 4,509,546 4,551,250 4.56% 4.56% 4/1/2023 Northrop Grumman property 5,593,555 5,666,866 4.40% 4.40% 3/2/2021 exp US Services property 3,353,987 3,385,353 (3) 4.25% 11/17/2024 Harley property 6,686,362 6,748,029 4.25% 4.25% 9/1/2024 Wyndham property (2) 5,662,800 5,716,200 One-month LIBOR+2.05% 4.34% 6/5/2027 Williams Sonoma property (2) 4,484,400 4,530,600 One-month LIBOR+2.05% 4.34% 6/5/2022 Omnicare property 4,233,547 4,273,552 4.36% 4.36% 5/1/2026 EMCOR property 2,837,293 2,862,484 4.35% 4.35% 12/1/2024 Husqvarna property 6,379,182 6,379,182 (4) 4.60% 2/20/2028 AvAir property (10) 14,539,619 14,575,000 (5) 4.84% 3/27/2028 3M property 8,229,000 8,290,000 One-month LIBOR+2.25% 5.09% 3/29/2023 Cummins property 8,396,400 8,458,600 One-month LIBOR+2.25% 5.16% 4/4/2023 24 Hour Fitness property (6) 6,250,074 6,283,898 One-month LIBOR+4.30% 4.64% 4/1/2049 Texas Health property 4,400,000 4,400,000 4.00% 4.00% 12/5/2024 Bon Secours property 5,216,133 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 Taylor Fresh Foods 12,350,000 12,350,000 3.85% 3.85% 11/1/2029 Levins property (7) 2,056,288 2,079,793 One-month LIBOR + 1.93% 3.74% 1/5/2021 Island Pacific Supermarket property (7)(11) — 1,891,225 One-month LIBOR + 1.93% 3.74% 5/30/2033 Dollar General Bakersfield property (7) 2,296,868 2,324,338 One-month LIBOR + 1.48% 3.38% 3/5/2021 Rite Aid property (7)(11) — 3,659,338 One-month LIBOR + 1.50% 3.25% 5/5/2021 PMI Preclinical property (7) 4,069,936 4,118,613 One-month LIBOR + 1.48% 3.38% 3/5/2021 EcoThrift property (7) 2,606,620 2,639,237 One-month LIBOR + 1.21% 2.96% 7/5/2021 GSA (MSHA) property (7) 1,774,395 1,796,361 One-month LIBOR + 1.25% 3.13% 8/5/2021 PreK San Antonio property (7) 5,089,648 5,140,343 4.25% 4.25% 12/1/2021 Dinan Cars property (7)(8)(11) — 2,710,834 2.76% 2.76% 1/5/2022 Solar Turbines, Amec Foster, ITW Rippey properties (7) 9,325,631 9,434,692 3.35% 3.35% 11/1/2026 Dollar General Big Spring property (7) 605,288 611,161 4.50% 4.50% 4/1/2022 Gap property (7) 3,607,190 3,643,166 4.15% 4.15% 8/1/2023 L-3 Communications property (7) 5,235,972 5,284,884 4.69% 4.69% 4/1/2022 Sutter Health property (7) 14,015,229 14,161,776 4.50% 4.50% 3/9/2024 Walgreens property (7)(10) 3,000,000 3,000,000 One-month LIBOR+5.00% 7.50% 8/6/2020 Chevron Roseville property (9) 2,000,000 — 8.00% 8.00% 9/1/2020 Chevron San Jose property (9) 2,000,000 — 8.00% 8.00% 9/1/2020 Total mortgage notes payable 188,124,950 195,739,481 Plus unamortized mortgage premium (12) 499,967 489,664 Less unamortized deferred financing costs (1,947,788 ) (2,189,938 ) Mortgage notes payable, net $ 186,677,129 $ 194,039,207 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of June 30, 2020 . Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2020 , consisting of the contractual interest rate and the effect of the interest rate swap, if applicable (see Note 8 for further information regarding the Company’s derivative instruments) . (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 the U.S. Treasury Bill index rate plus 3.25% . (4) The initial contractual interest rate is 4.60% for the first five years and the greater of 4.60% or five-year Treasury Constant Maturity (“TCM”) plus 2.45% for the second five years. (5) The initial contractual interest rate is 4.84% for the first five-years 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 interest rate adjusts in the 133rd, 253rd and 313th months. As discussed in Note 4 , during the three months ended June 30, 2020 , the Company recorded an impairment charge of $5,664,517 related to its investment in the 24 Hour Fitness property in Las Vegas, Nevada due to the substantial impact on fitness centers from the COVID-19 pandemic and the requirement of an indefinite and potentially extended period of store closures and the resulting inability of the tenant to make rent payments. On April 1, 2020, the Company’s special purpose subsidiary initiated negotiations with the lender on the 24 Hour Fitness property regarding the special purpose subsidiary's request for a deferral of mortgage payments until the tenant resumes paying rent. The lender on this property did not agree to provide any substantial mortgage relief to the Company's special purpose subsidiary, but rather agreed to only temporarily reduce its $32,000 monthly mortgage payment by $8,000 for the next four monthly payments. On June 15, 2020, the Company received written notice that the lease was formally rejected in connection with 24 Hour Fitness' Chapter 11 bankruptcy proceeding and the premises were surrendered to the Company's subsidiary. If the Company's special purpose subsidiary cannot find a replacement tenant, then it may allow the lender to foreclose on the property and take possession. The estimated liability of $3,125,037 under a loan guarantee related to the secured mortgage was accrued and included in accounts payable and accrued liabilities on the condensed consolidated balance sheet as of June 30, 2020 . The lender on the 24 Hour Fitness property has issued a notice of default as a result of 24 Hour Fitness's bankruptcy filing and reserves the right to exercise its rights and remedies pursuant to the loan documents. (7) The loan was acquired through the Merger on December 31, 2019. (8) The Company negotiated a lease termination with Dinan Cars effective January 31, 2020 in exchange for a termination payment from Dinan Cars of $783,182 which was used to reduce the principal balance of this mortgage by $650,000 and establish a payment reserve with the remaining $133,182 . In connection with the principal prepayment, the Company terminated the related swap agreement on February 4, 2020 at a cost of $47,000 (see Note 8 for further discussion). See Note 11 for details on the subsequent sale of the property. (9) These loans were provided by Mr. Raymond Wirta, Chairman of the Board of the Company, and a trust belonging to Mr. Wirta (“Wirta Trust”). On June 1, 2020, the maturity date of these mortgages was extended to September 1, 2020 on the same terms. On July 31, 2020, the Chevron San Jose property loan was fully repaid with proceeds from the refinancing of the AvAir property (see Note 11 for further discussion). (10) The loan was refinanced subsequent to June 30, 2020 (see Note 11 for further discussion). (11) The mortgage note balance is reflected in mortgage notes payable related to real estate investments held for sale, net (excluding the portion related to Accredo) in the accompanying condensed consolidated balance sheet as of June 30, 2020 (see Note 11 for further discussion). (12) Represents unamortized net mortgage premium acquired through the Merger. The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2020 and December 31, 2019 : June 30, 2020 December 31, 2019 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 188,124,950 $ 186,677,129 $ 186,322,921 $ 195,739,481 $ 194,039,207 $ 200,535,334 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 fair value. Unsecured Credit Facility, Net The details of the Company's unsecured credit facility as of June 30, 2020 and December 31, 2019 follow: June 30, December 31, Unsecured credit facility $ 12,000,000 $ 7,740,000 Less unamortized deferred financing costs (39,800 ) (90,139 ) Unsecured credit facility, net $ 11,960,200 $ 7,649,861 On December 19, 2019, the Company, NNN LP, the Operating Partnership, Merger Sub, BrixInvest and modiv, LLC (collectively, the “Borrowers”) entered into a Loan and Security Agreement (the “Unsecured Credit Facility”) with Pacific Mercantile Bank (“PMB”). The Unsecured Credit Facility is a line of credit for a maximum principal amount of $12,000,000 and as of June 30, 2020 and December 31, 2019 , the Unsecured Credit Facility had an outstanding balance of $12,000,000 and $7,740,000 , respectively. On March 13, 2020, the Company amended the Unsecured Credit Facility to extend the maturity date of $6,940,000 of outstanding borrowings under the Unsecured Credit Facility from March 31, 2020 to July 31, 2020, and to extend the maturity date of $3,060,000 of the outstanding borrowings under the Unsecured Credit Facility from May 4, 2020 to August 31, 2020. On August 13, 2020, the Company amended the Unsecured Credit Facility to extend the maturity date of $6,000,000 of the outstanding borrowings under the Unsecured Credit Facility to September 1, 2020 and the maturity date of the remaining $6,000,000 of the outstanding borrowings under the Unsecured Credit Facility to October 15, 2021. The Company plans to repay $6,000,000 of the outstanding borrowings under the Unsecured Credit Facility with proceeds recently generated by property refinancings and asset sales (see Note 11. Subsequent Events ). Under the August 13, 2020 amendment, there is a moratorium on new borrowings under the Unsecured Credit Facility until the entire $12,000,000 is fully repaid. The Company paid PMB $25,000 for loan extension and modification fees in connection with the August 13, 2020 amendment. In connection with the August 13, 2020 amendment to the Unsecured Credit Facility, the Company's Chairman, Mr. Wirta and the Wirta Trust have guaranteed the Company’s obligations under the Unsecured Credit Facility. On July 30, 2020, the Company entered into an indemnification agreement with Mr. Wirta and the Wirta Trust with respect to their guarantees of the Company’s Unsecured Credit Facility pursuant to which the Company agreed to indemnify Mr. Wirta and the Wirta Trust if they are required to make payments to PMB pursuant to such guarantees. Once the $12,000,000 of outstanding borrowings under the Unsecured Credit Facility are fully repaid, the Unsecured Credit Facility will again be available to fund the Company’s acquisitions of single-tenant, income producing commercial, office, industrial or retail real estate properties, in an amount of up to 70% of the purchase price of such acquisitions. The Company intends to repay amounts outstanding under the Unsecured Credit Facility from proceeds generated by asset sales and mortgage refinancings on one or more of the properties owned, either directly or indirectly through one or more wholly-owned single member special purpose entities, by the Operating Partnership, along with gross offering proceeds from the sale of shares of the Company’s common stock. Under the terms of the Unsecured Credit Facility, the Borrowers pay a variable rate of interest on outstanding amounts equal to one percentage point over the prime rate published in The Wall Street Journal, provided that the interest rate in effect on any one day shall not be less than 5.50% per annum. The interest rate was 5.50% and 5.75% as of June 30, 2020 and December 31, 2019 , respectively. The current interest rate is 5.50% , which is the minimum rate. To secure the payment and performance of all obligations under the Unsecured Credit Facility, each of modiv, LLC and BrixInvest granted to PMB a security interest in all of their right, title and interest in their accounts, inventory, equipment, deposit accounts, intellectual property, general intangibles, investment property and other property. The Unsecured Credit Facility contains customary representations, warranties and covenants, which are substantially similar to those in the Company's prior credit facility. The Company’s ability to borrow under the Unsecured Credit Facility will be subject to its ongoing compliance with various affirmative and negative covenants, including with respect to indebtedness, guaranties, mergers and asset sales, liens, tangible net worth, 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, PMB may accelerate the repayment of amounts outstanding under the Unsecured Credit Facility, take possession of any collateral securing the Unsecured Credit Facility and exercise other remedies subject, in certain instances, to the expiration of an applicable cure period. The August 13, 2020 amendment to the agreement requires the Company to maintain a minimum debt service coverage ratio of 1.25 to 1.00 and tangible net worth of $125,000,000 , measured quarterly. Short-term Notes Payable In connection with the Self-Management Transaction, the Company assumed from BrixInvest its unsecured short-term notes payable (formerly known as “Convertible Promissory Notes”) of $4,800,000 on December 31, 2019. The notes represented private party notes and bore interest at a fixed rate of 8% with all interest and principal due on the maturity date. Except for six notes from one borrower aggregating $1,024,750 for which the maturity date was extended to April 30, 2020, all notes were repaid prior to March 31, 2020. In exchange for the maturity date extension, the Company agreed to pay 2% of the principal and accrued interest, or $24,845 , as an extension fee and agreed to an increase in the interest rate from 8% to 10% per annum during the extension period. The maturity date for the $490,000 extended short-term notes was subsequently accelerated to April 6, 2020 in exchange for a $10,000 reduction in the extension fee to $14,845 and these notes were repaid on April 6, 2020. Economic Relief Notes Payable On April 20, 2020, a subsidiary of the Company entered into a loan agreement and promissory note evidencing an unsecured loan in the aggregate amount of $517,000 made to this subsidiary under the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The PPP is administered by the U.S. Small Business Administration (the “SBA”). Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and the Paycheck Protection Program Flexibility Act of 2020 have extended the time period for loan forgiveness beyond the original eight-week period to 24 weeks, making it possible for the Company's subsidiary to apply for forgiveness of 100% of its PPP loan in October 2020. No assurance can be given that the Company's subsidiary will be successful in obtaining forgiveness of the loan in whole or in part The PPP loan was made through PMB. To the extent that the loan is not forgiven, the subsidiary and PMB may mutually agree to fully amortize any unforgiven principal balance of the loan over a period of up to 10 years from the date on which the subsidiary applies for loan forgiveness. The annual interest rate on any unforgiven principal balance of the PPP loan is 1% . The promissory note evidencing the PPP loan contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or PMB, or breaching the terms of the loan documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the subsidiary, or filing suit and obtaining judgment against the subsidiary. On May 20, 2020, the Company also obtained a $10,000 Economic Injury Disaster Loan ("EIDL") from the SBA which is expected to be treated as a grant since the Company has decided not to apply for an EIDL, and will therefore reduce the amount of the PPP loan that can be forgiven by $10,000 . Compliance with All Debt Agreements On March 27, 2020, the Company's conflicts committee and board of directors approved an increase in the Company's maximum leverage from 50% to 55% in order to allow the Company to take advantage of the current low interest rate environment, the relative cost of debt and equity capital, and strategic borrowing advantages potentially available to the Company. 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 June 30, 2020 . Due to the COVID-19 pandemic, the lender to the Company's special purpose subsidiary which owns the 24 Hour Fitness property in Las Vegas, Nevada subsequently agreed to accept reduced payments on the related secured mortgage for four months commencing May 1, 2020 through August 1, 2020 (see Note 4 and above) and the Company remains in compliance with the loan agreement for this property and will be required to pay the full amount of monthly principal and interest starting September 1, 2020. The following summarizes the future principal repayments of the Company’s mortgage notes payable, unsecured credit facility and short-term notes payable as of June 30, 2020 : Mortgage Notes Payable Unsecured Credit Facility Short-term Notes Payable Total July through December 2020 $ 8,364,457 $ 12,000,000 $ 527,000 $ 20,891,457 2021 24,640,690 — — 24,640,690 2022 21,004,076 — — 21,004,076 2023 25,311,036 — — 25,311,036 2024 30,320,929 — — 30,320,929 2025 1,626,959 — — 1,626,959 Thereafter 76,856,803 — — 76,856,803 Total principal 188,124,950 12,000,000 527,000 200,651,950 Plus unamortized mortgage premium, net of discount 499,967 — — 499,967 Less deferred financing costs (1,947,788 ) (39,800 ) — (1,987,588 ) Net principal $ 186,677,129 $ 11,960,200 $ 527,000 $ 199,164,329 Interest Expense The following is a reconciliation of the components of interest expense for the three and six months ended June 30, 2020 and 2019 : Three Months Ended Six Months Ended 2020 2019 2020 2019 Mortgage notes payable: Interest expense $ 2,147,112 $ 1,368,662 $ 4,332,089 $ 2,845,158 Amortization of deferred financing costs 139,600 109,071 258,631 379,593 Loss on interest rate swaps (1) 80,985 562,571 1,446,476 890,385 Unsecured credit facility: Interest expense 166,834 27,918 321,458 111,436 Amortization of deferred financing costs 42,876 8,503 75,336 10,503 Other (18,530 ) — 29,543 — Total interest expense $ 2,558,877 $ 2,076,725 $ 6,463,533 $ 4,237,075 (1) Includes unrealized loss on interest rate swaps of $7,785 and $553,490 for the three months ended June 30, 2020 and 2019 , respectively, and $1,292,752 and $874,016 for the six months ended June 30, 2020 and 2019 , respectively (see Note 8 ). Accrued interest payable of $71,882 and $22,282 at June 30, 2020 and December 31, 2019 , 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 | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
INTEREST RATE SWAP DERIVATIVES | INTEREST RATE SWAP DERIVATIVES The Company, through its 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 as of June 30, 2020 and December 31, 2019 , respectively: June 30, 2020 December 31, 2019 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 (iv) 11 $ 45,504,305 One-month LIBOR + applicable spread/Fixed at 3.13%-5.16% 3.91 % 2.4 years 12 $ 48,215,139 One-month LIBOR + applicable spread/Fixed at 2.76%-5.16% 3.87 % 2.9 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 amounts (outstanding principal balance at the maturity date) as of June 30, 2020 and December 31, 2019 were $42,917,710 and $45,514,229 , respectively. (ii) The reference rate was June 30, 2020 . (iii) The reference rate was December 31, 2019 . (iv) The Company terminated the swap agreement related to the Dinan property mortgage loan on February 4, 2020 at a cost of $47,000 (see Note 7 ). Subsequent to June 30, 2020, the Company terminated the swap agreement related to the Rite Aid property mortgage loan on July 30, 2020 at a cost of $40,700 (see Note 11 ). 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: June 30, 2020 December 31, 2019 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 — $ — 5 $ 34,567 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 11 $ (2,279,909 ) 7 $ (1,021,724 ) 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 June 30, 2020 or December 31, 2019 were designated as hedging instruments; therefore, the net unrealized loss recognized on interest rate swaps of $7,785 and $553,490 was recorded as a decrease in interest expense for the three months ended June 30, 2020 and 2019 , respectively, and $1,292,752 and $874,016 was recorded as an increase in interest expense for the six months ended June 30, 2020 and 2019 , respectively (see Note 7 ). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
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 through cash payments or by issuing shares of Class C common stock to them. For the three months ended June 30, 2020 and 2019 , the total amount of fees incurred for board services was $101,250 and $76,667 , respectively, and the value paid during the periods by issuing shares of Class C common stock was $70,000 (issued in arrears for first quarter services) and $55,000 , respectively, for which the Company issued 6,816 and 5,414 shares, respectively. For the six months ended June 30, 2020 and 2019 , the total amount of fees incurred for board services was $204,583 and $176,667 , respectively, and the value paid during the periods by issuing shares of Class C common stock was $179,565 and $105,000 , respectively, for which the Company issued 7,066 and 10,335 shares, respectively. As of June 30, 2020 , $101,250 was accrued and then paid in July 2020 by issuing 14,464 shares of Class C common stock. In conjunction with the Self-Management Transaction effective December 31, 2019 , the Advisory Agreement was terminated. The Advisory Agreement entitled the Former 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 entitled the Former Advisor to reimbursement of organizational and offering costs incurred by the Former Advisor or Former Sponsor on behalf of the Company, such as expenses related to the Offerings, and certain costs incurred by the Former Advisor or Former Sponsor in providing services to the Company. In addition, the Former Advisor was entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Former Sponsor also served as the sponsor for REIT I and BRIX REIT. Effective February 3, 2020, the Company's indirect subsidiary, modiv Advisors, LLC, became the advisor to BRIX REIT. During the three and six months ended June 30, 2020 and 2019 , no business transactions occurred between the Company and BRIX REIT other than minor expenses advanced and, during the three and six months ended June 30, 2019 , no business transactions occurred between the Company and REIT I, other than as described below or elsewhere herein, and those relating to the Company’s investment in REIT I before the Merger, as described in Note 5 . On March 2, 2020, the Company borrowed a total of $4,000,000 , secured by mortgages on its two Chevron properties, from the Company's Chairman, Mr. Wirta (see Note 7 ). The Company's conflicts committee approved the terms of these mortgages which bear interest at an annual rate of 8% and were scheduled to mature on June 2, 2020. On June 1, 2020, the maturity date of these mortgages was extended to September 1, 2020 on the same terms, along with an option for a further extension to November 30, 2020 at the Company’s election prior to August 18, 2020. On July 31, 2020, the mortgage secured by the Chevron San Jose, CA property for $2,000,000 was fully repaid along with all related accrued interest as described in Note 11, and the $2,000,000 mortgage on the second Chevron property remains outstanding. Summarized below are the related party costs incurred by the Company, including those incurred pursuant to the Advisory Agreement, for the three and six months ended June 30, 2020 and 2019 and related party receivable and payable as of June 30, 2020 and December 31, 2019 : Three Months Ended Six Months Ended Three Months Ended Six Months Ended June 30, 2020 June 30, 2020 June 30, 2019 December 31, 2019 Incurred Incurred Receivable Payable Incurred Incurred Receivable Payable Expensed: Asset management fees (1) $ — $ — $ — $ — $ 680,019 $ 1,360,037 $ — $ — Operating expense reimbursements — — — — 132,000 264,000 — — Fees to affiliates — — 812,019 1,624,037 Property management fees* — — — — 56,122 112,072 — — Directors and officers insurance and other reimbursements** — — — — 70,785 133,675 — — Expense reimbursements from Former Sponsor (2) — — — — (148,233 ) (236,232 ) — — Capitalized: Financing coordination fees — — — — — 63,500 — — Reimbursable organizational and offering expenses (3) — — — — 415,299 899,863 — — Other: Due from BRIX REIT (4) — — 3,214 — — — 1,378 — Due from TIC — — — — — — 954 — Notes due to Chairman of the Board — — — — — — — 630,820 $ 3,214 $ — $ 2,332 $ 630,820 * 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 Former Advisor elected, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Former Advisor was 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 and six months ended June 30, 2019 , the Former Advisor did no t waive any of the asset management fees. In addition to amounts presented in this table, the Company also incurred asset management fees to the Former Advisor of $47,977 and $95,953 related to the TIC Interest during the three and six months ended June 30, 2019 , respectively, which amounts were reflected as reductions 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 Former Sponsor ” below . The Former Sponsor agreed to reimburse the Company for these investor relations compensation costs which the Former Sponsor considered to be offering expenses in accordance with the Advisory Agreement which was terminated effective September 30, 2019. The expense reimbursements from the Former Sponsor for the three and six months ended June 30, 2019 also include a refund of $0 and $40,915 of employment related legal fees, respectively, which the Former Sponsor agreed to reimburse the Company. (3) As of June 30, 2019 , the Former Sponsor had incurred $8,815,104 of organizational and offering costs on behalf of the Company. However, the Company was only obligated to reimburse the Former Sponsor for such organizational and offering expenses to the extent of 3% of gross offering proceeds. (4) The receivables represent incidental expenses advanced to BRIX REIT. The 2019 amount included unpaid asset management fees of $242,299 as of December 31, 2019 due from BRIX REIT, which the Company agreed to waive in May 2020 given the impact of the COVID-19 pandemic on BRIX REIT. Organizational and Offering Expenses The Company was obligated to reimburse the Former Sponsor or its affiliates for organizational and offering expenses (as defined in the Advisory Agreement) paid by the Former Sponsor on behalf of the Company. The Company reimbursed the Former Sponsor for organizational and offering expenses up to 3% of gross offering proceeds. Pursuant to an amendment to the Advisory Agreement dated October 14, 2019, the Company agreed to pay all future organization and offering costs, and to no longer be reimbursed by the Former Sponsor for investor relations personnel costs after September 30, 2019, in exchange for the Former Sponsor's agreement to terminate its right to receive 3% of all offering proceeds as a reimbursement for organization and offering costs paid by the Former Sponsor. The Former Sponsor and its affiliates were responsible for any organizational and offering expenses to the extent they exceeded 3% of gross offering proceeds through September 30, 2019. Through June 30, 2019 , the Former Sponsor had incurred organizational and offering expenses in excess of 3% of the gross offering proceeds received by the Company. Through June 30, 2019 , the Company reimbursed the Former Sponsor $5,092,718 in organizational and offering costs. Through September 30, 2019, the Company had reimbursed the Former Sponsor $5,429,105 in organization and offering costs, which was the Company's maximum liability for organization and offering costs. Investor Relations Payroll Expense Reimbursement from Former Sponsor The Company employs investor relations personnel to answer inquiries from potential and existing investors regarding the Company and/or its Registered Offerings. The payroll expenses associated with the investor relations personnel were reimbursed by the Former Sponsor through September 30, 2019. The Former Sponsor considered these payroll expenses to be offering expenses. The amount of payroll expenses reimbursements from the Former Sponsor for the three and six months ended June 30, 2019 was $143,997 and $272,911 , respectively, which was partially offset by a refund of employment related legal costs of $0 and $40,915 , respectively. Acquisition Fees The Company paid the Former Advisor an amount equal to 3% of the contract purchase price of the Company’s properties plus additions to real estate investments as acquisition fees. The total of all acquisition fees and acquisition expenses was required to be reasonable and not to 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 had the authority to approve fees in excess of these limits if they determined the transaction to be commercially competitive, fair and reasonable to the Company. There were no acquisition fees incurred during the three and six months ended June 30, 2019 . Asset Management Fee The Company paid the Former 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 in the Advisory Agreement (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 was payable monthly on the last business day of such month. The Asset Management Fee, which was required to be reasonable in the determination of the Company’s independent directors at least annually, was to be taken or waived, in whole or in part as to any year, in the sole discretion of the Former Advisor. All or any portion of the Asset Management Fee not paid as to any fiscal year was allowed to be deferred without interest and paid in such other fiscal year as the Former Advisor determined. Additionally, to the extent the Former Advisor elected, in its sole discretion, to defer all or any portion of its monthly Asset Management Fee, the Former Advisor was deemed to have waived, not deferred, that portion of its monthly Asset Management Fee that was up to 0.025% of the total investment value of the Company’s assets. The total amount of Asset Management Fees incurred during the three and six months ended June 30, 2019 was $680,019 and $1,360,037 , respectively, of which $0 was waived. Financing Coordination Fee Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if the Former Advisor or an affiliate provided 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 obtained relative to a property, then the Company was to pay the Former Advisor or such affiliate a financing coordination fee equal to 1% of the amount of such financing. There were no financing coordination fees during the three months ended June 30, 2019 as there were no loans obtained during the quarter but the Company incurred and paid $63,500 of financing coordination fees related to a single loan during the six months ended June 30, 2019 . Property Management Fees If the Former Advisor or any of its affiliates provided 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 paid the Former Advisor or such affiliate a property management fee equal to 1.5% of gross revenues from the properties managed. The Company also reimbursed the Former Advisor and any of its affiliates for property-level expenses that such tenant paid or incurred to the Company, including salaries, bonuses and benefits of persons employed by the Former Advisor, except for the salaries, bonuses and benefits of persons who also served as one of the Company’s executive officers. The Former Advisor or its affiliate were entitled to 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 contracted for these services. The Former Advisor provided property management services for 10 properties in the Company's portfolio during the three and six months ended June 30, 2019 . The Company incurred and paid $56,122 and $112,072 of property management fees during the three and six months ended June 30, 2019 , respectively. Disposition Fees For substantial assistance in connection with the sale of properties, the Company was to pay the Former Advisor or one of its affiliates 3% of the contract sales price, as defined in the Advisory Agreement, of each property sold; provided, however, that if, in connection with such disposition, commissions were paid to third parties unaffiliated with the Former Advisor or its affiliates, the disposition fees paid to the Former Advisor, the Former Sponsor, their affiliates and unaffiliated third parties could not exceed the lesser of the competitive real estate commission or 6% of the contract sales price. There were no disposition fees incurred during the three and six months ended June 30, 2019 . Subordinated Participation Fees The Company incurred a subordinated participation fee calculated as of December 31 of each year through 2018, payable to the Former Advisor or an affiliate thereof, which was paid (if owed) in the immediately following January. The subordinated participation fee was only due if the Preferred Return, as defined in the Advisory Agreement, was achieved and was 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 resulted 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, exceeded 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 , which was accrued as of December 31, 2018 and paid in cash during the first quarter of 2019 . On August 9, 2019, the Advisory Agreement was amended to eliminate the Subordinated Participation Fee. Leasing Commission Fees If a property or properties of the Company became unleased and the Former Advisor or any of its affiliates provided 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 paid the Former 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 was less than ten years, such commission percentage was applied 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) accrued a commission of 3% in lieu of the aforementioned 6% commission. There were no leasing commission fees incurred during the three and six months ended June 30, 2019 . Other Operating Expense Reimbursements Under the Company's charter, prior to December 31, 2019 , total operating expenses of the Company were 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 exceeded the 2% / 25% Limitation, the Former Advisor was required to reimburse the Company the amount by which the aggregate total operating expenses exceeded the limitation, or the Company was required to obtain a waiver from the Company's conflicts committee. For purposes of determining the 2% / 25% Limitation amount, “average invested assets” meant 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” meant all expenses paid or incurred by the Company, as determined by GAAP, that were 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 related to potential investments that the Company did 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 total reimbursable operating expenses incurred were $132,000 and $264,000 during the three and six months ended June 30, 2019 , respectively. The Company was in compliance with the 2% / 25% Limitation for operating expenses for the four fiscal quarters ended June 30, 2019 . Due to Affiliates In connection with the Self-Management Transaction, the Company assumed two notes payable aggregating $630,820 on December 31, 2019 owed to Mr. Wirta, the Company's Chairman, which were presented under due to affiliates in the Company's condensed consolidated balance sheets as of December 31, 2019 . The notes payable had identical terms including a fixed interest rate of 10% paid semi-monthly and a maturity date of April 23, 2020. The remaining principal amount of $218,931 due for each note, aggregating $437,862 , was paid on the maturity date. Related Party Transactions with Unconsolidated Entities The Company’s portion of asset management fees paid to the Former Advisor relating to the TIC Interest for the three and six months ended June 30, 2019 was $47,977 and $95,953 , respectively. The advisory agreement with the entity that owns the TIC Interest property was assigned to the Company's taxable REIT subsidiary following the Self-Management Transaction and the Company earns a monthly management fee equal to 0.1% of the total investment value of the property from this entity, which resulted in a fee of $65,993 for the three months ended June 30, 2020 , of which the Company's portion was $47,984 , and a fee of $131,986 for the six months ended June 30, 2020 , of which the Company's portion was $95,967 . The Company’s portion of asset management fees paid to the Former Advisor relating to REIT I for the three and six months ended June 30, 2019 was $10,437 and $20,123 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES 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 June 30, 2020 and December 31, 2019 , the Company had obligations to pay $60,598 and $98,329 , respectively, for on-site and tenant improvements to be incurred by tenants, including a 72.7% share of the tenant improvements for the Santa Clara, California TIC Interest. As of both June 30, 2020 and December 31, 2019 , the Company had $92,684 of restricted cash held to fund the improvements. Operating Lease As a result of the Self-Management Transaction, on December 31, 2019, a subsidiary of the Company assumed the operating lease of the corporate office in Costa Mesa, California from BrixInvest. The office lease has a remaining term of four years , ending on June 30, 2024, and no option to renew. The Company's subsidiary re-evaluated its physical office space requirement given the effect of the COVID-19 pandemic, surrendered the premises to the landlord on June 1, 2020 and is trying to negotiate a settlement with the landlord for early termination of the lease. The Company is not a party to the lease and did not guarantee the lease. Because the rate implicit in the subsidiary's lease was not readily determinable, the Company used an incremental borrowing rate to account for the lease. In determining the Company's incremental borrowing rate for the lease, the Company considered the recent rate on its unsecured borrowings, observable risk-free interest rates and credit spreads correlating to the Company's creditworthiness and the term of the subsidiary's lease agreement. The discount rate used was 5.75% . Scheduled maturities of the operating lease liability as of June 30, 2020 are as follows: July to December 2020 $ 243,542 2021 599,953 2022 620,444 2023 639,928 2024 322,483 Total undiscounted lease payments 2,426,350 Less amounts representing interest (273,431 ) Total operating lease liability $ 2,152,919 Redemption of Common Stock The Company has a share repurchase program that enables qualifying stockholders to sell their stock to the Company in limited circumstances. The maximum amount of common stock 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 are 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 Offerings 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, it needs to maintain 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, subject to any Extraordinary Circumstance Repurchase (defined below). The Company has the discretion, but not the obligation, under extraordinary market or economic circumstances, to make a special repurchase in equal, nominal quantities of shares from all stockholders who have submitted share repurchase requests during the period (“Extraordinary Circumstance Repurchase”). Extraordinary Circumstance Repurchases will precede any pro rata share repurchases that may be made during the period. During March 2020, the Company received repurchase requests for $8,647,085 of share value and did not honor any of these requests given the Company’s need to maintain liquidity for its operations. During April 2020, the Company received repurchase requests for $10,514,377 of share value and repurchased $876,744 of share value on May 5, 2020, including Extraordinary Circumstance Repurchases and after applicable administrative fees for shares held less than three years. During May 2020, the Company received repurchase requests for $11,218,557 of share value and did not honor any of these requests given that the Offerings were suspended from May 8, 2020 through May 31, 2020 and the Company’s need to maintain liquidity for its operations. During June 2020, the Company received repurchase requests for $7,427,489 of share value and repurchased $750,684 of share value on July 6, 2020, including Extraordinary Circumstance Repurchases and after applicable administrative fees for shares held less than three years. During July 2020, the Company received repurchase requests for $8,359,586 of share value and repurchased $995,023 of share value on August 5, 2020, including Extraordinary Circumstance Repurchases, and after applicable administrative fees for shares held less than three years. In addition, the Company’s board of directors may amend, suspend or terminate the share repurchase program without stockholder approval upon 10 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. On September 18, 2019, a lawsuit was filed in the Superior Court of the State of California, County of Los Angeles, against the Former Advisor by “John Doe,” a fictitiously-named individual who was one of the Former Advisor's former employees. The Former Advisor understands that the plaintiff was its former Chief Digital Officer, who along with six other employees was subject to a reduction in force, communicated to all in advance, that was a result of financial constraints of the Former Advisor which necessitated the elimination of numerous job positions in May 2019. In the lawsuit, the former employee claims he was terminated in retaliation for his purported whistleblowing with respect to alleged misleading statements made by the Former Advisor and fraudulently induced arbitration requirements applicable to employees and investors. The complaint seeks to enjoin and rescind the enforcement of the arbitration agreement signed by the former employee and the arbitration requirements related to this complaint. The Company is not a party to the lawsuit. The Former Advisor has denied all the accusations and allegations in the complaint and the Former Advisor intends to vigorously defend against the claims made by the plaintiff. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events until the date the condensed consolidated financial statements are issued. Significant subsequent events are described below: Offering Status Through July 31, 2020 , the Company had sold 19,453,205 shares of Class C common stock in the Registered Offerings, for aggregate gross offering proceeds of $194,513,632 , which included 2,098,346 shares of Class C common stock sold under its distribution reinvestment plan, for gross proceeds of $20,408,840 . Through July 31, 2020 , the Company had sold 189,836 shares of Class S common stock in the Class S Offering, for aggregate gross offering proceeds of $1,922,992 , which included 4,873 shares of Class S common stock sold under its distribution reinvestment plan for gross proceeds of $45,828 . Distributions The Company paid the June 2020 distribution of $691,443 on July 26, 2020, based on the daily distribution rate of $0.0009589 per share of Class C and Class S common stock, which reflects an annualized distribution rate of $0.35 per share or 5.0% per share based on the Company's new estimated NAV per share of $7.00 (unaudited). The Company generally pays distributions on the 25th day following the end of each month, or the next business day if the 25th day falls on a weekend or holiday. Redeemable Common Stock Subsequent to June 30, 2020 , the Company redeemed 250,710 shares of Class C common stock for $1,745,707 and no shares of Class S common stock. Sale of Real Estate Investments On August 3, 2020, the Company completed the sale of its Lake Elsinore retail property which was leased to Rite Aid for $7,250,000 , which generated net proceeds of $3,299,016 after repayment of the existing mortgage, commissions and closing costs. Mortgage Notes Payable In July and August 2020, the Company refinanced the following mortgage notes. June 30, 2020 New Properties Principal Amount Principal Amount Prior Interest Rate New Interest Rate Original Maturity Date New Maturity Date Accredo/Walgreens properties $ 6,800,000 $ 8,538,000 3.95 % 3.80 % 7/1/21 8/1/25 AvAir property 14,545,000 19,950,000 4.84 % 3.80 % 3/27/28 8/1/25 Walgreens property 3,000,000 3,217,500 7.50 % 4.25 % 8/6/20 7/16/30 As a result of the refinancings above, the Company generated total net proceeds of $6,904,178 which were used to repay a $2,000,000 mortgage note on one of the Company’s Chevron properties which had a maturity date of September 1, 2020 and was owed to Mr. Raymond Wirta, the Chairman of the Company’s Board of Directors, and the Wirta Trust. The Company plans to use the balance of these proceeds to repay $6,000,000 of the Company’s outstanding borrowings under the Unsecured Credit Facility which are due by September 1, 2020 as described below. Unsecured Credit Facility On July 30, 2020, the Company entered into an indemnification agreement with Mr. Ray Wirta, the Chairman of the Company’s Board of Directors, and the Wirta Trust with respect to their guarantees of the Company’s $12,000,000 Unsecured Credit Facility with PMB pursuant to which the Company agreed to indemnify Mr. Wirta and the Wirta Trust if they are required to make payments to PMB pursuant to such guarantees. On August 13, 2020, the Company amended the Unsecured Credit Facility to extend the maturity date of $6,000,000 of outstanding borrowings to September 1, 2020 and the remaining $6,000,000 of outstanding borrowings to October 15, 2021 (see Note 7. Debt - Unsecured Credit Facility, Net ). The Company paid PMB $25,000 for loan extension and modification fees in connection with the August 13, 2020 amendment. Termination of Swap Agreements On August 3, 2020, the Company terminated the swap agreement related to the Company's Rite Aid property mortgage loan at a cost of $40,700 in connection with the sale of this property. On August 10, 2020, the Company terminated the swap agreement related to the Company's Accredo property mortgage loan at a cost of $42,479 in connection with the refinancing of this property. |
SUMMARY OF SIGNIFICANT ACOUNT_2
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
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 audited consolidated financial statements as of December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 6, 2020. 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 the Company's financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2019 included herein was derived from the audited financial statements. The condensed consolidated financial statements do 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. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience, including considerations related to the COVID-19 pandemic |
Noncontrolling Interests in Consolidated Entities | Noncontrolling Interests in Consolidated Entities The Company accounts for the noncontrolling interests in its Operating Partnership in accordance with the related accounting guidance. Due to the Company's control of the Operating Partnership through its general partnership interest therein and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company, and the limited partner interests are reflected as noncontrolling interests in the accompanying condensed consolidated balance sheets. |
Business Combinations | Business Combinations The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) and applicable Accounting Standard Updates, whereby the total consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to any non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination. ASC 805 defines a business as an integrated set of activities and assets (collectively, a “set”) that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASC 805 provides a practical screen to determine when a set would not be considered a business. If the screen is not met and further assessment determines that the set is not a business, then the set is an asset acquisition. The primary difference between a business combination and an asset acquisition is that an asset acquisition requires cost accumulation and allocation at relative fair value. Acquisition costs are capitalized for an asset acquisition and expensed for a business combination |
Revenue Recognition | Revenue Recognition The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606 ) (“ASU No. 2014-09”), effective January 1, 2018. The Company’s revenue impacted by ASU No. 2014-09 included revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenues are recognized when the services are provided and the performance obligations are satisfied. 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, as discussed below, in the period the recoverable costs are incurred. Tenant reimbursements, for which the Company pays the associated costs directly to third-party vendors and is reimbursed by the tenants, are recognized and recorded on a gross basis. The Company adopted FASB ASU No. 2016-02, Leases (Topic 842), and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01 effective January 1, 2019, 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. Topic 842 impacts the Company's accounting for leases primarily as a lessor. However, Topic 842 also impacts the Company's accounting as a lessee for an operating lease assumed as a result of the Self-Management Transaction, which was completed on December 31, 2019. 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 ASU No. 2014-09. 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 No. 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 components 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 No. 2018-11 have been combined under rental income subsequent to the adoption of Topic 842 in the Company's consolidated statements of operations. For the three months ended June 30, 2020 and 2019 , tenant reimbursements included in rental income amounted to $1,538,586 and $1,098,603 , respectively, and for the six months ended June 30, 2020 and 2019 , tenant reimbursements included in rental income amounted to $3,899,505 and $2,186,463 , respectively. The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectability of such amounts is reasonably assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, management of the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general-purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. In instances where the operating lease agreement has an early termination option, the termination penalty is based on a predetermined termination fee or based on the unamortized tenant improvements and leasing commissions. The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, credit rating, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides an allowance against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. |
Bad Debts and Allowances for Tenant and Deferred Rent Receivables and Leasing Costs | Bad Debts and Allowances for Tenant and Deferred Rent Receivables Since 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. With respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt allowance for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments. 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, since January 1, 2019, the Company no longer capitalizes internal leasing costs and third-party legal leasing costs and instead charges these costs to expense as incurred. These expenses are included in legal leasing costs under property expenses in the Company's condensed consolidated statements of operations. The election of the package of practical expedients described above permits the Company to continue to account for its 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 entered into or acquired commencing or modified after January 1, 2019. |
Impairment of Investment in Real Estate Properties | Impairment of Investment in Real Estate Properties The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset. |
Per Share Data | Per Share Data The Company reports a dual presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted EPS uses the treasury stock method or the if-converted method, where applicable, to compute for the potential dilution that would occur if dilutive securities or commitments to issue common stock were exercised. Diluted EPS is the same as Basic EPS for the three and six months ended June 30, 2020 and 2019 as the Company had a net loss for all reported periods. As of June 30, 2020 , there were 657,949.5 Class M OP Units and 56,029 Class P OP Units that are convertible to Class C OP Units (defined below) at a conversion ratio of five Class C OP Units for each one Class M OP Unit or Class P OP Unit, as applicable, after a specified period of time (see Note 3 ). The holders of Class C OP Units may exchange such Class C OP Units for shares of the Company's Class C common stock on a 1- for-1 basis or, at the Company’s sole and absolute discretion, for cash. The Class M OP Units and Class P OP Units, and the shares of Class C common stock into which they may ultimately be converted, were excluded from the computation of Diluted EPS because their effect would not be dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended. The Company has presented the basic and diluted net loss per share amounts on the accompanying condensed consolidated statements of operations for Class C and S share classes as a combined common share class. |
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, 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 sheets. 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. Goodwill and Intangible Assets: The fair value measurements of goodwill and intangible assets are considered Level 3 nonrecurring fair value measurements. For goodwill, fair value measurement involves the determination of fair value of a reporting unit. The Company uses a Monte Carlo simulation model to estimate future performance, generating the fair value of the reporting unit's business. For intangible assets, fair value measurements include assumptions with inherent uncertainty, including projected Offerings volumes and related projected revenues and long-term growth rates, among others. The carrying value of intangible assets is at risk of impairment if future projected Offerings proceeds, revenues or long-term growth rates are lower than those currently projected. Unsecured credit facility and short-term notes payable: The fair values of the Company’s unsecured credit facility and short-term notes payable approximate the carrying values of the unsecured credit facility and short-term notes payable as their interest rates and other terms are comparable to those available in the market place for a similar credit facility and short-term note, respectively. 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 or modification and for on-site and tenant improvements or property taxes. |
Real Estate Investments Held for Sale | Real Estate Investments Held for Sale The Company generally considers a real estate investment to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate investment held for sale, net” and “assets related to real estate investment held for sale,” respectively, in the accompanying condensed consolidated balance sheets. Mortgage note payable and other liabilities related to a real estate investment held for sale are classified as “mortgage notes payable related to real estate investments held for sale, net” and “liabilities related to real estate investment held for sale,” respectively, in the accompanying condensed consolidated balance sheets. Real estate investment classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties that were classified as held for sale in the ordinary course of business are included in continuing operations in the Company’s accompanying condensed consolidated statements of operations. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. The Company evaluates goodwill for possible impairment in accordance with ASC 350, Intangibles–Goodwill and Other on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit has declined below its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized. Due to the impacts of the COVID-19 pandemic, the Company performed an impairment test of goodwill for the quarter ended March 31, 2020. Since the Company is a single reporting unit, the Company performed a quantitative analysis to compare the estimated fair value of the Company’s net tangible and intangible assets to the preliminary carrying value of its net tangible and intangible assets as of March 31, 2020. The recorded goodwill impairment charge of $33,267,143 represents the excess of the Company’s net book value over its estimated fair value as of March 31, 2020. No goodwill impairment charges were recorded during the three months ended June 30, 2020 . Intangible assets consist of purchased customer-related intangible assets, marketing-related intangible assets, developed technology and other intangible assets. Intangible assets are amortized over their estimated useful lives using the straight-line method ranging from three years to five years . No significant residual value is estimated for intangible assets. An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. The Company evaluates long-lived assets (including intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. |
Reclassifications | Reclassifications Certain prior period cash flows from operations account grouping in the condensed consolidated statement of cash flows has been reclassified to conform with the current year presentation. The reclassifications had no impact on net loss. |
Restricted Stock Units and Restricted Stock Unit Awards | Restricted Stock Units and Restricted Stock Unit Awards The fair values of the Operating Partnership's units or restricted stock unit awards issued or granted by the Company are based on the most recent NAV per share of the Company’s common stock on the date of issuance or grant. Operating Partnership units issued as purchase consideration in connection with the Self-Management Transaction discussed in Note 3 are recorded in equity under noncontrolling interests in the Operating Partnership in the Company's condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 and condensed consolidated statement of equity for the three and six months ended June 30, 2020 . For units granted to employees of the Company that are not included in the purchase consideration, the fair value of the award is amortized using the straight-line method over the requisite service period of the award, which is generally the vesting period (see Note 3 ). The Company determines the accounting classification of equity instruments (e.g. restricted stock units) that are issued as purchase consideration or part of the purchase consideration in a business combination, as either liability or equity, by first assessing whether the equity instruments meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, equity instruments are classified as liabilities if the equity instruments are mandatorily redeemable, obligate the issuer to settle the equity instruments or the underlying shares by paying cash or other assets, or must or may require an unconditional obligation that must be settled by issuing a variable number of shares. If equity instruments do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the equity instruments do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the equity instruments are indexed to its common stock and whether the equity instruments are classified as equity under ASC 815-40 or other applicable GAAP guidance. After all relevant assessments are made, the Company concludes whether the equity instruments are classified as liability or equity. Liability classified equity instruments are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified equity instruments are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards Recently Issued and 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 No. 2018-13 is effective for the Company beginning January 1, 2020. Entities were 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 adoption of ASU No. 2018-13 on January 1, 2020 did not have a material impact on the Company's consolidated financial statements. In April 2020, the FASB issued a FASB Staff Q&A related to Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic (the “Topic 842 Q&A”). The Company adopted the lease accounting standards of Topic 842 beginning January 1, 2019. Under Topic 842, subsequent changes to lease payments that are not stipulated in the original lease contract are generally accounted for as lease modifications. Some contracts may contain explicit or implicit enforceable rights and obligations that require lease concessions if certain circumstances arise that are beyond the control of the parties to the contract. If a lease contract provides enforceable rights and obligations for concessions in the contract and no changes are made to that contract, the concessions are not accounted for under the lease modification guidance in Topic 842. If concessions granted by lessors are beyond the enforceable rights and obligations in the contract, entities would generally account for those concessions in accordance with the lease modification guidance in Topic 842. Because of the unprecedented and global nature of the COVID-19 pandemic, the FASB staff is aware that it may be exceedingly challenging for entities to determine whether existing contracts provide enforceable rights and obligations for lease concessions and whether those concessions are consistent with the terms of the contract or are modifications to the contract. As such, the FASB staff believes that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations. Some concessions will provide a deferral of payments with no substantive changes to the consideration in the original contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original contract. The FASB staff expects that there will be multiple ways to account for those deferrals, none of which the FASB staff believes are more preferable than the others. Two of those methods are: (1) account for the concessions as if no changes to the lease contract were made; under that accounting, a lessor would increase its lease receivable, and a lessee would increase its accounts payable as receivables/payments accrue; in its income statement, a lessor would continue to recognize income, and a lessee would continue to recognize expense during the deferral period; and (2) account for the deferred payments as variable lease payments. The Company has elected to utilize the method wherein the concessions result in additional lease receivable during the deferral period as available under Topic 842 Q&A for lease concessions related to the effects of the COVID-19 pandemic. The Company's lease concessions related to the effects of the COVID-19 pandemic resulted in a receivable of $89,460 on the Company’s condensed consolidated balance sheet as of June 30, 2020. Due to the continuing nature of the COVID-19 pandemic, there may be subsequent impacts from future tenant requests for lease concessions or deferrals for future periods. The Company maintains an inventory of tenants which have or are expected to request lease concessions. Future lease concessions may have an impact on the Company’s business, financial condition and results of operations, but the ultimate impact will largely depend on future developments with respect to the continued spread and treatment of COVID-19, which the Company cannot accurately predict at this time. New Accounting Standards Recently Issued and Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 eases the potential burden in accounting for recognizing the effects of reference rate reform on financial reporting. Such challenges include the accounting and operational implications for contract modifications and hedge accounting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to loan and lease agreements, contracts, hedging relationships, and other transactions affected by reference rate reform. These provisions apply to contract modifications that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discounted because of reference rate reform. Qualifying modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modification would be considered “minor” so that any existing unamortized deferred loan origination fees and costs would carry forward and continue to be amortized. Qualifying modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for hedge accounting. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022, with adoption permitted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, the amendments must be applied prospectively for all eligible contract modifications. The Company is currently evaluating the effect that ASU 2020-04 will have on the Company’s consolidated financial statements. |
MERGER AND SELF-MANAGEMENT TR_2
MERGER AND SELF-MANAGEMENT TRANSACTION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Purchase Price Allocation | The following table summarizes the allocation of the purchase price to the fair values assigned to the BrixInvest assets acquired and liabilities assumed as of December 31, 2019, the closing date of the Self-Management Transaction. These fair values were based on internal Company and independent external third-party valuations: Fair Values Assigned December 31, 2019 Assets: Cash and cash equivalents $ (204,176 ) Prepaid expenses and other assets (305,212 ) Operating lease right-of-use asset (2,386,877 ) Intangible assets (7,700,000 ) Liabilities: Short-term notes payable 4,800,000 Due to affiliates 630,820 Bank line of credit 800,000 Accounts payable and other liabilities 2,070,968 Operating lease liability 2,386,877 Net liabilities assumed 92,400 Less: Cancellation of investment in the Company (107,400 ) Add: Contribution of Class M OP Units and Class P OP Units 50,603,000 Goodwill $ 50,588,000 The following table summarizes the allocation of the purchase price to the fair values assigned to the REIT I assets acquired and liabilities assumed as of December 31, 2019, the Merger closing date. These fair values were based on internal Company and independent external third-party valuations: Fair Values Assigned December 31, Assets: Real estate property, including above/below lease intangibles $ 151,099,097 Cash and cash equivalents 1,612,331 Tenant receivable 310,169 Prepaid expenses and other assets 51,924 Liabilities: Mortgage notes payable, net (62,985,425 ) Accounts payable and other liabilities (2,243,156 ) Net 87,844,940 Less: Cancellation of investment in REIT I (Note 5) (3,091,489 ) Capitalized transaction-related costs (3,044,480 ) Net Assets Acquired $ 81,708,971 |
Class M OP Units Conversion | In the event that the Class M OP Units are converted into Class C OP Units prior to December 31, 2023, such Class M OP Units shall be exchanged at the rate indicated below: Date of Exchange Early Conversion Rate From December 31, 2020 to December 30, 2021 50% of the Class M conversion ratio From December 31, 2021 to December 30, 2022 60% of the Class M conversion ratio From December 31, 2022 to December 30, 2023 70% of the Class M conversion ratio The Class M OP Units are eligible for an increase in the conversion ratio (conversion ratio enhancement) if the Company achieves both of the targets for assets under management (“AUM”) and adjusted funds from operations (“AFFO”) in a given year as set forth below: Hurdles AUM AFFO Per Share Class M ($ in billions) ($) Conversion Ratio Initial Conversion Ratio 1:5.00 Fiscal Year 2021 $ 0.860 $ 0.59 1:5.75 Fiscal Year 2022 $ 1.175 $ 0.65 1:7.50 Fiscal Year 2023 $ 1.551 $ 0.70 1:9.00 |
Net Carrying Amount of Goodwill | The net carrying amount of goodwill as of June 30, 2020 and December 31, 2019 is as follows: June 30, December 31, Goodwill $ 17,320,857 $ 50,588,000 |
Other Intangible Assets Acquired | Intangible assets, net as of June 30, 2020 and December 31, 2019 and related useful lives are as follows: Intangible Assets Weighted-Average Useful Life June 30, December 31, Investor list, net 5.0 years $ 3,494,740 $ 4,800,000 Web services technology, domains and licenses 3.0 years 3,433,041 2,900,000 6,927,781 7,700,000 Accumulated amortization (925,989 ) — Net $ 6,001,792 $ 7,700,000 |
REAL ESTATE INVESTMENTS, NET (T
REAL ESTATE INVESTMENTS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties | The following table provides summary information regarding the Company’s real estate portfolio as of June 30, 2020 : 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 $ 1,269,349 $ (1,988,113 ) $ 9,137,083 Dollar General Litchfield, ME 11/4/2016 Retail 1,281,812 116,302 (145,884 ) 1,252,230 Dollar General Wilton, ME 11/4/2016 Retail 1,543,776 140,653 (186,700 ) 1,497,729 Dollar General Thompsontown, PA 11/4/2016 Retail 1,199,860 106,730 (140,168 ) 1,166,422 Dollar General Mt. Gilead, OH 11/4/2016 Retail 1,174,188 111,847 (134,389 ) 1,151,646 Dollar General Lakeside, OH 11/4/2016 Retail 1,112,872 100,857 (137,925 ) 1,075,804 Dollar General Castalia, OH 11/4/2016 Retail 1,102,086 86,408 (134,008 ) 1,054,486 Dana (1) Cedar Park, TX 12/27/2016 Industrial 6,802,876 531,439 (1,688,477 ) 5,645,838 Northrop Grumman Melbourne, FL 3/7/2017 Office 12,382,991 1,341,199 (2,577,470 ) 11,146,720 exp US Services Maitland, FL 3/27/2017 Office 6,056,668 388,248 (721,294 ) 5,723,622 Harley Bedford, TX 4/13/2017 Retail 13,178,288 — (1,080,657 ) 12,097,631 Wyndham Summerlin, NV 6/22/2017 Office 10,406,483 669,232 (992,977 ) 10,082,738 Williams Sonoma Summerlin, NV 6/22/2017 Office 8,079,612 550,486 (902,677 ) 7,727,421 Omnicare Richmond, VA 7/20/2017 Industrial 7,262,747 281,442 (710,174 ) 6,834,015 EMCOR Cincinnati, OH 8/29/2017 Office 5,960,610 463,488 (514,464 ) 5,909,634 Husqvarna Charlotte, NC 11/30/2017 Industrial 11,840,200 1,013,948 (935,104 ) 11,919,044 AvAir Chandler, AZ 12/28/2017 Industrial 27,357,900 — (1,764,098 ) 25,593,802 3M DeKalb, IL 3/29/2018 Industrial 14,762,819 2,356,361 (2,853,917 ) 14,265,263 Cummins Nashville, TN 4/4/2018 Office 14,465,491 1,536,998 (1,754,657 ) 14,247,832 Northrop Grumman Parcel Melbourne, FL 6/21/2018 Land 329,410 — — 329,410 24 Hour Fitness (1) Las Vegas, NV 7/27/2018 Retail 6,848,966 176,275 (825,644 ) 6,199,597 Texas Health Dallas, TX 9/13/2018 Office 6,976,703 713,221 (532,685 ) 7,157,239 Bon Secours Richmond, VA 10/31/2018 Office 10,388,751 800,356 (751,926 ) 10,437,181 Costco Issaquah, WA 12/20/2018 Office 27,330,797 2,765,136 (2,002,991 ) 28,092,942 Taylor Fresh Foods Yuma, AZ 10/24/2019 Industrial 34,194,370 2,894,017 (936,185 ) 36,152,202 Chevron Gas Station San Jose, CA 12/31/2019 Retail 4,054,759 145,577 (30,317 ) 4,170,019 Levins Sacramento, CA 12/31/2019 Industrial 4,429,390 221,927 (110,304 ) 4,541,013 Chevron Gas Station Roseville, CA 12/31/2019 Retail 3,648,571 136,415 (59,513 ) 3,725,473 Dollar General Bakersfield, CA 12/31/2019 Retail 4,899,714 261,630 (73,566 ) 5,087,778 PMI Preclinical San Carlos, CA 12/31/2019 Office 9,672,174 408,225 (102,161 ) 9,978,238 EcoThrift Sacramento, CA 12/31/2019 Retail 5,550,226 273,846 (148,740 ) 5,675,332 GSA (MSHA) Vacaville, CA 12/31/2019 Office 3,112,076 243,307 (69,257 ) 3,286,126 PreK Education San Antonio, TX 12/31/2019 Retail 12,447,287 447,927 (299,714 ) 12,595,500 Dollar Tree Morrow, GA 12/31/2019 Retail 1,320,367 73,298 (35,455 ) 1,358,210 Solar Turbines San Diego, CA 12/31/2019 Office 7,133,241 284,026 (602,129 ) 6,815,138 Wood Group San Diego, CA 12/31/2019 Office 9,731,220 392,955 — 10,124,175 ITW Rippey El Dorado, CA 12/31/2019 Industrial 7,071,143 304,387 — 7,375,530 Dollar General Big Spring, TX 12/31/2019 Retail 1,281,683 76,351 (25,484 ) 1,332,550 Gap Rocklin, CA 12/31/2019 Office 8,378,276 360,377 (239,653 ) 8,499,000 L-3 Communications San Diego, CA 12/31/2019 Office 11,631,857 454,035 (235,412 ) 11,850,480 Sutter Health Rancho Cordova, CA 12/31/2019 Office 29,555,055 1,616,610 (540,174 ) 30,631,491 Walgreens Santa Maria, CA 12/31/2019 Retail 5,223,442 335,945 (66,480 ) 5,492,907 $ 371,036,604 $ 24,450,830 $ (27,050,943 ) $ 368,436,491 (1) See impairment charges discussion below. The details of the Company's real estate impairment charges for the three and six months ended June 30, 2020 are as follows: Property Location Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Rite Aid Lake Elsinore, CA $ 349,457 $ 349,457 Dana Cedar Park, TX — 2,184,395 24 Hour Fitness Las Vegas, NV — 5,664,517 Dinan Cars Morgan Hill, CA — 1,308,156 $ 349,457 $ 9,506,525 |
Revenue Concentration | The Company’s revenue concentration based on tenants representing greater than 10% of total revenues for the three and six months ended June 30, 2019 was as follows. Three Months Ended Property and Location Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 697,522 11.8 % AvAir, Chandler, AZ $ 666,774 11.3 % Six Months Ended Property and Location Revenue Percentage of Total Revenue Costco, Issaquah, WA $ 1,376,025 11.7 % AvAir, Chandler, AZ $ 1,333,549 11.3 % |
Rental Payments for Operating Leases | As of June 30, 2020 , the future minimum contractual rent payments due to the Company under the Company’s non-cancellable operating leases, excluding any rents from 24 Hour Fitness due to its rejection of the lease in connection with its bankruptcy proceeding and excluding rents due related to real estate investments held for sale, are as follows: July through December 2020 $ 13,567,979 2021 25,932,970 2022 23,666,227 2023 20,401,395 2024 19,832,230 2025 16,029,926 Thereafter 49,126,171 $ 168,556,898 |
Intangible Assets | As of June 30, 2020 , the Company’s lease intangibles were as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 24,450,830 $ 1,194,720 $ (15,552,554 ) Accumulated amortization (7,764,826 ) (248,773 ) 1,894,359 Net amount $ 16,686,004 $ 945,947 $ (13,658,195 ) |
Intangible Assets Amortization | As of June 30, 2020 , the amortization of intangible assets for the six months ending December 31, 2020 and for each year of the next five years and thereafter is expected to be as follows: Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles July through December 2020 $ 2,213,836 $ 70,890 $ (766,689 ) 2021 3,692,924 141,779 (1,525,877 ) 2022 2,709,181 141,780 (1,280,240 ) 2023 1,832,039 139,131 (984,317 ) 2024 1,715,028 134,500 (980,897 ) 2025 1,316,375 122,383 (980,897 ) Thereafter 3,206,621 195,484 (7,139,278 ) $ 16,686,004 $ 945,947 $ (13,658,195 ) Weighted-average remaining amortization period 7.0 years 7.5 years 12.3 years |
Summary of Major Components Related to Real Estate Investments Held for Sale | The following table summarizes the major components of assets and liabilities related to real estate investments held for sale as of June 30, 2020 : June 30, 2020 Assets related to real estate investments held for sale: Land, buildings and improvements $ 18,172,435 Tenant origination and absorption costs 1,304,620 Accumulated depreciation and amortization (1,550,648 ) Real estate investments held for sale, net 17,926,407 Other assets, net 725,990 Total assets related to real estate investments held for sale: $ 18,652,397 Liabilities related to real estate investments held for sale: Mortgage notes payable, net $ 9,549,467 Other liabilities, net 196,938 Total liabilities related to real estate investments held for sale: $ 9,746,405 The following table summarizes the major components of rental income, expenses and impairment related to real estate investments held for sale as of June 30, 2020 , which were included in continuing operations for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Total revenues $ 312,060 $ 98,800 $ 1,480,909 $ 192,452 Expenses: Interest expense 83,658 25,182 221,022 50,472 Depreciation and amortization 185,368 81,990 375,575 163,979 Other expenses 101,131 34,029 221,811 65,689 Impairment of real estate properties 349,457 — 1,657,613 — Total expenses 719,614 141,201 2,476,021 280,140 Net loss $ (407,554 ) $ (42,401 ) $ (995,112 ) $ (87,688 ) |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED ENTITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Schedule of Equity Method Investments [Line Items] | |
Investments | The Company’s investment in unconsolidated entity as of June 30, 2020 and December 31, 2019 is as follows: June 30, December 31, The TIC Interest $ 10,200,810 $ 10,388,588 |
Entities Equity In Earnings | The Company’s income (loss) from investments in unconsolidated entities for the three and six months ended June 30, 2020 and 2019 , is as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 The TIC Interest $ 125,658 $ 71,703 $ 146,411 $ 152,063 REIT I — (15,748 ) — (22,075 ) $ 125,658 $ 55,955 $ 146,411 $ 129,988 |
The TIC Interest | |
Schedule of Equity Method Investments [Line Items] | |
Summarized Financial Information | The following is summarized financial information for the Santa Clara property as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 : June 30, December 31, Assets: Real estate investments, net $ 30,406,177 $ 30,858,240 Cash and cash equivalents 254,083 275,760 Other assets 237,428 228,770 Total assets $ 30,897,688 $ 31,362,770 Liabilities: Mortgage notes payable $ 13,619,257 $ 13,746,635 Below-market lease, net 2,880,167 2,953,360 Other liabilities 62,333 68,587 Total liabilities 16,561,757 16,768,582 Total equity 14,335,931 14,594,188 Total liabilities and equity $ 30,897,688 $ 31,362,770 Three Months Ended Six Months Ended 2020 2019 2020 2019 Total revenues $ 751,653 $ 693,571 $ 1,349,573 $ 1,359,992 Expenses: Interest expense 140,906 143,367 282,609 285,886 Depreciation and amortization 250,680 248,136 499,898 496,272 Other expenses 187,246 203,452 365,703 368,697 Total expenses 578,832 594,955 1,148,210 1,150,855 Net income $ 172,821 $ 98,616 $ 201,363 $ 209,137 |
REIT I | |
Schedule of Equity Method Investments [Line Items] | |
Summarized Financial Information | The following is REIT I's summarized results of operations for the three and six months ended June 30, 2019 : Three Months Ended Six Months Ended Total revenues $ 3,277,710 $ 6,566,354 Expenses: Depreciation and amortization 1,444,354 2,886,414 Interest expense 982,223 1,845,396 Other expenses 1,175,029 2,403,892 Total expenses 3,601,606 7,135,702 Other income: Other income (1) — 113,773 Net loss $ (323,896 ) $ (455,575 ) (1) The gain on disposal of real estate investment property of $113,773 during the six months ended June 30, 2019 was due to the higher mortgage loan balance and related interest payable for the Antioch, California Chase property compared to its net book value when it was relinquished in a foreclosure sale on March 13, 2019. |
CONDENSED CONSOLIDATED BALANC_4
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Supplemental Balance Sheet Disclsoure [Abstract] | |
Summary of Tenant receivables | Tenant receivables consisted of the following: June 30, December 31, Straight-line rent $ 4,160,873 $ 3,541,238 Tenant rent 301,040 420,959 Tenant reimbursements 1,746,212 1,854,883 Tenant other 636,909 407,684 Total $ 6,845,034 $ 6,224,764 |
Accounts Payable, Accrued and Other Liabilities | Accounts payable, accrued and other liabilities were comprised of the following: June 30, December 31, Accounts payable $ 1,839,013 $ 660,111 Accrued expenses (a) 2,375,452 5,773,214 Accrued distributions 697,350 962,615 Accrued interest payable 736,582 1,690,168 Unearned rent 1,940,095 1,963,896 Reserve for loan guarantee (b) 3,125,037 — Lease incentive obligation 5,157 505,157 Total $ 10,718,686 $ 11,555,161 (a) Includes accrued Merger expenses of $486,354 and $1,570,622 as of June 30, 2020 and December 31, 2019 , respectively. (b) Represents the estimated liability for a loan guarantee related to the secured mortgage for the Las Vegas, Nevada 24 Hour Fitness property, as a result of the evaluation of the impact of the COVID-19 pandemic on the tenant's business and the risk that the lender could foreclose on the property. See Note 4 for additional information. |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | As of June 30, 2020 and December 31, 2019 , the Company’s mortgage notes payable consisted of the following: Collateral 2020 Principal Amount 2019 Principal Amount Contractual Interest Rate (1) Effective Interest Rate (1) Loan Maturity Accredo/Walgreens property (10)(11) $ 4,687,414 $ 6,853,442 3.95% 3.95% 7/1/2021 Six Dollar General properties 3,782,573 3,819,264 4.69% 4.69% 4/1/2022 Dana property 4,509,546 4,551,250 4.56% 4.56% 4/1/2023 Northrop Grumman property 5,593,555 5,666,866 4.40% 4.40% 3/2/2021 exp US Services property 3,353,987 3,385,353 (3) 4.25% 11/17/2024 Harley property 6,686,362 6,748,029 4.25% 4.25% 9/1/2024 Wyndham property (2) 5,662,800 5,716,200 One-month LIBOR+2.05% 4.34% 6/5/2027 Williams Sonoma property (2) 4,484,400 4,530,600 One-month LIBOR+2.05% 4.34% 6/5/2022 Omnicare property 4,233,547 4,273,552 4.36% 4.36% 5/1/2026 EMCOR property 2,837,293 2,862,484 4.35% 4.35% 12/1/2024 Husqvarna property 6,379,182 6,379,182 (4) 4.60% 2/20/2028 AvAir property (10) 14,539,619 14,575,000 (5) 4.84% 3/27/2028 3M property 8,229,000 8,290,000 One-month LIBOR+2.25% 5.09% 3/29/2023 Cummins property 8,396,400 8,458,600 One-month LIBOR+2.25% 5.16% 4/4/2023 24 Hour Fitness property (6) 6,250,074 6,283,898 One-month LIBOR+4.30% 4.64% 4/1/2049 Texas Health property 4,400,000 4,400,000 4.00% 4.00% 12/5/2024 Bon Secours property 5,216,133 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 Taylor Fresh Foods 12,350,000 12,350,000 3.85% 3.85% 11/1/2029 Levins property (7) 2,056,288 2,079,793 One-month LIBOR + 1.93% 3.74% 1/5/2021 Island Pacific Supermarket property (7)(11) — 1,891,225 One-month LIBOR + 1.93% 3.74% 5/30/2033 Dollar General Bakersfield property (7) 2,296,868 2,324,338 One-month LIBOR + 1.48% 3.38% 3/5/2021 Rite Aid property (7)(11) — 3,659,338 One-month LIBOR + 1.50% 3.25% 5/5/2021 PMI Preclinical property (7) 4,069,936 4,118,613 One-month LIBOR + 1.48% 3.38% 3/5/2021 EcoThrift property (7) 2,606,620 2,639,237 One-month LIBOR + 1.21% 2.96% 7/5/2021 GSA (MSHA) property (7) 1,774,395 1,796,361 One-month LIBOR + 1.25% 3.13% 8/5/2021 PreK San Antonio property (7) 5,089,648 5,140,343 4.25% 4.25% 12/1/2021 Dinan Cars property (7)(8)(11) — 2,710,834 2.76% 2.76% 1/5/2022 Solar Turbines, Amec Foster, ITW Rippey properties (7) 9,325,631 9,434,692 3.35% 3.35% 11/1/2026 Dollar General Big Spring property (7) 605,288 611,161 4.50% 4.50% 4/1/2022 Gap property (7) 3,607,190 3,643,166 4.15% 4.15% 8/1/2023 L-3 Communications property (7) 5,235,972 5,284,884 4.69% 4.69% 4/1/2022 Sutter Health property (7) 14,015,229 14,161,776 4.50% 4.50% 3/9/2024 Walgreens property (7)(10) 3,000,000 3,000,000 One-month LIBOR+5.00% 7.50% 8/6/2020 Chevron Roseville property (9) 2,000,000 — 8.00% 8.00% 9/1/2020 Chevron San Jose property (9) 2,000,000 — 8.00% 8.00% 9/1/2020 Total mortgage notes payable 188,124,950 195,739,481 Plus unamortized mortgage premium (12) 499,967 489,664 Less unamortized deferred financing costs (1,947,788 ) (2,189,938 ) Mortgage notes payable, net $ 186,677,129 $ 194,039,207 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of June 30, 2020 . Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2020 , consisting of the contractual interest rate and the effect of the interest rate swap, if applicable (see Note 8 for further information regarding the Company’s derivative instruments) . (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 the U.S. Treasury Bill index rate plus 3.25% . (4) The initial contractual interest rate is 4.60% for the first five years and the greater of 4.60% or five-year Treasury Constant Maturity (“TCM”) plus 2.45% for the second five years. (5) The initial contractual interest rate is 4.84% for the first five-years 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 interest rate adjusts in the 133rd, 253rd and 313th months. As discussed in Note 4 , during the three months ended June 30, 2020 , the Company recorded an impairment charge of $5,664,517 related to its investment in the 24 Hour Fitness property in Las Vegas, Nevada due to the substantial impact on fitness centers from the COVID-19 pandemic and the requirement of an indefinite and potentially extended period of store closures and the resulting inability of the tenant to make rent payments. On April 1, 2020, the Company’s special purpose subsidiary initiated negotiations with the lender on the 24 Hour Fitness property regarding the special purpose subsidiary's request for a deferral of mortgage payments until the tenant resumes paying rent. The lender on this property did not agree to provide any substantial mortgage relief to the Company's special purpose subsidiary, but rather agreed to only temporarily reduce its $32,000 monthly mortgage payment by $8,000 for the next four monthly payments. On June 15, 2020, the Company received written notice that the lease was formally rejected in connection with 24 Hour Fitness' Chapter 11 bankruptcy proceeding and the premises were surrendered to the Company's subsidiary. If the Company's special purpose subsidiary cannot find a replacement tenant, then it may allow the lender to foreclose on the property and take possession. The estimated liability of $3,125,037 under a loan guarantee related to the secured mortgage was accrued and included in accounts payable and accrued liabilities on the condensed consolidated balance sheet as of June 30, 2020 . The lender on the 24 Hour Fitness property has issued a notice of default as a result of 24 Hour Fitness's bankruptcy filing and reserves the right to exercise its rights and remedies pursuant to the loan documents. (7) The loan was acquired through the Merger on December 31, 2019. (8) The Company negotiated a lease termination with Dinan Cars effective January 31, 2020 in exchange for a termination payment from Dinan Cars of $783,182 which was used to reduce the principal balance of this mortgage by $650,000 and establish a payment reserve with the remaining $133,182 . In connection with the principal prepayment, the Company terminated the related swap agreement on February 4, 2020 at a cost of $47,000 (see Note 8 for further discussion). See Note 11 for details on the subsequent sale of the property. (9) These loans were provided by Mr. Raymond Wirta, Chairman of the Board of the Company, and a trust belonging to Mr. Wirta (“Wirta Trust”). On June 1, 2020, the maturity date of these mortgages was extended to September 1, 2020 on the same terms. On July 31, 2020, the Chevron San Jose property loan was fully repaid with proceeds from the refinancing of the AvAir property (see Note 11 for further discussion). (10) The loan was refinanced subsequent to June 30, 2020 (see Note 11 for further discussion). (11) The mortgage note balance is reflected in mortgage notes payable related to real estate investments held for sale, net (excluding the portion related to Accredo) in the accompanying condensed consolidated balance sheet as of June 30, 2020 (see Note 11 for further discussion). (12) Represents unamortized net mortgage premium acquired through the Merger. |
Mortgage Notes Payable | The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2020 and December 31, 2019 : June 30, 2020 December 31, 2019 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 188,124,950 $ 186,677,129 $ 186,322,921 $ 195,739,481 $ 194,039,207 $ 200,535,334 In July and August 2020, the Company refinanced the following mortgage notes. June 30, 2020 New Properties Principal Amount Principal Amount Prior Interest Rate New Interest Rate Original Maturity Date New Maturity Date Accredo/Walgreens properties $ 6,800,000 $ 8,538,000 3.95 % 3.80 % 7/1/21 8/1/25 AvAir property 14,545,000 19,950,000 4.84 % 3.80 % 3/27/28 8/1/25 Walgreens property 3,000,000 3,217,500 7.50 % 4.25 % 8/6/20 7/16/30 |
Schedule of Line of Credit Facilities | The details of the Company's unsecured credit facility as of June 30, 2020 and December 31, 2019 follow: June 30, December 31, Unsecured credit facility $ 12,000,000 $ 7,740,000 Less unamortized deferred financing costs (39,800 ) (90,139 ) Unsecured credit facility, net $ 11,960,200 $ 7,649,861 |
Maturities of Long-term Debt | The following summarizes the future principal repayments of the Company’s mortgage notes payable, unsecured credit facility and short-term notes payable as of June 30, 2020 : Mortgage Notes Payable Unsecured Credit Facility Short-term Notes Payable Total July through December 2020 $ 8,364,457 $ 12,000,000 $ 527,000 $ 20,891,457 2021 24,640,690 — — 24,640,690 2022 21,004,076 — — 21,004,076 2023 25,311,036 — — 25,311,036 2024 30,320,929 — — 30,320,929 2025 1,626,959 — — 1,626,959 Thereafter 76,856,803 — — 76,856,803 Total principal 188,124,950 12,000,000 527,000 200,651,950 Plus unamortized mortgage premium, net of discount 499,967 — — 499,967 Less deferred financing costs (1,947,788 ) (39,800 ) — (1,987,588 ) Net principal $ 186,677,129 $ 11,960,200 $ 527,000 $ 199,164,329 |
Interest Expenses | The following is a reconciliation of the components of interest expense for the three and six months ended June 30, 2020 and 2019 : Three Months Ended Six Months Ended 2020 2019 2020 2019 Mortgage notes payable: Interest expense $ 2,147,112 $ 1,368,662 $ 4,332,089 $ 2,845,158 Amortization of deferred financing costs 139,600 109,071 258,631 379,593 Loss on interest rate swaps (1) 80,985 562,571 1,446,476 890,385 Unsecured credit facility: Interest expense 166,834 27,918 321,458 111,436 Amortization of deferred financing costs 42,876 8,503 75,336 10,503 Other (18,530 ) — 29,543 — Total interest expense $ 2,558,877 $ 2,076,725 $ 6,463,533 $ 4,237,075 (1) Includes unrealized loss on interest rate swaps of $7,785 and $553,490 for the three months ended June 30, 2020 and 2019 , respectively, and $1,292,752 and $874,016 for the six months ended June 30, 2020 and 2019 , respectively (see Note 8 ). Accrued interest payable of $71,882 and $22,282 at June 30, 2020 and December 31, 2019 , 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) | 6 Months Ended |
Jun. 30, 2020 | |
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 as of June 30, 2020 and December 31, 2019 , respectively: June 30, 2020 December 31, 2019 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 (iv) 11 $ 45,504,305 One-month LIBOR + applicable spread/Fixed at 3.13%-5.16% 3.91 % 2.4 years 12 $ 48,215,139 One-month LIBOR + applicable spread/Fixed at 2.76%-5.16% 3.87 % 2.9 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 amounts (outstanding principal balance at the maturity date) as of June 30, 2020 and December 31, 2019 were $42,917,710 and $45,514,229 , respectively. (ii) The reference rate was June 30, 2020 . (iii) The reference rate was December 31, 2019 . (iv) The Company terminated the swap agreement related to the Dinan property mortgage loan on February 4, 2020 at a cost of $47,000 (see Note 7 ). Subsequent to June 30, 2020, the Company terminated the swap agreement related to the Rite Aid property mortgage loan on July 30, 2020 at a cost of $40,700 (see Note 11 ). |
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: June 30, 2020 December 31, 2019 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 — $ — 5 $ 34,567 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value 11 $ (2,279,909 ) 7 $ (1,021,724 ) |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 and six months ended June 30, 2020 and 2019 and related party receivable and payable as of June 30, 2020 and December 31, 2019 : Three Months Ended Six Months Ended Three Months Ended Six Months Ended June 30, 2020 June 30, 2020 June 30, 2019 December 31, 2019 Incurred Incurred Receivable Payable Incurred Incurred Receivable Payable Expensed: Asset management fees (1) $ — $ — $ — $ — $ 680,019 $ 1,360,037 $ — $ — Operating expense reimbursements — — — — 132,000 264,000 — — Fees to affiliates — — 812,019 1,624,037 Property management fees* — — — — 56,122 112,072 — — Directors and officers insurance and other reimbursements** — — — — 70,785 133,675 — — Expense reimbursements from Former Sponsor (2) — — — — (148,233 ) (236,232 ) — — Capitalized: Financing coordination fees — — — — — 63,500 — — Reimbursable organizational and offering expenses (3) — — — — 415,299 899,863 — — Other: Due from BRIX REIT (4) — — 3,214 — — — 1,378 — Due from TIC — — — — — — 954 — Notes due to Chairman of the Board — — — — — — — 630,820 $ 3,214 $ — $ 2,332 $ 630,820 * 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 Former Advisor elected, in its sole discretion, to defer all or any portion of its monthly asset management fee, the Former Advisor was 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 and six months ended June 30, 2019 , the Former Advisor did no t waive any of the asset management fees. In addition to amounts presented in this table, the Company also incurred asset management fees to the Former Advisor of $47,977 and $95,953 related to the TIC Interest during the three and six months ended June 30, 2019 , respectively, which amounts were reflected as reductions 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 Former Sponsor ” below . The Former Sponsor agreed to reimburse the Company for these investor relations compensation costs which the Former Sponsor considered to be offering expenses in accordance with the Advisory Agreement which was terminated effective September 30, 2019. The expense reimbursements from the Former Sponsor for the three and six months ended June 30, 2019 also include a refund of $0 and $40,915 of employment related legal fees, respectively, which the Former Sponsor agreed to reimburse the Company. (3) As of June 30, 2019 , the Former Sponsor had incurred $8,815,104 of organizational and offering costs on behalf of the Company. However, the Company was only obligated to reimburse the Former Sponsor for such organizational and offering expenses to the extent of 3% of gross offering proceeds. (4) The receivables represent incidental expenses advanced to BRIX REIT. The 2019 amount included unpaid asset management fees of $242,299 as of December 31, 2019 due from BRIX REIT, which the Company agreed to waive in May 2020 given the impact of the COVID-19 pandemic on BRIX REIT. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Maturities of Operating Lease Liability | Scheduled maturities of the operating lease liability as of June 30, 2020 are as follows: July to December 2020 $ 243,542 2021 599,953 2022 620,444 2023 639,928 2024 322,483 Total undiscounted lease payments 2,426,350 Less amounts representing interest (273,431 ) Total operating lease liability $ 2,152,919 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Mortgage Notes Payable | The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2020 and December 31, 2019 : June 30, 2020 December 31, 2019 Face Value Carrying Value Fair Value Face value Carrying Value Fair Value Mortgage notes payable $ 188,124,950 $ 186,677,129 $ 186,322,921 $ 195,739,481 $ 194,039,207 $ 200,535,334 In July and August 2020, the Company refinanced the following mortgage notes. June 30, 2020 New Properties Principal Amount Principal Amount Prior Interest Rate New Interest Rate Original Maturity Date New Maturity Date Accredo/Walgreens properties $ 6,800,000 $ 8,538,000 3.95 % 3.80 % 7/1/21 8/1/25 AvAir property 14,545,000 19,950,000 4.84 % 3.80 % 3/27/28 8/1/25 Walgreens property 3,000,000 3,217,500 7.50 % 4.25 % 8/6/20 7/16/30 |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details) | Aug. 11, 2017shares | Dec. 31, 2015$ / sharesshares | Jun. 24, 2015$ / sharesshares | Jun. 30, 2020USD ($)property$ / sharesshares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)property$ / sharesshares | Jun. 30, 2019USD ($) | Dec. 31, 2015$ / sharesshares | Dec. 31, 2019property$ / sharesshares | Jun. 30, 2020USD ($)property$ / sharesshares | Jun. 30, 2020USD ($)property$ / sharesshares | Jul. 26, 2020$ / shares | May 22, 2020$ / shares | May 20, 2020$ / shares | Feb. 01, 2020$ / shares | Dec. 23, 2019USD ($) | Jul. 15, 2015USD ($) |
Business And Organization [Line Items] | |||||||||||||||||
Issued common stock (in shares) | shares | 450,000,000 | 450,000,000 | 450,000,000 | 450,000,000 | |||||||||||||
Preferred stock, shares authorized (in shares) | shares | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||||||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||
Net asset value (in usd per share) | $ / shares | $ 7 | $ 7 | $ 10.16 | $ 7 | $ 7 | $ 7 | $ 7 | $ 10.27 | |||||||||
Issuance of common stock | $ | $ 4,851,043 | $ 13,848,287 | $ 14,092,239 | $ 30,005,491 | |||||||||||||
Number of real estate properties | 45 | 45 | 45 | 45 | |||||||||||||
Number of real estate properties, held-for-sale | 4 | 4 | 4 | 4 | |||||||||||||
REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties acquired | 20 | ||||||||||||||||
Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 41 | 41 | 41 | 41 | |||||||||||||
Real Estate Investment | REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties acquired | 17 | ||||||||||||||||
Tenant-in-common | Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Ownership percentage | 72.70% | 72.70% | 72.70% | 72.70% | |||||||||||||
Class S | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||
Common stock, shares authorized (in shares) | shares | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||||||
Issuance of common stock (in shares) | shares | 100,000,000 | 189,585 | |||||||||||||||
Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||
Common stock, shares authorized (in shares) | shares | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||
Common stock subscriptions | $ | $ 800,000,000 | ||||||||||||||||
Class C | REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock in merger (in shares) | shares | 8,042,221.6 | ||||||||||||||||
Class C | Minimum | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 500 | ||||||||||||||||
Distribution Reinvestment Plan | Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock subscriptions | $ | 75,000,000 | ||||||||||||||||
Primary Offering | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock subscriptions | $ | $ 90,000,000 | ||||||||||||||||
Follow-on Offering | Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock subscriptions | $ | $ 725,000,000 | ||||||||||||||||
Registered Offering | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Common stock subscriptions | $ | $ 10,000,000 | ||||||||||||||||
Registered Offering | Class S | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 4,621 | ||||||||||||||||
Issuance of common stock | $ | $ 1,921,229 | ||||||||||||||||
Registered Offering | Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 19,346,077 | ||||||||||||||||
Issuance of common stock | $ | $ 193,763,736 | ||||||||||||||||
Registered Offering | Distribution Reinvestment Plan | Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 2,045,330 | ||||||||||||||||
Sponsor | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 10,000 | 10,000 | |||||||||||||||
Shares issued (in usd per share) | $ / shares | $ 10 | $ 10 | $ 10 | ||||||||||||||
Sponsor | Class C | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Issuance of common stock (in shares) | shares | 20,000 | 10,740 | |||||||||||||||
Subsequent Event | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Net asset value (in usd per share) | $ / shares | $ 0.05 | ||||||||||||||||
Retail | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 20 | 20 | 20 | 20 | |||||||||||||
Number of real estate properties, held-for-sale | 3 | 3 | 3 | 3 | |||||||||||||
Retail | REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties acquired | 11 | ||||||||||||||||
Retail | Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 17 | 17 | 17 | 17 | |||||||||||||
Office | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 16 | 16 | 16 | 16 | |||||||||||||
Office | REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties acquired | 6 | ||||||||||||||||
Office | Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 16 | 16 | 16 | 16 | |||||||||||||
Industrial | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 9 | 9 | 9 | 9 | |||||||||||||
Number of real estate properties, held-for-sale | 1 | 1 | 1 | 1 | |||||||||||||
Industrial | REIT I | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties acquired | 3 | ||||||||||||||||
Industrial | Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 8 | 8 | 8 | 8 | |||||||||||||
Land | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 1 | 1 | 1 | 1 | |||||||||||||
Land | Real Estate Investment | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Number of real estate properties | 1 | 1 | 1 | 1 | |||||||||||||
Class M OP Units | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Net asset value (in usd per share) | $ / shares | $ 35 | $ 35 | $ 35 | $ 35 | |||||||||||||
Class P OP Units | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Other ownership interests, units issued (in shares) | shares | 56,029 | 56,029 | 56,029 | 56,029 | 56,029 | ||||||||||||
BrixInvest | Class M OP Units | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Other ownership interests, units issued (in shares) | shares | 657,949.5 | 657,949.5 | 657,949.5 | 657,949.5 | 657,949.5 | ||||||||||||
BrixInvest | Class P OP Units | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Other ownership interests, units issued (in shares) | shares | 26,318 | ||||||||||||||||
Operating Partnership | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Ownership interest (as a percent) | 99.00% | ||||||||||||||||
Remaining ownership interest ( as a percent) | 1.00% | ||||||||||||||||
Daisho OP Holdings, LLC | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Ownership interest (as a percent) | 87.00% | ||||||||||||||||
BrixInvest | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Ownership interest (as a percent) | 12.00% | ||||||||||||||||
Preferred Stock | |||||||||||||||||
Business And Organization [Line Items] | |||||||||||||||||
Preferred stock, shares authorized (in shares) | shares | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |||||||||||||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
SUMMARY OF SIGNIFICANT ACOUNT_3
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020USD ($)property$ / sharesshares | Mar. 31, 2020USD ($) | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2020USD ($)property$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | |
Accounting Policies [Line Items] | ||||||
Rental income from tenant reimbursements | $ 1,538,586 | $ 1,098,603 | $ 3,899,505 | $ 2,186,463 | ||
Impairment of real estate investment properties | $ 349,457 | $ 9,157,068 | $ 0 | $ 9,506,525 | $ 0 | |
Number of impaired real estate properties | property | 1 | 4 | ||||
Potentially dilutive securities outstanding (in shares) | shares | 0 | 0 | ||||
Net loss per share, basic and diluted (in usd per share) | $ / shares | $ (0.09) | $ (0.08) | $ (2.13) | $ (0.14) | ||
Restricted cash to fund property tax | $ 258,493 | $ 258,493 | $ 113,362 | |||
Tenant reimbursements | $ 60,598 | $ 98,329 | ||||
Percentage of share in property owned | 72.70% | 72.70% | ||||
Restricted cash | 258,493 | $ 258,493 | $ 113,362 | |||
Goodwill impairment loss | 0 | 33,267,143 | ||||
Impairment of intangible assets (excluding goodwill) | 0 | $ 1,305,260 | ||||
Lease concession receivable, CARES Act | $ 89,460 | $ 89,460 | ||||
Class M OP Units | ||||||
Accounting Policies [Line Items] | ||||||
Conversion ratio | 0.2 | 0.2 | ||||
Class P OP Units | ||||||
Accounting Policies [Line Items] | ||||||
Other ownership interests, units issued (in shares) | shares | 56,029 | 56,029 | 56,029 | |||
Conversion ratio | 0.2 | |||||
Minimum | ||||||
Accounting Policies [Line Items] | ||||||
Intangible assets, estimated useful lives | 3 years | |||||
Maximum | ||||||
Accounting Policies [Line Items] | ||||||
Intangible assets, estimated useful lives | 5 years | |||||
Class C | ||||||
Accounting Policies [Line Items] | ||||||
Conversion ratio | 1 | 1 | ||||
Net loss per share, basic and diluted (in usd per share) | $ / shares | $ (0.09) | (0.06) | $ (2.13) | (0.13) | ||
Class S | ||||||
Accounting Policies [Line Items] | ||||||
Net loss per share, basic and diluted (in usd per share) | $ / shares | $ (0.09) | $ (0.10) | $ (2.13) | $ (0.18) | ||
Lease Agreements | ||||||
Accounting Policies [Line Items] | ||||||
Obligation amount to pay for site and tenant improvements | $ 60,598 | $ 60,598 | $ 98,329 | |||
Restricted cash | $ 92,684 | $ 92,684 | $ 92,684 | |||
BrixInvest | Class M OP Units | ||||||
Accounting Policies [Line Items] | ||||||
Other ownership interests, units issued (in shares) | shares | 657,949.5 | 657,949.5 | 657,949.5 | |||
BrixInvest | Class P OP Units | ||||||
Accounting Policies [Line Items] | ||||||
Other ownership interests, units issued (in shares) | shares | 26,318 | |||||
Lender Reserves | ||||||
Accounting Policies [Line Items] | ||||||
Restricted cash to fund property tax | $ 165,809 | $ 165,809 | $ 20,678 |
MERGER AND SELF-MANAGEMENT TR_3
MERGER AND SELF-MANAGEMENT TRANSACTION - Additional Information (Details) | Dec. 31, 2015$ / sharesshares | Jun. 24, 2015$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2019USD ($)property$ / sharesshares | May 22, 2020$ / shares | May 20, 2020$ / shares | Apr. 30, 2020 | Feb. 01, 2020$ / shares |
Business Acquisition [Line Items] | |||||||||||
Net asset value (in usd per share) | $ / shares | $ 7 | $ 7 | $ 10.16 | $ 7 | $ 7 | $ 10.27 | |||||
Decrease in estimated fair value of real estate properties, percentage | 14.00% | ||||||||||
Goodwill impairment loss | $ 0 | $ 33,267,143 | |||||||||
Intangible assets amortization expense | 438,770 | $ 925,989 | |||||||||
Impairment of intangible assets (excluding goodwill) | $ 0 | 1,305,260 | |||||||||
Class M OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Net asset value (in usd per share) | $ / shares | $ 35 | $ 35 | |||||||||
Conversion ratio | 0.2 | 0.2 | |||||||||
Class P OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Other ownership interests, units issued (in shares) | shares | 56,029 | 56,029 | 56,029 | ||||||||
Stock compensation expense | $ 88,784 | $ 177,567 | |||||||||
Conversion ratio | 0.2 | ||||||||||
BrixInvest | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Self-management transaction expense | 8,460 | 201,920 | $ 1,468,913 | ||||||||
Contribution of Class M OP Units and Class P OP Units | 50,603,000 | ||||||||||
Intangible assets | $ 7,700,000 | ||||||||||
July through December 2020 | 921,648 | 921,648 | |||||||||
2021 | 1,843,295 | 1,843,295 | |||||||||
2022 | 1,843,295 | 1,843,295 | |||||||||
2023 | 756,434 | 756,434 | |||||||||
2024 | $ 637,120 | $ 637,120 | |||||||||
BrixInvest | Class M OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Other ownership interests, units issued (in shares) | shares | 657,949.5 | 657,949.5 | 657,949.5 | ||||||||
BrixInvest | Class P OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Other ownership interests, units issued (in shares) | shares | 26,318 | ||||||||||
BrixInvest | Investor list, net | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Impairment of intangible assets (excluding goodwill) | $ 1,305,260 | ||||||||||
BrixInvest | Web services technology, domains and licenses | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Additional finite-lived intangible assets acquired | $ 209,351 | $ 533,041 | |||||||||
Daisho OP Holdings, LLC | Class M OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Conversion ratio | 1 | ||||||||||
Daisho OP Holdings, LLC | BrixInvest | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership interests distributed | 100.00% | ||||||||||
Operating Partnership | Class M OP Units and Class P OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Noncontrolling interest (as a percent) | 13.00% | ||||||||||
REIT I | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Number of real estate properties acquired | property | 20 | ||||||||||
Number of real estate properties, subject to California law | property | 17 | ||||||||||
Percentage of assets acquired by value, subject to California law | 93.00% | ||||||||||
Contingent consideration paid | $ 0 | ||||||||||
Acquisition-related transaction costs | $ 3,044,480 | ||||||||||
Class C | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Conversion ratio | 1 | 1 | |||||||||
Class C | REIT I | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Issuance of common stock in merger (in shares) | shares | 8,042,221.6 | ||||||||||
Messrs. Halfacre and Pacini | Class P OP Units | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Other ownership interests, units issued (in shares) | shares | 29,711 | ||||||||||
Other ownership interests, capital account | $ 1,331,752 | $ 1,331,752 | $ 1,509,319 | ||||||||
Other ownership interests, amortization period | 51 months | ||||||||||
Sponsor | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Issuance of common stock (in shares) | shares | 10,000 | 10,000 | |||||||||
Shares issued (in usd per share) | $ / shares | $ 10 | $ 10 | $ 10 | ||||||||
Sponsor | Class C | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Issuance of common stock (in shares) | shares | 20,000 | 10,740 | |||||||||
REIT I | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Ownership percentage | 4.80% |
MERGER AND SELF-MANAGEMENT TR_4
MERGER AND SELF-MANAGEMENT TRANSACTION - REIT I Purchase Price Allocation (Details) - REIT I | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Assets: | |
Real estate property, including above/below lease intangibles | $ 151,099,097 |
Cash and cash equivalents | 1,612,331 |
Tenant receivable | 310,169 |
Prepaid expenses and other assets | 51,924 |
Liabilities: | |
Mortgage notes payable, net | (62,985,425) |
Accounts payable and other liabilities | (2,243,156) |
Net | 87,844,940 |
Less: Cancellation of investment in REIT I (Note 5) | (3,091,489) |
Capitalized transaction-related costs | (3,044,480) |
Net Assets Acquired | $ 81,708,971 |
MERGER AND SELF-MANAGEMENT TR_5
MERGER AND SELF-MANAGEMENT TRANSACTION - Class M OP Units Conversion (Details) $ / shares in Units, $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Initial Period | |
Conversion of Stock [Line Items] | |
Conversion ratio | 0.20 |
Fiscal Year 2021 | |
Conversion of Stock [Line Items] | |
Early conversion ratio | 0.50 |
AUM conversion threshold | $ | $ 860 |
AFFO conversion threshold (in usd per share) | $ / shares | $ 0.59 |
Conversion ratio | 0.17 |
Fiscal Year 2022 | |
Conversion of Stock [Line Items] | |
Early conversion ratio | 0.60 |
AUM conversion threshold | $ | $ 1,175 |
AFFO conversion threshold (in usd per share) | $ / shares | $ 0.65 |
Conversion ratio | 0.13 |
Fiscal Year 2023 | |
Conversion of Stock [Line Items] | |
Early conversion ratio | 0.70 |
AUM conversion threshold | $ | $ 1,551 |
AFFO conversion threshold (in usd per share) | $ / shares | $ 0.70 |
Conversion ratio | 0.11 |
MERGER AND SELF-MANAGEMENT TR_6
MERGER AND SELF-MANAGEMENT TRANSACTION - BrixInvest Purchase Price Allocation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2020 | |
Liabilities: | ||
Goodwill | $ 50,588,000 | $ 17,320,857 |
BrixInvest | ||
Assets: | ||
Cash and cash equivalents | (204,176) | |
Prepaid expenses and other assets | (305,212) | |
Operating lease right-of-use asset | (2,386,877) | |
Intangible assets | (7,700,000) | |
Liabilities: | ||
Short-term notes payable | 4,800,000 | |
Due to affiliates | 630,820 | |
Bank line of credit | 800,000 | |
Accounts payable and other liabilities | 2,070,968 | |
Operating lease liability | 2,386,877 | |
Net liabilities assumed | 92,400 | |
Less: Cancellation of investment in the Company | (107,400) | |
Add: Contribution of Class M OP Units and Class P OP Units | 50,603,000 | |
Goodwill | $ 50,588,000 |
MERGER AND SELF-MANAGEMENT TR_7
MERGER AND SELF-MANAGEMENT TRANSACTION - Net Carrying Amount of Goodwill (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Business Combinations [Abstract] | ||
Goodwill | $ 17,320,857 | $ 50,588,000 |
MERGER AND SELF-MANAGEMENT TR_8
MERGER AND SELF-MANAGEMENT TRANSACTION - Other Intangible Assets Acquired (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ (925,989) | $ 0 |
Net amount | 6,001,792 | 7,700,000 |
BrixInvest | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross amount | $ 6,927,781 | 7,700,000 |
Investor list, net | BrixInvest | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Useful Life | 5 years 1 day | |
Gross amount | $ 3,494,740 | 4,800,000 |
Web services technology, domains and licenses | BrixInvest | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Useful Life | 3 years 1 day | |
Gross amount | $ 3,433,041 | $ 2,900,000 |
REAL ESTATE INVESTMENTS, NET -
REAL ESTATE INVESTMENTS, NET - Narrative (Details) | Apr. 01, 2020USD ($)payment | Jun. 30, 2020USD ($)propertystate | Mar. 31, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)propertystate | Jun. 30, 2019USD ($) | Apr. 30, 2020USD ($)lease | Dec. 31, 2019property |
Real Estate [Line Items] | ||||||||
Number of real estate properties | 45 | 45 | ||||||
Number of impaired real estate properties, vacant | 2 | 2 | ||||||
Impairment of real estate investment properties | $ | $ 349,457 | $ 9,157,068 | $ 0 | $ 9,506,525 | $ 0 | |||
Impairment charge percentage | 0.10% | 2.20% | 0.10% | |||||
Weighted average amortization period | 9 years 3 months 22 days | |||||||
Number of real estate properties, held-for-sale | 4 | 4 | ||||||
24 Hour Fitness | ||||||||
Real Estate [Line Items] | ||||||||
Impairment of real estate investment properties | $ | $ 5,664,517 | |||||||
24 Hour Fitness | Mortgages | ||||||||
Real Estate [Line Items] | ||||||||
Monthly mortgage payment | $ | $ 32,000 | |||||||
Decrease in monthly mortgage payment | $ | $ 8,000 | |||||||
Number of reduced monthly payments | payment | 4 | |||||||
REIT I | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties acquired | 20 | |||||||
Retail | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 20 | 20 | ||||||
Number of real estate properties, held-for-sale | 3 | 3 | ||||||
Retail | 24 Hour Fitness | ||||||||
Real Estate [Line Items] | ||||||||
Impairment of real estate investment properties | $ | $ 0 | $ 5,664,517 | ||||||
Retail | Rite Aid | ||||||||
Real Estate [Line Items] | ||||||||
Impairment of real estate investment properties | $ | $ 349,457 | $ 349,457 | ||||||
Retail | Walgreens Santa Maria and Stockbridge | ||||||||
Real Estate [Line Items] | ||||||||
Aggregate payment of lease incentives | $ | $ 990,000 | |||||||
Number of operating leases with lease incentives | lease | 2 | |||||||
Retail | Walgreens Santa Maria | ||||||||
Real Estate [Line Items] | ||||||||
Operating leases extension | 7 years | |||||||
Retail | Walgreens Stockbridge | ||||||||
Real Estate [Line Items] | ||||||||
Operating leases extension | 6 years | |||||||
Retail | REIT I | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties acquired | 11 | |||||||
Office | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 16 | 16 | ||||||
Office | REIT I | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties acquired | 6 | |||||||
Industrial | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 9 | 9 | ||||||
Number of real estate properties, held-for-sale | 1 | 1 | ||||||
Industrial | REIT I | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties acquired | 3 | |||||||
Land | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 1 | 1 | ||||||
Real Estate Investment | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 41 | 41 | ||||||
Number of states in which entity operates | state | 14 | 14 | ||||||
Real Estate Investment | Tenant-in-common | ||||||||
Real Estate [Line Items] | ||||||||
Ownership percentage | 72.70% | 72.70% | ||||||
Real Estate Investment | REIT I | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties acquired | 17 | |||||||
Real Estate Investment | Retail | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 17 | 17 | ||||||
Real Estate Investment | Office | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 16 | 16 | ||||||
Real Estate Investment | Industrial | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 8 | 8 | ||||||
Real Estate Investment | Land | ||||||||
Real Estate [Line Items] | ||||||||
Number of real estate properties | 1 | 1 |
REAL ESTATE INVESTMENTS, NET _2
REAL ESTATE INVESTMENTS, NET - Summary of Real Estate Properties (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Real Estate [Line Items] | ||
Land, Buildings and Improvements | $ 371,036,604 | |
Tenant origination and absorption costs | 24,450,830 | $ 27,266,610 |
Accumulated Depreciation and Amortization | (27,050,943) | (20,411,794) |
Total investments in real estate property, net | 368,436,491 | $ 403,535,694 |
Accredo Health | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 9,855,847 | |
Tenant origination and absorption costs | 1,269,349 | |
Accumulated Depreciation and Amortization | (1,988,113) | |
Total investments in real estate property, net | 9,137,083 | |
Dollar General One | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,281,812 | |
Tenant origination and absorption costs | 116,302 | |
Accumulated Depreciation and Amortization | (145,884) | |
Total investments in real estate property, net | 1,252,230 | |
Dollar General Two | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,543,776 | |
Tenant origination and absorption costs | 140,653 | |
Accumulated Depreciation and Amortization | (186,700) | |
Total investments in real estate property, net | 1,497,729 | |
Dollar General Three | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,199,860 | |
Tenant origination and absorption costs | 106,730 | |
Accumulated Depreciation and Amortization | (140,168) | |
Total investments in real estate property, net | 1,166,422 | |
Dollar General Four | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,174,188 | |
Tenant origination and absorption costs | 111,847 | |
Accumulated Depreciation and Amortization | (134,389) | |
Total investments in real estate property, net | 1,151,646 | |
Dollar General Five | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,112,872 | |
Tenant origination and absorption costs | 100,857 | |
Accumulated Depreciation and Amortization | (137,925) | |
Total investments in real estate property, net | 1,075,804 | |
Dollar General Six | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,102,086 | |
Tenant origination and absorption costs | 86,408 | |
Accumulated Depreciation and Amortization | (134,008) | |
Total investments in real estate property, net | 1,054,486 | |
Dana | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,802,876 | |
Tenant origination and absorption costs | 531,439 | |
Accumulated Depreciation and Amortization | (1,688,477) | |
Total investments in real estate property, net | 5,645,838 | |
Northrop Grumman | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 12,382,991 | |
Tenant origination and absorption costs | 1,341,199 | |
Accumulated Depreciation and Amortization | (2,577,470) | |
Total investments in real estate property, net | 11,146,720 | |
exp US Services | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,056,668 | |
Tenant origination and absorption costs | 388,248 | |
Accumulated Depreciation and Amortization | (721,294) | |
Total investments in real estate property, net | 5,723,622 | |
Harley | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 13,178,288 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | (1,080,657) | |
Total investments in real estate property, net | 12,097,631 | |
Wyndham | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 10,406,483 | |
Tenant origination and absorption costs | 669,232 | |
Accumulated Depreciation and Amortization | (992,977) | |
Total investments in real estate property, net | 10,082,738 | |
Williams Sonoma | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 8,079,612 | |
Tenant origination and absorption costs | 550,486 | |
Accumulated Depreciation and Amortization | (902,677) | |
Total investments in real estate property, net | 7,727,421 | |
Omnicare | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,262,747 | |
Tenant origination and absorption costs | 281,442 | |
Accumulated Depreciation and Amortization | (710,174) | |
Total investments in real estate property, net | 6,834,015 | |
EMCOR | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,960,610 | |
Tenant origination and absorption costs | 463,488 | |
Accumulated Depreciation and Amortization | (514,464) | |
Total investments in real estate property, net | 5,909,634 | |
Husqvarna | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 11,840,200 | |
Tenant origination and absorption costs | 1,013,948 | |
Accumulated Depreciation and Amortization | (935,104) | |
Total investments in real estate property, net | 11,919,044 | |
AvAir | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 27,357,900 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | (1,764,098) | |
Total investments in real estate property, net | 25,593,802 | |
3M | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 14,762,819 | |
Tenant origination and absorption costs | 2,356,361 | |
Accumulated Depreciation and Amortization | (2,853,917) | |
Total investments in real estate property, net | 14,265,263 | |
Cummins | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 14,465,491 | |
Tenant origination and absorption costs | 1,536,998 | |
Accumulated Depreciation and Amortization | (1,754,657) | |
Total investments in real estate property, net | 14,247,832 | |
Northrop Grumman Parcel | Land | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 329,410 | |
Tenant origination and absorption costs | 0 | |
Accumulated Depreciation and Amortization | 0 | |
Total investments in real estate property, net | 329,410 | |
24 Hour Fitness | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,848,966 | |
Tenant origination and absorption costs | 176,275 | |
Accumulated Depreciation and Amortization | (825,644) | |
Total investments in real estate property, net | 6,199,597 | |
Texas Health | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,976,703 | |
Tenant origination and absorption costs | 713,221 | |
Accumulated Depreciation and Amortization | (532,685) | |
Total investments in real estate property, net | 7,157,239 | |
Bon Secours | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 10,388,751 | |
Tenant origination and absorption costs | 800,356 | |
Accumulated Depreciation and Amortization | (751,926) | |
Total investments in real estate property, net | 10,437,181 | |
Costco | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 27,330,797 | |
Tenant origination and absorption costs | 2,765,136 | |
Accumulated Depreciation and Amortization | (2,002,991) | |
Total investments in real estate property, net | 28,092,942 | |
Taylor Fresh Foods | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 34,194,370 | |
Tenant origination and absorption costs | 2,894,017 | |
Accumulated Depreciation and Amortization | (936,185) | |
Total investments in real estate property, net | 36,152,202 | |
Chevron Gas Station | Retail | San Jose, CA | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,054,759 | |
Tenant origination and absorption costs | 145,577 | |
Accumulated Depreciation and Amortization | (30,317) | |
Total investments in real estate property, net | 4,170,019 | |
Chevron Gas Station | Retail | Roseville, CA | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 3,648,571 | |
Tenant origination and absorption costs | 136,415 | |
Accumulated Depreciation and Amortization | (59,513) | |
Total investments in real estate property, net | 3,725,473 | |
Levins | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,429,390 | |
Tenant origination and absorption costs | 221,927 | |
Accumulated Depreciation and Amortization | (110,304) | |
Total investments in real estate property, net | 4,541,013 | |
Dollar General | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,899,714 | |
Tenant origination and absorption costs | 261,630 | |
Accumulated Depreciation and Amortization | (73,566) | |
Total investments in real estate property, net | 5,087,778 | |
PMI Preclinical | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 9,672,174 | |
Tenant origination and absorption costs | 408,225 | |
Accumulated Depreciation and Amortization | (102,161) | |
Total investments in real estate property, net | 9,978,238 | |
EcoThrift | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,550,226 | |
Tenant origination and absorption costs | 273,846 | |
Accumulated Depreciation and Amortization | (148,740) | |
Total investments in real estate property, net | 5,675,332 | |
GSA (MSHA) | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 3,112,076 | |
Tenant origination and absorption costs | 243,307 | |
Accumulated Depreciation and Amortization | (69,257) | |
Total investments in real estate property, net | 3,286,126 | |
PreK Education | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 12,447,287 | |
Tenant origination and absorption costs | 447,927 | |
Accumulated Depreciation and Amortization | (299,714) | |
Total investments in real estate property, net | 12,595,500 | |
Dollar Tree | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,320,367 | |
Tenant origination and absorption costs | 73,298 | |
Accumulated Depreciation and Amortization | (35,455) | |
Total investments in real estate property, net | 1,358,210 | |
Solar Turbines | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,133,241 | |
Tenant origination and absorption costs | 284,026 | |
Accumulated Depreciation and Amortization | (602,129) | |
Total investments in real estate property, net | 6,815,138 | |
Wood Group | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 9,731,220 | |
Tenant origination and absorption costs | 392,955 | |
Accumulated Depreciation and Amortization | 0 | |
Total investments in real estate property, net | 10,124,175 | |
ITW Rippey | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,071,143 | |
Tenant origination and absorption costs | 304,387 | |
Accumulated Depreciation and Amortization | 0 | |
Total investments in real estate property, net | 7,375,530 | |
Dollar General Seven | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,281,683 | |
Tenant origination and absorption costs | 76,351 | |
Accumulated Depreciation and Amortization | (25,484) | |
Total investments in real estate property, net | 1,332,550 | |
Gap | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 8,378,276 | |
Tenant origination and absorption costs | 360,377 | |
Accumulated Depreciation and Amortization | (239,653) | |
Total investments in real estate property, net | 8,499,000 | |
L-3 Communications | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 11,631,857 | |
Tenant origination and absorption costs | 454,035 | |
Accumulated Depreciation and Amortization | (235,412) | |
Total investments in real estate property, net | 11,850,480 | |
Sutter Health | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 29,555,055 | |
Tenant origination and absorption costs | 1,616,610 | |
Accumulated Depreciation and Amortization | (540,174) | |
Total investments in real estate property, net | 30,631,491 | |
Walgreens | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,223,442 | |
Tenant origination and absorption costs | 335,945 | |
Accumulated Depreciation and Amortization | (66,480) | |
Total investments in real estate property, net | $ 5,492,907 |
REAL ESTATE INVESTMENTS, NET _3
REAL ESTATE INVESTMENTS, NET - Real Estate Impairment Charges (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | $ 349,457 | $ 9,157,068 | $ 0 | $ 9,506,525 | $ 0 |
Rite Aid | Retail | |||||
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | 349,457 | 349,457 | |||
Dana | Industrial | |||||
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | 0 | 2,184,395 | |||
24 Hour Fitness | |||||
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | 5,664,517 | ||||
24 Hour Fitness | Retail | |||||
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | 0 | 5,664,517 | |||
Dinan Cars | Industrial | |||||
Real Estate [Line Items] | |||||
Impairment of real estate investment properties | $ 0 | $ 1,308,156 |
REAL ESTATE INVESTMENTS, NET _4
REAL ESTATE INVESTMENTS, NET - Revenue Concentration (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Costco | ||
Real Estate [Line Items] | ||
Revenue | $ 697,522 | $ 1,376,025 |
Percentage of Total Revenue | 11.80% | 11.70% |
AvAir, Chandler, AZ | ||
Real Estate [Line Items] | ||
Revenue | $ 666,774 | $ 1,333,549 |
Percentage of Total Revenue | 11.30% | 11.30% |
REAL ESTATE INVESTMENTS, NET _5
REAL ESTATE INVESTMENTS, NET - Rental Payments for Operating Leases (Details) | Jun. 30, 2020USD ($) |
Real Estate [Abstract] | |
July through December 2020 | $ 13,567,979 |
2021 | 25,932,970 |
2022 | 23,666,227 |
2023 | 20,401,395 |
2024 | 19,832,230 |
2025 | 16,029,926 |
Thereafter | 49,126,171 |
Total | $ 168,556,898 |
REAL ESTATE INVESTMENTS, NET _6
REAL ESTATE INVESTMENTS, NET - Intangible Assets (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Real Estate [Line Items] | ||
Accumulated amortization | $ (925,989) | $ 0 |
Net amount | 6,001,792 | $ 7,700,000 |
Tenant Origination and Absorption Costs | ||
Real Estate [Line Items] | ||
Cost | 24,450,830 | |
Accumulated amortization | (7,764,826) | |
Net amount | 16,686,004 | |
Above-Market Lease Intangibles | ||
Real Estate [Line Items] | ||
Cost | 1,194,720 | |
Accumulated amortization | (248,773) | |
Net amount | 945,947 | |
Below-Market Lease Intangibles | ||
Below-Market Lease Intangibles | ||
Cost | (15,552,554) | |
Accumulated amortization | 1,894,359 | |
Net amount | $ (13,658,195) |
REAL ESTATE INVESTMENTS, NET _7
REAL ESTATE INVESTMENTS, NET - Intangible Assets Amortization (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Real Estate [Line Items] | ||
Net amount | $ 6,001,792 | $ 7,700,000 |
Below-Market Lease Intangibles | ||
Weighted average amortization period | 9 years 3 months 22 days | |
Tenant Origination and Absorption Costs | ||
Real Estate [Line Items] | ||
July through December 2020 | $ 2,213,836 | |
2021 | 3,692,924 | |
2022 | 2,709,181 | |
2023 | 1,832,039 | |
2024 | 1,715,028 | |
2025 | 1,316,375 | |
Thereafter | 3,206,621 | |
Net amount | $ 16,686,004 | |
Below-Market Lease Intangibles | ||
Weighted average amortization period | 7 years 2 days | |
Above-Market Lease Intangibles | ||
Real Estate [Line Items] | ||
July through December 2020 | $ 70,890 | |
2021 | 141,779 | |
2022 | 141,780 | |
2023 | 139,131 | |
2024 | 134,500 | |
2025 | 122,383 | |
Thereafter | 195,484 | |
Net amount | $ 945,947 | |
Below-Market Lease Intangibles | ||
Weighted average amortization period | 7 years 5 months 20 days | |
Below-Market Lease Intangibles | ||
Below-Market Lease Intangibles | ||
July through December 2020 | $ (766,689) | |
2020 | (1,525,877) | |
2021 | (1,280,240) | |
2022 | (984,317) | |
2023 | (980,897) | |
2024 | (980,897) | |
Thereafter | (7,139,278) | |
Net amount | $ (13,658,195) | |
Weighted average amortization period | 12 years 3 months 2 days |
REAL ESTATE INVESTMENTS, NET _8
REAL ESTATE INVESTMENTS, NET - Summary of Major Components Related to Real Estate Investments Held for Sale (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Assets related to real estate investments held for sale: | |||||
Real estate investments held for sale, net | $ 17,926,407 | $ 17,926,407 | $ 0 | ||
Other assets, net | 725,990 | 725,990 | 0 | ||
Liabilities related to real estate investments held for sale: | |||||
Mortgage notes payable, net | 9,549,467 | 9,549,467 | 0 | ||
Other liabilities, net | 196,938 | 196,938 | $ 0 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||||
Assets related to real estate investments held for sale: | |||||
Land, buildings and improvements | 18,172,435 | 18,172,435 | |||
Tenant origination and absorption costs | 1,304,620 | 1,304,620 | |||
Accumulated depreciation and amortization | (1,550,648) | (1,550,648) | |||
Real estate investments held for sale, net | 17,926,407 | 17,926,407 | |||
Other assets, net | 725,990 | 725,990 | |||
Total assets related to real estate investments held for sale: | 18,652,397 | 18,652,397 | |||
Liabilities related to real estate investments held for sale: | |||||
Mortgage notes payable, net | 9,549,467 | 9,549,467 | |||
Other liabilities, net | 196,938 | 196,938 | |||
Total liabilities related to real estate investments held for sale: | 9,746,405 | 9,746,405 | |||
Rental income, expenses and impairment related to real estate investments held for sale: | |||||
Total revenues | 312,060 | $ 98,800 | 1,480,909 | $ 192,452 | |
Interest expense | 83,658 | 25,182 | 221,022 | 50,472 | |
Depreciation and amortization | 185,368 | 81,990 | 375,575 | 163,979 | |
Other expenses | 101,131 | 34,029 | 221,811 | 65,689 | |
Impairment of real estate properties | 349,457 | 0 | 1,657,613 | 0 | |
Total expenses | 719,614 | 141,201 | 2,476,021 | 280,140 | |
Net loss | $ (407,554) | $ (42,401) | $ (995,112) | $ (87,688) |
INVESTMENT IN UNCONSOLIDATED _3
INVESTMENT IN UNCONSOLIDATED ENTITY - Investments (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
The TIC Interest | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in unconsolidated entity (Note 5) | $ 10,200,810 | $ 10,388,588 |
INVESTMENT IN UNCONSOLIDATED _4
INVESTMENT IN UNCONSOLIDATED ENTITY - Entities Equity In Earnings (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||||
Income from investments in unconsolidated entities, net | $ 125,658 | $ 55,955 | $ 146,411 | $ 129,988 |
The TIC Interest | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Income from investments in unconsolidated entities, net | 125,658 | 71,703 | 146,411 | 152,063 |
REIT I | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Income from investments in unconsolidated entities, net | $ 0 | $ (15,748) | $ 0 | $ (22,075) |
INVESTMENT IN UNCONSOLIDATED _5
INVESTMENT IN UNCONSOLIDATED ENTITY - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Sep. 28, 2017 | |
REIT I | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage | 72.70% | |||||
Ownership percentage by noncontrolling owners | 27.30% | |||||
Dividends | $ 169,158 | $ 109,719 | $ 334,189 | $ 273,618 | ||
Hagg Lane II, LLC | REIT I | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage by noncontrolling owners | 23.40% | |||||
Hagg Lane III, LLC | REIT I | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage by noncontrolling owners | 3.90% | |||||
REIT I | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage | 4.80% | |||||
Cash distributions received from REIT I | $ 75,746 | $ 145,112 |
INVESTMENT IN UNCONSOLIDATED _6
INVESTMENT IN UNCONSOLIDATED ENTITY - Summarized Financial Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Assets | ||||||||
Total assets | $ 437,058,801 | $ 437,058,801 | $ 490,917,263 | |||||
Liabilities: | ||||||||
Total liabilities | 238,471,127 | 238,471,127 | 236,675,009 | |||||
Total equity | 189,662,529 | $ 120,812,608 | 189,662,529 | $ 120,812,608 | $ 191,294,801 | 240,172,562 | $ 113,287,570 | $ 103,092,769 |
Total liabilities and equity | 437,058,801 | 437,058,801 | 490,917,263 | |||||
The TIC Interest | ||||||||
Assets | ||||||||
Real estate investments, net | 30,406,177 | 30,406,177 | 30,858,240 | |||||
Cash and cash equivalents | 254,083 | 254,083 | 275,760 | |||||
Other assets | 237,428 | 237,428 | 228,770 | |||||
Total assets | 30,897,688 | 30,897,688 | 31,362,770 | |||||
Liabilities: | ||||||||
Mortgage notes payable | 13,619,257 | 13,619,257 | 13,746,635 | |||||
Below-market lease, net | 2,880,167 | 2,880,167 | 2,953,360 | |||||
Other liabilities | 62,333 | 62,333 | 68,587 | |||||
Total liabilities | 16,561,757 | 16,561,757 | 16,768,582 | |||||
Total equity | 14,335,931 | 14,335,931 | 14,594,188 | |||||
Total liabilities and equity | 30,897,688 | 30,897,688 | $ 31,362,770 | |||||
Total revenues | 751,653 | 693,571 | 1,349,573 | 1,359,992 | ||||
Expenses: | ||||||||
Interest expense | 140,906 | 143,367 | 282,609 | 285,886 | ||||
Depreciation and amortization | 250,680 | 248,136 | 499,898 | 496,272 | ||||
Other expenses | 187,246 | 203,452 | 365,703 | 368,697 | ||||
Total expenses | 578,832 | 594,955 | 1,148,210 | 1,150,855 | ||||
Other income: | ||||||||
Net loss | $ 172,821 | 98,616 | $ 201,363 | 209,137 | ||||
REIT I | Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||||||||
Liabilities: | ||||||||
Total revenues | 3,277,710 | 6,566,354 | ||||||
Expenses: | ||||||||
Interest expense | 982,223 | 1,845,396 | ||||||
Depreciation and amortization | 1,444,354 | 2,886,414 | ||||||
Other expenses | 1,175,029 | 2,403,892 | ||||||
Total expenses | 3,601,606 | 7,135,702 | ||||||
Other income: | ||||||||
Other income | 0 | 113,773 | ||||||
Net loss | $ (323,896) | $ (455,575) |
CONDENSED CONSOLIDATED BALANC_5
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS - Tenant Receivables, Net (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Supplemental Balance Sheet Disclsoure [Abstract] | ||
Straight-line rent | $ 4,160,873 | $ 3,541,238 |
Tenant rent | 301,040 | 420,959 |
Tenant reimbursements | 1,746,212 | 1,854,883 |
Tenant other | 636,909 | 407,684 |
Total | $ 6,845,034 | $ 6,224,764 |
CONDENSED CONSOLIDATED BALANC_6
CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS - Accounts Payable, Accrued and Other Liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Supplemental Balance Sheet Disclsoure [Abstract] | ||
Accounts payable | $ 1,839,013 | $ 660,111 |
Accrued expenses | 2,375,452 | 5,773,214 |
Accrued distributions | 697,350 | 962,615 |
Accrued interest payable | 736,582 | 1,690,168 |
Unearned rent | 1,940,095 | 1,963,896 |
Reverse for loan guarantee | 3,125,037 | 0 |
Lease incentive obligation | 5,157 | 505,157 |
Total | 10,718,686 | 11,555,161 |
Accrued merger expenses | $ 486,354 | $ 1,570,622 |
DEBT - Schedule of Debt (Detail
DEBT - Schedule of Debt (Details) | Apr. 01, 2020USD ($)payment | Feb. 04, 2020USD ($) | Jan. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 200,651,950 | $ 200,651,950 | |||||||
Plus unamortized mortgage premium | 499,967 | 499,967 | |||||||
Less unamortized deferred financing costs | (1,987,588) | (1,987,588) | |||||||
Net principal | 199,164,329 | $ 199,164,329 | |||||||
Loan to value ratio (as a percent) | 60.00% | ||||||||
Impairment of real estate investment properties | 349,457 | $ 9,157,068 | $ 0 | $ 9,506,525 | $ 0 | ||||
Reverse for loan guarantee | 3,125,037 | 3,125,037 | $ 0 | ||||||
Estimated liability under loan guarantee | $ 10,718,686 | $ 10,718,686 | 11,555,161 | ||||||
Impairment charge percentage | 0.10% | 2.20% | 0.10% | ||||||
Accredo/Walgreen property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,687,414 | $ 4,687,414 | 6,853,442 | ||||||
Debt instrument, stated interest rate | 3.95% | 3.95% | |||||||
Debt instrument, effective interest rate | 3.95% | 3.95% | |||||||
Six Dollar General properties | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 3,782,573 | $ 3,782,573 | 3,819,264 | ||||||
Debt instrument, stated interest rate | 4.69% | 4.69% | |||||||
Debt instrument, effective interest rate | 4.69% | 4.69% | |||||||
Dana property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,509,546 | $ 4,509,546 | 4,551,250 | ||||||
Debt instrument, stated interest rate | 4.56% | 4.56% | |||||||
Debt instrument, effective interest rate | 4.56% | 4.56% | |||||||
Northrop Grumman property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 5,593,555 | $ 5,593,555 | 5,666,866 | ||||||
Debt instrument, stated interest rate | 4.40% | 4.40% | |||||||
Debt instrument, effective interest rate | 4.40% | 4.40% | |||||||
exp US Services property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 3,353,987 | $ 3,353,987 | 3,385,353 | ||||||
Debt instrument, effective interest rate | 4.25% | 4.25% | |||||||
Harley property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 6,686,362 | $ 6,686,362 | 6,748,029 | ||||||
Debt instrument, stated interest rate | 4.25% | 4.25% | |||||||
Debt instrument, effective interest rate | 4.25% | 4.25% | |||||||
Wyndham property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 5,662,800 | $ 5,662,800 | 5,716,200 | ||||||
Debt instrument, effective interest rate | 4.34% | 4.34% | |||||||
Wiiliams Sonoma property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,484,400 | $ 4,484,400 | 4,530,600 | ||||||
Debt instrument, effective interest rate | 4.34% | 4.34% | |||||||
Omnicare property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,233,547 | $ 4,233,547 | 4,273,552 | ||||||
Debt instrument, stated interest rate | 4.36% | 4.36% | |||||||
Debt instrument, effective interest rate | 4.36% | 4.36% | |||||||
EMCOR property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,837,293 | $ 2,837,293 | 2,862,484 | ||||||
Debt instrument, stated interest rate | 4.35% | 4.35% | |||||||
Debt instrument, effective interest rate | 4.35% | 4.35% | |||||||
Husqvarna property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 6,379,182 | $ 6,379,182 | 6,379,182 | ||||||
Debt instrument, stated interest rate | 4.60% | 4.60% | |||||||
Debt instrument, effective interest rate | 4.60% | 4.60% | |||||||
AvAir property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 14,539,619 | $ 14,539,619 | 14,575,000 | ||||||
Debt instrument, stated interest rate | 4.84% | 4.84% | |||||||
Debt instrument, effective interest rate | 4.84% | 4.84% | |||||||
3M property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 8,229,000 | $ 8,229,000 | 8,290,000 | ||||||
Debt instrument, effective interest rate | 5.09% | 5.09% | |||||||
Cummins property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 8,396,400 | $ 8,396,400 | 8,458,600 | ||||||
Debt instrument, effective interest rate | 5.16% | 5.16% | |||||||
24 Hour Fitness property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 6,250,074 | $ 6,250,074 | 6,283,898 | ||||||
Debt instrument, effective interest rate | 4.64% | 4.64% | |||||||
Impairment of real estate investment properties | $ 5,664,517 | ||||||||
Texas Health property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,400,000 | $ 4,400,000 | 4,400,000 | ||||||
Debt instrument, stated interest rate | 4.00% | 4.00% | |||||||
Debt instrument, effective interest rate | 4.00% | 4.00% | |||||||
Bon Secours property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 5,216,133 | $ 5,216,133 | 5,250,000 | ||||||
Debt instrument, stated interest rate | 5.41% | 5.41% | |||||||
Debt instrument, effective interest rate | 5.41% | 5.41% | |||||||
Costco property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 18,850,000 | $ 18,850,000 | 18,850,000 | ||||||
Debt instrument, stated interest rate | 4.85% | 4.85% | |||||||
Debt instrument, effective interest rate | 4.85% | 4.85% | |||||||
Taylor Fresh Foods | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 12,350,000 | $ 12,350,000 | 12,350,000 | ||||||
Debt instrument, stated interest rate | 3.85% | 3.85% | |||||||
Debt instrument, effective interest rate | 3.85% | 3.85% | |||||||
Levins property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,056,288 | $ 2,056,288 | 2,079,793 | ||||||
Debt instrument, effective interest rate | 3.74% | 3.74% | |||||||
Island Pacific Supermarket property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | 1,891,225 | ||||||||
Debt instrument, effective interest rate | 3.74% | 3.74% | |||||||
Dollar General Bakersfield property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,296,868 | $ 2,296,868 | 2,324,338 | ||||||
Debt instrument, effective interest rate | 3.38% | 3.38% | |||||||
Rite Aid property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | 3,659,338 | ||||||||
Debt instrument, effective interest rate | 3.25% | 3.25% | |||||||
PMI Preclinical property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 4,069,936 | $ 4,069,936 | 4,118,613 | ||||||
Debt instrument, effective interest rate | 3.38% | 3.38% | |||||||
EcoThrift property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,606,620 | $ 2,606,620 | 2,639,237 | ||||||
Debt instrument, effective interest rate | 2.96% | 2.96% | |||||||
GSA (MSHA) property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 1,774,395 | $ 1,774,395 | 1,796,361 | ||||||
Debt instrument, effective interest rate | 3.13% | 3.13% | |||||||
PreK Education property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 5,089,648 | $ 5,089,648 | 5,140,343 | ||||||
Debt instrument, stated interest rate | 4.25% | 4.25% | |||||||
Debt instrument, effective interest rate | 4.25% | 4.25% | |||||||
Dinan Cars property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | 2,710,834 | ||||||||
Debt instrument, stated interest rate | 2.76% | 2.76% | |||||||
Debt instrument, effective interest rate | 2.76% | 2.76% | |||||||
Proceeds from lease termination payment | $ 783,182 | ||||||||
Solar Turbines, Amec Foster, ITW Rippey properties | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 9,325,631 | $ 9,325,631 | 9,434,692 | ||||||
Debt instrument, stated interest rate | 3.35% | 3.35% | |||||||
Debt instrument, effective interest rate | 3.35% | 3.35% | |||||||
Dollar General Big Spring property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 605,288 | $ 605,288 | 611,161 | ||||||
Debt instrument, stated interest rate | 4.50% | 4.50% | |||||||
Debt instrument, effective interest rate | 4.50% | 4.50% | |||||||
Gap property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 3,607,190 | $ 3,607,190 | 3,643,166 | ||||||
Debt instrument, stated interest rate | 4.15% | 4.15% | |||||||
Debt instrument, effective interest rate | 4.15% | 4.15% | |||||||
L-3 Communications property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 5,235,972 | $ 5,235,972 | 5,284,884 | ||||||
Debt instrument, stated interest rate | 4.69% | 4.69% | |||||||
Debt instrument, effective interest rate | 4.69% | 4.69% | |||||||
Sutter Health property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 14,015,229 | $ 14,015,229 | 14,161,776 | ||||||
Debt instrument, stated interest rate | 4.50% | 4.50% | |||||||
Debt instrument, effective interest rate | 4.50% | 4.50% | |||||||
Walgreens property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 3,000,000 | $ 3,000,000 | 3,000,000 | ||||||
Debt instrument, effective interest rate | 7.50% | 7.50% | |||||||
modiv Chevron Roseville property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,000,000 | $ 2,000,000 | 0 | ||||||
Debt instrument, stated interest rate | 8.00% | 8.00% | |||||||
Debt instrument, effective interest rate | 8.00% | 8.00% | |||||||
modiv Chevron San Jose property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 2,000,000 | $ 2,000,000 | 0 | ||||||
Debt instrument, stated interest rate | 8.00% | 8.00% | |||||||
Debt instrument, effective interest rate | 8.00% | 8.00% | |||||||
Initial Contractual Interest One | exp US Services property | |||||||||
Short Term Debt [LineItems] | |||||||||
Interest rate at period start | 4.25% | 4.25% | |||||||
LIBOR | Wyndham property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 2.05% | ||||||||
LIBOR | Wiiliams Sonoma property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 2.05% | ||||||||
LIBOR | 3M property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||||
LIBOR | Cummins property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||||
LIBOR | 24 Hour Fitness property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 4.30% | ||||||||
LIBOR | Levins property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.93% | ||||||||
LIBOR | Island Pacific Supermarket property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.93% | ||||||||
LIBOR | Dollar General Bakersfield property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.48% | ||||||||
LIBOR | Rite Aid property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||||
LIBOR | PMI Preclinical property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.48% | ||||||||
LIBOR | EcoThrift property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.21% | ||||||||
LIBOR | GSA (MSHA) property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 1.25% | ||||||||
LIBOR | Walgreens property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, basis spread on variable rate | 5.00% | ||||||||
Treasury Bill Index | exp US Services property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, stated interest rate | 3.25% | 3.25% | |||||||
Minimum | Treasury Bill Index | AvAir property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, stated interest rate | 4.60% | 4.60% | |||||||
Maximum | Treasury Bill Index | Husqvarna property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, stated interest rate | 2.45% | 2.45% | |||||||
Maximum | Treasury Bill Index | AvAir property | |||||||||
Short Term Debt [LineItems] | |||||||||
Debt instrument, stated interest rate | 2.45% | 2.45% | |||||||
Mortgages | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 188,124,950 | $ 188,124,950 | 195,739,481 | ||||||
Plus unamortized mortgage premium | 499,967 | 499,967 | 489,664 | ||||||
Less unamortized deferred financing costs | (1,947,788) | (1,947,788) | (2,189,938) | ||||||
Net principal | 186,677,129 | 186,677,129 | $ 194,039,207 | ||||||
Mortgages | Accredo/Walgreen property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | 6,800,000 | 6,800,000 | |||||||
Mortgages | AvAir property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | 14,545,000 | 14,545,000 | |||||||
Mortgages | 24 Hour Fitness property | |||||||||
Short Term Debt [LineItems] | |||||||||
Monthly mortgage payment | $ 32,000 | ||||||||
Decrease in monthly mortgage payment | $ 8,000 | ||||||||
Number of reduced monthly payments | payment | 4 | ||||||||
Mortgages | Dinan Cars property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal repayments of mortgage | 650,000 | ||||||||
Debt instrument, payment reserve | $ 133,182 | ||||||||
Mortgages | Walgreens property | |||||||||
Short Term Debt [LineItems] | |||||||||
Principal amount | $ 3,000,000 | $ 3,000,000 | |||||||
Swap | Dinan Cars property | |||||||||
Short Term Debt [LineItems] | |||||||||
Derivative, cost of hedge net of cash received | $ 47,000 |
DEBT - Mortgage Loan Payable (D
DEBT - Mortgage Loan Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Face Value | $ 200,651,950 | |
Carrying Value | 186,677,129 | $ 194,039,207 |
Fair Value | 186,322,921 | 200,535,334 |
Mortgages | ||
Debt Instrument [Line Items] | ||
Face Value | $ 188,124,950 | $ 195,739,481 |
DEBT - Schedule of Line of Cred
DEBT - Schedule of Line of Credit Facilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Unsecured credit facility | $ 12,000,000 | $ 7,740,000 |
Less unamortized deferred financing costs | (39,800) | (90,139) |
Unsecured credit facility, net | $ 11,960,200 | $ 7,649,861 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | Aug. 13, 2020USD ($) | Apr. 01, 2020 | Mar. 31, 2020USD ($) | Feb. 28, 2020USD ($) | Dec. 31, 2019USD ($) | Aug. 14, 2020 | Jun. 30, 2020USD ($) | May 20, 2020USD ($) | Apr. 20, 2020USD ($) | Apr. 06, 2020USD ($) | Mar. 27, 2020 | Mar. 26, 2020 | Mar. 13, 2020USD ($) | Feb. 27, 2020 | Dec. 19, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||||||||
Unsecured credit facility | $ 7,740,000 | $ 12,000,000 | |||||||||||||
Debt instrument, fair value disclosure | $ 200,535,334 | $ 186,322,921 | |||||||||||||
Maximum leverage ratio | 0.55 | 0.50 | |||||||||||||
Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 12,000,000 | ||||||||||||||
Percentage of purchase price allowed for acquisition funding purposes | 70.00% | ||||||||||||||
Line of credit facility, interest rate at period end | 5.75% | 5.50% | |||||||||||||
Prime Rate | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||||||||||
Minimum | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Line of credit facility, interest rate during period | 5.50% | ||||||||||||||
Subsequent Event | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 6,000,000 | ||||||||||||||
Loan extension and modification fees paid | $ 25,000 | ||||||||||||||
Line of credit facility, interest rate at period end | 5.50% | ||||||||||||||
Subsequent Event | Unsecured Credit Facility | Mortgage Notes Payable | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum debt service coverage ratio | 125.00% | ||||||||||||||
Minimum tangible net worth | $ 125,000,000 | ||||||||||||||
Loans, Mature on July 31, 2020 | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 6,940,000 | ||||||||||||||
Loans, Mature on August 31, 2020 | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 3,060,000 | ||||||||||||||
Loans, Mature on September 1, 2020 | Subsequent Event | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | 6,000,000 | ||||||||||||||
Loans, Mature on October 15, 2021 | Subsequent Event | Unsecured Credit Facility | Unsecured Credit Facility | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 6,000,000 | ||||||||||||||
Short-term Notes Payable | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt instrument, stated interest rate | 10.00% | 8.00% | |||||||||||||
Debt instrument, face amount | $ 4,800,000 | ||||||||||||||
Debt instrument, fair value disclosure | $ 1,024,750 | $ 490,000 | |||||||||||||
Notes payable extension fee reduction | $ 10,000 | ||||||||||||||
Notes payable extension fee percentage | 2.00% | ||||||||||||||
Notes payable extension fee | $ 14,845 | $ 24,845 | |||||||||||||
Short-term Notes Payable | Loan Agreement and Promissory Note, Paycheck Protection Program, CARES Act | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt instrument, stated interest rate | 1.00% | ||||||||||||||
Debt instrument, face amount | $ 517,000 | ||||||||||||||
Short-term Notes Payable | EIDL, Paycheck Protection Program, CARES Act | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt instrument, face amount | $ 10,000 | ||||||||||||||
24 Hour Fitness | Mortgages | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt instrument, term subject to reduced payments | 4 months |
DEBT - Maturities of Long-term
DEBT - Maturities of Long-term Debt (Details) | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
July through December 2020 | $ 20,891,457 |
2021 | 24,640,690 |
2022 | 21,004,076 |
2023 | 25,311,036 |
2024 | 30,320,929 |
2025 | 1,626,959 |
Thereafter | 76,856,803 |
Total principal | 200,651,950 |
Plus unamortized mortgage premium, net of discount | 499,967 |
Less unamortized deferred financing costs | (1,987,588) |
Net principal | 199,164,329 |
Short-term Notes Payable | |
Debt Instrument [Line Items] | |
July through December 2020 | 527,000 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
Total principal | 527,000 |
Plus unamortized mortgage premium, net of discount | 0 |
Less unamortized deferred financing costs | 0 |
Net principal | 527,000 |
Unsecured Credit Facility | |
Debt Instrument [Line Items] | |
July through December 2020 | 12,000,000 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
Total principal | 12,000,000 |
Plus unamortized mortgage premium, net of discount | 0 |
Less unamortized deferred financing costs | (39,800) |
Net principal | 11,960,200 |
Mortgage Notes Payable | |
Debt Instrument [Line Items] | |
July through December 2020 | 8,364,457 |
2021 | 24,640,690 |
2022 | 21,004,076 |
2023 | 25,311,036 |
2024 | 30,320,929 |
2025 | 1,626,959 |
Thereafter | 76,856,803 |
Total principal | 188,124,950 |
Plus unamortized mortgage premium, net of discount | 499,967 |
Less unamortized deferred financing costs | (1,947,788) |
Net principal | $ 186,677,129 |
DEBT - Interest Expenses (Detai
DEBT - Interest Expenses (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||
Interest expense | $ 2,558,877 | $ 2,076,725 | $ 6,463,533 | $ 4,237,075 | |
Loss on interest rate swaps | 7,785 | 553,490 | 1,292,752 | 874,016 | |
Other | (18,530) | 0 | 29,543 | 0 | |
Accrued interest payable | 71,882 | 71,882 | $ 22,282 | ||
Mortgage Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Interest expense | 2,147,112 | 1,368,662 | 4,332,089 | 2,845,158 | |
Amortization of deferred financing costs | 139,600 | 109,071 | 258,631 | 379,593 | |
Loss on interest rate swaps | 80,985 | 562,571 | 1,446,476 | 890,385 | |
Unsecured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Interest expense | 166,834 | 27,918 | 321,458 | 111,436 | |
Amortization of deferred financing costs | $ 42,876 | $ 8,503 | $ 75,336 | $ 10,503 |
INTEREST RATE SWAP DERIVATIVE_2
INTEREST RATE SWAP DERIVATIVES - Derivative Instruments (Details) | Aug. 03, 2020USD ($) | Jul. 30, 2020USD ($) | Feb. 04, 2020USD ($) | Jun. 30, 2020USD ($)instrument | Dec. 31, 2019USD ($)instrument |
Dinan Cars property | Swap | |||||
Receivables with Imputed Interest [Line Items] | |||||
Derivative, cost of hedge net of cash received | $ 47,000 | ||||
Rite Aid property | Swap | Subsequent Event | |||||
Receivables with Imputed Interest [Line Items] | |||||
Derivative, cost of hedge net of cash received | $ 40,700 | $ 40,700 | |||
Interest Rate Swaps | |||||
Receivables with Imputed Interest [Line Items] | |||||
Number of Instruments | instrument | 11 | 12 | |||
Notional Amount | $ 45,504,305 | $ 48,215,139 | |||
Weighted Average Fixed Pay Rate | 3.91% | 3.87% | |||
Weighted Average Remaining Term | 2 years 5 months 10 days | 2 years 10 months 12 days | |||
Minimum | |||||
Receivables with Imputed Interest [Line Items] | |||||
Notional Amount | $ 42,917,710 | $ 45,514,229 | |||
LIBOR | Maximum | Interest Rate Swaps | |||||
Receivables with Imputed Interest [Line Items] | |||||
Reference Rate | 5.16% | 5.16% | |||
LIBOR | Minimum | Interest Rate Swaps | |||||
Receivables with Imputed Interest [Line Items] | |||||
Reference Rate | 3.13% | 2.76% |
INTEREST RATE SWAP DERIVATIVE_3
INTEREST RATE SWAP DERIVATIVES - Statement of FInancial Position (Details) | Jun. 30, 2020USD ($)instrument | Dec. 31, 2019USD ($)instrument |
Derivatives, Fair Value [Line Items] | ||
Fair Value | $ 0 | $ 34,567 |
Fair Value | $ (2,279,909) | $ (1,021,724) |
Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 11 | 12 |
Interest Rate Swaps | Liability | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 11 | 7 |
Fair Value | $ (2,279,909) | $ (1,021,724) |
Interest Rate Swaps | Assets | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 0 | 5 |
Fair Value | $ 0 | $ 34,567 |
INTEREST RATE SWAP DERIVATIVE_4
INTEREST RATE SWAP DERIVATIVES - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Loss (gain) on interest rate swaps | $ 7,785 | $ 553,490 | $ 1,292,752 | $ 874,016 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) | Jul. 31, 2020USD ($) | Mar. 02, 2020USD ($)property | Apr. 30, 2020shares | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($)propertyshares | Jun. 30, 2020USD ($)shares | Jun. 30, 2019USD ($)propertyshares | Sep. 30, 2019USD ($) | Mar. 31, 2019 | Apr. 23, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | $ 0 | $ 0 | $ 630,820 | |||||||||
Repayments of related party debt | $ 0 | $ 63,500 | ||||||||||
Property management fees percentage | 1.50% | |||||||||||
Number of real estate properties under property management services | property | 10 | 10 | ||||||||||
Leasing commissions and fees, percentage of rents | 6.00% | |||||||||||
Leasing commission fee, renewal rate | 3.00% | |||||||||||
Limitation as of average invested assets (as a percent) | 2.00% | |||||||||||
Limitation as of net income (as a percent) | 25.00% | |||||||||||
Leasing Commission Fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount paid for related party transactions | $ 0 | $ 0 | ||||||||||
Waiver of asset management fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction fees | 0 | 0 | ||||||||||
Monthly asset management fees waive percentage | 0.025% | |||||||||||
Financing coordination fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | $ 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | 0 | 0 | 63,500 | ||||||||
Property management fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | 56,122 | $ 0 | 112,072 | ||||||||
Property Selling Fee | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction rate | 3.00% | |||||||||||
Due from TIC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | $ 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | 0 | 0 | 0 | ||||||||
Reimbursable organizational and offering expenses | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | 415,299 | $ 0 | 899,863 | ||||||||
Accrual organization and offering cost | 5,092,718 | 5,092,718 | ||||||||||
Sponsor reimbursement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction fees | 143,997 | 272,911 | ||||||||||
Acquisition Fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction rate | 3.00% | |||||||||||
Amount paid for related party transactions | 0 | 0 | ||||||||||
Asset Management Fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | $ 0 | 0 | |||||||||
Related party transaction rate | 0.10% | |||||||||||
Amount paid for related party transactions | 0 | 680,019 | $ 0 | 1,360,037 | ||||||||
Related party transaction fees | 680,019 | 1,360,037 | ||||||||||
Expense reimbursements from Former Sponsor | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | (148,233) | $ 0 | (236,232) | ||||||||
Disposition Fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction rate | 6.00% | |||||||||||
Amount paid for related party transactions | 0 | 0 | ||||||||||
Subordinated participation fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | $ 839,050 | |||||||||||
Operating expense reimbursements | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | 0 | $ 0 | 0 | |||||||||
Amount paid for related party transactions | 0 | 132,000 | $ 0 | 264,000 | ||||||||
Advisor fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction rate | 0.10% | |||||||||||
Amount paid for related party transactions | 65,993 | $ 131,986 | ||||||||||
Maximum | Reimbursable organizational and offering expenses | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount paid for related party transactions | $ 5,429,105 | |||||||||||
Maximum | Acquisition Fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party transaction rate | 6.00% | |||||||||||
Board of Directors Chairman | Secured Notes Payable | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related parties | $ 630,820 | |||||||||||
Related party transaction rate | 10.00% | |||||||||||
Balloon payment due at maturity | $ 437,862 | |||||||||||
Board of Directors Chairman | Secured Notes Payable, Note One | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Balloon payment due at maturity | 218,931 | |||||||||||
Board of Directors Chairman | Secured Notes Payable, Note Two | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Balloon payment due at maturity | $ 218,931 | |||||||||||
Board of Directors Chairman | Wirta Trust | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Notes payable, related party | $ 4,000,000 | |||||||||||
Number of real estate properties under mortgages | property | 2 | |||||||||||
Related party transaction rate | 8.00% | |||||||||||
Board of Directors Chairman | Subsequent Event | Wirta Trust | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Notes payable, related party | $ 2,000,000 | |||||||||||
Repayments of related party debt | $ 2,000,000 | |||||||||||
Sponsor | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Employment related legal costs | 0 | $ 40,915 | ||||||||||
Sponsor | Reimbursable organizational and offering expenses | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Gross offering proceeds, percentage | 3.00% | |||||||||||
Advisor | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Financing coordination fees percentage | 1.00% | |||||||||||
Subordinated participation fees percentage | 30.00% | |||||||||||
Santa Clara | Advisor fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount paid for related party transactions | 47,984 | 47,977 | $ 95,967 | $ 95,953 | ||||||||
REIT I | Advisor fees | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount paid for related party transactions | 10,437 | 20,123 | ||||||||||
Directors Not Including Executive Officers | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Payments to independent member of Company's board of directors for services rendered | 101,250 | 76,667 | 204,583 | 176,667 | ||||||||
Due to related parties | 101,250 | 101,250 | ||||||||||
Directors Not Including Executive Officers | Class C | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Total amount paid to board of directors | $ 70,000 | $ 55,000 | $ 179,565 | $ 105,000 | ||||||||
Common stock issued to board of directors (in shares) | shares | 14,464 | 6,816 | 5,414 | 7,066 | 10,335 |
RELATED PARTY TRANSACTIONS - Re
RELATED PARTY TRANSACTIONS - Related Party Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||||
Receivable | $ 3,214 | $ 3,214 | $ 2,332 | |||
Payable | 0 | 0 | 630,820 | |||
Asset management fees | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | $ 680,019 | 0 | $ 1,360,037 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Related party transaction fees | 680,019 | 1,360,037 | ||||
Operating expense reimbursements | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 132,000 | 0 | 264,000 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Fees to affiliates | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 812,019 | 0 | 1,624,037 | ||
Property management fees | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 56,122 | 0 | 112,072 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Directors and officers insurance and other reimbursements | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 70,785 | 0 | 133,675 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Expense reimbursements from Former Sponsor | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | (148,233) | 0 | (236,232) | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Financing coordination fees | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 0 | 0 | 63,500 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Reimbursable organizational and offering expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 415,299 | 0 | 899,863 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | 0 | 0 | |||
Due from BRIX REIT | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 0 | 0 | 0 | ||
Receivable | 3,214 | 3,214 | 1,378 | |||
Payable | 0 | 0 | 0 | |||
Due from TIC | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 0 | 0 | 0 | ||
Receivable | 0 | 0 | 954 | |||
Payable | 0 | 0 | 0 | |||
Notes due to Chairman of the Board | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 0 | 0 | 0 | ||
Receivable | 0 | 0 | 0 | |||
Payable | 0 | $ 0 | 630,820 | |||
Waiver of asset management fees | ||||||
Related Party Transaction [Line Items] | ||||||
Monthly asset management fees waive percentage | 0.025% | |||||
Related party transaction fees | 0 | 0 | ||||
Advisor fees | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 65,993 | $ 131,986 | ||||
Asset management fees due from BRIX REIT, Inc. | ||||||
Related Party Transaction [Line Items] | ||||||
Receivable | $ 242,299 | |||||
Santa Clara | Advisor fees | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | $ 47,984 | 47,977 | $ 95,967 | 95,953 | ||
Sponsor | ||||||
Related Party Transaction [Line Items] | ||||||
Employment related legal costs | $ 0 | 40,915 | ||||
Organizational and offering costs incurred | $ 8,815,104 | |||||
Sponsor | Reimbursable organizational and offering expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Gross offering proceeds, percentage | 3.00% | |||||
Maximum | Reimbursable organizational and offering expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | $ 5,429,105 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) | Aug. 05, 2020 | Jul. 06, 2020 | May 05, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | May 31, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
COMMITMENTS AND CONTINGENCIES [Line Items] | ||||||||||
Restricted cash | $ 258,493 | $ 258,493 | $ 113,362 | |||||||
Operating lease, remaining lease term | 4 years | 4 years | ||||||||
Operating lease, discount rate | 5.75% | 5.75% | ||||||||
Repurchase requests received | $ 7,427,489 | $ 11,218,557 | $ 10,514,377 | $ 8,647,085 | ||||||
Share value repurchased | $ 876,744 | |||||||||
Subsequent Event | ||||||||||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||||||||||
Repurchase requests received | $ 8,359,586 | |||||||||
Share value repurchased | $ 995,023 | $ 750,684 | ||||||||
Maximum | ||||||||||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||||||||||
Shares authorized to be repurchased per month (as a percent) | 2.00% | |||||||||
Shares authorized to be repurchased per quarter (as a percent) | 5.00% | |||||||||
Lease Agreements | ||||||||||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||||||||||
Obligation amount to pay for site and tenant improvements | 60,598 | $ 60,598 | 98,329 | |||||||
Restricted cash | $ 92,684 | $ 92,684 | $ 92,684 | |||||||
Lease Agreements | Santa Clara Property | ||||||||||
COMMITMENTS AND CONTINGENCIES [Line Items] | ||||||||||
Ownership percentage | 72.70% | 72.70% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Maturities of Operating Lease Liability (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
July to December 2020 | $ 243,542 | |
2021 | 599,953 | |
2022 | 620,444 | |
2023 | 639,928 | |
2024 | 322,483 | |
Total undiscounted lease payments | 2,426,350 | |
Less amounts representing interest | (273,431) | |
Total operating lease liability | $ 2,152,919 | $ 2,386,877 |
SUBSEQUENT EVENTS - Narrative (
SUBSEQUENT EVENTS - Narrative (Details) - USD ($) | Aug. 13, 2020 | Aug. 10, 2020 | Aug. 03, 2020 | Jul. 31, 2020 | Jul. 30, 2020 | Jun. 30, 2020 | Aug. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 31, 2020 | Jul. 31, 2020 | Jul. 26, 2020 | May 22, 2020 | May 20, 2020 | Feb. 01, 2020 | Dec. 31, 2019 | Dec. 19, 2019 |
Subsequent Event [Line Items] | |||||||||||||||||||
Proceeds from issuance of common stock and investor deposits | $ 9,427,526 | $ 26,340,968 | |||||||||||||||||
Dividends | $ 691,443 | $ 3,270,291 | $ 2,605,268 | $ 7,459,393 | 4,993,962 | ||||||||||||||
Net asset value (in usd per share) | $ 7 | $ 7 | $ 7 | $ 7 | $ 7 | $ 10.27 | $ 10.16 | ||||||||||||
Proceeds from mortgage notes payable | $ 4,000,000 | 6,350,000 | |||||||||||||||||
Repayments of related party debt | $ 0 | $ 63,500 | |||||||||||||||||
Unsecured Debt | Unsecured Credit Facility | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Maximum borrowing capacity | $ 12,000,000 | ||||||||||||||||||
Subsequent Event | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Daily distribution rate (in usd per share) | $ 0.0009589 | ||||||||||||||||||
Annualized distribution rate (in usd per share) | 0.35 | ||||||||||||||||||
Net asset value (in usd per share) | $ 0.05 | ||||||||||||||||||
Proceeds from mortgage notes payable | $ 6,904,178 | ||||||||||||||||||
Subsequent Event | Unsecured Debt | Unsecured Credit Facility | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Maximum borrowing capacity | $ 6,000,000 | ||||||||||||||||||
Loan extension and modification fees paid | 25,000 | ||||||||||||||||||
Subsequent Event | Loans, Mature on September 1, 2020 | Unsecured Debt | Unsecured Credit Facility | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Maximum borrowing capacity | 6,000,000 | ||||||||||||||||||
Subsequent Event | Loans, Mature on October 15, 2021 | Unsecured Debt | Unsecured Credit Facility | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Maximum borrowing capacity | $ 6,000,000 | ||||||||||||||||||
Subsequent Event | Rite Aid property | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Disposal group, including discontinued operation, consideration | $ 7,250,000 | ||||||||||||||||||
Net proceeds generated from sale of real estate | 3,299,016 | ||||||||||||||||||
Subsequent Event | Rite Aid property | Swap | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Derivative, cost of hedge net of cash received | $ 40,700 | $ 40,700 | |||||||||||||||||
Subsequent Event | Accredo Health | Swap | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Derivative, cost of hedge net of cash received | $ 42,479 | ||||||||||||||||||
Subsequent Event | Wirta Trust | Board of Directors Chairman | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Repayments of related party debt | $ 2,000,000 | ||||||||||||||||||
Subsequent Event | Class C | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Common stock redeemed (in shares) | 250,710 | ||||||||||||||||||
Common stock redeemed during period | $ 1,745,707 | ||||||||||||||||||
Subsequent Event | Class S | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Common stock issued in transaction (in shares) | 189,836 | ||||||||||||||||||
Proceeds from issuance of common stock and investor deposits | $ 1,922,992 | ||||||||||||||||||
Common stock redeemed (in shares) | 0 | ||||||||||||||||||
Subsequent Event | Distribution Reinvestment Plan | Class C | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Common stock issued in transaction (in shares) | 2,098,346 | ||||||||||||||||||
Proceeds from issuance of common stock and investor deposits | $ 20,408,840 | ||||||||||||||||||
Subsequent Event | Distribution Reinvestment Plan | Class S | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Common stock issued in transaction (in shares) | 4,873 | ||||||||||||||||||
Proceeds from issuance of common stock and investor deposits | $ 45,828 | ||||||||||||||||||
Subsequent Event | Registered Offering | Class C | |||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||
Common stock issued in transaction (in shares) | 19,453,205 | ||||||||||||||||||
Proceeds from issuance of common stock and investor deposits | $ 194,513,632 |
SUBSEQUENT EVENTS - Mortgage No
SUBSEQUENT EVENTS - Mortgage Notes Payable (Details) - USD ($) | Aug. 14, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||
Principal amount | $ 200,651,950 | ||
Accredo/Walgreens properties | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 4,687,414 | $ 6,853,442 | |
Debt instrument, effective interest rate | 3.95% | ||
Accredo/Walgreens properties | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Debt instrument, effective interest rate | 3.80% | ||
AvAir property | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 14,539,619 | 14,575,000 | |
Debt instrument, effective interest rate | 4.84% | ||
AvAir property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Debt instrument, effective interest rate | 3.80% | ||
Walgreens property | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 3,000,000 | 3,000,000 | |
Debt instrument, effective interest rate | 7.50% | ||
Walgreens property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Debt instrument, effective interest rate | 4.25% | ||
Mortgages | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 188,124,950 | $ 195,739,481 | |
Mortgages | Accredo/Walgreens properties | |||
Subsequent Event [Line Items] | |||
Principal amount | 6,800,000 | ||
Mortgages | Accredo/Walgreens properties | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 8,538,000 | ||
Mortgages | AvAir property | |||
Subsequent Event [Line Items] | |||
Principal amount | 14,545,000 | ||
Mortgages | AvAir property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Principal amount | 19,950,000 | ||
Mortgages | Walgreens property | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 3,000,000 | ||
Mortgages | Walgreens property | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Principal amount | $ 3,217,500 |