Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Aug. 10, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Rich Uncles Real Estate Investment Trust I | |
Entity Central Index Key | 1,672,754 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 7,385,425 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Real estate investments: | ||
Land | $ 29,910,452 | $ 27,738,010 |
Buildings and improvements | 94,281,495 | 72,141,786 |
Tenant origination and absorption costs | 12,250,951 | 9,380,693 |
Total real estate investments, cost | 136,442,898 | 109,260,489 |
Accumulated depreciation and amortization | (5,016,064) | (3,797,990) |
Total real estate investments, net | 131,426,834 | 105,462,499 |
Cash and cash equivalents | 10,079,127 | 12,341,682 |
Restricted cash | 1,585,610 | 1,123,470 |
Tenant receivables | 975,105 | 731,690 |
Above-market leases, net | 718,042 | 249,967 |
Due from affiliates | 48,950 | 48,950 |
Purchase and other deposits | 0 | 1,250,000 |
Interest rate swap derivatives | 232,316 | 180,759 |
Other assets | 35,486 | 18,553 |
TOTAL ASSETS | 145,101,470 | 121,407,570 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Mortgage note payable, net | 62,939,103 | 38,705,103 |
Accounts payable, accrued expenses and other liabilities | 1,225,194 | 923,249 |
Sales deposit liability (Note 4) | 1,000,000 | 1,000,000 |
Share repurchase payable | 549,492 | 592,511 |
Below-market leases, net | 4,622,754 | 4,841,757 |
Due to affiliates | 679,164 | 644,277 |
Interest rate swap derivatives | 72,940 | 106,840 |
TOTAL LIABILITIES | 71,088,647 | 46,813,737 |
Redeemable common stock | 1,169,076 | 1,229,644 |
Common stock $0.01 par value, 50,000,000,000 shares authorized, 8,302,216 shares issued and outstanding as of March 31, 2017 and 8,249,204 shares issued and outstanding as of December 31, 2016 | 83,022 | 82,492 |
Additional paid-in-capital | 81,270,220 | 80,637,051 |
Cumulative distributions and net losses | (8,509,495) | (7,355,354) |
TOTAL STOCKHOLDERS' EQUITY | 72,843,747 | 73,364,189 |
Commitments and contingencies (Note 9) | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 145,101,470 | $ 121,407,570 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 50,000,000,000 | 50,000,000,000 |
Common Stock, Shares, Issued | 8,302,216 | 8,249,204 |
Common Stock, Shares, Outstanding | 8,302,216 | 8,249,204 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues: | ||
Rental income | $ 2,392,795 | $ 773,476 |
Tenant recoveries | 333,472 | 31,426 |
Total revenue | 2,726,267 | 804,902 |
Expenses: | ||
Fees to affiliates (Note 8) | 162,201 | 187,339 |
General and administrative | 149,665 | 704,215 |
Depreciation and amortization | 1,218,074 | 481,481 |
Interest expense | 461,200 | 458,716 |
Property expenses | 340,959 | 51,391 |
Acquisition costs | 0 | 54,676 |
Total expenses | 2,332,099 | 1,937,818 |
Other income - interest income | 280 | 0 |
Net income (loss) | $ 394,448 | $ (1,132,916) |
Net income (loss) per share, basic and diluted | $ 0.05 | $ (0.26) |
Weighted-average number of common shares outstanding, basic and diluted | 8,318,101 | 4,341,301 |
Dividends declared per common share | $ 0.1875 | $ 0.1875 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Cumulative Distributions and Net Losses [Member] |
Balance at Dec. 31, 2016 | $ 73,364,189 | $ 82,492 | $ 80,637,051 | $ (7,355,354) |
Balance (in shares) at Dec. 31, 2016 | 8,249,204 | |||
Issuance of common stock | 1,092,632 | $ 1,093 | 1,091,539 | 0 |
Issuance of common stock (in shares) | 109,263 | |||
Dividends declared | (1,548,589) | $ 0 | 0 | (1,548,589) |
Common stock awarded for services | 30,000 | $ 30 | 29,970 | 0 |
Common stock awarded for services (in shares) | 3,000 | |||
Repurchase of common stock | (592,518) | $ (593) | (591,925) | 0 |
Repurchase of common stock (in shares) | (59,252) | |||
Net income | 394,448 | $ 0 | 0 | 394,448 |
Transfer from redeemable common stock | 103,585 | 0 | 103,585 | 0 |
Balance at Mar. 31, 2017 | $ 72,843,747 | $ 83,022 | $ 81,270,220 | $ (8,509,495) |
Balance (in shares) at Mar. 31, 2017 | 8,302,216 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 394,448 | $ (1,132,916) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 1,218,074 | 481,481 |
Common stock awarded for services | 30,000 | 11,610 |
Straight-line rents | (155,188) | (47,714) |
Amortization of deferred financing costs | 68,258 | 22,423 |
Amortization of above-market lease | 6,016 | (14,134) |
Amortization of below-market leases | (219,003) | (19,801) |
Distributions from earnings in limited partnerships | 0 | 21,193 |
Unrealized gain (loss) on interest rate swap | (85,457) | 318,567 |
Expensed organization and offering costs | 32,779 | 505,443 |
Expensed acquisition fees and costs | 0 | 149,676 |
Changes in operating assets and liabilities: | ||
Tenant receivables | (88,227) | (5,813) |
Other assets | (16,821) | 0 |
Accounts payable, accrued liabilities, and other liabilities | 551,947 | 155,337 |
Due to affiliates | 34,909 | 99,195 |
Net cash provided by operating activities | 1,771,735 | 544,547 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of real estate investment | (25,750,000) | (4,326,879) |
Payments of acquisition fees and costs | (602,523) | (50,565) |
Payment of seller holdback | (250,000) | 0 |
Additions to real estate investment | (53,978) | 0 |
Refundable loan/purchase deposits | 0 | (850,000) |
Distributions from sales proceeds in limited partnerships | 0 | 1,230,858 |
Net cash used in investing activities | (26,656,501) | (3,996,586) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from mortgage notes payable | 24,865,612 | 6,977,000 |
Cash held in escrow from mortgage financing | 0 | 4,296,000 |
Repayments of mortgage note payable | (208,936) | (32,859) |
Borrowings from unsecured credit facility | 0 | 0 |
Repayments of unsecured credit facility | 0 | (8,044,432) |
Payment of deferred financing costs | (491,049) | (381,259) |
Proceeds from sale of an interest in real property recorded as a financing transaction | 0 | 1,000,000 |
Proceeds from issuance of common stock | 0 | 16,962,495 |
Payment of organization and offering costs | (32,800) | (576,734) |
Repurchase of common stock | (592,518) | (262,098) |
Dividends paid to common shareholders | (455,958) | (147,005) |
Net cash provided by financing activities | 23,084,351 | 19,791,108 |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (1,800,415) | 16,339,069 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 12,341,682 | 2,102,868 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 10,079,127 | 18,441,938 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 383,503 | 60,009 |
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Transfer from redeemable common stock | 103,586 | 0 |
Reduction in share redemptions payable | 43,019 | 0 |
Reinvested dividends from common shareholders | 1,092,631 | 403,415 |
Purchase deposits applied to acquisition of real estates | 1,250,000 | 200,000 |
Security deposits assumed and prorations from acquisitions | $ 0 | $ 23,122 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Business Description and Basis of Presentation [Text Block] | NOTE 1. BUSINESS AND ORGANIZATION Rich Uncles Real Estate Investment Trust I (the “Company”) was formed on March 7, 2012. The Company is an unincorporated association under the laws of the State of California and is treated as a real estate investment trust (“REIT”). From April 2012 until July 20, 2016 (“Termination Date”), the Company was engaged in an offering of its shares of common stock. The Company continues to sell its shares to existing shareholders under the Company’s dividend reinvestment plan (the “Plan”). The number of shares authorized for issuance under the Company’s dividend reinvestment plan is 3,000,000 Additionally, no later than the 10 th On April 29, 2016, the Company filed a registration statement on Form 10 with the Securities and Exchange Commission (the “SEC”) to register its common stock under the Securities Exchange Act of 1934, as amended. The Form 10 registration statement became effective on May 29, 2016. The Company was formed to primarily invest, directly or indirectly through investments in real estate owning entities, in single-tenant income-producing corporate properties located 80% in California and 20% in other 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 directly and/or through special purpose wholly owned limited liability companies or other subsidiaries. The Company holds its 70.14 The Company is externally managed by its advisor and sponsor, Rich Uncles, LLC (the “Advisor” or the “Sponsor”) whose members include Harold Hofer, Howard Makler, and Ray Wirta. Rich Uncles, LLC is a Delaware limited liability company registered to do business in California. The Company has entered into an agreement (the “Advisory Agreement”) with the Advisor. The current term of the Advisory Agreement ends on March 8, 2018. The Advisory Agreement may be renewed for an unlimited number of successive one-year periods upon the mutual consent of the Company and the Advisor. The Advisor may terminate the Advisory Agreement for any reason and without penalty upon 60 days’ written notice; and we may terminate the Advisory Agreement for cause as defined in the Advisory Agreement. Upon termination of the Advisory Agreement, the Advisor may be entitled to a termination fee. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate investments, the management of those investments, among other services, and the disposition of investments, as well as entitles the Advisor to reimbursement of organization and offering costs incurred by the Advisor or Sponsor on behalf of the Company, such as expenses related to the offering, and certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Advisor Agreement is terminable by a majority of the members of the Company’s independent Board of Trustees or the Advisor on 60 days’ written notice with or without cause. The Sponsor also serves as the sponsor for RW Holdings NNN REIT, Inc. The Company elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, beginning with the year ended December 31, 2014. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”), and in conjunction with rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include certain information and footnote disclosures required by GAAP for audited financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments which are of a normal and recurring nature, necessary for a fair and consistent presentation of the financial position and the results for the interim period presented. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The accompanying unaudited interim financial information should be read in conjunction with our December 31, 2016 audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on July 14, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash, cash equivalents and restricted cash are stated at cost, which approximates fair value. The Company’s cash, cash equivalents, and restricted cash could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. Other Comprehensive Loss For all periods presented, other comprehensive loss is the same as net loss. Use of Estimates The preparation of the unaudited 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 unaudited condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates. Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01 , Business Combinations (Topic 805): Clarifying the Definition of a Business New Accounting Standards Recently Issued and Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) Leases (Topic 840). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) |
REAL ESTATE INVESTMENTS
REAL ESTATE INVESTMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Real Estate [Abstract] | |
Real Estate Disclosure [Text Block] | NOTE 3. REAL ESTATE INVESTMENTS The following table provides summary information regarding the Company’s properties as of March 31, 2017: Tenant Accumulated Total real Land, origination depreciation estate Acquisition Property building and and absorption and investments, Property Location Date Type improvements costs amortization net Chase Bank & Great Clips Antioch, CA 8/22/2014 Retail $ 3,160,035 $ 668,200 $ (839,838) $ 2,988,397 Chevron Gas Station Rancho Cordova, CA 2/6/2015 Retail 2,600,000 - (153,510) 2,446,490 Chevron Gas Station San Jose, CA 5/29/2015 Retail 2,775,000 - (72,680) 2,702,320 Levins Sacramento, CA 8/19/2015 Industrial 3,750,000 - (345,929) 3,404,071 Chevron Gas Station (See Note 4) Roseville, CA 9/30/2015 Retail 2,800,000 - (147,330) 2,652,670 Island Pacific Supermarket Elk Grove, CA 10/1/2015 Retail 3,151,460 568,540 (249,903) 3,470,097 Dollar General Bakersfield, CA 11/11/2015 Retail 4,632,567 689,020 (264,054) 5,057,533 Rite Aid Lake Elsinore, CA 12/7/2015 Retail 6,663,446 968,286 (308,158) 7,323,574 PMI Preclinical San Carlos, CA 12/9/2015 Office 8,920,000 - (265,570) 8,654,430 EcoThrift Sacramento, CA 3/17/2016 Retail 4,486,993 541,729 (252,298) 4,776,424 GSA (MSHA) Vacaville, CA 4/5/2016 Office 2,998,232 456,645 (145,548) 3,309,329 PreK San Antonio San Antonio, TX 4/8/2016 Retail 11,851,540 1,593,451 (875,068) 12,569,923 Dollar Tree Morrow, GA 4/22/2016 Retail 1,248,156 206,844 (87,703) 1,367,297 Dinan Cars Morgan Hill, CA 6/21/2016 Industrial 4,651,845 654,155 (301,015) 5,004,985 Solar Turbines San Diego, CA 7/21/2016 Office 5,481,198 389,718 (133,991) 5,736,925 Amec Foster San Diego, CA 7/21/2016 Office 5,697,402 485,533 (138,248) 6,044,687 ITW Ripley El Dorado, CA 8/18/2016 Industrial 6,178,204 407,316 (184,226) 6,401,294 Dollar General Big Spring Big Spring, TX 11/4/2016 Retail 1,161,647 112,958 (11,390) 1,263,215 Gap Rocklin, CA 12/1/2016 Office 7,209,629 677,191 (93,165) 7,793,655 L-3 Communications San Diego, CA 12/23/2016 Office 10,516,420 961,107 (98,153) 11,379,374 Sutter Health Rancho Cordova, CA 3/15/2017 Office 24,258,173 2,870,258 (48,287) 27,080,144 $ 124,191,947 $ 12,250,951 $ (5,016,064) $ 131,426,834 Current Acquisitions Tenant origination Land, building and absorption Above Purchase Property and improvements costs market lease price Sutter Health $ 24,258,173 $ 2,870,258 $ 474,091 $ 27,602,523 Purchase price $ 27,602,523 Purchase deposits applied (1,250,000) Acquisition fees and costs (602,523) Cash paid for acquisition of real estate investment $ 25,750,000 The purchase price allocations reflected in the accompanying condensed consolidated financial statements are based upon estimates and assumptions that are subject to change that may impact the fair value of the assets and liabilities above (including real estate investments, other assets and accrued liabilities) . The expiration of the leases of the properties acquired during the three months ended March 31, 2017 are as follows: Property Lease Expiration Sutter Health 10/31/2025 The Company recognized $ 112,725 Operating Leases The Company’s real estate properties are primarily leased to tenants under triple-net leases for which terms and expirations vary. The Company monitors the credit of all tenants to stay abreast of any material changes in credit quality. The Company monitors tenant credit by (1) reviewing the credit ratings of tenants (or their parent companies or lease guarantors) that are rated by national recognized rating agencies; (2) reviewing financial statements and related metrics and information that are publicly available or that are required to be provided pursuant to the lease; (3) monitoring new reports and press releases regarding the tenants (or their parent companies or lease guarantors), and their underlying business and industry; and (4) monitoring the timeliness of rent collections. At March 31, 2017 and December 31, 2016, tenant receivables included $ 700,462 545,274 April 1, 2017 through December 31, 2017 $ 9,720,186 2018 9,761,153 2019 9,957,362 2020 10,158,543 2021 9,189,556 2022 7,644,732 Thereafter 18,412,166 $ 74,843,698 Revenue Concentration Percentage of Annualized Annualized Property and Location Base Rent* Base Rent Sutter Health, CA $ 2,161,686 $ 21.31 % *Effective Annualized Base Rent is calculated based on the monthly base rent at June 30, 2017 for twelve months. As of March 31, 2017, no other tenant accounted for more than 10% of annualized base rent. Intangibles Tenant Above-Market Below-Market Cost $ 12,250,951 $ 747,358 $ (5,349,908) Accumulated amortization (1,536,948) (29,316) 727,154 Net amount $ 10,714,003 $ 718,042 $ (4,622,754) Tenant Above-Market Below-Market Remaining 2017 $ (1,313,970) $ (24,406) $ 656,746 2018 (1,557,413) (32,542) 860,165 2019 (1,557,413) (32,542) 860,165 2020 (1,557,414) (32,542) 860,165 2021 (1,310,296) (32,542) 667,541 2022 (1,310,296) (32,542) 657,362 Thereafter (2,107,201) (530,926) 60,610 $ (10,714,003) $ (718,042) $ 4,622,754 Weighted average remaining amortization period 7.36 years 34.44 years 6.08 years |
SALE OF INTEREST IN REAL ESTATE
SALE OF INTEREST IN REAL ESTATE INVESTMENT PROPERTY | 3 Months Ended |
Mar. 31, 2017 | |
Real Estate [Abstract] | |
Disposal Of Interest In Real Estate Property [Text Block] | NOTE 4. SALE OF INTEREST IN REAL ESTATE INVESTMENT PROPERTY In March 2016, the Company entered into a tenancy in common agreement and sold an undivided 29.86 1,000,000 13,751 4,278 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 5. DEBT Mortgage Notes Payable Deferred Effective Principal Financing Contractual Interest Loan Collateral Amount Costs Net Balance Interest Rate Rate (1) Maturity Chase Bank & Great Clips $ 1,915,752 $ (31,229) $ 1,884,523 4.37% fixed 4.37 % 2/5/2019 Levins 2,201,696 (46,306) 2,155,390 One-month LIBOR + 1.93% 3.74 % 1/5/2021 Island Pacific Supermarket 2,002,076 (44,764) 1,957,312 One-month LIBOR + 1.93% 3.74 % 1/5/2021 Dollar General 2,467,596 (71,869) 2,395,727 One-month LIBOR + 1.48% 3.38 % 3/5/2021 Rite Aid 3,887,628 (132,348) 3,755,280 One-month LIBOR + 1.50% 3.25 % 5/5/2021 PMI Preclinical 4,372,458 (164,971) 4,207,487 One-month LIBOR + 1.48% 3.38 % 3/5/2021 EcoThrift 2,810,441 (106,073) 2,704,368 One-month LIBOR + 1.21% 2.96 % 7/5/2021 GSA 1,911,588 (81,798) 1,829,790 One-month LIBOR + 1.25% 3.00 % 8/5/2021 PreK San Antonio 5,401,275 (192,418) 5,208,857 4.25% fixed 4.25 % 12/1/2021 Dinan Cars 2,854,082 (95,908) 2,758,174 One-month LIBOR + 2.27% 4.02 % 1/5/2022 ITW Sky Park 10,003,732 (279,673) 9,724,059 3.35% fixed 3.35 % 11/1/2026 L-3 Communications 5,527,600 (134,338) 5,393,262 4.5% fixed 4.50 % 4/1/2022 Gap 3,831,387 (97,234) 3,734,153 4.15% fixed 4.15 % 8/1/2023 Dollar General Big Spring (2) 638,012 (29,215) 608,797 4.69% fixed 4.69 % 3/13/2022 Sutter Health 14,850,000 (228,076) 14,621,924 4.5% fixed 4.50 % 3/9/2024 $ 64,675,323 $ (1,736,220) $ 62,939,103 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of March 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2017 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments, see Note 6. (2) The loan is cross-collateralized with the six Dollar General properties owned by RW Holdings NNN REIT, Inc. The deed of trust for the Company’s Dollar General Big Spring property and the deeds of trust for the RW Holdings NNN REIT, Inc.’s six Dollar General properties contain cross collateralization and cross default provisions. At June 30, 2017, the outstanding principal balance of the loans on RW Holdings NNN REIT, Inc.’s six Dollar General properties was $ 3,976,515 The mortgage notes payable provide for monthly payments of principal and interest. The mortgage loans payable have balloon payments that are due at loan maturity. Pursuant to the terms of the mortgage notes payable agreements, the Company is subject to certain financial loan covenants. The Company was in compliance with all terms and conditions of the mortgage loan agreements. April 1, 2017 through December 31, 2017 $ 879,268 2018 1,233,521 2019 3,092,990 2020 1,287,632 2021 23,880,363 2022 8,889,131 Thereafter 25,412,418 Total $ 64,675,323 Unsecured Credit Facility On January 13, 2015, the Company (“Borrower”), entered into a credit agreement (the “Unsecured Credit Agreement”) with Pacific Mercantile Bank (“Lender”). The line of credit was paid off in January 2016 and no amounts were drawn on the line after January 2016. The Company canceled its line of credit with Pacific Mercantile Bank in June 2016. Three Months Ended March 31, 2017 2016 Mortgage notes payable Interest expense (1) $ 465,115 $ 105,637 Amortization of deferred financing costs 68,258 10,173 Unrealized loss (gain) on interest rate swaps (see Note 6) (85,924) 332,123 Unsecured credit facility Interest expense - (5,745) Amortization of deferred financing costs - 12,250 Sales deposit liability 13,751 4,278 Total interest expense $ 461,200 $ 458,716 (1) Includes $ 467 9,821 13,242 9,821 |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | NOTE 6. INTEREST RATE SWAP DERIVATIVES The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes. The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate mortgage notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. During 2016, the Company (or wholly owned LLCs) entered into interest rate swap agreements with amortizing notational amounts relating to eight of its mortgage notes payable. The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of March 31, 2017. March 31, 2017 Derivative Number of Notional Amount Reference Rate as Weighted Average Weighted Average Instruments Instruments (1) of 3/31/2017 Fixed Pay Rate Remaining Term Interest Rate 8 $ 22,507,565 One-month LIBOR/Fixed at 1.21%-2.27% 3.42 % 4.09 years (1) The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. The minimum notional amount (outstanding principal balance at the maturity date) is $ 20,552,875 March 31, 2017 December 31, 2016 Number of Number of Derivative Instrument Balance Sheet Location Instruments Fair Value Instruments Fair Value Interest Rate Swaps Asset - Interest rate swap derivatives, at fair value 5 $ 232,316 5 $ 180,759 Liability Interest rate swap derivatives, at fair value 3 $ (72,940) 3 $ (106,840) The change in fair value of a derivative instrument that is not designated as a cash flow hedge is recorded as interest expense in the accompanying consolidated statements of operations. None of the Company’s derivatives at March 31, 2017 or December 31, 2016 were designated as hedging instruments, therefore the net unrealized loss (gain) recognized on interest rate swaps of $ (85,457) 318,567 |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | NOTE 7. FAIR VALUE DISCLOSURES The fair value for certain financial instruments is derived using a combination of market quotes, pricing models, and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value: Cash and cash equivalents, restricted cash, tenant receivables, due from affiliates, purchase and other deposits, other assets, accounts payable, accrued expenses and other liabilities, sales deposit liability, share repurchase payable, and due to affiliates: Derivative Instruments Mortgage Notes Payable: The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31,2016 Face value Carrying value Fair value Face Value Carrying Value Fair Value $ 64,675,323 $ 62,939,103 $ 62,613,614 $ 40,018,648 $ 38,705,103 $ 38,153,219 Disclosures of the fair values of financial instruments are based on pertinent information available to the Company as of March 31, 2017 and December 31, 2015 and require a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. The actual value could be materially different from the Company’s estimate of value. During the three months ended March 31, 2017 and the year ended December 31, 2016, the Company measured the following assets and liabilities at fair value: Recurring Basis Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2017: Asset - Interest rate swap derivatives $ 232,316 $ - $ 232,316 $ - Liability Interest rate swap derivatives $ (72,940 ) $ - $ (72,940 ) $ - December 31, 2016: Asset - Interest rate swap derivatives $ 180,759 $ - $ 180,759 $ - Liability Interest rate swap derivatives $ (106,840 ) $ - $ (106,840 ) $ - |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 8. RELATED PARTY TRANSACTIONS The costs incurred by the Company pursuant to the Advisory Agreement for the three months ended March 31, 2017 and 2016 as well as the related amounts payable or receivable as of March 31, 2017 and December 31, 2016 are included in the table below. Three Three months months ended ended March 31, March 31, 2017 March 31, 2017 2016 December 31, 2016 Incurred Receivable Payable Incurred Receivable Payable Expensed: Acquisition fees $ - $ - $ - $ 95,000 $ - $ - Asset management fees 162,201 - 46,036 62,339 - 43,993 Disposition fees - - - 30,000 - - Fees to affiliates 162,201 187,339 Property management fees * 17,866 - 39,133 1,063 - 21,267 Reimbursable organizational and 32,779 - 41,775 521,135 - 41,797 Capitalized: Acquisition fees 540,000 48,950 - - 48,950 - Financing coordination fees 100,156 - 137,800 69,770 - 137,800 Other: Due to advisor for costs advanced 15,000 - 285,372 47,055 - 270,372 Due to other - SSLFO (1) - - 100,477 - - 100,477 Due to RW Holdings NNN REIT - - 28,571 - - 28,571 $ 868,002 $ 48,950 $ 679,164 $ 826,362 $ 48,950 $ 644,277 * Property management fees are presented as “property expenses” in the condensed consolidated statement of operations (1) These costs were incurred by SSLFO, an affiliate of the Sponsor, in connection with the organization and offering of the Company’s shares. (2) These costs were incurred in connection with the potential acquisition of a property by the Company. The property was acquired by RW Holdings NNN REIT, Inc.; therefore, the Company has a receivable from RW Holdings NNN REIT, Inc. Organizational and Offering Expenses During the offering, pursuant to the Advisory Agreement, the Company is obligated to reimburse the Sponsor or its affiliates for organizational and offering expenses paid by the Sponsor on behalf of the Company. The Company will reimburse the Sponsor for organizational and offering expenses up to 3.0% of gross offering proceeds. The Sponsor and affiliates will be responsible for any organizational and offering expenses related to the offering to the extent they exceed 3.0% of gross offering proceeds from the offering. As of March 31, 2017, the Sponsor has incurred organizational and offering expenses of $ 3,424,663 As of March 31, 2017 and December 31, 2016, the Company has reimbursed the Sponsor $ 2,546,870 2,514,070 2,588,645 2,555,866 41,775 41,797 Acquisition Fees 3.0 6.0 Asset Management Fee The Company shall pay to the Advisor as compensation for the advisory services rendered to the Company, a monthly fee in an amount equal to 0.05 Financing Coordination Fee Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if the Advisor or an affiliate provides a substantial amount of the services (as determined by a majority of the Company’s independent trust managers) in connection with the post-acquisition financing or refinancing of any debt that the Company obtains relative to a property, then the Company shall pay to the Advisor or such affiliate a financing coordination fee equal to 1.0 Property Management Fees If the Advisor or any of its affiliates provides a substantial amount of the property management services (as determined by a majority of the Company’s independent trust managers) for the Company’s properties, then the Company shall pay to the Advisor or such affiliate a property management fee equal to 1.5 Disposition Fees For substantial assistance in connection with the sale of properties, the Company shall pay to its Advisor or one of its affiliates 3.0 6 Leasing Commission Fees If the Advisor or any of its affiliates provides a substantial amount of the services (as determined by a majority of the Company’s independent trust managers) in connection with the Company’s leasing of its properties to unaffiliated third parties, then the Company shall pay to the Advisor or such affiliate leasing commissions equal to 6.0 3.0 Other Operating Expense Reimbursement Under the prospectus, total operating expenses of the Company are limited to the greater of 2 25 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 9. COMMITMENTS AND CONTINGENCIES Economic Dependency The Company depends on its Sponsor and its Advisor for certain services that are essential to the Company, including the sale of the Company’s shares of common stock under the Plan, the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other sources. Environmental As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities. Legal Matters From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. The Company is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that could have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably. The U.S. Securities and Exchange Commission (the “SEC”) is conducting an investigation related to the advertising and sale of securities by the Company in connection with the offering. The investigation is a non-public fact finding inquiry. It is neither an allegation of wrongdoing nor a finding that violations of law have occurred. In connection with the investigation, the Company and certain affiliates have received and responded to subpoenas from the SEC requesting documents and other information related to the Company and the offering. The SEC’s investigation is ongoing. The Company has cooperated and intends to continue to cooperate with the SEC in this matter. The Company is unable to predict the likely outcome of the investigation or determine its potential impact, if any, on the Company. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 10. SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the unaudited condensed consolidated financial statements are issued. Distributions On April 20, 2017 0.0020833 1,559,176 April 20, 2017 1,082,081 On July 20, 2017 0.0020604 1,569,284 July 20, 2017 1,103,595 Acquisitions On June 29, 2017, through a wholly owned subsidiary, the Company acquired a 14,490 5,125,000 125,040 3,298,019 Property Sale On April 27, 2017, the Company sold the Chevron Gas Station property in Rancho Cordova, CA to a third party for $ 3,434,000 800,000 Repurchase of Common Stock For the period from April 1, 2017 through August 10, 2017, the Company repurchased 202,791 2,027,911 Legal Matters None. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”), and in conjunction with rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include certain information and footnote disclosures required by GAAP for audited financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments which are of a normal and recurring nature, necessary for a fair and consistent presentation of the financial position and the results for the interim period presented. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The accompanying unaudited interim financial information should be read in conjunction with our December 31, 2016 audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on July 14, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash, cash equivalents and restricted cash are stated at cost, which approximates fair value. The Company’s cash, cash equivalents, and restricted cash could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. |
Comprehensive Income, Policy [Policy Text Block] | Other Comprehensive Loss For all periods presented, other comprehensive loss is the same as net loss. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of the unaudited 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 unaudited condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01 , Business Combinations (Topic 805): Clarifying the Definition of a Business New Accounting Standards Recently Issued and Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition (Topic 605) Leases (Topic 840). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) |
REAL ESTATE INVESTMENTS (Tables
REAL ESTATE INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties [Table Text Block] | The following table provides summary information regarding the Company’s properties as of March 31, 2017: Tenant Accumulated Total real Land, origination depreciation estate Acquisition Property building and and absorption and investments, Property Location Date Type improvements costs amortization net Chase Bank & Great Clips Antioch, CA 8/22/2014 Retail $ 3,160,035 $ 668,200 $ (839,838) $ 2,988,397 Chevron Gas Station Rancho Cordova, CA 2/6/2015 Retail 2,600,000 - (153,510) 2,446,490 Chevron Gas Station San Jose, CA 5/29/2015 Retail 2,775,000 - (72,680) 2,702,320 Levins Sacramento, CA 8/19/2015 Industrial 3,750,000 - (345,929) 3,404,071 Chevron Gas Station (See Note 4) Roseville, CA 9/30/2015 Retail 2,800,000 - (147,330) 2,652,670 Island Pacific Supermarket Elk Grove, CA 10/1/2015 Retail 3,151,460 568,540 (249,903) 3,470,097 Dollar General Bakersfield, CA 11/11/2015 Retail 4,632,567 689,020 (264,054) 5,057,533 Rite Aid Lake Elsinore, CA 12/7/2015 Retail 6,663,446 968,286 (308,158) 7,323,574 PMI Preclinical San Carlos, CA 12/9/2015 Office 8,920,000 - (265,570) 8,654,430 EcoThrift Sacramento, CA 3/17/2016 Retail 4,486,993 541,729 (252,298) 4,776,424 GSA (MSHA) Vacaville, CA 4/5/2016 Office 2,998,232 456,645 (145,548) 3,309,329 PreK San Antonio San Antonio, TX 4/8/2016 Retail 11,851,540 1,593,451 (875,068) 12,569,923 Dollar Tree Morrow, GA 4/22/2016 Retail 1,248,156 206,844 (87,703) 1,367,297 Dinan Cars Morgan Hill, CA 6/21/2016 Industrial 4,651,845 654,155 (301,015) 5,004,985 Solar Turbines San Diego, CA 7/21/2016 Office 5,481,198 389,718 (133,991) 5,736,925 Amec Foster San Diego, CA 7/21/2016 Office 5,697,402 485,533 (138,248) 6,044,687 ITW Ripley El Dorado, CA 8/18/2016 Industrial 6,178,204 407,316 (184,226) 6,401,294 Dollar General Big Spring Big Spring, TX 11/4/2016 Retail 1,161,647 112,958 (11,390) 1,263,215 Gap Rocklin, CA 12/1/2016 Office 7,209,629 677,191 (93,165) 7,793,655 L-3 Communications San Diego, CA 12/23/2016 Office 10,516,420 961,107 (98,153) 11,379,374 Sutter Health Rancho Cordova, CA 3/15/2017 Office 24,258,173 2,870,258 (48,287) 27,080,144 $ 124,191,947 $ 12,250,951 $ (5,016,064) $ 131,426,834 |
Schedule Of Real Estate Investment Property Purchase Price [Table Text Block] | During the three months ended March 31, 2017, the Company acquired the following property: Tenant origination Land, building and absorption Above Purchase Property and improvements costs market lease price Sutter Health $ 24,258,173 $ 2,870,258 $ 474,091 $ 27,602,523 Purchase price $ 27,602,523 Purchase deposits applied (1,250,000) Acquisition fees and costs (602,523) Cash paid for acquisition of real estate investment $ 25,750,000 |
Schedule Of Lease Expiration Date [Table Text Block] | The expiration of the leases of the properties acquired during the three months ended March 31, 2017 are as follows: Property Lease Expiration Sutter Health 10/31/2025 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | As of March 31, 2017, the future minimum contractual rent payments due under the Company’s non-cancelable operating leases are as follows: April 1, 2017 through December 31, 2017 $ 9,720,186 2018 9,761,153 2019 9,957,362 2020 10,158,543 2021 9,189,556 2022 7,644,732 Thereafter 18,412,166 $ 74,843,698 |
Schedule of Revenue Concentration [Table Text Block] | Percentage of Annualized Annualized Property and Location Base Rent* Base Rent Sutter Health, CA $ 2,161,686 $ 21.31 % *Effective Annualized Base Rent is calculated based on the monthly base rent at June 30, 2017 for twelve months. |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | As of March 31, 2017, the Company’s intangibles were as follows: Tenant Above-Market Below-Market Cost $ 12,250,951 $ 747,358 $ (5,349,908) Accumulated amortization (1,536,948) (29,316) 727,154 Net amount $ 10,714,003 $ 718,042 $ (4,622,754) |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Amortization of intangible assets over the next five years is expected to be as follows: Tenant Above-Market Below-Market Remaining 2017 $ (1,313,970) $ (24,406) $ 656,746 2018 (1,557,413) (32,542) 860,165 2019 (1,557,413) (32,542) 860,165 2020 (1,557,414) (32,542) 860,165 2021 (1,310,296) (32,542) 667,541 2022 (1,310,296) (32,542) 657,362 Thereafter (2,107,201) (530,926) 60,610 $ (10,714,003) $ (718,042) $ 4,622,754 Weighted average remaining amortization period 7.36 years 34.44 years 6.08 years |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | As of March 31, 2017, the Company’s mortgage notes payable consisted of the following: Deferred Effective Principal Financing Contractual Interest Loan Collateral Amount Costs Net Balance Interest Rate Rate (1) Maturity Chase Bank & Great Clips $ 1,915,752 $ (31,229) $ 1,884,523 4.37% fixed 4.37 % 2/5/2019 Levins 2,201,696 (46,306) 2,155,390 One-month LIBOR + 1.93% 3.74 % 1/5/2021 Island Pacific Supermarket 2,002,076 (44,764) 1,957,312 One-month LIBOR + 1.93% 3.74 % 1/5/2021 Dollar General 2,467,596 (71,869) 2,395,727 One-month LIBOR + 1.48% 3.38 % 3/5/2021 Rite Aid 3,887,628 (132,348) 3,755,280 One-month LIBOR + 1.50% 3.25 % 5/5/2021 PMI Preclinical 4,372,458 (164,971) 4,207,487 One-month LIBOR + 1.48% 3.38 % 3/5/2021 EcoThrift 2,810,441 (106,073) 2,704,368 One-month LIBOR + 1.21% 2.96 % 7/5/2021 GSA 1,911,588 (81,798) 1,829,790 One-month LIBOR + 1.25% 3.00 % 8/5/2021 PreK San Antonio 5,401,275 (192,418) 5,208,857 4.25% fixed 4.25 % 12/1/2021 Dinan Cars 2,854,082 (95,908) 2,758,174 One-month LIBOR + 2.27% 4.02 % 1/5/2022 ITW Sky Park 10,003,732 (279,673) 9,724,059 3.35% fixed 3.35 % 11/1/2026 L-3 Communications 5,527,600 (134,338) 5,393,262 4.5% fixed 4.50 % 4/1/2022 Gap 3,831,387 (97,234) 3,734,153 4.15% fixed 4.15 % 8/1/2023 Dollar General Big Spring (2) 638,012 (29,215) 608,797 4.69% fixed 4.69 % 3/13/2022 Sutter Health 14,850,000 (228,076) 14,621,924 4.5% fixed 4.50 % 3/9/2024 $ 64,675,323 $ (1,736,220) $ 62,939,103 (1) Contractual interest rate represents the interest rate in effect under the mortgage note payable as of March 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2017 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments, see Note 6. (2) The loan is cross-collateralized with the six Dollar General properties owned by RW Holdings NNN REIT, Inc. The deed of trust for the Company’s Dollar General Big Spring property and the deeds of trust for the RW Holdings NNN REIT, Inc.’s six Dollar General properties contain cross collateralization and cross default provisions. At June 30, 2017, the outstanding principal balance of the loans on RW Holdings NNN REIT, Inc.’s six Dollar General properties was $ 3,976,515 |
Schedule of Maturities of Long-term Debt [Table Text Block] | The following summarizes the future principal payments on the Company’s mortgage notes payable as of March 31, 2017: April 1, 2017 through December 31, 2017 $ 879,268 2018 1,233,521 2019 3,092,990 2020 1,287,632 2021 23,880,363 2022 8,889,131 Thereafter 25,412,418 Total $ 64,675,323 |
Schedule Of Interest Expenses Reconciliation [Table Text Block] | The following is a reconciliation of the components of interest expense for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, 2017 2016 Mortgage notes payable Interest expense (1) $ 465,115 $ 105,637 Amortization of deferred financing costs 68,258 10,173 Unrealized loss (gain) on interest rate swaps (see Note 6) (85,924) 332,123 Unsecured credit facility Interest expense - (5,745) Amortization of deferred financing costs - 12,250 Sales deposit liability 13,751 4,278 Total interest expense $ 461,200 $ 458,716 (1) Includes $ 467 9,821 13,242 9,821 |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments [Table Text Block] | 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: March 31, 2017 Derivative Number of Notional Amount Reference Rate as Weighted Average Weighted Average Instruments Instruments (1) of 3/31/2017 Fixed Pay Rate Remaining Term Interest Rate 8 $ 22,507,565 One-month LIBOR/Fixed at 1.21%-2.27% 3.42 % 4.09 years (1) The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. The minimum notional amount (outstanding principal balance at the maturity date) is $ 20,552,875 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | March 31, 2017 December 31, 2016 Number of Number of Derivative Instrument Balance Sheet Location Instruments Fair Value Instruments Fair Value Interest Rate Swaps Asset - Interest rate swap derivatives, at fair value 5 $ 232,316 5 $ 180,759 Liability Interest rate swap derivatives, at fair value 3 $ (72,940) 3 $ (106,840) |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping [Table Text Block] | The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31,2016 Face value Carrying value Fair value Face Value Carrying Value Fair Value $ 64,675,323 $ 62,939,103 $ 62,613,614 $ 40,018,648 $ 38,705,103 $ 38,153,219 |
Fair Value, Liabilities Measured on Recurring Basis [Table Text Block] | During the three months ended March 31, 2017 and the year ended December 31, 2016, the Company measured the following assets and liabilities at fair value: Recurring Basis Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2017: Asset - Interest rate swap derivatives $ 232,316 $ - $ 232,316 $ - Liability Interest rate swap derivatives $ (72,940 ) $ - $ (72,940 ) $ - December 31, 2016: Asset - Interest rate swap derivatives $ 180,759 $ - $ 180,759 $ - Liability Interest rate swap derivatives $ (106,840 ) $ - $ (106,840 ) $ - |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | The amounts payable or receivable are presented in the unaudited condensed consolidated balance sheets as “Due to Affiliates” and “Due from Affiliates.” Three Three months months ended ended March 31, March 31, 2017 March 31, 2017 2016 December 31, 2016 Incurred Receivable Payable Incurred Receivable Payable Expensed: Acquisition fees $ - $ - $ - $ 95,000 $ - $ - Asset management fees 162,201 - 46,036 62,339 - 43,993 Disposition fees - - - 30,000 - - Fees to affiliates 162,201 187,339 Property management fees * 17,866 - 39,133 1,063 - 21,267 Reimbursable organizational and 32,779 - 41,775 521,135 - 41,797 Capitalized: Acquisition fees 540,000 48,950 - - 48,950 - Financing coordination fees 100,156 - 137,800 69,770 - 137,800 Other: Due to advisor for costs advanced 15,000 - 285,372 47,055 - 270,372 Due to other - SSLFO (1) - - 100,477 - - 100,477 Due to RW Holdings NNN REIT - - 28,571 - - 28,571 $ 868,002 $ 48,950 $ 679,164 $ 826,362 $ 48,950 $ 644,277 * Property management fees are presented as “property expenses” in the condensed consolidated statement of operations (1) These costs were incurred by SSLFO, an affiliate of the Sponsor, in connection with the organization and offering of the Company’s shares. (2) These costs were incurred in connection with the potential acquisition of a property by the Company. The property was acquired by RW Holdings NNN REIT, Inc.; therefore, the Company has a receivable from RW Holdings NNN REIT, Inc. |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details Textual) | Mar. 31, 2017USD ($) |
Common Stock, Value, Subscriptions | $ 3,000,000 |
Noncontrolling Interest, Ownership Percentage by Parent | 70.14% |
REAL ESTATE INVESTMENTS (Detail
REAL ESTATE INVESTMENTS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Land building and improvements | $ 124,191,947 | |
Tenant origination and absorption costs | 12,250,951 | $ 9,380,693 |
Accumulated depreciation and amortization | (5,016,064) | (3,797,990) |
Total real estate investments, net | $ 131,426,834 | $ 105,462,499 |
Chase Bank Great Clips [Member] | Antioch, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Aug. 22, 2014 | |
Land building and improvements | $ 3,160,035 | |
Tenant origination and absorption costs | 668,200 | |
Accumulated depreciation and amortization | (839,838) | |
Total real estate investments, net | $ 2,988,397 | |
Chevron Gas Station [Member] | Rancho Cordova, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Feb. 6, 2015 | |
Land building and improvements | $ 2,600,000 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (153,510) | |
Total real estate investments, net | $ 2,446,490 | |
Chevron Gas Station [Member] | San Jose, CA [Member] | Retail Site [Member] | ||
Acquisition Date | May 29, 2015 | |
Land building and improvements | $ 2,775,000 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (72,680) | |
Total real estate investments, net | $ 2,702,320 | |
Chevron Gas Station [Member] | Roseville, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Sep. 30, 2015 | |
Land building and improvements | $ 2,800,000 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (147,330) | |
Total real estate investments, net | $ 2,652,670 | |
Levins [Member] | Sacramento, CA [Member] | Industrial Property [Member] | ||
Acquisition Date | Aug. 19, 2015 | |
Land building and improvements | $ 3,750,000 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (345,929) | |
Total real estate investments, net | $ 3,404,071 | |
Island Pacific Supermarket [Member] | Elk Grove, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Oct. 1, 2015 | |
Land building and improvements | $ 3,151,460 | |
Tenant origination and absorption costs | 568,540 | |
Accumulated depreciation and amortization | (249,903) | |
Total real estate investments, net | $ 3,470,097 | |
Dollar General [Member] | Bakersfield, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Nov. 11, 2015 | |
Land building and improvements | $ 4,632,567 | |
Tenant origination and absorption costs | 689,020 | |
Accumulated depreciation and amortization | (264,054) | |
Total real estate investments, net | $ 5,057,533 | |
Rite Aid [Member] | Lake Elsinore, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Dec. 7, 2015 | |
Land building and improvements | $ 6,663,446 | |
Tenant origination and absorption costs | 968,286 | |
Accumulated depreciation and amortization | (308,158) | |
Total real estate investments, net | $ 7,323,574 | |
PMI Preclinical [Member] | San Carlos, CA [Member] | Office Building [Member] | ||
Acquisition Date | Dec. 9, 2015 | |
Land building and improvements | $ 8,920,000 | |
Tenant origination and absorption costs | 0 | |
Accumulated depreciation and amortization | (265,570) | |
Total real estate investments, net | $ 8,654,430 | |
EcoThrift [Member] | Sacramento, CA [Member] | Retail Site [Member] | ||
Acquisition Date | Mar. 17, 2016 | |
Land building and improvements | $ 4,486,993 | |
Tenant origination and absorption costs | 541,729 | |
Accumulated depreciation and amortization | (252,298) | |
Total real estate investments, net | $ 4,776,424 | |
GSA MSHA [Member] | Vacaville, CA [Member] | Office Building [Member] | ||
Acquisition Date | Apr. 5, 2016 | |
Land building and improvements | $ 2,998,232 | |
Tenant origination and absorption costs | 456,645 | |
Accumulated depreciation and amortization | (145,548) | |
Total real estate investments, net | $ 3,309,329 | |
PreK San Antonio [Member] | San Antonio, TX [Member] | Retail Site [Member] | ||
Acquisition Date | Apr. 8, 2016 | |
Land building and improvements | $ 11,851,540 | |
Tenant origination and absorption costs | 1,593,451 | |
Accumulated depreciation and amortization | (875,068) | |
Total real estate investments, net | $ 12,569,923 | |
Dollar Tree [Member] | Morrow, GA [Member] | Retail Site [Member] | ||
Acquisition Date | Apr. 22, 2016 | |
Land building and improvements | $ 1,248,156 | |
Tenant origination and absorption costs | 206,844 | |
Accumulated depreciation and amortization | (87,703) | |
Total real estate investments, net | $ 1,367,297 | |
Dinan Cars [Member] | Morgan Hill, CA [Member] | Industrial Property [Member] | ||
Acquisition Date | Jun. 21, 2016 | |
Land building and improvements | $ 4,651,845 | |
Tenant origination and absorption costs | 654,155 | |
Accumulated depreciation and amortization | (301,015) | |
Total real estate investments, net | $ 5,004,985 | |
ITW Ripley [Member] | El Dorado, CA [Member] | Industrial Property [Member] | ||
Acquisition Date | Aug. 18, 2016 | |
Land building and improvements | $ 6,178,204 | |
Tenant origination and absorption costs | 407,316 | |
Accumulated depreciation and amortization | (184,226) | |
Total real estate investments, net | $ 6,401,294 | |
Solar Turbines [Member] | San Diego, CA [Member] | Office Building [Member] | ||
Acquisition Date | Jul. 21, 2016 | |
Land building and improvements | $ 5,481,198 | |
Tenant origination and absorption costs | 389,718 | |
Accumulated depreciation and amortization | (133,991) | |
Total real estate investments, net | $ 5,736,925 | |
Amec Foster [Member] | San Diego, CA [Member] | Office Building [Member] | ||
Acquisition Date | Jul. 21, 2016 | |
Land building and improvements | $ 5,697,402 | |
Tenant origination and absorption costs | 485,533 | |
Accumulated depreciation and amortization | (138,248) | |
Total real estate investments, net | $ 6,044,687 | |
Dollar General Big Spring [Member] | Big Spring, TX [Member] | Retail Site [Member] | ||
Acquisition Date | Nov. 4, 2016 | |
Land building and improvements | $ 1,161,647 | |
Tenant origination and absorption costs | 112,958 | |
Accumulated depreciation and amortization | (11,390) | |
Total real estate investments, net | $ 1,263,215 | |
Gap [Member] | Rocklin, CA [Member] | Office Building [Member] | ||
Acquisition Date | Dec. 1, 2016 | |
Land building and improvements | $ 7,209,629 | |
Tenant origination and absorption costs | 677,191 | |
Accumulated depreciation and amortization | (93,165) | |
Total real estate investments, net | $ 7,793,655 | |
L-3 Communications | San Diego, CA [Member] | Office Building [Member] | ||
Acquisition Date | Dec. 23, 2016 | |
Land building and improvements | $ 10,516,420 | |
Tenant origination and absorption costs | 961,107 | |
Accumulated depreciation and amortization | (98,153) | |
Total real estate investments, net | $ 11,379,374 | |
Sutter Health [Member] | Rancho Cordova, CA [Member] | Office Building [Member] | ||
Acquisition Date | Mar. 15, 2017 | |
Land building and improvements | $ 24,258,173 | |
Tenant origination and absorption costs | 2,870,258 | |
Accumulated depreciation and amortization | (48,287) | |
Total real estate investments, net | $ 27,080,144 |
REAL ESTATE INVESTMENTS (Deta25
REAL ESTATE INVESTMENTS (Details 1) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Below-market leases | $ 4,622,754 | $ 4,841,757 |
Purchase Price | 27,602,523 | |
Sutter Health [Member] | ||
Land, Buildings and Improvements | 24,258,173 | |
Tenant origination and absorption costs | 2,870,258 | |
Below-market leases | 474,091 | |
Purchase Price | $ 27,602,523 |
REAL ESTATE INVESTMENTS (Deta26
REAL ESTATE INVESTMENTS (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Purchase price | $ 27,602,523 | |
Purchase deposits applied | 1,250,000 | $ 200,000 |
Acquisition fees and costs capitalized | 0 | 149,676 |
Cash paid for acquisition of real estate investment | $ 25,750,000 | $ 4,326,879 |
REAL ESTATE INVESTMENTS (Deta27
REAL ESTATE INVESTMENTS (Details 3) | 3 Months Ended |
Mar. 31, 2017 | |
Sutter Health [Member] | |
Lease Expiration Date | Oct. 31, 2025 |
REAL ESTATE INVESTMENTS (Deta28
REAL ESTATE INVESTMENTS (Details 4) | Mar. 31, 2017USD ($) |
April 1, 2017 through December 31, 2017 | $ 9,720,186 |
2,018 | 9,761,153 |
2,019 | 9,957,362 |
2,020 | 10,158,543 |
2,021 | 9,189,556 |
2,022 | 7,644,732 |
Thereafter | 18,412,166 |
Operating Leases, Future Minimum Payments Receivable | $ 74,843,698 |
REAL ESTATE INVESTMENTS (Deta29
REAL ESTATE INVESTMENTS (Details 5) - Sutter Health, CA [Member] | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Effective Annualized Base Rent | $ 2,161,686 | [1] |
Percentage of Annualized Base Rent | 21.31% | |
[1] | Effective Annualized Base Rent is calculated based on the monthly base rent at June 30, 2017 for twelve months. |
REAL ESTATE INVESTMENTS (Deta30
REAL ESTATE INVESTMENTS (Details 6) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Below-Market Leases, Cost | $ (5,349,908) | |
Below-Market Leases, Accumulated amortization | 727,154 | |
Below-Market Leases, Net Amount | 4,622,754 | $ 4,841,757 |
Tenant Origination and Absorption Costs [Member] | ||
Finite-Lived Intangible Assets, Cost | 12,250,951 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (1,536,948) | |
Finite-Lived Intangible Assets, Net Amount | 10,714,003 | |
Above-Market Leases [Member] | ||
Finite-Lived Intangible Assets, Cost | 747,358 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (29,316) | |
Finite-Lived Intangible Assets, Net Amount | $ 718,042 |
REAL ESTATE INVESTMENTS (Deta31
REAL ESTATE INVESTMENTS (Details 7) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Remaining 2,017 | $ 656,746 |
2,018 | 860,165 |
2,019 | 860,165 |
2,020 | 860,165 |
2,021 | 667,541 |
2,022 | 657,362 |
Thereafter | 60,610 |
Below-Market Lease Finite-Lived Intangible Net | 4,622,754 |
Tenant Origination and Absorption Costs [Member] | |
Remaining 2,017 | (1,313,970) |
2,018 | (1,557,413) |
2,019 | (1,557,413) |
2,020 | (1,557,414) |
2,021 | (1,310,296) |
2,022 | (1,310,296) |
Thereafter | (2,107,201) |
Finite-Lived Intangible Assets, Net | $ 10,714,003 |
Weighted average remaining amortization period | 7 years 4 months 10 days |
Above-Market Leases [Member] | |
Remaining 2,017 | $ (24,406) |
2,018 | (32,542) |
2,019 | (32,542) |
2,020 | (32,542) |
2,021 | (32,542) |
2,022 | (32,542) |
Thereafter | (530,926) |
Finite-Lived Intangible Assets, Net | $ 718,042 |
Weighted average remaining amortization period | 34 years 5 months 8 days |
Below-Market Leases [Member] | |
Weighted Average Remaining Amortization Period Below-Market Lease Intangibles | 6 years 29 days |
REAL ESTATE INVESTMENTS (Deta32
REAL ESTATE INVESTMENTS (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable, Net | $ 700,462 | $ 545,274 |
Advisory Agreement [Member] | ||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 112,725 |
SALE OF INTEREST IN REAL ESTA33
SALE OF INTEREST IN REAL ESTATE INVESTMENT PROPERTY (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Proceeds from Sale of Real Estate | $ 0 | $ 1,000,000 |
Interest Expense, Customer Deposits | $ 13,751 | $ 4,278 |
Chevron Gas Station [Member] | ||
Equity Method Investment, Ownership Percentage | 29.86% |
DEBT (Details)
DEBT (Details) - Mortgages [Member] - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | ||
Principal Amount | $ 62,939,103 | $ 38,705,103 | |
Deferred Financing Costs | (1,736,220) | ||
Net Balance | 62,939,103 | ||
Chase Bank Great Clips [Member] | |||
Principal Amount | 1,915,752 | ||
Deferred Financing Costs | (31,229) | ||
Net Balance | $ 1,884,523 | ||
Contractual Interest Rate | 4.37% fixed | ||
Effective Interest Rate | [1] | 4.37% | |
Loan Maturity | Feb. 5, 2019 | ||
Levins [Member] | |||
Principal Amount | $ 2,201,696 | ||
Deferred Financing Costs | (46,306) | ||
Net Balance | $ 2,155,390 | ||
Contractual Interest Rate | One-month LIBOR + 1.93% | ||
Effective Interest Rate | [1] | 3.74% | |
Loan Maturity | Jan. 5, 2021 | ||
Island Pacific Supermarket [Member] | |||
Principal Amount | $ 2,002,076 | ||
Deferred Financing Costs | (44,764) | ||
Net Balance | $ 1,957,312 | ||
Contractual Interest Rate | One-month LIBOR + 1.93% | ||
Effective Interest Rate | [1] | 3.74% | |
Loan Maturity | Jan. 5, 2021 | ||
Dollar General [Member] | |||
Principal Amount | $ 2,467,596 | ||
Deferred Financing Costs | (71,869) | ||
Net Balance | $ 2,395,727 | ||
Contractual Interest Rate | One-month LIBOR + 1.48% | ||
Effective Interest Rate | [1] | 3.38% | |
Loan Maturity | Mar. 5, 2021 | ||
Rite Aid [Member] | |||
Principal Amount | $ 3,887,628 | ||
Deferred Financing Costs | (132,348) | ||
Net Balance | $ 3,755,280 | ||
Contractual Interest Rate | One-month LIBOR + 1.50% | ||
Effective Interest Rate | [1] | 3.25% | |
Loan Maturity | May 5, 2021 | ||
PMI Preclinical [Member] | |||
Principal Amount | $ 4,372,458 | ||
Deferred Financing Costs | (164,971) | ||
Net Balance | $ 4,207,487 | ||
Contractual Interest Rate | One-month LIBOR + 1.48% | ||
Effective Interest Rate | [1] | 3.38% | |
Loan Maturity | Mar. 5, 2021 | ||
EcoThrift [Member] | |||
Principal Amount | $ 2,810,441 | ||
Deferred Financing Costs | (106,073) | ||
Net Balance | $ 2,704,368 | ||
Contractual Interest Rate | One-month LIBOR + 1.21% | ||
Effective Interest Rate | [1] | 2.96% | |
Loan Maturity | Jul. 5, 2021 | ||
PreK San Antonio [Member] | |||
Principal Amount | $ 5,401,275 | ||
Deferred Financing Costs | (192,418) | ||
Net Balance | $ 5,208,857 | ||
Contractual Interest Rate | 4.25% fixed | ||
Effective Interest Rate | [1] | 4.25% | |
Loan Maturity | Dec. 1, 2021 | ||
GSA [Member] | |||
Principal Amount | $ 1,911,588 | ||
Deferred Financing Costs | (81,798) | ||
Net Balance | $ 1,829,790 | ||
Contractual Interest Rate | One-month LIBOR + 1.25% | ||
Effective Interest Rate | [1] | 3.00% | |
Loan Maturity | Aug. 5, 2021 | ||
Dinan Cars [Member] | |||
Principal Amount | $ 2,854,082 | ||
Deferred Financing Costs | (95,908) | ||
Net Balance | $ 2,758,174 | ||
Contractual Interest Rate | One-month LIBOR + 2.27% | ||
Effective Interest Rate | [1] | 4.02% | |
Loan Maturity | Jan. 5, 2022 | ||
ITW Sky Park [Member] | |||
Principal Amount | $ 10,003,732 | ||
Deferred Financing Costs | (279,673) | ||
Net Balance | $ 9,724,059 | ||
Contractual Interest Rate | 3.35% fixed | ||
Effective Interest Rate | [1] | 3.35% | |
Loan Maturity | Nov. 1, 2026 | ||
Dollar General Big Spring [Member] | |||
Principal Amount | [2] | $ 638,012 | |
Deferred Financing Costs | [2] | (29,215) | |
Net Balance | [2] | $ 608,797 | |
Contractual Interest Rate | [2] | 4.69% fixed | |
Effective Interest Rate | [1],[2] | 4.69% | |
Loan Maturity | [2] | Mar. 13, 2022 | |
L-3 Communications | |||
Principal Amount | $ 5,527,600 | ||
Deferred Financing Costs | (134,338) | ||
Net Balance | $ 5,393,262 | ||
Contractual Interest Rate | 4.5% fixed | ||
Effective Interest Rate | [1] | 4.50% | |
Loan Maturity | Apr. 1, 2022 | ||
Sutter Health [Member] | |||
Principal Amount | $ 14,850,000 | ||
Deferred Financing Costs | (228,076) | ||
Net Balance | $ 14,621,924 | ||
Contractual Interest Rate | 4.5% fixed | ||
Effective Interest Rate | [1] | 4.50% | |
Loan Maturity | Mar. 9, 2024 | ||
Gap [Member] | |||
Principal Amount | $ 3,831,387 | ||
Deferred Financing Costs | (97,234) | ||
Net Balance | $ 3,734,153 | ||
Contractual Interest Rate | 4.15% fixed | ||
Effective Interest Rate | [1] | 4.15% | |
Loan Maturity | Aug. 1, 2023 | ||
[1] | Contractual interest rate represents the interest rate in effect under the mortgage note payable as of March 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2017 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments, see Note 6. | ||
[2] | The loan is cross-collateralized with the six Dollar General properties owned by RW Holdings NNN REIT, Inc. The deed of trust for the Company’s Dollar General Big Spring property and the deeds of trust for the RW Holdings NNN REIT, Inc.’s six Dollar General properties contain cross collateralization and cross default provisions. At June 30, 2017, the outstanding principal balance of the loans on RW Holdings NNN REIT, Inc.’s six Dollar General properties was $3,976,515. |
DEBT (Details 1)
DEBT (Details 1) - Secured Debt [Member] | Mar. 31, 2017USD ($) |
April 1, 2017 through December 31, 2017 | $ 879,268 |
2,018 | 1,233,521 |
2,019 | 3,092,990 |
2,020 | 1,287,632 |
2,021 | 23,880,363 |
2,022 | 8,889,131 |
Thereafter | 25,412,418 |
Total principal | $ 64,675,323 |
DEBT (Details 2)
DEBT (Details 2) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Unrealized loss (gain) on interest rate swaps (see Note 6) | $ 85,457 | $ (318,567) | |
Sales deposit liability (See Note 4) | 13,751 | 4,278 | |
Total interest expense | 461,200 | 458,716 | |
Unsecured Debt [Member] | |||
Interest expense | 0 | (5,745) | |
Amortization of deferred financing costs | 0 | 12,250 | |
Sales deposit liability (See Note 4) | 13,751 | 4,278 | |
Total interest expense | 461,200 | 458,716 | |
Secured Debt [Member] | |||
Interest expense | [1] | 465,115 | 105,637 |
Amortization of deferred financing costs | 68,258 | 10,173 | |
Unrealized loss (gain) on interest rate swaps (see Note 6) | $ (85,924) | $ 332,123 | |
[1] | Includes $467 and $9,821 for the three months ended March 31, 2017 and 2016, respectively, of monthly payments to settle the Company’s interest rate swaps and $13,242 and $9,821 of accrued interest payable at March 31, 2017 and 2016, respectively, representing the unsettled portion of the interest rate swaps for the period from the most recent settlement date through March 31, 2017 and 2016, respectively. |
DEBT (Details Textual)
DEBT (Details Textual) - USD ($) | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |
Interest Expenses, Interest Rate Swap | $ 467 | $ 9,821 | ||
Interest Payable | 13,242 | $ 9,821 | ||
Mortgages [Member] | ||||
Long-term Debt, Gross | $ 62,939,103 | $ 38,705,103 | ||
Mortgages [Member] | Scenario, Forecast [Member] | ||||
Long-term Debt, Gross | $ 3,976,515 |
INTEREST RATE SWAP DERIVATIVE38
INTEREST RATE SWAP DERIVATIVES (Details) | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Derivative Instruments, Number of Instruments | 8 | |
Derivative Instruments, Weighted Average Remaining Term | 4 years 1 month 2 days | |
Interest Rate Swap [Member] | ||
Derivative Instruments, Notional Amount | $ 22,507,565 | [1] |
Derivative Instruments, Reference Rate | One-month LIBOR/Fixed at 1.21%-2.27% | |
Derivative Instruments, Weighted Average Fixed Pay Rate | 3.42% | |
[1] | The notional amount of the Company’s swaps decreases each month to correspond to the outstanding principal balance on the related mortgage. The maximum notional amount is shown above. The minimum notional amount (outstanding principal balance at the maturity date) is $20,552,875. |
INTEREST RATE SWAP DERIVATIVE39
INTEREST RATE SWAP DERIVATIVES (Details 1) | 3 Months Ended | |
Mar. 31, 2017USD ($)Number | Dec. 31, 2016USD ($)Number | |
Derivative Instruments, Number of Instruments | 8 | |
Derivative Instrument, Fair Value | $ 72,940 | $ 106,840 |
Interest Rate Swap [Member] | Liability [Member] | ||
Derivative Instrument, Balance Sheet Location | Liability – Interest rate swap derivatives, at fair value | |
Derivative Instruments, Number of Instruments | Number | 3 | 3 |
Derivative Instrument, Fair Value | $ (72,940) | $ (106,840) |
Interest Rate Swap [Member] | Assets [Member] | ||
Derivative Instrument, Balance Sheet Location | Asset - Interest rate swap derivatives, at fair value | |
Derivative Instruments, Number of Instruments | Number | 5 | 5 |
Derivative Instrument, Fair Value | $ 232,316 | $ 180,759 |
INTEREST RATE SWAP DERIVATIVE40
INTEREST RATE SWAP DERIVATIVES (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Unrealized Gain (Loss) on Derivatives | $ 85,457 | $ (318,567) |
Maximum [Member] | ||
Derivative, Notional Amount | $ 20,552,875 |
FAIR VALUE DISCLOSURES (Details
FAIR VALUE DISCLOSURES (Details) - Mortgages [Member] - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument, Face Value | $ 64,675,323 | $ 40,018,648 |
Debt Instrument, Carrying Value | 62,939,103 | 38,705,103 |
Debt Instrument, Fair Value | $ 62,613,614 | $ 38,153,219 |
FAIR VALUE DISCLOSURES (Detai42
FAIR VALUE DISCLOSURES (Details 1) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Asset - Interest rate swap derivatives | $ 232,316 | $ 180,759 |
Liability - Interest rate swap derivatives | 72,940 | 106,840 |
Fair Value, Measurements, Recurring [Member] | ||
Asset - Interest rate swap derivatives | 232,316 | 180,759 |
Liability - Interest rate swap derivatives | (72,940) | (106,840) |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Asset - Interest rate swap derivatives | 0 | 0 |
Liability - Interest rate swap derivatives | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Asset - Interest rate swap derivatives | 232,316 | 180,759 |
Liability - Interest rate swap derivatives | (72,940) | (106,840) |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Asset - Interest rate swap derivatives | 0 | 0 |
Liability - Interest rate swap derivatives | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 868,002 | $ 826,362 | ||
Due to Related Parties | 48,950 | $ 48,950 | ||
Due from Related Parties | 48,950 | 48,950 | ||
Advisor fees, Acquisition fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 95,000 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 0 | 0 | ||
Advisor fees, Asset management fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 162,201 | 62,339 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 46,036 | 43,993 | ||
Advisor fees, Property management fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | [1] | 17,866 | 1,063 | |
Due to Related Parties | [1] | 0 | 0 | |
Due from Related Parties | [1] | 39,133 | 21,267 | |
Advisor fees, Disposition fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 0 | 30,000 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 0 | 0 | ||
Reimbursable organizational and offering expenses [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 32,779 | 521,135 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 41,775 | 41,797 | ||
Fees To Affliates [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 162,201 | 187,339 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 0 | 0 | ||
Capitalized Acquisition Fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 540,000 | 0 | ||
Due to Related Parties | 48,950 | 48,950 | ||
Due from Related Parties | 0 | 0 | ||
Financing Coordination Fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 100,156 | 69,770 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 137,800 | 137,800 | ||
Due to advisor [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 15,000 | 47,055 | ||
Due to Related Parties | 0 | 0 | ||
Due from Related Parties | 285,372 | 270,372 | ||
Due to other SSLFO [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | [2] | 0 | 0 | |
Due to Related Parties | [2] | 0 | 0 | |
Due from Related Parties | [2] | 100,477 | 100,477 | |
Due to RW Holdings NNN REIT [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | [3] | 0 | $ 0 | |
Due to Related Parties | [3] | 0 | 0 | |
Due from Related Parties | [3] | $ 28,571 | $ 28,571 | |
[1] | Property management fees are presented as “property expenses” in the condensed consolidated statement of operations | |||
[2] | These costs were incurred by SSLFO, an affiliate of the Sponsor, in connection with the organization and offering of the Company’s shares. | |||
[3] | These costs were incurred in connection with the potential acquisition of a property by the Company. The property was acquired by RW Holdings NNN REIT, Inc.; therefore, the Company has a receivable from RW Holdings NNN REIT, Inc. |
RELATED PARTY TRANSACTIONS (D44
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 868,002 | $ 826,362 | ||
Organization and Offering Expenses | 3,424,663 | |||
Organization and Offering Expenses [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | 2,588,645 | $ 2,555,866 | ||
Organization and Offering Expenses Payable | 41,775 | |||
Organization and Offering Expenses Receivable | 41,797 | |||
Advisor fees, Acquisition fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0 | 95,000 | ||
Related Party Transaction, Description of Transaction | The Company shall pay the Advisor a fee in an amount equal 3.0% of Companys contract purchase price of its properties | |||
Related Party Transaction, Rate | 3.00% | |||
Advisor fees, Acquisition fees [Member] | Maximum [Member] | ||||
Related Party Transaction, Rate | 6.00% | |||
Advisor fees, Asset management fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 162,201 | 62,339 | ||
Related Party Transaction, Rate | 0.05% | |||
Advisor fees, Financing fee [Member] | ||||
Related Party Transaction, Rate | 1.00% | |||
Advisor fees, Property management fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | [1] | $ 17,866 | 1,063 | |
Related Party Transaction, Rate | 1.50% | |||
Advisor fees, Disposition fees [Member] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0 | $ 30,000 | ||
Related Party Transaction, Rate | 6.00% | |||
Advisor fees, Disposition fees [Member] | Maximum [Member] | ||||
Related Party Transaction, Rate | 6.00% | |||
Leasing Commission Fees [Member] | ||||
Related Party Transaction, Rate | 3.00% | |||
Operating Expenses [Member] | ||||
Related Party Transaction, Expense Reimbursement Percentage to Average Invested Assets | 2.00% | |||
Related Party Transaction, Expense Reimbursement Percentage to Net Income | 25.00% | |||
Rich Uncles, LLC [Member] | ||||
Repayments of Related Party Debt | $ 2,546,870 | $ 2,514,070 | ||
Advisor or Affiliates [Member] | Advisor fees, Disposition fees [Member] | ||||
Related Party Transaction, Rate | 3.00% | |||
[1] | Property management fees are presented as “property expenses” in the condensed consolidated statement of operations |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) | 1 Months Ended | 3 Months Ended | 4 Months Ended | |||||
Jul. 20, 2017USD ($)$ / shares | Jun. 29, 2017USD ($)a | Apr. 28, 2017USD ($) | Apr. 27, 2017USD ($) | Apr. 20, 2017USD ($)$ / shares | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Aug. 10, 2017USD ($)shares | |
Dividends Payable, Amount Per Share | $ / shares | $ 0.0020604 | $ 0.0020833 | ||||||
Dividends Payable | $ 1,559,176 | |||||||
Dividend Reinvested | $ 1,082,081 | |||||||
Payments to Acquire Real Estate | $ 25,750,000 | $ 4,326,879 | ||||||
Proceeds from Sale of Real Estate | $ 0 | $ 1,000,000 | ||||||
Scenario, Forecast [Member] | ||||||||
Stock Repurchased During Period, Shares | shares | 202,791 | |||||||
Stock Repurchased During Period, Value | $ 2,027,911 | |||||||
Subsequent Event [Member] | ||||||||
Dividends Payable, Date Declared | Jul. 20, 2017 | Apr. 20, 2017 | ||||||
Dividends Payable | $ 1,569,284 | |||||||
Dividends Payable, Date to be Paid | Jul. 20, 2017 | Apr. 20, 2017 | ||||||
Dividend Reinvested | $ 1,103,595 | |||||||
Proceeds from Sale of Real Estate | $ 3,434,000 | |||||||
Gains (Losses) on Sales of Investment Real Estate | $ 800,000 | |||||||
Subsequent Event [Member] | Rancho Cordova, CA [Member] | ||||||||
Proceeds from Sale of Real Estate | $ 3,298,019 | |||||||
Subsequent Event [Member] | Walgreen Company [Member] | ||||||||
Area of Real Estate Property | a | 14,490 | |||||||
Payments to Acquire Real Estate | $ 5,125,000 | |||||||
Business Acquisition, Transaction Costs | $ 125,040 |