Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 28, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Rich Uncles Real Estate Investment Trust I | ||
Entity Central Index Key | 0001672754 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 8,407,350 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Real estate investments: | ||
Land | $ 29,691,680 | $ 29,896,957 |
Buildings and improvements | 97,752,787 | 97,857,500 |
Tenant origination and absorption costs | 12,701,634 | 12,699,134 |
Total investments in real estate property | 140,146,101 | 140,453,591 |
Accumulated depreciation and amortization | (15,070,564) | (9,286,921) |
Total investments in real estate property, net | 125,075,537 | 131,166,670 |
Cash and cash equivalents | 2,914,005 | 5,565,667 |
Restricted cash | 462,140 | 462,140 |
Tenant receivables, net (Note 3) | 1,707,835 | 1,494,938 |
Above-market lease intangibles, net | 781,862 | 817,182 |
Interest rate swap derivatives | 404,267 | 321,450 |
Other assets | 176,511 | 25,207 |
Total assets | 131,522,157 | 139,853,254 |
Liabilities and Shareholders' Equity | ||
Mortgage notes payable, net | 61,446,068 | 62,277,387 |
Accounts payable, accrued and other liabilities (Note 3) | 1,419,222 | 1,254,632 |
Sales deposit liability (Note 5) | 1,000,000 | 1,000,000 |
Share repurchase payable | 880,404 | 612,099 |
Below-market lease intangibles, net | 3,105,843 | 3,966,008 |
Due to affiliates (Note 9) | 59,992 | 51,518 |
Interest rate swap derivatives | 0 | 18,998 |
Total liabilities | 67,911,529 | 69,180,642 |
Commitments and contingencies (Note 10) | ||
Redeemable common stock | 163,572 | 586,242 |
Common stock $0.01 par value, 10,000,000 shares authorized, 8,390,776 and 8,358,254 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 83,908 | 83,583 |
Additional paid-in-capital | 82,890,895 | 82,350,273 |
Cumulative dividends and net losses | (19,527,747) | (12,347,486) |
Total shareholders' equity | 63,447,056 | 70,086,370 |
Total liabilities and shareholders' equity | $ 131,522,157 | $ 139,853,254 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par or stated value per share ( in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized ( in shares ) | 10,000,000 | 10,000,000 |
Common stock, shares, issued ( in shares ) | 8,390,776 | 8,358,254 |
Common stock, shares, outstanding ( in shares ) | 8,390,776 | 8,358,254 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | ||
Rental income | $ 10,960,847 | $ 10,654,604 |
Tenant reimbursements | 2,205,784 | 2,183,150 |
Total revenue | 13,166,631 | 12,837,754 |
Expenses: | ||
Fees to affiliates (Note 9) | 1,180,657 | 860,635 |
General and administrative | 967,390 | 887,813 |
Depreciation and amortization | 5,783,643 | 5,645,451 |
Interest expense (Note 7) | 2,813,430 | 2,503,810 |
Property expenses | 2,455,916 | 2,293,794 |
Impairment of real estate investment property (Note 4) | 862,190 | 0 |
Total expenses | 14,063,226 | 12,191,503 |
Other income: | ||
Interest income | 0 | 838 |
Gain on sale of real estate investment property, net (Note 6) | 0 | 747,957 |
Total other income | 0 | 748,795 |
Net (loss) income | $ (896,595) | $ 1,395,046 |
Net (loss) income per share, basic and diluted (in USD per share) | $ (0.11) | $ 0.17 |
Weighted-average number of shares of common stock outstanding, basic and diluted ( in shares ) | 8,404,346 | 8,359,108 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in- Capital | Cumulative Dividends and Net Income (Loss) |
Balance (in shares) at Dec. 31, 2016 | 8,263,758 | |||
Balance at Dec. 31, 2016 | $ 73,364,188 | $ 82,638 | $ 80,782,440 | $ (7,500,890) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock (in shares) | 438,469 | |||
Issuance of common stock | 4,384,688 | $ 4,385 | 4,380,303 | |
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 13,400 | |||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | 134,000 | $ 134 | 133,866 | |
Reclassification from redeemable common stock | 623,815 | 623,815 | ||
Repurchases of common stock (in shares) | (357,373) | |||
Repurchases of common stock | (3,573,725) | $ (3,574) | (3,570,151) | |
Dividends declared | (6,241,642) | (6,241,642) | ||
Net (loss) income | 1,395,046 | 1,395,046 | ||
Balance (in shares) at Dec. 31, 2017 | 8,358,254 | |||
Balance at Dec. 31, 2017 | 70,086,370 | $ 83,583 | 82,350,273 | (12,347,486) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock (in shares) | 399,249 | |||
Issuance of common stock | 4,255,485 | $ 3,992 | 4,251,493 | |
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 16,700 | |||
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | 178,022 | $ 167 | 177,855 | |
Reclassification from redeemable common stock | 154,373 | 154,373 | ||
Repurchases of common stock (in shares) | (383,427) | |||
Repurchases of common stock | (4,046,933) | $ (3,834) | (4,043,099) | |
Dividends declared | (6,283,666) | (6,283,666) | ||
Net (loss) income | (896,595) | (896,595) | ||
Balance (in shares) at Dec. 31, 2018 | 8,390,776 | |||
Balance at Dec. 31, 2018 | $ 63,447,056 | $ 83,908 | $ 82,890,895 | $ (19,527,747) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net (loss) income | $ (896,595) | $ 1,395,046 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,783,643 | 5,645,451 |
Provision for doubtful accounts | 65,944 | 58,328 |
Stock compensation expense | 178,022 | 134,000 |
Deferred rents | (317,196) | (557,016) |
Amortization of deferred financing costs | 375,330 | 303,044 |
Amortization of above-market lease intangibles | 35,320 | 31,926 |
Amortization of below-market lease intangibles | (860,165) | (875,749) |
Impairment of real estate investment property | 862,190 | 0 |
Gain on sale of real estate investment property, net | 0 | (747,957) |
Gain on interest rate swap derivatives | (101,815) | (228,533) |
Expensed organization and offering costs | 0 | 131,541 |
Changes in operating assets and liabilities: | ||
Tenant receivables | 38,355 | (284,770) |
Other assets | (151,304) | (7,041) |
Accounts payable, accrued and other liabilities | 164,598 | 576,564 |
Due to affiliates | 117,264 | (413,218) |
Net cash provided by operating activities | 5,293,591 | 5,161,616 |
Cash Flows from Investing Activities: | ||
Acquisitions of real estate investments | 0 | (30,699,222) |
Improvements to existing real estate investments | (554,700) | (1,501,764) |
Payment of acquisition fees and costs | 0 | (622,320) |
Payment of seller holdback | 0 | (250,000) |
Refundable purchase deposits | 0 | (250,000) |
Net proceeds from sale of real estate investment property | 0 | 3,196,480 |
Net cash used in investing activities | (554,700) | (30,126,826) |
Cash Flows from Financing Activities: | ||
Proceeds from mortgage notes payable | 0 | 24,865,612 |
Principal payments on mortgage notes payable | (1,206,649) | (1,084,582) |
Payments of deferred financing costs | 0 | (649,205) |
Payments of offering costs | (108,790) | (173,281) |
Repurchases of common stock | (4,046,933) | (3,573,725) |
Dividends paid to common shareholders | (2,028,181) | (1,856,954) |
Net cash (used in) provided by financing activities | (7,390,553) | 17,527,865 |
Net decrease in cash, cash equivalents and restricted cash | (2,651,662) | (7,437,345) |
Cash, cash equivalents and restricted cash, beginning of year | 6,027,807 | 13,465,152 |
Cash, cash equivalents and restricted cash, end of year | 3,376,145 | 6,027,807 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 2,521,936 | 2,310,354 |
Supplemental Schedule of Noncash Investing and Financing Activities: | ||
Reclassifications from redeemable common stock | 154,373 | 623,812 |
Increase in share repurchases payable | 268,297 | 19,588 |
Reinvested dividends from common shareholders | 4,255,485 | 4,384,688 |
Purchase deposits applied to acquisition of real estate investments | $ 0 | $ 1,500,000 |
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
BUSINESS AND ORGANIZATION | BUSINESS AND ORGANIZATION Rich Uncles Real Estate Investment Trust I (the “Company”) was formed on March 7, 2012. The Company is an unincorporated real estate investment trust (“REIT’) under the laws of the State of California and is treated as a real estate investment trust (“REIT”). The Company elected to be taxed as a REIT for U.S. federal income tax purposes under Section 856 through 860 of the Internal Revenue Code of 1986, as amended, beginning with the year ended December 31, 2014. From April 2012 until July 20, 2016 (“Termination Date”), the Company was engaged in an offering of its shares of common stock for sale to investors. On July 20, 2016 , the Company ceased offering its shares for sale with the exception of shares sold to existing shareholders under the Company’s dividend reinvestment plan (the “DRP”). The number of shares authorized for issuance under the Company’s DRP is 3,000,000 . The offering includes the sale of shares to investors and the sale of shares pursuant to the DRP. Additionally, no later than the 10t h anniversary date of the Termination Date, the Company intends to create a liquidity event for its shareholders. Accordingly, on January 14, 2019 , the Company announced that its board of trust managers engaged Cushman & Wakefield as its real estate financial advisor to evaluate strategic alternatives which includes marketing the Company's entire real estate properties portfolio for disposition by sale, merger or other transaction structure. The Company was formed to primarily invest in single-tenant income-producing properties located in California and that are leased to creditworthy tenants under long-term net leases, however, the Company may invest up to 20% of the net proceeds of its offering in properties located outside of California. 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 a 70.14% interest in one property through a tenancy in common agreement. The Company is externally managed by its advisor and sponsor, BrixInvest LLC, formerly Rich Uncles LLC (the “Advisor”) whose members include Aaron Halfacre and Ray Wirta, the Company’s Chief Executive Officer and President and Chairman of the Board of Trust Managers, respectively. The Advisor 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 expires on May 10, 2019 . 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 Agreement is terminable by a majority of the Company’s independent board of trust managers or the Advisor on 60 days’ written notice with or without cause. Upon termination of the Advisory Agreement, the Advisor may be entitled to a termination fee. The Advisor also serves, directly or through an affiliate, as the advisor and sponsor for RW Holdings NNN REIT, Inc. ("NNN REIT") and BRIX REIT, Inc. On January 11, 2019, the Company’s board of trust managers approved and established an estimated net asset value (“NAV”) per share of the Company’s common stock of $10.57 . Effective January 14, 2019 , the purchase price per share of the Company’s common stock under the DRP and under the share repurchase plan (“SRP”) decreased from $10.66 to $10.57 per share of common stock. |
SUMMARY OF SIGNIFICANT ACOUNTIN
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements include the accounts of the Company and, its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Revenue Recognition Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. The adoption of ASU No. 2014-09 did not result in a cumulative effect adjustment as of January 1, 2018, the date of the Company's adoption. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenue is recognized when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 amounted to $ 0 . Such amount would have been included in tenant reimbursements on the accompanying consolidated statements of operations. The Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. The Company did not have any sales of real estate during the year ended December 31, 2018. 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. The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, the operations, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides 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. In addition, 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. Fair Value Measurements and 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 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; other assets; accounts payable, accrued and other liabilities; sales deposit liability; share repurchase payable; 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 on the accompanying 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. 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. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance may exceed federally insurable limits. The Company mitigates this risk by depositing funds with major financial institutions; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. Restricted Cash Restricted cash is comprised of funds which are restricted for tenant improvements and property tax impounds. Real Estate Investments Real Estate Acquisition Valuation The Company records acquisitions that meet the definition of a business as a business combination. If the acquisition does not meet the definition of a business, the Company records the acquisition as an asset acquisition. Under both methods, all assets acquired and liabilities assumed are measured based on their acquisition-date fair values. Transaction costs that are related to a business combination are charged to expense as incurred. Transaction costs that are related to an asset acquisition are capitalized as incurred. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles, and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining noncancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining noncancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods. The Company amortizes the value of tenant origination and absorption costs to amortization expense over the remaining noncancelable term of the respective lease. Estimates of the fair value of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. Therefore, the Company classifies these inputs as Level 3 inputs. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income (loss). Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and depreciated or amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset and are expensed as incurred. Significant replacements and betterments are capitalized. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: • Buildings 15-52 years • Site/building improvements 5-21 years • Tenant improvements Shorter of 15 years or remaining contractual lease term • Tenant origination and absorption costs, and above-/below-market lease intangibles Remaining contractual lease term with consideration as to above- and below-market extension options for above- and below-market lease intangibles Impairment of Real Estate and Related Intangible Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate and related intangible assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate and related intangible assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company will record an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset. As more fully discussed in Note 4, the Company recorded an impairment charge of $862,190 related to its Antioch, California property during the second quarter of 2018. The impairment charge was less than 1% of the Company’s investments in real estate property as of June 30, 2018, the date of impairment. There were no other impairment charges during the years ended December 31, 2018 or December 31, 2017 . Assets Held for Sale Investments in real estate property and the related mortgage notes payable are presented as a separate section of the consolidated balance sheet when the criteria set by ASU 360 for assets held for sale are met. Assets held for sale are measured at the lower of their carrying value or fair value less cost to sell. As of December 31, 2018, the Company’s investment in the Antioch, California property and the related mortgage note payable met the criteria for assets held for sale (see Notes 4 and 7). However, this property investment has not been separately presented in the accompanying consolidated balance sheets as its net carrying value is approximately 1% of total real estate investments, net and total assets as of December 31, 2018 and is therefore not material. Deferred Financing Costs Deferred financing costs represent commitment fees, financing coordination fees paid to Advisor, loan fees, legal fees, and other third-party costs associated with obtaining financing and are presented on the Company's balance sheet as a direct deduction from the carrying value of the associated debt liabilities. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Unamortized deferred financing costs related to revolving credit facilities are reclassified to presentation as an asset in periods where there are no outstanding borrowings under the facility. Derivative Instruments The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate mortgage notes payable. The Company does not enter into derivatives for speculative purposes. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. The Company’s mortgage derivative instruments do not meet the hedge accounting criteria and therefore the changes in fair value are recorded as gain or loss on derivative instruments in the accompanying consolidated statements of operations. The gain or loss is included in interest expense. The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate 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. Distributions The Company intends, although is not legally obligated, to continue to make regular quarterly dividend distributions to holders of its shares at least at the level required to maintain REIT status unless the results of operations, general financial condition, general economic conditions or other factors inhibit the Company from doing so. Dividend distributions are authorized at the discretion of the Company’s board of trust managers which is directed, in substantial part, by its obligation to cause the Company to comply with the REIT requirements of the Internal Revenue Code. To the extent declared by the board of trust managers, dividends are payable on the 25t h day of the month following the quarter declared. Should the 25t h day fall on a weekend, dividends are expected to be paid on the first business day thereafter. Prior to January 19, 2018, to the extent dividends were declared by the board of trust managers, they were payable on the 20t h day of the month following quarter declared or the first business day thereafter if the 20 th day fell on a weekend. Dividends declared per common share were $ 0.1875 per quarter for the years ended December 31, 2018 and 2017 . The following presents the federal income tax characterizations of dividend distributions paid: Years Ended December 31, 2018 2017 Ordinary income $ 0.238 $ 0.285 Nontaxable dividend distributions 0.512 0.465 $ 0.750 $ 0.750 Dividend Reinvestment Plan The Company has adopted the DRP through which common shareholders may elect to reinvest any amount up to the dividends declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash dividends. Participants in the DRP will acquire common stock at a price per share equal to the price established as the most recent estimated net asset value. The prior price per share during 2018 was $10.66 per share. Effective January 14, 2019, the estimated per share value is $10.57 (unaudited), which is also the price to acquire a share of common stock through the DRP. Redeemable Common Stock The Company has adopted the SRP pursuant to which all of its shareholders are eligible to sell their shares back to the Company for any reason on a quarterly basis. Shareholders who wish to participate in the SRP must notify the Company's Advisor, in writing, no later than the 15th day of the last month of the then current calendar quarter of such shareholder’s desire to participate in the SRP and the number of shares that it wants to the Company to repurchase. Any shareholder who elects to participate in the SRP will receive a confirmation of its redemption of shares setting forth the number and price of the shares sold back to the Company, and the total number of shares remaining in such shareholder’s account, if any. In exchange for the shares redeemed by the Company from shareholders, the Company shall pay such shareholders a per share purchase price in cash equal to the net asset value per share, as calculated and published by the Company. The SRP is funded by, and limited to, proceeds realized from the Company's sale of shares under the DRP. The Company reserves the right to reject any request for the redemption of shares. Additionally, the Company may terminate, suspend or amend the SRP at any time without shareholder approval if the Company believes such action is in the best interest of all shareholders or if the Company determines the funds otherwise available to fund its SRP are needed for other purposes. On January 14, 2019, the Company announced that redemptions of common stock under the have been suspended during the strategic alternatives review process discussed above in Note 1. Share repurchase requests will be made on a first-come, first served basis. The Company cannot guarantee that it will have sufficient available cash flow to accommodate all requests when made. If the Company does not have such sufficient funds available, at the time when redemption is requested, the redeeming shareholders may (i) withdraw their request for redemption or (ii) ask that the Company to honor their request, if and when sufficient funds become available. Such pending requests will generally be honored on a first-come, first-serve basis. When the Company became a SEC reporting entity on May 29, 2016, it became subject to the SEC’s regulation limiting the maximum amount of shares that can be repurchased to 5% of the weighted average outstanding shares for the past twelve months. The maximum dollar amount that the Company can be required to repurchase at the balance sheet date is recorded as redeemable common stock. Advertising Costs Advertising costs relating to the offering are expensed as incurred. Offering advertising costs expensed were $108,790 and $131,541 for the years ended December 31, 2018 and 2017 , respectively, and are included in general and administrative expenses. in the accompanying statements of operations. These amounts are reimbursements to the Advisor for organization and offering costs that they incurred on the Company’s behalf, see Note 9. Income Taxes 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 its taxable year ended December 31, 2014. The Company believes it has qualified and continues to qualify as a REIT. To qualify as a REIT, the Company must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for dividend distribution to shareholders. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for the tax years ended December 31, 2018 . As of December 31, 2018 , the returns for calendar years 2014, 2015, 2016 and 2017 remain subject to examination by certain tax jurisdictions. Other Comprehensive (Loss) Income For all periods presented, other comprehensive (loss) income is the same as net (loss) income. Per Share Data Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share of common stock equals basic net (loss) income per share of common stock as there were no potentially dilutive securities outstanding during the years ended December 31, 2018 and 2017 . Segments At December 31, 2018 and 2017 , except for one investment, the Company’s real estate investments are single-tenant income-producing properties. The Company’s investments in real estate property exhibit similar long-term financial performance and have similar economic characteristics to each other. As of December 31, 2018 and 2017 , the Company aggregated its investments in real estate property into one reportable segment. Square Footage, Occupancy and Other Measures Square footage, occupancy and other measures used to describe real estate investments included elsewhere in the notes to consolidated financial statements are presented on an unaudited basis. Reclassifications Certain prior year revenue account balances in the statement of operations have been reclassified to conform with the current year presentation. The reclassifications had no impact on the Company's prior year results of operations. Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09, as amended, requires an entity to use a five-step model to determine when to recognize revenue from customer contracts in an effort to increase consistency and comparability throughout global capital markets and across industries. ASU 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry specific guidance throughout the Industry Topics of the Codification. This ASU requires an entity to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and to provide certain additional disclosures. The Company has evaluated each of its revenue streams and their related accounting policies under ASU 2014-09. Rental income and tenant reimbursements earned from leasing its real estate properties are excluded from ASU 2014-09 and are assessed with the adoption of the ASU for leases as discussed below. The Company adopted ASU 2014-09 beginning January 1, 2018 and utilized the modified retrospective basis. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements. However, future real estate sales contracts will qualify as sales to noncustomers. The Company will assess and implement any future recognition of gain or loss on sales of properties according to the provisions of ASU 2014-09. New Accounting Standards Issued and Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The amendments in ASU 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. Under ASU 2016-02, the accounting applied by a lessor is largely unchanged from that applied under Topic 840 leases. The large majority of operating leases shall remain classified as operating leases and lessors should continue to recognize rental income for those leases on a straight-line basis over the lease term. ASU 2016-02 may impact the timing, recognition, presentation and disclosures related to the Company’s tenant reimbursements earned from leasing its real estate properties, although the Company does not expect a significant impact. ASU 2016-02 is effective for the Company on January 1, 2019. The Company expects to adopt the practical expedients available for implementation under ASU 2016-02. By adopting the practical expedients, the Company will not be required to reassess (i) whether an expired or existing contract meets the definition of a lease and (ii) the lease classification at the adoption date for expired or existing leases. ASU 2016-02 will also require new disclosures within the notes to the Company's consolidated financial statements. The Company does not expect the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”). ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon adoption of the lease accounting standard under Topic 842, the Company expects to adopt this practical expedient, specifically |
CONSOLIDATED BALANCE SHEET DETA
CONSOLIDATED BALANCE SHEET DETAILS | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONSOLIDATED BALANCE SHEET DETAILS | CONSOLIDATED BALANCE SHEET DETAILS Tenant receivables, net consisted of the following: December 31, 2018 2017 Straight-line rent $ 1,399,276 $ 1,082,080 Tenant rent 200,301 301,588 Unbilled tenant recoveries 108,258 93,420 Other — 76,178 1,707,835 1,553,266 Less allowance for doubtful accounts — (58,328 ) $ 1,707,835 $ 1,494,938 Accounts payable, accrued and other liabilities consisted of the following: December 31, 2018 2017 Accounts payable $ 52,057 $ 45,029 Accrued expenses 184,441 205,774 Accrued interest payable 288,437 215,700 Unearned rent 624,181 518,023 Tenant security deposits 270,106 270,106 $ 1,419,222 $ 1,254,632 |
REAL ESTATE INVESTMENTS
REAL ESTATE INVESTMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
REAL ESTATE INVESTMENTS | NOTE 4. REAL ESTATE INVESTMENTS The Company’s real estate portfolio as of December 31, 2018 , consisted of 21 properties in three states consisting of 11 retail, seven office and three industrial properties. The following table provides summary information regarding the Company’s real estate as of December 31, 2018 : Property Location Acquisition Date Property Type Land, Buildings and Improvements Tenant Origination and Absorption Costs Accumulated Depreciation and Amortization Total Real Estate Investments, Net Chase Bank & Great Clips (1) Antioch, CA 8/22/2014 Retail $ 2,297,845 $ 668,201 $ (1,117,265 ) $ 1,848,781 Chevron Gas Station San Jose, CA 5/29/2015 Retail 2,775,000 — (140,514 ) 2,634,486 Levins Sacramento, CA 8/19/2015 Industrial 3,750,000 2,500 (718,814 ) 3,033,686 Chevron Gas Station (see Note 5) Roseville, CA 9/30/2015 Retail 2,800,000 — (314,569 ) 2,485,431 Island Pacific Supermarket Elk Grove, CA 10/1/2015 Retail 3,151,461 568,539 (529,099 ) 3,190,901 Dollar General Bakersfield, CA 11/11/2015 Retail 4,632,567 689,020 (600,123 ) 4,721,464 Rite Aid Lake Elsinore, CA 12/7/2015 Retail 6,663,446 968,285 (725,662 ) 6,906,069 PMI Preclinical San Carlos, CA 12/9/2015 Office 8,920,000 — (625,375 ) 8,294,625 EcoThrift Sacramento, CA 3/17/2016 Retail 4,486,993 541,729 (676,158 ) 4,352,564 GSA (MSHA) Vacaville, CA 4/5/2016 Office 2,998,232 456,645 (390,068 ) 3,064,809 PreK San Antonio San Antonio, TX 4/8/2016 Retail 11,851,540 1,593,451 (2,473,019 ) 10,971,972 Dollar Tree Morrow, GA 4/22/2016 Retail 1,295,879 206,844 (251,940 ) 1,250,783 Dinan Cars Morgan Hill, CA 6/21/2016 Industrial 4,651,845 654,155 (966,415 ) 4,339,585 Solar Turbines San Diego, CA 7/21/2016 Office 5,738,978 389,718 (475,261 ) 5,653,435 Amec Foster San Diego, CA 7/21/2016 Office 7,010,799 485,533 (586,075 ) 6,910,257 ITW Rippey El Dorado, CA 8/18/2016 Industrial 6,299,982 407,316 (701,075 ) 6,006,223 Dollar General Big Spring Big Spring, TX 11/4/2016 Retail 1,161,647 112,958 (64,545 ) 1,210,060 Gap Rocklin, CA 12/1/2016 Office 7,220,909 677,192 (652,721 ) 7,245,380 L-3 Communications San Diego, CA 12/23/2016 Office 10,813,390 961,107 (787,194 ) 10,987,303 Sutter Health Rancho Cordova, CA 3/15/2017 Office 24,256,632 2,870,258 (2,076,277 ) 25,050,613 Walgreens Santa Maria, CA 6/29/2017 Retail 4,667,322 448,183 (198,395 ) 4,917,110 $ 127,444,467 $ 12,701,634 $ (15,070,564 ) $ 125,075,537 (1) See following impairment charge discussion. Impairment Charge During the second quarter of 2018, the Company learned that it was unlikely that a single tenant would be interested in leasing the 5,660 square feet of space at the Antioch, California property that was previously leased by Chase Bank. While the Company had received expressions of interest from potential tenants, they were all interested in smaller spaces at lower rental rates which would have required the Company to invest in substantial tenant improvements to subdivide the space. The Company’s special purpose subsidiary that owns this property notified the lender on July 13, 2018 that it is unwilling to make such additional improvements in the Antioch, California property unless it could restructure the existing mortgage scheduled to mature in February 2019, or payoff the mortgage at a discount, as discussed in Note 7. Having not reached any agreement with the lender when the August 2018 mortgage payment came due, the Company’s special purpose subsidiary notified the lender on August 9, 2018 that it was defaulting on the mortgage loan which had a balance of $1,869,536 as of June 30, 2018, and that it intended to surrender the property to the lender unless an acceptable agreement could be reached. Given the decline in expected rental rates for the Antioch, California property, the Company concluded that it was necessary to record an impairment charge of $862,190 as of June 30, 2018, which is less than 1% of the Company’s total investments in real estate property, based on the estimated fair value of the real estate which approximated the then outstanding balance of the existing mortgage loan. This impairment charge is reflected in the Company’s results of operations for the year ended December 31, 2018. The book value of the Antioch property after the impairment charge is less than 2.0% of the Company’s total investments in real estate property. Notice of Default On September 28, 2018, the Company’s special purpose subsidiary and the Company received a notice of default and election to sell under deed of trust (the “Notice”) dated September 19, 2018 for the Antioch, California property from an agent for the lender. The Notice was filed for recording in the Office of the Recorder of Contra Costa County, California on September 24, 2018. While the Company’s special purpose subsidiary and the Company were given a 90-day cure period from the date of record before a sale date of the Antioch, California property could be set, the Company’s special purpose subsidiary and the Company did not plan to cure the default. During February 2019, the Company’s special purpose subsidiary and the Company received a Notice of Trustee’s Sale. The Antioch property was foreclosed and sold on March 13, 2019. The loan in default is non-recourse to the Company (except for property taxes, insurance and the lender’s legal fees and other costs incurred prior to the date of foreclosure) and, while eight of the Company’s other special purpose property owner subsidiaries have mortgage loans with this lender, none of those loans are cross-collateralized with the Antioch property loan and the Company’s special purpose subsidiary’s default on that loan does not cross-default any of these other loans. The Company is continuing to accrue default interest, penalties as well as property taxes, insurance and the lender’s legal fees and costs. The Company’s estimated liability under the carve-out guarantee for the lender’s legal fees and costs prior to the date of foreclosure is estimated to be approximately $20,000 . 2018 Acquisitions or Dispositions There were no acquisitions nor dispositions during the year ended December 31, 2018. 2017 Acquisitions or Dispositions During the year ended December 31, 2017 , the Company acquired the following properties: Property Land, building and Improvements Tenant Origination and Absorption Costs Above-Market Lease Intangibles Total Sutter Health $ 24,256,632 $ 2,870,258 $ 474,091 (1) $ 27,600,981 Walgreens 4,667,322 448,183 125,050 5,240,555 $ 28,923,954 $ 3,318,441 $ 599,141 $ 32,841,536 Purchase price $ 32,841,536 Purchase deposits applied (2) (1,500,000 ) Acquisition fees to affiliate (642,314 ) Amount paid for acquisition of real estate before financing $ 30,699,222 (1) This represents the ground leasehold value allocated to a 50 years ground lease under a water tower that is part of the Sutter Health property. The annual rental payments under the ground lease are $1,300 . The entire property including the ground leasehold interest is leased by Sutter Health. (2) $250,000 of the purchase deposits applied were paid in 2017 . During the year ended December 31, 2017 , the Company recognized $2,225,405 of total revenue related to the properties acquired in fiscal 2017 . The expiration of the leases of the properties acquired during the year ended December 31, 2017 is as follows: Property Lease Expiration Sutter Health 10/31/2025 Walgreens 3/31/2062 See Note 6 for disposition of property during the year ended December 31, 2017 . 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. As of December 31, 2018 , the future minimum contractual rental income from the Company’s non-cancelable operating leases is as follows: 2019 $ 10,008,899 2020 10,209,110 2021 9,220,308 2022 7,674,625 2023 5,884,134 Thereafter 27,782,225 $ 70,779,301 Revenue Concentration For the year ended December 31, 2018 , the Company's portfolio revenue concentration (greater than 10% t otal revenue) was as follows: Property and Location Revenue Percentage of Total Revenue Sutter Health, Rancho Cordova, CA $ 2,702,879 20.5 % PreK San Antonio, San Antonio, TX $ 1,655,819 12.6 % As of December 31, 2018 , no other tenant accounted for more than 10% of the total revenue. Asset Concentration The Company’s asset portfolio concentration (greater than 10% of total assets) for the fiscal period December 31, 2018 was as follows: Property and Location Net Carrying Value Percentage of Total Assets Sutter Health, Rancho Cordova, CA $ 25,050,613 19.0 % As of December 31, 2018 , no other investment in real estate property accounted for more than 10% of the total assets. Intangibles As of December 31, 2018 and 2017 , the Company’s intangibles were as follows: 2018 2017 Tenant Origination and Absorption Costs Above- Market Lease Intangibles Below- Market Lease Intangibles Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 12,701,634 $ 872,408 $ (5,349,909 ) $ 12,699,134 $ 872,408 $ (5,349,909 ) Accumulated amortization (4,456,975 ) (90,546 ) 2,244,066 (2,856,322 ) (55,226 ) 1,383,901 Net amount $ 8,244,659 $ 781,862 $ (3,105,843 ) $ 9,842,812 $ 817,182 $ (3,966,008 ) Amortization of intangible assets in the future years is expected to be as follows: Tenant origination and absorption costs Above- Market Lease Intangibles Below- Market Lease Intangibles 2019 $ 1,563,076 $ 35,320 $ (860,165 ) 2020 1,563,076 35,320 (860,165 ) 2021 1,315,958 35,320 (667,541 ) 2022 934,592 35,320 (201,982 ) 2023 682,858 35,320 (113,651 ) Thereafter 2,185,099 605,262 (402,339 ) $ 8,244,659 $ 781,862 $ (3,105,843 ) Weighted average remaining amortization period 8.3 years 13.5 years 4.7 years |
SALE OF INTEREST IN REAL PROPER
SALE OF INTEREST IN REAL PROPERTY | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
SALE OF INTEREST IN REAL PROPERTY | NOTE 5. SALE OF INTEREST IN REAL PROPERTY In March 2016, the Company entered into a tenancy in common agreement and sold an undivided 29.86% tenant-in-common interest in the Chevron Gas Station located in Roseville, CA for $1,000,000 . The purchaser had the right to require the Company to repurchase their interest in the property during the period from March 1, 2018 through March 1, 2019. Therefore, the sale did not qualify for sales recognition under ASC 360 for financial reporting purposes and the transaction is accounted for as a financing transaction. The proceeds received from the purchaser were recorded as a sales deposit liability in the Company’s consolidated balance sheets and the payments to the purchaser were recorded as interest expense in the statement of operations. As of December 31, 2018 and 2017, sales deposit liability amounted to $1,000,000 at both balance sheet dates. The interest expense recorded as a result of this transaction was $55,002 for each of the years ended December 31, 2018 and 2017 (see Note 7). On February 8, 2019, the purchaser gave notice of exercise to require the Company to repurchase the 29.86% tenant-in-common interest in the property and the Company is proceeding under the terms of the contract to acquire the 29.86% tenant-in-common interest in the property for $1,000,000 by May 9, 2019. |
SALE OF REAL ESTATE INVESTMENT
SALE OF REAL ESTATE INVESTMENT PROPERTY | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
SALE OF REAL ESTATE INVESTMENT PROPERTY | SALE OF REAL ESTATE INVESTMENT PROPERTY On April 27, 2017, the Company sold the Chevron Gas Station property in Rancho Cordova, CA to a third party for $3,434,000 which was paid in cash. The sale resulted in gain for financial reporting purposes of $747,957 , which is net of the $103,020 disposition fee the Advisor earned in connection with this transaction (see Note 11). The Company entered into a 1031 exchange to defer the taxable gain of approximately $900,000 on the transaction. The 1031 exchange was completed when the Company purchased the Walgreens property on June 29, 2017. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Mortgage Notes Payable As of December 31, 2018 and 2017 , the Company’s mortgage notes payable consisted of the following: 2018 2017 Collateral Principal Amount Principal Amount Contractual Interest Rate Effective Interest Rate (1) Maturity Date Chase Bank & Great Clips (2) $ 1,866,364 $ 1,888,325 4.37% 4.37 % February 5, 2019 Levins 2,125,703 2,169,908 One-month LIBOR + 1.93% 3.74 % January 5, 2021 Island Pacific Supermarket 1,932,973 1,973,170 One-month LIBOR + 1.93% 3.74 % January 5, 2021 Dollar General 2,378,106 2,430,065 One-month LIBOR + 1.48% 3.38 % March 5, 2021 Rite Aid 3,744,915 3,827,722 One-month LIBOR + 1.50% 3.25 % May 5, 2021 PMI Preclinical 4,213,887 4,305,954 One-month LIBOR + 1.48% 3.38 % March 5, 2021 EcoThrift 2,703,239 2,765,351 One-month LIBOR + 1.21% 2.96 % July 5, 2021 GSA (MHSA) 1,839,454 1,881,257 One-month LIBOR + 1.25% 3.00 % August 5, 2021 PreK San Antonio 5,239,125 5,333,750 4.25% 4.25 % December 1, 2021 Dinan Cars 2,764,937 2,816,882 One-month LIBOR + 2.27% 4.02 % January 5, 2022 ITW Rippey, Solar Turbines, Amec Foster 9,648,214 9,855,485 3.35% 3.35 % November 1, 2026 L-3 Communications 5,380,085 5,471,050 4.50% 4.50 % April 1, 2022 Gap 3,714,623 3,782,712 4.15% 4.15 % August 1, 2023 Dollar General Big Spring 621,737 632,218 4.69% 4.69 % April 1, 2022 Sutter Health 14,419,666 14,665,829 4.50% 4.50 % March 9, 2024 Total mortgage notes payable $ 62,593,028 $ 63,799,678 Less unamortized deferred financing costs (1,146,960 ) (1,522,291 ) Mortgage notes payable, net $ 61,446,068 $ 62,277,387 (1) Contractual interest rate represents the interest rate in effect under the mortgage notes payable as of December 31, 2018 . Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2018 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments, see Note 8. (2) This property was foreclosed and sold on March 13, 2019 as discussed below. On August 3, 2018, the Company’s independent trust managers and the board of trust managers approved an increase in the Company’s maximum leverage ratio from 45% to 50% . Factors considered in approving the increase in the leverage ratio included the moderate level of 50% leverage, current economic and market conditions, the relative cost of debt and equity capital, the ability of the Company's properties to generate sufficient cash flow to cover debt service requirements and other similar factors. 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 is in compliance with all terms and conditions of the mortgage loan agreements, with the exception of the Chase Bank and Great Clips loan (Antioch, California) for which the Company did not make the August 5, 2018 or subsequent mortgage payments. On July 13, 2018, the Company’s special purpose subsidiary that owns the Antioch, California property initiated discussions with the mortgage lender regarding the potential restructuring of the mortgage loan on the property which had a balance of $1,869,536 as of June 30, 2018 and matured on February 5, 2019 , or the potential to repay the loan at a discount. Given that potential rent rates for prospective tenants of the property are significantly less than the rent previously received from Chase Bank and the significant investment in tenant improvements that would be required to attract new tenants, the Company’s special purpose subsidiary informed the lender that it would need to reach an agreement to either pay the loan off at a significant discount or restructure the loan with terms that would be economically viable to the Company’s special purpose subsidiary under current market conditions. Since no agreement was reached on how to restructure this loan, on August 9, 2018, the Company’s special purpose subsidiary that owns the Antioch property notified the lender that it had defaulted on the mortgage loan and intended to surrender the property to the lender. The loan in default is non-recourse to the Company (except for property taxes, insurance and the lender’s legal fees and other costs incurred prior to the date of foreclosure) and, while eight of the Company’s other special purpose property owner subsidiaries have mortgage loans with this lender, none of those loans are cross-collateralized with the Antioch property loan and the Company’s special purpose subsidiary’s default on that loan does not cross-default any of these other loans. On September 28, 2018, the Company’s special purpose subsidiary and the Company received a notice of default and election to sell under deed of trust dated September 19, 2018 for the Antioch, California property from an agent for the lender. The notice was filed for recording in the Office of the Recorder of Contra Costa County, California on September 24, 2018. While the Company’s special purpose subsidiary and the Company were given a 90 -day cure period from the date of record before a sale date of the Antioch, California property could be set, the Company’s special purpose subsidiary and the Company did not plan to cure the default. During February 2019, the Company’s special purpose subsidiary and the Company received a Notice of Trustee’s Sale indicating that the Antioch property was expected to be sold by the Trustee in March 2019. The foreclosure sale of the Antioch property was completed on March 13, 2019. The Company’s estimated liability under the carve-out guarantee for the lender’s legal fees and costs prior to the date of foreclosure is approximately $20,000 . Fair Value The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of December 31, 2018 and 2017: December 31, 2018 December 31, 2017 Face Value Carrying Value Fair Value Face Value Carrying Value Fair Value $ 62,593,028 $ 61,446,068 $ 61,283,165 $ 63,799,677 $ 62,277,387 $ 62,258,532 Disclosures of the fair values of financial instruments is based on pertinent information available to the Company as of December 31, 2018 and 2017 and requires 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. The following summarizes the future principal payments of the Company’s mortgage notes payable as of December 31, 2018 : 2019 $ 3,107,706 2020 1,286,480 2021 23,879,056 2022 8,888,943 2023 3,966,692 Thereafter 21,464,151 Total principal $ 62,593,028 Interest Expense The following is a reconciliation of the components of interest expense: Year Ended December 31, 2018 2017 Mortgage notes payable: Interest expense $ 2,565,921 $ 2,251,673 Amortization of deferred financing costs 375,330 303,044 Gain on interest rate swaps (1) (182,823 ) (105,909 ) Sales deposit liability: Interest on sales deposit (see Note 5) 55,002 55,002 Total interest expense $ 2,813,430 $ 2,503,810 (1) Includes unrealized gain on interest rate swaps of $101,815 and $228,533 as of December 31, 2018 and 2017 , respectively (see Note 8). Accrued interest receivable of $(12,432) and accrual interest payable of $3,913 at December 31, 2018 and 2017 , respectively, represents the unsettled portion of the interest rate swaps for the period from the most recent settlement date through respective balance sheet dates. |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swap Derivatives | INTEREST RATE SWAP DERIVATIVES The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The Company does not enter into derivatives for speculative purposes. The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of December 31, 2018 and 2017 . 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: Derivative Instruments Number of Instruments Notional Amount (1) Reference Rate Weighted Average Fixed Pay Rate Weighted Average Remaining Term Interest Rate Swaps 2018 8 $ 21,703,214 One-month LIBOR/Fixed at 1.21%-2.27% 3.42 % 2.4 years 2017 8 $ 22,170,310 One-month LIBOR/Fixed at 1.21%-2.28% 3.42 % 3.3 years (1) The notional amount of the Company’s swaps are reduced monthly 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 $20,546,330 as of December 31, 2018 . The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement for all swaps), as well as their classification in the consolidated balance sheet as of December 31, 2018 and 2017 . December 31, 2018 December 31, 2017 Derivative Instrument Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Assets: Interest rate swap derivatives, at fair value 8 $ 404,267 7 $ 321,450 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value — $ — 1 $ (18,998 ) The change in fair value of a derivative instrument that is not designated as a cash flow hedge is recorded as gain (loss) on interest rate swaps in the accompanying consolidated statements of operations. None of the Company’s derivatives at December 31, 2018 or 2017 were designated as hedging instruments, therefore the net unrealized gain recognized on interest rate swaps of $101,815 and $228,533 , respectively, was recorded as an addition to gain on interest rate swap (see Note 7). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS The Company paid its independent trust managers for services rendered. The amount paid was $178,022 and $134,000 for the years ended December 31, 2018 and 2017 , respectively. Such amounts are included in general and administrative expenses in the accompanying consolidated statements of operations. The costs incurred by the Company pursuant to the Advisory Agreement for the years ended December 31, 2018 and 2017 , as well as the related amounts payable or receivable as of December 31, 2018 and 2017 , are included in the table below. The amounts payable or receivable are presented in the accompanying consolidated balance sheets as “Due to Affiliates” and “Due from Affiliates,” respectively. Summarized below are descriptions of the related party transactions provided for in the Advisory Agreement that may be applicable to the Company in this stage of their life cycle. Year Ended December 31, 2018 December 31, 2018 Year Ended December 31, 2017 December 31, 2017 Incurred Receivable Payable Incurred Receivable Payable Expensed: Asset management fees $ 810,471 $ — $ — $ 758,555 $ — $ 3,513 Other operating expense reimbursement — — — — — 47,948 Reimbursable operating expenses 370,186 — — 102,080 — — Fees to affiliates 1,180,657 860,635 Property management fees * 100,771 — — 98,246 — — Directors and officers insurance and other reimbursements ** 92,624 — 59,992 — — — Disposition fees *** — — — 103,020 — — Reimbursable organizational and offering expenses 108,790 — — 173,281 — 57 Capitalized: Acquisition fees — — — 671,270 — — Financing coordination fees — — — 100,156 — — Other: Due from NNN REIT — — — 48,418 — — $ — $ 59,992 $ — $ 51,518 * Property management fees are included in "property expenses" in the accompanying consolidated statements of operations. ** Trust managers and officers and other reimbursements are classified within general and administrative expenses in the consolidated statements of operations. *** Disposition fees for the year ended December 31, 2017 are presented as a reduction of gain on sale of real estate investment property (see Note 6). Organization and Offering Costs During the Company's offering of its common stock which was terminated in July 2016, the Company was obligated to reimburse the Advisor or its affiliates for organization and offering costs paid by the Advisor on behalf of the Company. The Company reimburses the Advisor for organizational and offering expenses up to 3.0% of gross offering proceeds. As of December 31, 2018 , the Advisor has incurred organization and offering expenses of $2,796,198 , which was less than 3.0% of the gross offering proceeds received by the Company as of December 31, 2018 and the Company has reimbursed the Advisor for all of these organization and offering expenses. Through December 31, 2018 and 2017 , the Company reimbursed the Advisor $2,796,198 and $2,687,407 , respectively, for organizational and offering expenses. The Company’s maximum liability for organization and offering costs through December 31, 2018 and 2017 was $2,796,198 and $2,687,350 , respectively, of which $0 and $57 remained payable as of December 31, 2018 and 2017 , respectively. Acquisition Fees The Company pays the Advisor an acquisition fee in an amount equal 3.0% of Company’s contract purchase price of its properties. The total of all acquisition fees and acquisition costs must be reasonable, and not exceed 6.0% of the contract price of the properties. However, a majority of the trust managers (including a majority of the independent trust managers) not otherwise interested in the transaction may approve fees in excess of these limits if they determine the transaction to be commercially competitive, fair and reasonable to the Company. Asset Management Fees The Company pays the Advisor as compensation for the advisory services rendered, a monthly fee in an amount equal to 0.05% of the Company’s average invested assets, as defined, as of the end of the preceding month. The asset management fee is payable monthly on the last business day of such month. The asset management fee, which must be reasonable in the determination of the Company’s independent trust managers at least annually, may or may not be taken, in whole or in part as to any year, in the sole discretion of the Advisor. All or any portion of the asset management fee not paid as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine. Financing Coordination Fees Other than with respect to any mortgage or other financing related to a property concurrent with its acquisition, if an Advisor or an Affiliate provides a substantial amount of the services (as determined by a majority of the independent 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 pays the Advisor or such Affiliate a financing coordination fee equal to 1.0% of the amount of such financing. Property Management Fees If an Advisor or any of its affiliates provides a substantial amount of the property management services (as determined by a majority of the independent trust managers) for the Company’s properties, then the Company pays the Advisor or such affiliate a property management fee equal to 1.5% of gross revenues from the properties managed. The Company also will reimburse the Advisor and any of its affiliates for property-level expenses that such person pays or incurs on behalf of the Company, including salaries, bonuses and benefits of persons employed by such person, except for the salaries, bonuses and benefits of persons who also serve as one of the Company’s executive officers or as an executive officer of such person. The Advisor or its affiliate may subcontract the performance of its property management duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services. Disposition Fees For substantial assistance in connection with the sale of properties, the Company pay the Advisor or one of its affiliates 3.0% of the contract sales price. as defined, of each property sold; provided, however, that if, in connection with such disposition, commissions are paid to third parties unaffiliated with the Company's Advisor or its affiliates, the disposition fees paid to the Advisor, its affiliates and unaffiliated third parties may not exceed the lesser of the competitive real estate commission or 6% of the contract sales price. Leasing Commission Fees If an Advisor or an affiliate provides a substantial amount of the services (as determined by a majority of the independent trust managers) in connection with the Company’s leasing of its properties to unaffiliated third parties, then the Company pays the Advisor or such affiliate leasing commissions equal to 6.0% of the rents due pursuant to such lease for the first ten years of the lease term; provided, however (i) if the term of the lease is less than ten years, such commission percentage will apply to the full term of the lease and (ii) any rents due under a renewal of a lease of an existing tenant upon expiration of the initial lease agreement (including any extensions provided for thereunder) shall accrue a commission of 3.0% in lieu of the aforementioned 6.0% commission. Other Operating Expense Reimbursement Total operating expenses of the Company are limited to the greater of 2% of average invested assets or 25% of net income for the four most recently completed fiscal quarters (the " 2% / 25% Limitation"). If the Company exceeds the 2% / 25% Limitation, the Advisor must reimburse the Company the amount by which the aggregate total operating expenses exceeds the limitation, or the Company must obtain a waiver from the Company's board of trust managers, including a majority of its independent trust managers. For purposes of determining the 2% / 25% Limitation amount, “average invested assets” means the average monthly book value of the Company’s assets invested directly or indirectly in equity interests and loans secured by real estate during the 12-month period before deducting depreciation, reserves for bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by the Company, as determined by GAAP, that are in any way related to the Company’s operation including asset management fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, listing and registration of shares of the Company’s common stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt; (e) reasonable incentive fees based upon increases in NAV per share; (f) acquisition fees and acquisition expenses (including expenses, relating to potential investments that the Company does not close); and (g) 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. Operating expenses for the four fiscal quarters ended December 31, 2018 and 2017 did not exceeded the 2% / 25% Limitation. Related Party Investment in the Company The investment in the Company by NNN REIT totaled 403,980 shares, or an approximate 4.8% ownership interest, as of December 31, 2018 and 364,352 shares, or an approximate 4.4% ownership interest, as of December 31, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Economic Dependency The Company depends on the Advisor for certain services that are essential to the Company, including 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 would be required to obtain such services from other sources. Environmental As an owner of real estate properties, 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 real estate properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the real estate properties could result in future environmental liabilities. Tenant Improvements Pursuant to a lease agreement, the Company has an obligation to pay for $207,000 and $553,088 in tenant improvements to be incurred by tenants at December 31, 2018 and 2017 , respectively, for one property. At December 31, 2018 and 2017 , the Company had $462,140 of restricted cash held by a lender to fund the tenant improvements for one property. 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 the below, the Company is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. The SEC is conducting an investigation related to the advertising and sale of securities by a REIT affiliated with the Company in connection with the early stage of its 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 these offerings. The SEC’s investigation is ongoing. The Company has cooperated and intends to continue cooperating 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 | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Board of Trust Managers Effective January 11, 2019, Mr. Jeffrey Randolph resigned as a member of the board of trust managers of the Company, including his roles as the Audit Committee Chairman. Mr. Vipe Desai succeeded Mr. Randolph as the Audit Committee Chairman upon the resignation of Mr. Randolph. Mr. Randolph resigned voluntarily and his decision was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Mr. Randolph’s resignation was in connection with the strategic alternatives review described in “ Potential Sale or Merger Transaction ” below. In addition, the Company’s three remaining independent board members, who were also independent directors of NNN REIT, resigned from the NNN REIT board effective upon appointment of their successors which occurred on January 15, 2019. As a result of these resignations, there is no longer an overlap of independent board members of the Company and NNN REIT. Potential Sale or Merger Transaction Since commencement of the offering, the Company has intended to create a liquidity event for our shareholders no later than the 10th anniversary date of the Termination Date. Accordingly, on January 14, 2019, the Company announced that its board of trust managers engaged Cushman & Wakefield as the Company's real estate financial advisor to evaluate strategic alternatives which includes marketing its entire 20-property real estate portfolio for disposition by sale, merger or other transaction structure, subject to the approval of the Company's shareholders. The Company has also suspended the redemptions of common stock under its share repurchase program during the strategic alternatives review process. The portfolio marketing process includes a non-public competitive bidding that is being managed by Cushman &Wakefield over successive rounds that began in March and will continue during the second quarter of 2019. If an acceptable acquiror and price are identified, any portfolio sale or merger transaction would initially be subject to approval of the Company's board of trust managers, including the independent trust managers who are serving as a special committee in connection with the strategic alternatives review, portfolio marketing and negotiation of any potential transaction. If the special committee and the board of trust managers approve a sale or merger transaction, such transaction would then be subject to the approval of the Company's shareholders owning a majority of the outstanding common stock. The Company does not intend to provide any updates pertaining to the bidding process and shareholders should not expect any announcement from the Company until such time that an outcome has been reached with respect to any potential offer, except as required under applicable laws. In connection with the portfolio marketing process, one of the Comoany's independent trust managers has resigned and the three remaining independent trust managers, who were also independent directors of NNN REIT, have resigned from the NNN REIT board. As a result of these resignations, the Company's independent trust managers are no longer affiliated with NNN REIT, BRIX REIT, or any other BRIX affiliate. On March 19, 2019, NNN REIT announced that it intends to explore a potential acquisition of the Company or its real estate portfolio and that its board of directors has formed a special committee to evaluate the potential for a transaction with the Company. The members of the NNN REIT special committee have no affiliation with the Company or the Advisor. Assuming an offer on acceptable price and terms results from this competitive bidding process, the Company's special committee and its board could announce and present a fully negotiated and approved sale or merger transaction for shareholder approval during the third calendar quarter of 2019. If shareholder approval is then obtained, the sale or merger transaction would proceed in accordance with the negotiated terms. There can be no assurance that a sale or merger transaction will occur at all, or that any such transaction would conclude during the third calendar quarter of 2019. If the portfolio was liquidated at $147,480,776 , the total estimated value of real estate properties as of December 31, 2018, which was included in the Company's most recently reported estimated NAV calculation, the Advisor would earn a disposition fee of approximately $4,424,400 and a subordinated participation fee of approximately $1,239,400 . Antioch, California Property As described in Notes 4 and 7, the Company’s Antioch property was foreclosed and sold on March 13, 2019. Pending Purchase of Interest in Real Estate Property As discussed in Note 5, on February 21, 2019, the Company and the owner of the 29.86% tenant-in-common interest in a Chevron property in Roseville, CA entered into a purchase and sale agreement whereby the Company will acquire the 29.86% tenant in common interest in the property for $1,000,000 by no later than May 9, 2019. Distributions On January 22, 2019, the Company’s board of trust managers declared dividends based on daily record dates for the period October 1, 2018 through December 31, 2018 at a rate of $0.00203800 per share per day, or $1,566,932 , on the outstanding shares of the Company’s common stock, which the Company paid on January 25, 2018. Of the $1,566,932 dividend, $1,085,126 was reinvested through the Company’s DRP. Redeemable common stock Subsequent to December 31, 2018, the Company redeemed 82,589 shares of common stock for $880,404 . The Company suspended the redemption during its strategic alternatives process related to the potential sale or merger transaction discussed above on January 14, 2019. As a result, the redemption period for investors to be paid on April 15, 2019 ended on January 16, 2019. |
Schedule III-Real Estate Assets
Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization | RICH UNCLES REAL ESTATE INVESTMENT TRUST I Schedule III Real Estate Assets and Accumulated Depreciation and Amortization December 31, 2018 Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount at which Carried at Close of Period Accumulated Depreciation and Amortization Description Location Ownership Percentage Original Year of Construction Date Acquired Encumbrances Land Buildings and Improvements (1) Total Land Buildings and Improvements (1) Total Net Chase Bank and Great Clips (2) Antioch, CA 100 % 1998 8/22/2014 $ 1,866,364 $ 649,633 $ 3,178,601 $ 3,828,234 $ (862,190 ) $ 444,358 $ 2,521,688 $ 2,966,046 $ (1,117,265 ) $ 1,848,781 Chevron Gas Station San Jose, CA 100 % 1964 5/29/2015 — 1,844,383 930,617 2,775,000 — 1,844,383 930,617 2,775,000 (140,514 ) 2,634,486 Levins Sacramento, CA 100 % 1970 8/19/2015 2,125,703 598,913 3,151,087 3,750,000 2,500 598,913 3,153,587 3,752,500 (718,814 ) 3,033,686 Chevron Gas Station (3) Roseville, CA 100 % 2003 9/30/2015 — 602,375 2,197,625 2,800,000 — 602,375 2,197,625 2,800,000 (314,569 ) 2,485,431 Island Pacific Supermarket Elk Grove, CA 100 % 2012 10/1/2015 1,932,973 958,328 2,761,672 3,720,000 — 958,328 2,761,672 3,720,000 (529,099 ) 3,190,901 Dollar General Bakersfield, CA 100 % 1952 11/11/2015 2,378,106 2,218,862 3,102,725 5,321,587 — 2,218,862 3,102,725 5,321,587 (600,123 ) 4,721,464 Rite Aid Lake Elsinore, CA 100 % 2008 12/7/2015 3,744,915 2,049,596 5,582,136 7,631,732 — 2,049,595 5,582,136 7,631,731 (725,662 ) 6,906,069 PMI Preclinical San Carlos, CA 100 % 1974 12/9/2015 4,213,887 2,940,133 5,979,867 8,920,000 — 2,940,133 5,979,867 8,920,000 (625,375 ) 8,294,625 EcoThrift Sacramento, CA 100 % 1982 3/17/2016 2,703,239 1,594,857 3,433,865 5,028,722 — 1,594,857 3,433,865 5,028,722 (676,158 ) 4,352,564 GSA (MSHA) Vacaville, CA 100 % 1987 4/5/2016 1,839,454 286,380 3,168,497 3,454,877 — 286,380 3,168,497 3,454,877 (390,068 ) 3,064,809 PreK San Antonio San Antonio, TX 100 % 2014 4/8/2016 5,239,125 509,476 12,935,515 13,444,991 — 509,476 12,935,515 13,444,991 (2,473,019 ) 10,971,972 Dollar Tree Morrow, GA 100 % 1997 4/22/2016 — 255,989 1,199,011 1,455,000 47,723 255,989 1,246,734 1,502,723 (251,940 ) 1,250,783 Dinan Cars Morgan Hill, CA 100 % 2001 6/21/2016 2,764,937 724,994 4,581,006 5,306,000 — 724,994 4,581,006 5,306,000 (966,415 ) 4,339,585 ITW Rippey El Dorado, CA 100 % 1998 8/18/2016 3,182,786 429,668 6,155,852 6,585,520 121,778 429,668 6,277,630 6,707,298 (701,075 ) 6,006,223 Solar Turbines San Diego, CA 100 % 1985 7/21/2016 2,908,224 3,081,332 2,789,586 5,870,918 257,778 3,081,332 3,047,364 6,128,696 (475,261 ) 5,653,435 Amec Foster San Diego, CA 100 % 1985 7/21/2016 3,557,204 3,551,615 2,631,320 6,182,935 1,313,397 3,551,615 3,944,717 7,496,332 (586,075 ) 6,910,257 Dollar General Big Spring Big Spring, TX 100 % 2015 11/4/2016 621,737 337,204 937,401 1,274,605 — 337,204 937,401 1,274,605 (64,545 ) 1,210,060 Gap Rocklin, CA 100 % 1998 12/1/2016 3,714,623 1,661,831 6,224,989 $ 7,886,820 11,281 1,661,831 6,236,270 7,898,101 (652,721 ) 7,245,380 L-3 Communications San Diego, CA 100 % 1984 12/23/2016 5,380,085 2,504,578 8,918,971 11,423,549 350,948 2,504,578 9,269,919 11,774,497 (787,194 ) 10,987,303 Sutter Health Rancho Cordova, CA 100 % 2009 3/15/2017 14,419,666 2,172,442 24,954,448 27,126,890 — 2,172,442 24,954,448 27,126,890 (2,076,277 ) 25,050,613 Walgreens Santa Maria, CA 100 % 2001 6/29/2017 — 924,368 4,191,137 5,115,505 — 924,368 4,191,137 5,115,505 (198,395 ) 4,917,110 $ 62,593,028 $ 29,896,957 $ 109,005,928 $ 138,902,885 $ 1,243,215 $ 29,691,681 $ 110,454,420 $ 140,146,101 $ (15,070,564 ) $ 125,075,537 (1) Building and improvements include tenant origination and absorption costs. (2) Foreclosed and sold on March 13, 2019. (3) The Company owns an undivided 70.14% interest through a tenancy in common agreement that was entered into in March 2016. On February 8, 2019, the owner of the remaining 29.86% interest gave notice of exercise to require the Company to repurchase the 29.86% interest in the property. On February 21, 2019, the Company and the owner of the 29.86% interest entered into a purchase and sale agreement whereby the Company will acquire the 29.86% interest in the property for $1,000,000 by no later than May 9, 2019. Notes: • The aggregate cost of real estate for federal income tax purposes was approximately $136,000,000 (unaudited) as of December 31, 2018 . • Real estate investments (excluding land) are depreciated over their estimated useful lives. Their useful lives are generally 15 - 52 years for buildings, 5 - 21 years for site/building improvements, the shorter of 15 years or remaining contractual lease term for tenant improvements and the remaining contractual lease term with consideration as to above- and below-market extension options for above- and below-market lease intangibles. RICH UNCLES REAL ESTATE INVESTMENT TRUST I Schedule III Real Estate Assets and Accumulated Depreciation and Amortization December 31, 2018 and 2017 The following table summarizes the Company's real estate and accumulated depreciation and amortization for the years ended December 31, : 2018 2017 Real estate investments: Balance at beginning of year $ 140,453,591 $ 109,260,489 Acquisitions — 32,291,338 Improvements to real estate 554,700 1,501,764 Reserve (862,190 ) — Dispositions — (2,600,000 ) Balance at end of year $ 140,146,101 $ 140,453,591 Accumulated depreciation and amortization: Balance at beginning of year $ (9,286,921 ) $ (3,797,990 ) Depreciation and amortization expense (5,783,643 ) (5,645,451 ) Dispositions — 156,520 Balance at end of year $ (15,070,564 ) $ (9,286,921 ) |
SUMMARY OF SIGNIFICANT ACOUNT_2
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The consolidated financial statements include the accounts of the Company and, its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. The adoption of ASU No. 2014-09 did not result in a cumulative effect adjustment as of January 1, 2018, the date of the Company's adoption. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenue is recognized when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 amounted to $ 0 . Such amount would have been included in tenant reimbursements on the accompanying consolidated statements of operations. The Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. The Company did not have any sales of real estate during the year ended December 31, 2018. 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. The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, the operations, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides 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. In addition, 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. |
Fair Value Measurements and Disclosures | Fair Value Measurements and 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 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; other assets; accounts payable, accrued and other liabilities; sales deposit liability; share repurchase payable; 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 on the accompanying 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. 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance may exceed federally insurable limits. The Company mitigates this risk by depositing funds with major financial institutions; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. |
Restricted Cash | Restricted Cash Restricted cash is comprised of funds which are restricted for tenant improvements and property tax impounds. |
Real Estate Investments | Real Estate Investments Real Estate Acquisition Valuation The Company records acquisitions that meet the definition of a business as a business combination. If the acquisition does not meet the definition of a business, the Company records the acquisition as an asset acquisition. Under both methods, all assets acquired and liabilities assumed are measured based on their acquisition-date fair values. Transaction costs that are related to a business combination are charged to expense as incurred. Transaction costs that are related to an asset acquisition are capitalized as incurred. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles, and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining noncancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining noncancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods. The Company amortizes the value of tenant origination and absorption costs to amortization expense over the remaining noncancelable term of the respective lease. Estimates of the fair value of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. Therefore, the Company classifies these inputs as Level 3 inputs. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income (loss). Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and depreciated or amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset and are expensed as incurred. Significant replacements and betterments are capitalized. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: • Buildings 15-52 years • Site/building improvements 5-21 years • Tenant improvements Shorter of 15 years or remaining contractual lease term • Tenant origination and absorption costs, and above-/below-market lease intangibles Remaining contractual lease term with consideration as to above- and below-market extension options for above- and below-market lease intangibles Impairment of Real Estate and Related Intangible Assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate and related intangible assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate and related intangible assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company will record an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset |
Assets Held for Sale | Assets Held for Sale Investments in real estate property and the related mortgage notes payable are presented as a separate section of the consolidated balance sheet when the criteria set by ASU 360 for assets held for sale are met. Assets held for sale are measured at the lower of their carrying value or fair value less cost to sell. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs represent commitment fees, financing coordination fees paid to Advisor, loan fees, legal fees, and other third-party costs associated with obtaining financing and are presented on the Company's balance sheet as a direct deduction from the carrying value of the associated debt liabilities. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Unamortized deferred financing costs related to revolving credit facilities are reclassified to presentation as an asset in periods where there are no outstanding borrowings under the facility. |
Derivative Instruments | Derivative Instruments The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate mortgage notes payable. The Company does not enter into derivatives for speculative purposes. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. The Company’s mortgage derivative instruments do not meet the hedge accounting criteria and therefore the changes in fair value are recorded as gain or loss on derivative instruments in the accompanying consolidated statements of operations. The gain or loss is included in interest expense. The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate 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. |
Distributions | Distributions The Company intends, although is not legally obligated, to continue to make regular quarterly dividend distributions to holders of its shares at least at the level required to maintain REIT status unless the results of operations, general financial condition, general economic conditions or other factors inhibit the Company from doing so. Dividend distributions are authorized at the discretion of the Company’s board of trust managers which is directed, in substantial part, by its obligation to cause the Company to comply with the REIT requirements of the Internal Revenue Code. To the extent declared by the board of trust managers, dividends are payable on the 25t h day of the month following the quarter declared. Should the 25t h day fall on a weekend, dividends are expected to be paid on the first business day thereafter. Prior to January 19, 2018, to the extent dividends were declared by the board of trust managers, they were payable on the 20t h day of the month following quarter declared or the first business day thereafter if the 20 th day fell on a weekend. |
Dividend Reinvestment Plan | Dividend Reinvestment Plan The Company has adopted the DRP through which common shareholders may elect to reinvest any amount up to the dividends declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash dividends. |
Redeemable Common Stock | Redeemable Common Stock The Company has adopted the SRP pursuant to which all of its shareholders are eligible to sell their shares back to the Company for any reason on a quarterly basis. Shareholders who wish to participate in the SRP must notify the Company's Advisor, in writing, no later than the 15th day of the last month of the then current calendar quarter of such shareholder’s desire to participate in the SRP and the number of shares that it wants to the Company to repurchase. Any shareholder who elects to participate in the SRP will receive a confirmation of its redemption of shares setting forth the number and price of the shares sold back to the Company, and the total number of shares remaining in such shareholder’s account, if any. In exchange for the shares redeemed by the Company from shareholders, the Company shall pay such shareholders a per share purchase price in cash equal to the net asset value per share, as calculated and published by the Company. The SRP is funded by, and limited to, proceeds realized from the Company's sale of shares under the DRP. The Company reserves the right to reject any request for the redemption of shares. Additionally, the Company may terminate, suspend or amend the SRP at any time without shareholder approval if the Company believes such action is in the best interest of all shareholders or if the Company determines the funds otherwise available to fund its SRP are needed for other purposes. On January 14, 2019, the Company announced that redemptions of common stock under the have been suspended during the strategic alternatives review process discussed above in Note 1. Share repurchase requests will be made on a first-come, first served basis. The Company cannot guarantee that it will have sufficient available cash flow to accommodate all requests when made. If the Company does not have such sufficient funds available, at the time when redemption is requested, the redeeming shareholders may (i) withdraw their request for redemption or (ii) ask that the Company to honor their request, if and when sufficient funds become available. Such pending requests will generally be honored on a first-come, first-serve basis. When the Company became a SEC reporting entity on May 29, 2016, it became subject to the SEC’s regulation limiting the maximum amount of shares that can be repurchased to 5% of the weighted average outstanding shares for the past twelve months. The maximum dollar amount that the Company can be required to repurchase at the balance sheet date is recorded as redeemable common stock. |
Advertising Costs | Advertising Costs Advertising costs relating to the offering are expensed as incurred. Offering advertising costs expensed were $108,790 and $131,541 for the years ended December 31, 2018 and 2017 , respectively, and are included in general and administrative expenses. in the accompanying statements of operations. These amounts are reimbursements to the Advisor for organization and offering costs that they incurred on the Company’s behalf, see Note 9. |
Income Taxes | Income Taxes 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 its taxable year ended December 31, 2014. The Company believes it has qualified and continues to qualify as a REIT. To qualify as a REIT, the Company must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its shareholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its shareholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for dividend distribution to shareholders. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for the tax years ended December 31, 2018 . As of December 31, 2018 , the returns for calendar years 2014, 2015, 2016 and 2017 remain subject to examination by certain tax jurisdictions. |
Other Comprehensive (Loss) Income | Other Comprehensive (Loss) Income For all periods presented, other comprehensive (loss) income is the same as net (loss) income. |
Per Share Data | Per Share Data Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share of common stock equals basic net (loss) income per share of common stock as there were no potentially dilutive securities outstanding during the years ended December 31, 2018 and 2017 . |
Segments | Segments At December 31, 2018 and 2017 , except for one investment, the Company’s real estate investments are single-tenant income-producing properties. The Company’s investments in real estate property exhibit similar long-term financial performance and have similar economic characteristics to each other. As of December 31, 2018 and 2017 , the Company aggregated its investments in real estate property into one reportable segment. |
Square Footage, Occupancy and Other Measures | Square Footage, Occupancy and Other Measures Square footage, occupancy and other measures used to describe real estate investments included elsewhere in the notes to consolidated financial statements are presented on an unaudited basis. |
Reclassifications | Reclassifications Certain prior year revenue account balances in the statement of operations have been reclassified to conform with the current year presentation. The reclassifications had no impact on the Company's prior year results of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards Issued and Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09, as amended, requires an entity to use a five-step model to determine when to recognize revenue from customer contracts in an effort to increase consistency and comparability throughout global capital markets and across industries. ASU 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry specific guidance throughout the Industry Topics of the Codification. This ASU requires an entity to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and to provide certain additional disclosures. The Company has evaluated each of its revenue streams and their related accounting policies under ASU 2014-09. Rental income and tenant reimbursements earned from leasing its real estate properties are excluded from ASU 2014-09 and are assessed with the adoption of the ASU for leases as discussed below. The Company adopted ASU 2014-09 beginning January 1, 2018 and utilized the modified retrospective basis. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements. However, future real estate sales contracts will qualify as sales to noncustomers. The Company will assess and implement any future recognition of gain or loss on sales of properties according to the provisions of ASU 2014-09. New Accounting Standards Issued and Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The amendments in ASU 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. Under ASU 2016-02, the accounting applied by a lessor is largely unchanged from that applied under Topic 840 leases. The large majority of operating leases shall remain classified as operating leases and lessors should continue to recognize rental income for those leases on a straight-line basis over the lease term. ASU 2016-02 may impact the timing, recognition, presentation and disclosures related to the Company’s tenant reimbursements earned from leasing its real estate properties, although the Company does not expect a significant impact. ASU 2016-02 is effective for the Company on January 1, 2019. The Company expects to adopt the practical expedients available for implementation under ASU 2016-02. By adopting the practical expedients, the Company will not be required to reassess (i) whether an expired or existing contract meets the definition of a lease and (ii) the lease classification at the adoption date for expired or existing leases. ASU 2016-02 will also require new disclosures within the notes to the Company's consolidated financial statements. The Company does not expect the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”). ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon adoption of the lease accounting standard under Topic 842, the Company expects to adopt this practical expedient, specifically related to its tenant reimbursements which would otherwise be accounted for under the new revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements as 1) the timing and pattern of transfer of the nonlease components and associated lease components are the same and 2) the lease component would be classified as an operating lease. In addition, ASU No. 2018-11 provides an additional optional transition method to allow entities to apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease accounting standard will continue to be reported under the current lease accounting standards of Topic 840. The Company expects to adopt this transition method upon adoption of the lease accounting standard of Topic 842 on January 1, 2019. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”). ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurement. In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU 2016-02 is effective for the Company beginning January 1, 2020. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its consolidated financial statements. In December 2018, the FASB issued ASU No. 2018- 20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU No.2018-13”). ASU No. 2018-20 provides clarification for lessors when applying Topic 842. The areas of clarification include sales taxes and other similar taxes collected from lessees, treatment of certain lessor costs and recognition of variable payments for contracts with lease and nonlease components. The amendments in ASU No. 2018-20 affect the amendments in ASU No. 2016-02, which are not yet effective but can be early adopted. The effective date and transition requirements of ASU No. 2018-20 is January 1, 2019 for the Company. All entities are required to apply the amendments in ASU No. 2018-20 to all new and existing leases. Consistent with the adoption of ASU No. 2016-02, the Company does not expect the adoption of ASU No. 2018-20 will have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
SUMMARY OF SIGNIFICANT ACOUNT_3
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Dividends Declared | Dividends declared per common share were $ 0.1875 per quarter for the years ended December 31, 2018 and 2017 . The following presents the federal income tax characterizations of dividend distributions paid: Years Ended December 31, 2018 2017 Ordinary income $ 0.238 $ 0.285 Nontaxable dividend distributions 0.512 0.465 $ 0.750 $ 0.750 |
CONSOLIDATED BALANCE SHEET DE_2
CONSOLIDATED BALANCE SHEET DETAILS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Balance Sheet | Tenant receivables, net consisted of the following: December 31, 2018 2017 Straight-line rent $ 1,399,276 $ 1,082,080 Tenant rent 200,301 301,588 Unbilled tenant recoveries 108,258 93,420 Other — 76,178 1,707,835 1,553,266 Less allowance for doubtful accounts — (58,328 ) $ 1,707,835 $ 1,494,938 Accounts payable, accrued and other liabilities consisted of the following: December 31, 2018 2017 Accounts payable $ 52,057 $ 45,029 Accrued expenses 184,441 205,774 Accrued interest payable 288,437 215,700 Unearned rent 624,181 518,023 Tenant security deposits 270,106 270,106 $ 1,419,222 $ 1,254,632 |
REAL ESTATE INVESTMENTS (Tables
REAL ESTATE INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Schedule of Properties | The following table provides summary information regarding the Company’s real estate as of December 31, 2018 : Property Location Acquisition Date Property Type Land, Buildings and Improvements Tenant Origination and Absorption Costs Accumulated Depreciation and Amortization Total Real Estate Investments, Net Chase Bank & Great Clips (1) Antioch, CA 8/22/2014 Retail $ 2,297,845 $ 668,201 $ (1,117,265 ) $ 1,848,781 Chevron Gas Station San Jose, CA 5/29/2015 Retail 2,775,000 — (140,514 ) 2,634,486 Levins Sacramento, CA 8/19/2015 Industrial 3,750,000 2,500 (718,814 ) 3,033,686 Chevron Gas Station (see Note 5) Roseville, CA 9/30/2015 Retail 2,800,000 — (314,569 ) 2,485,431 Island Pacific Supermarket Elk Grove, CA 10/1/2015 Retail 3,151,461 568,539 (529,099 ) 3,190,901 Dollar General Bakersfield, CA 11/11/2015 Retail 4,632,567 689,020 (600,123 ) 4,721,464 Rite Aid Lake Elsinore, CA 12/7/2015 Retail 6,663,446 968,285 (725,662 ) 6,906,069 PMI Preclinical San Carlos, CA 12/9/2015 Office 8,920,000 — (625,375 ) 8,294,625 EcoThrift Sacramento, CA 3/17/2016 Retail 4,486,993 541,729 (676,158 ) 4,352,564 GSA (MSHA) Vacaville, CA 4/5/2016 Office 2,998,232 456,645 (390,068 ) 3,064,809 PreK San Antonio San Antonio, TX 4/8/2016 Retail 11,851,540 1,593,451 (2,473,019 ) 10,971,972 Dollar Tree Morrow, GA 4/22/2016 Retail 1,295,879 206,844 (251,940 ) 1,250,783 Dinan Cars Morgan Hill, CA 6/21/2016 Industrial 4,651,845 654,155 (966,415 ) 4,339,585 Solar Turbines San Diego, CA 7/21/2016 Office 5,738,978 389,718 (475,261 ) 5,653,435 Amec Foster San Diego, CA 7/21/2016 Office 7,010,799 485,533 (586,075 ) 6,910,257 ITW Rippey El Dorado, CA 8/18/2016 Industrial 6,299,982 407,316 (701,075 ) 6,006,223 Dollar General Big Spring Big Spring, TX 11/4/2016 Retail 1,161,647 112,958 (64,545 ) 1,210,060 Gap Rocklin, CA 12/1/2016 Office 7,220,909 677,192 (652,721 ) 7,245,380 L-3 Communications San Diego, CA 12/23/2016 Office 10,813,390 961,107 (787,194 ) 10,987,303 Sutter Health Rancho Cordova, CA 3/15/2017 Office 24,256,632 2,870,258 (2,076,277 ) 25,050,613 Walgreens Santa Maria, CA 6/29/2017 Retail 4,667,322 448,183 (198,395 ) 4,917,110 $ 127,444,467 $ 12,701,634 $ (15,070,564 ) $ 125,075,537 (1) See following impairment charge discussion. |
Schedule of Property Acquisitions | During the year ended December 31, 2017 , the Company acquired the following properties: Property Land, building and Improvements Tenant Origination and Absorption Costs Above-Market Lease Intangibles Total Sutter Health $ 24,256,632 $ 2,870,258 $ 474,091 (1) $ 27,600,981 Walgreens 4,667,322 448,183 125,050 5,240,555 $ 28,923,954 $ 3,318,441 $ 599,141 $ 32,841,536 Purchase price $ 32,841,536 Purchase deposits applied (2) (1,500,000 ) Acquisition fees to affiliate (642,314 ) Amount paid for acquisition of real estate before financing $ 30,699,222 (1) This represents the ground leasehold value allocated to a 50 years ground lease under a water tower that is part of the Sutter Health property. The annual rental payments under the ground lease are $1,300 . The entire property including the ground leasehold interest is leased by Sutter Health. (2) $250,000 of the purchase deposits applied were paid in 2017 . |
Lease Expiration Date | The expiration of the leases of the properties acquired during the year ended December 31, 2017 is as follows: Property Lease Expiration Sutter Health 10/31/2025 Walgreens 3/31/2062 |
Schedule of Future Minimum Rental Payments for Operating Leases | As of December 31, 2018 , the future minimum contractual rental income from the Company’s non-cancelable operating leases is as follows: 2019 $ 10,008,899 2020 10,209,110 2021 9,220,308 2022 7,674,625 2023 5,884,134 Thereafter 27,782,225 $ 70,779,301 |
Schedule Of Portfolio Concentrations | For the year ended December 31, 2018 , the Company's portfolio revenue concentration (greater than 10% t otal revenue) was as follows: Property and Location Revenue Percentage of Total Revenue Sutter Health, Rancho Cordova, CA $ 2,702,879 20.5 % PreK San Antonio, San Antonio, TX $ 1,655,819 12.6 % The Company’s asset portfolio concentration (greater than 10% of total assets) for the fiscal period December 31, 2018 was as follows: Property and Location Net Carrying Value Percentage of Total Assets Sutter Health, Rancho Cordova, CA $ 25,050,613 19.0 % |
Schedule of Finite-Lived Intangible Assets | As of December 31, 2018 and 2017 , the Company’s intangibles were as follows: 2018 2017 Tenant Origination and Absorption Costs Above- Market Lease Intangibles Below- Market Lease Intangibles Tenant Origination and Absorption Costs Above-Market Lease Intangibles Below-Market Lease Intangibles Cost $ 12,701,634 $ 872,408 $ (5,349,909 ) $ 12,699,134 $ 872,408 $ (5,349,909 ) Accumulated amortization (4,456,975 ) (90,546 ) 2,244,066 (2,856,322 ) (55,226 ) 1,383,901 Net amount $ 8,244,659 $ 781,862 $ (3,105,843 ) $ 9,842,812 $ 817,182 $ (3,966,008 ) |
Intangible Assets, Future Amortization Expense | Amortization of intangible assets in the future years is expected to be as follows: Tenant origination and absorption costs Above- Market Lease Intangibles Below- Market Lease Intangibles 2019 $ 1,563,076 $ 35,320 $ (860,165 ) 2020 1,563,076 35,320 (860,165 ) 2021 1,315,958 35,320 (667,541 ) 2022 934,592 35,320 (201,982 ) 2023 682,858 35,320 (113,651 ) Thereafter 2,185,099 605,262 (402,339 ) $ 8,244,659 $ 781,862 $ (3,105,843 ) Weighted average remaining amortization period 8.3 years 13.5 years 4.7 years |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Companies Mortgage Notes | As of December 31, 2018 and 2017 , the Company’s mortgage notes payable consisted of the following: 2018 2017 Collateral Principal Amount Principal Amount Contractual Interest Rate Effective Interest Rate (1) Maturity Date Chase Bank & Great Clips (2) $ 1,866,364 $ 1,888,325 4.37% 4.37 % February 5, 2019 Levins 2,125,703 2,169,908 One-month LIBOR + 1.93% 3.74 % January 5, 2021 Island Pacific Supermarket 1,932,973 1,973,170 One-month LIBOR + 1.93% 3.74 % January 5, 2021 Dollar General 2,378,106 2,430,065 One-month LIBOR + 1.48% 3.38 % March 5, 2021 Rite Aid 3,744,915 3,827,722 One-month LIBOR + 1.50% 3.25 % May 5, 2021 PMI Preclinical 4,213,887 4,305,954 One-month LIBOR + 1.48% 3.38 % March 5, 2021 EcoThrift 2,703,239 2,765,351 One-month LIBOR + 1.21% 2.96 % July 5, 2021 GSA (MHSA) 1,839,454 1,881,257 One-month LIBOR + 1.25% 3.00 % August 5, 2021 PreK San Antonio 5,239,125 5,333,750 4.25% 4.25 % December 1, 2021 Dinan Cars 2,764,937 2,816,882 One-month LIBOR + 2.27% 4.02 % January 5, 2022 ITW Rippey, Solar Turbines, Amec Foster 9,648,214 9,855,485 3.35% 3.35 % November 1, 2026 L-3 Communications 5,380,085 5,471,050 4.50% 4.50 % April 1, 2022 Gap 3,714,623 3,782,712 4.15% 4.15 % August 1, 2023 Dollar General Big Spring 621,737 632,218 4.69% 4.69 % April 1, 2022 Sutter Health 14,419,666 14,665,829 4.50% 4.50 % March 9, 2024 Total mortgage notes payable $ 62,593,028 $ 63,799,678 Less unamortized deferred financing costs (1,146,960 ) (1,522,291 ) Mortgage notes payable, net $ 61,446,068 $ 62,277,387 (1) Contractual interest rate represents the interest rate in effect under the mortgage notes payable as of December 31, 2018 . Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2018 (consisting of the contractual interest rate and the effect of the interest rate swap, if applicable). For further information regarding the Company’s derivative instruments, see Note 8. (2) This property was foreclosed and sold on March 13, 2019 as discussed below. |
Mortgage Notes Payable | The following were the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of December 31, 2018 and 2017: December 31, 2018 December 31, 2017 Face Value Carrying Value Fair Value Face Value Carrying Value Fair Value $ 62,593,028 $ 61,446,068 $ 61,283,165 $ 63,799,677 $ 62,277,387 $ 62,258,532 |
Future principal payments | The following summarizes the future principal payments of the Company’s mortgage notes payable as of December 31, 2018 : 2019 $ 3,107,706 2020 1,286,480 2021 23,879,056 2022 8,888,943 2023 3,966,692 Thereafter 21,464,151 Total principal $ 62,593,028 |
Interest Expenses Reconciliation | The following is a reconciliation of the components of interest expense: Year Ended December 31, 2018 2017 Mortgage notes payable: Interest expense $ 2,565,921 $ 2,251,673 Amortization of deferred financing costs 375,330 303,044 Gain on interest rate swaps (1) (182,823 ) (105,909 ) Sales deposit liability: Interest on sales deposit (see Note 5) 55,002 55,002 Total interest expense $ 2,813,430 $ 2,503,810 (1) Includes unrealized gain on interest rate swaps of $101,815 and $228,533 as of December 31, 2018 and 2017 , respectively (see Note 8). Accrued interest receivable of $(12,432) and accrual interest payable of $3,913 at December 31, 2018 and 2017 , respectively, represents the unsettled portion of the interest rate swaps for the period from the most recent settlement date through respective balance sheet dates. |
INTEREST RATE SWAP DERIVATIVES
INTEREST RATE SWAP DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 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: Derivative Instruments Number of Instruments Notional Amount (1) Reference Rate Weighted Average Fixed Pay Rate Weighted Average Remaining Term Interest Rate Swaps 2018 8 $ 21,703,214 One-month LIBOR/Fixed at 1.21%-2.27% 3.42 % 2.4 years 2017 8 $ 22,170,310 One-month LIBOR/Fixed at 1.21%-2.28% 3.42 % 3.3 years (1) The notional amount of the Company’s swaps are reduced monthly 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 $20,546,330 as of December 31, 2018 . |
Fair Value of Derivative Instruments | The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement for all swaps), as well as their classification in the consolidated balance sheet as of December 31, 2018 and 2017 . December 31, 2018 December 31, 2017 Derivative Instrument Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Assets: Interest rate swap derivatives, at fair value 8 $ 404,267 7 $ 321,450 Interest Rate Swaps Liability - Interest rate swap derivatives, at fair value — $ — 1 $ (18,998 ) |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Summarized below are descriptions of the related party transactions provided for in the Advisory Agreement that may be applicable to the Company in this stage of their life cycle. Year Ended December 31, 2018 December 31, 2018 Year Ended December 31, 2017 December 31, 2017 Incurred Receivable Payable Incurred Receivable Payable Expensed: Asset management fees $ 810,471 $ — $ — $ 758,555 $ — $ 3,513 Other operating expense reimbursement — — — — — 47,948 Reimbursable operating expenses 370,186 — — 102,080 — — Fees to affiliates 1,180,657 860,635 Property management fees * 100,771 — — 98,246 — — Directors and officers insurance and other reimbursements ** 92,624 — 59,992 — — — Disposition fees *** — — — 103,020 — — Reimbursable organizational and offering expenses 108,790 — — 173,281 — 57 Capitalized: Acquisition fees — — — 671,270 — — Financing coordination fees — — — 100,156 — — Other: Due from NNN REIT — — — 48,418 — — $ — $ 59,992 $ — $ 51,518 * Property management fees are included in "property expenses" in the accompanying consolidated statements of operations. ** Trust managers and officers and other reimbursements are classified within general and administrative expenses in the consolidated statements of operations. *** Disposition fees for the year ended December 31, 2017 are presented as a reduction of gain on sale of real estate investment property (see Note 6). |
BUSINESS AND ORGANIZATION (Deta
BUSINESS AND ORGANIZATION (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2018 | Jan. 14, 2019 | Jan. 13, 2019 | Jan. 11, 2019 | |
Business And Organization [Line Items] | ||||
Ownership percentage | 20.00% | |||
Ownership percentage | 70.14% | |||
Advisory agreement period | 1 year | |||
Written notice period required | 60 days | |||
Share price ( in USD per share) | $ 10.66 | |||
Subsequent event | ||||
Business And Organization [Line Items] | ||||
Share price ( in USD per share) | $ 10.57 | |||
Common Stock | Subsequent event | ||||
Business And Organization [Line Items] | ||||
Net asset value, per share (USD per share) | $ 10.57 | |||
DRP Offering | Common Stock | Subsequent event | ||||
Business And Organization [Line Items] | ||||
Share price ( in USD per share) | $ 10.57 | $ 10.66 | ||
DRP Offering | ||||
Business And Organization [Line Items] | ||||
Common stock | 3,000,000 |
SUMMARY OF SIGNIFICANT ACOUNT_4
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)properties$ / shares | Dec. 31, 2017USD ($)properties | Jan. 14, 2019$ / shares | |
Mortgage notes payable | |||||
Tenant reimbursement used for rent credit | $ 0 | ||||
Number of non-single-tenant-income-producing properties | properties | 1 | 1 | |||
Asset impairment charges | $ 862,190 | $ 862,190 | |||
Share price ( in USD per share) | $ / shares | $ 10.66 | ||||
Advertising Expense | $ 0 | $ 131,541 | |||
Percent of investments impaired (less than) | 1.00% | ||||
Percentage of assets held for sale to total real estate investments, net and total assets | 1.00% | ||||
General and Administrative Expense | |||||
Mortgage notes payable | |||||
Advertising Expense | $ 108,790 | $ 131,541 | |||
Subsequent event | |||||
Mortgage notes payable | |||||
Share price ( in USD per share) | $ / shares | $ 10.57 | ||||
Building | Minimum | |||||
Mortgage notes payable | |||||
Useful life (in years) | 15 years | ||||
Building | Maximum | |||||
Mortgage notes payable | |||||
Useful life (in years) | 52 years | ||||
Building Improvements | Minimum | |||||
Mortgage notes payable | |||||
Useful life (in years) | 5 years | ||||
Building Improvements | Maximum | |||||
Mortgage notes payable | |||||
Useful life (in years) | 21 years | ||||
Tenant Improvement | |||||
Mortgage notes payable | |||||
Useful life (in years) | 15 years | ||||
Tenant Improvement | Maximum | |||||
Mortgage notes payable | |||||
Useful life (in years) | 15 years |
SUMMARY OF SIGNIFICANT ACOUNT_5
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES - Dividends Declared (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||||||||||
Ordinary income (in USD per share) | $ 0.238 | $ 0.285 | ||||||||
Nontaxable dividend distributions (in USD per share) | 0.512 | 0.465 | ||||||||
Dividends (in USD per share) | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.75 | $ 0.75 |
CONSOLIDATED BALANCE SHEET DE_3
CONSOLIDATED BALANCE SHEET DETAILS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Tenant receivables, net: | ||
Straight-line rent | $ 1,399,276 | $ 1,082,080 |
Tenant rent | 200,301 | 301,588 |
Unbilled tenant recoveries | 108,258 | 93,420 |
Other | 0 | 76,178 |
Accounts receivable, gross | 1,707,835 | 1,553,266 |
Less allowance for doubtful accounts | 0 | (58,328) |
Accounts and notes receivable, net | 1,707,835 | 1,494,938 |
Accounts payable, accrued expense and other liabilities: | ||
Accounts payable | 52,057 | 45,029 |
Accrued expenses | 184,441 | 205,774 |
Accrued interest payable | 288,437 | 215,700 |
Unearned rent | 624,181 | 518,023 |
Tenant security deposits | 270,106 | 270,106 |
Accounts payable and accrued liabilities | $ 1,419,222 | $ 1,254,632 |
REAL ESTATE INVESTMENTS (Detail
REAL ESTATE INVESTMENTS (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)ft²properties | Dec. 31, 2017USD ($) | Feb. 28, 2019USD ($) | |
Real Estate [Line Items] | |||||
Area of real estate property ( in square feet) | ft² | 5,660 | ||||
Number of real estate properties | properties | 21 | ||||
Asset impairment charges | $ 862,190 | $ 862,190 | |||
Ownership percentage ( less than) | 1.00% | ||||
Ground leases, term of contract | 50 years | ||||
Annual rental payments under ground lease | $ 1,300 | ||||
Other payments to acquire businesses | $ 0 | (250,000) | |||
Land, Buildings and Improvements | 127,444,467 | ||||
Tenant Origination and Absorption Costs | 12,701,634 | 12,699,134 | |||
Accumulated depreciation and amortization | (15,070,564) | (9,286,921) | |||
Total investments in real estate property, net | $ 125,075,537 | 131,166,670 | |||
Advisory agreement | |||||
Real Estate [Line Items] | |||||
Revenue of acquire | 2,225,405 | ||||
Antioch, CA | |||||
Real Estate [Line Items] | |||||
Ownership percentage ( less than) | 2.00% | ||||
Retail | |||||
Real Estate [Line Items] | |||||
Number of real estate properties | properties | 11 | ||||
Industrial | |||||
Real Estate [Line Items] | |||||
Number of real estate properties | properties | 3 | ||||
Office | |||||
Real Estate [Line Items] | |||||
Number of real estate properties | properties | 7 | ||||
Mortgages | |||||
Real Estate [Line Items] | |||||
Long-term debt, gross | $ 62,593,028 | $ 63,799,678 | |||
Mortgages | Subsequent event | |||||
Real Estate [Line Items] | |||||
Debt default, amount | $ 20,000 | ||||
Mortgages | Antioch, CA | |||||
Real Estate [Line Items] | |||||
Long-term debt, gross | $ 1,869,536 | $ 1,869,536 |
REAL ESTATE INVESTMENTS - Sched
REAL ESTATE INVESTMENTS - Schedule of properties (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Real Estate [Line Items] | ||
Land, Buildings and Improvements | $ 127,444,467 | |
Tenant Origination and Absorption Costs | 12,701,634 | $ 12,699,134 |
Accumulated depreciation and amortization | (15,070,564) | (9,286,921) |
Total investments in real estate property, net | 125,075,537 | $ 131,166,670 |
Chase Bank & Great Clips | Antioch, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 2,297,845 | |
Tenant Origination and Absorption Costs | 668,201 | |
Accumulated depreciation and amortization | (1,117,265) | |
Total investments in real estate property, net | 1,848,781 | |
Chevron Gas Station | San Jose, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 2,775,000 | |
Tenant Origination and Absorption Costs | 0 | |
Accumulated depreciation and amortization | (140,514) | |
Total investments in real estate property, net | 2,634,486 | |
Chevron Gas Station | Roseville, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 2,800,000 | |
Tenant Origination and Absorption Costs | 0 | |
Accumulated depreciation and amortization | (314,569) | |
Total investments in real estate property, net | 2,485,431 | |
Levins | Sacramento, CA | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 3,750,000 | |
Tenant Origination and Absorption Costs | 2,500 | |
Accumulated depreciation and amortization | (718,814) | |
Total investments in real estate property, net | 3,033,686 | |
Island Pacific Supermarket | Elk Grove, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 3,151,461 | |
Tenant Origination and Absorption Costs | 568,539 | |
Accumulated depreciation and amortization | (529,099) | |
Total investments in real estate property, net | 3,190,901 | |
Dollar General | Bakersfield, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,632,567 | |
Tenant Origination and Absorption Costs | 689,020 | |
Accumulated depreciation and amortization | (600,123) | |
Total investments in real estate property, net | 4,721,464 | |
Rite Aid | Lake Elsinore, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,663,446 | |
Tenant Origination and Absorption Costs | 968,285 | |
Accumulated depreciation and amortization | (725,662) | |
Total investments in real estate property, net | 6,906,069 | |
PMI Preclinical | San Carlos, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 8,920,000 | |
Tenant Origination and Absorption Costs | 0 | |
Accumulated depreciation and amortization | (625,375) | |
Total investments in real estate property, net | 8,294,625 | |
EcoThrift | Sacramento, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,486,993 | |
Tenant Origination and Absorption Costs | 541,729 | |
Accumulated depreciation and amortization | (676,158) | |
Total investments in real estate property, net | 4,352,564 | |
GSA (MSHA) | Vacaville, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 2,998,232 | |
Tenant Origination and Absorption Costs | 456,645 | |
Accumulated depreciation and amortization | (390,068) | |
Total investments in real estate property, net | 3,064,809 | |
PreK San Antonio | San Antonio, TX | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 11,851,540 | |
Tenant Origination and Absorption Costs | 1,593,451 | |
Accumulated depreciation and amortization | (2,473,019) | |
Total investments in real estate property, net | 10,971,972 | |
Dollar Tree | Morrow, GA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,295,879 | |
Tenant Origination and Absorption Costs | 206,844 | |
Accumulated depreciation and amortization | (251,940) | |
Total investments in real estate property, net | 1,250,783 | |
Dinan Cars | Morgan Hill, CA | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,651,845 | |
Tenant Origination and Absorption Costs | 654,155 | |
Accumulated depreciation and amortization | (966,415) | |
Total investments in real estate property, net | 4,339,585 | |
Solar Turbines | San Diego, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 5,738,978 | |
Tenant Origination and Absorption Costs | 389,718 | |
Accumulated depreciation and amortization | (475,261) | |
Total investments in real estate property, net | 5,653,435 | |
Amec Foster | San Diego, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,010,799 | |
Tenant Origination and Absorption Costs | 485,533 | |
Accumulated depreciation and amortization | (586,075) | |
Total investments in real estate property, net | 6,910,257 | |
ITW Rippey | El Dorado, CA | Industrial | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 6,299,982 | |
Tenant Origination and Absorption Costs | 407,316 | |
Accumulated depreciation and amortization | (701,075) | |
Total investments in real estate property, net | 6,006,223 | |
Dollar General Big Spring | Big Spring, TX | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 1,161,647 | |
Tenant Origination and Absorption Costs | 112,958 | |
Accumulated depreciation and amortization | (64,545) | |
Total investments in real estate property, net | 1,210,060 | |
Gap | Rocklin, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 7,220,909 | |
Tenant Origination and Absorption Costs | 677,192 | |
Accumulated depreciation and amortization | (652,721) | |
Total investments in real estate property, net | 7,245,380 | |
L-3 Communications | San Diego, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 10,813,390 | |
Tenant Origination and Absorption Costs | 961,107 | |
Accumulated depreciation and amortization | (787,194) | |
Total investments in real estate property, net | 10,987,303 | |
Sutter Health | Rancho Cordova, CA | Office | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 24,256,632 | |
Tenant Origination and Absorption Costs | 2,870,258 | |
Accumulated depreciation and amortization | (2,076,277) | |
Total investments in real estate property, net | 25,050,613 | |
Walgreens | Santa Maria, CA | Retail | ||
Real Estate [Line Items] | ||
Land, Buildings and Improvements | 4,667,322 | |
Tenant Origination and Absorption Costs | 448,183 | |
Accumulated depreciation and amortization | (198,395) | |
Total investments in real estate property, net | $ 4,917,110 |
REAL ESTATE INVESTMENTS - Sch_2
REAL ESTATE INVESTMENTS - Schedule of property acquisitions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate [Line Items] | ||
Land, building and Improvements | $ 28,923,954 | |
Tenant Origination and Absorption Costs | 3,318,441 | |
Above-Market Lease Intangibles | (599,141) | |
Total | 32,841,536 | |
Purchase price | $ 125,075,537 | 32,841,536 |
Purchase deposits applied (2) | 0 | 1,500,000 |
Acquisition fees to affiliate | (642,314) | |
Amount paid for acquisition of real estate before financing | 0 | 30,699,222 |
Sutter Health | ||
Real Estate [Line Items] | ||
Land, building and Improvements | 24,256,632 | |
Tenant Origination and Absorption Costs | 2,870,258 | |
Above-Market Lease Intangibles | (474,091) | |
Total | 27,600,981 | |
Purchase price | 25,050,613 | |
Walgreens | ||
Real Estate [Line Items] | ||
Land, building and Improvements | 4,667,322 | |
Tenant Origination and Absorption Costs | 448,183 | |
Above-Market Lease Intangibles | (125,050) | |
Total | $ 5,240,555 | |
Purchase price | $ 4,917,110 |
REAL ESTATE INVESTMENTS - Sch_3
REAL ESTATE INVESTMENTS - Schedule of future minimum rental payments for operating leases (Details) | Dec. 31, 2018USD ($) |
Real Estate [Abstract] | |
2019 | $ 10,008,899 |
2020 | 10,209,110 |
2021 | 9,220,308 |
2022 | 7,674,625 |
2023 | 5,884,134 |
Thereafter | 27,782,225 |
Total | $ 70,779,301 |
REAL ESTATE INVESTMENTS - Conce
REAL ESTATE INVESTMENTS - Concentrations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate [Line Items] | ||
Total revenue | $ 13,166,631 | $ 12,837,754 |
Net Carrying Value | 125,075,537 | $ 131,166,670 |
Sutter Health | Portfolio Revenue | ||
Real Estate [Line Items] | ||
Total revenue | $ 2,702,879 | |
Percent of total | 20.50% | |
Sutter Health | Portfolio Assets | ||
Real Estate [Line Items] | ||
Net Carrying Value | $ 25,050,613 | |
Percent of total | 19.00% | |
PreK San Antonio | Portfolio Revenue | ||
Real Estate [Line Items] | ||
Total revenue | $ 1,655,819 | |
Percent of total | 12.60% |
REAL ESTATE INVESTMENTS - Finit
REAL ESTATE INVESTMENTS - Finite lived intangibles (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Below Market Lease, Net [Abstract] | ||
Cost | $ (5,349,909) | $ (5,349,909) |
Accumulated amortization | 2,244,066 | 1,383,901 |
Net amount | (3,105,843) | (3,966,008) |
Tenant Origination and Absorption Costs | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | 12,701,634 | 12,699,134 |
Accumulated amortization | (4,456,975) | (2,856,322) |
Net amount | 8,244,659 | 9,842,812 |
Above- Market Lease Intangibles | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | 872,408 | 872,408 |
Accumulated amortization | (90,546) | (55,226) |
Net amount | $ 781,862 | $ 817,182 |
REAL ESTATE INVESTMENTS - Intan
REAL ESTATE INVESTMENTS - Intangible assets, future amortization expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate [Line Items] | ||
Net amount | $ (3,105,843) | $ (3,966,008) |
Tenant Origination and Absorption Costs | ||
Real Estate [Line Items] | ||
2019 Finite lived | 1,563,076 | |
2020 Finite lived | 1,563,076 | |
2021 Finite lived | 1,315,958 | |
2022 Finite lived | 934,592 | |
2023 Finite lived | 682,858 | |
Thereafter Finite lived | 2,185,099 | |
Net amount | $ 8,244,659 | 9,842,812 |
Weighted average remaining amortization period | 8 years 4 months | |
Above- Market Lease Intangibles | ||
Real Estate [Line Items] | ||
2019 Finite lived | $ 35,320 | |
2020 Finite lived | 35,320 | |
2021 Finite lived | 35,320 | |
2022 Finite lived | 35,320 | |
2023 Finite lived | 35,320 | |
Thereafter Finite lived | 605,262 | |
Net amount | $ 781,862 | $ 817,182 |
Weighted average remaining amortization period | 13 years 5 months 13 days | |
Below- Market Lease Intangibles | ||
Real Estate [Line Items] | ||
2019 Below Market Finite Lived | $ (860,165) | |
2020 Below Market Finite Lived | (860,165) | |
2021 Below Market Finite Lived | (667,541) | |
2022 Below Market Finite Lived | (201,982) | |
2023 Below Market Finite Lived | (113,651) | |
Thereafter Below Market Finite Lived | (402,339) | |
Net amount | $ (3,105,843) | |
Weighted average remaining amortization period | 4 years 8 months 12 days |
SALE OF INTEREST IN REAL PROP_2
SALE OF INTEREST IN REAL PROPERTY (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Mar. 09, 2019 | Mar. 08, 2019 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 21, 2019 | Feb. 08, 2019 | |
Real Estate [Line Items] | |||||||
Ownership percentage | 20.00% | ||||||
Proceeds from Sale of Real Estate | $ 1,000,000 | ||||||
Interest on sales deposit | $ 55,002 | $ 55,002 | |||||
Interest expense | 1,000,000 | 1,000,000 | |||||
Amount paid for acquisition of real estate before financing | $ 0 | $ 30,699,222 | |||||
Subsequent event | |||||||
Real Estate [Line Items] | |||||||
Proceeds from Sale of Real Estate | $ 1,000,000 | ||||||
Chevron Gas Station | |||||||
Real Estate [Line Items] | |||||||
Ownership percentage | 29.86% | ||||||
Chevron Gas Station | Subsequent event | |||||||
Real Estate [Line Items] | |||||||
Ownership percentage | 29.86% | 29.86% | |||||
Forecast | Chevron Gas Station | |||||||
Real Estate [Line Items] | |||||||
Amount paid for acquisition of real estate before financing | $ 1,000,000 |
SALE OF REAL ESTATE INVESTMEN_2
SALE OF REAL ESTATE INVESTMENT PROPERTY (Details) - USD ($) | Apr. 27, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Real Estate [Line Items] | |||
Proceeds from Sale of Real Estate Held-for-investment | $ 0 | $ 3,196,480 | |
Gains (Losses) on Sales of Investment Real Estate | $ 0 | $ 747,957 | |
Deferred Taxable Gain On Sale Of Real Estate | $ 900,000 | ||
Chevron Gas Station | |||
Real Estate [Line Items] | |||
Proceeds from Sale of Real Estate Held-for-investment | 3,434,000 | ||
Gains (Losses) on Sales of Investment Real Estate | 747,957 | ||
Disposition Fee Earned | $ 103,020 |
DEBT (Details)
DEBT (Details) - USD ($) | Feb. 28, 2019 | Dec. 31, 2018 | Aug. 03, 2018 | Aug. 02, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||||
Leverage Ratio | 50.00% | 45.00% | ||||
Mortgages | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 62,593,028 | $ 63,799,678 | ||||
Mortgages | Antioch, CA | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 1,869,536 | |||||
Mortgages | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Debt default, amount | $ 20,000 |
DEBT - Company's Mortgage Notes
DEBT - Company's Mortgage Notes (Details) - Mortgages - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Principal amount | $ 62,593,028 | $ 63,799,678 |
Debt Issuance Costs, Net | (1,146,960) | (1,522,291) |
Total principal | 61,446,068 | 62,277,387 |
Chase Bank & Great Clips | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 1,866,364 | 1,888,325 |
Contractual Interest Rate ( as a percent) | 4.37% | |
Effective Interest Rate (as a percent) | 4.37% | |
Levins | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 2,125,703 | 2,169,908 |
Effective Interest Rate (as a percent) | 3.74% | |
Levins | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.93% | |
Island Pacific Supermarket | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 1,932,973 | 1,973,170 |
Effective Interest Rate (as a percent) | 3.74% | |
Island Pacific Supermarket | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.93% | |
Dollar General | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 2,378,106 | 2,430,065 |
Effective Interest Rate (as a percent) | 3.38% | |
Dollar General | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.48% | |
Rite Aid | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 3,744,915 | 3,827,722 |
Effective Interest Rate (as a percent) | 3.25% | |
Rite Aid | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.50% | |
PMI Preclinical | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 4,213,887 | 4,305,954 |
Effective Interest Rate (as a percent) | 3.38% | |
PMI Preclinical | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.48% | |
EcoThrift | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 2,703,239 | 2,765,351 |
Effective Interest Rate (as a percent) | 2.96% | |
EcoThrift | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.21% | |
GSA (MHSA) | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 1,839,454 | 1,881,257 |
Effective Interest Rate (as a percent) | 3.00% | |
GSA (MHSA) | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 1.25% | |
PreK San Antonio | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 5,239,125 | 5,333,750 |
Contractual Interest Rate ( as a percent) | 4.25% | |
Effective Interest Rate (as a percent) | 4.25% | |
Dinan Cars | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 2,764,937 | 2,816,882 |
Effective Interest Rate (as a percent) | 4.02% | |
Dinan Cars | (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis Spread on Variable Rate ( as a percent ) | 2.27% | |
ITW Rippey, Solar Turbines, Amec Foster | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 9,648,214 | 9,855,485 |
Contractual Interest Rate ( as a percent) | 3.35% | |
Effective Interest Rate (as a percent) | 3.35% | |
L-3 Communications | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 5,380,085 | 5,471,050 |
Contractual Interest Rate ( as a percent) | 4.50% | |
Effective Interest Rate (as a percent) | 4.50% | |
Gap | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 3,714,623 | 3,782,712 |
Contractual Interest Rate ( as a percent) | 4.15% | |
Effective Interest Rate (as a percent) | 4.15% | |
Dollar General Big Spring | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 621,737 | 632,218 |
Contractual Interest Rate ( as a percent) | 4.69% | |
Effective Interest Rate (as a percent) | 4.69% | |
Sutter Health | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 14,419,666 | $ 14,665,829 |
Contractual Interest Rate ( as a percent) | 4.50% | |
Effective Interest Rate (as a percent) | 4.50% |
DEBT DEBT - Mortgage Notes Paya
DEBT DEBT - Mortgage Notes Payable (Details) - Mortgages - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Face Value | $ 62,593,028 | $ 63,799,677 |
Long-term Debt | 61,446,068 | 62,277,387 |
Fair Value | $ 61,283,165 | $ 62,258,532 |
DEBT - Future principal payment
DEBT - Future principal payments (Details) - Secured Debt | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | |
2019 | $ 3,107,706 |
2020 | 1,286,480 |
2021 | 23,879,056 |
2022 | 8,888,943 |
2023 | 3,966,692 |
Thereafter | 21,464,151 |
Total principal | $ 62,593,028 |
DEBT - Interest expense (Detail
DEBT - Interest expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Gain on interest rate swap derivatives | $ (101,815) | $ (228,533) |
Interest on sales deposit (see Note 5) | 55,002 | 55,002 |
Interest expense (Note 7) | 2,813,430 | 2,503,810 |
Liabilities Accrued Interest Payable | (12,432) | 3,913 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Interest expense | 2,565,921 | 2,251,673 |
Amortization of deferred financing costs | 375,330 | 303,044 |
Gain on interest rate swap derivatives | (182,823) | (105,909) |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest on sales deposit (see Note 5) | $ 55,002 | $ 55,002 |
INTEREST RATE SWAP DERIVATIVE_2
INTEREST RATE SWAP DERIVATIVES - Derivatives (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Minimum | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 20,546,330 | |
Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | 8 | 8 |
Notional Amount | $ 21,703,214 | $ 22,170,310 |
Weighted Average Fixed Pay Rate (as a percent) | 3.42% | 3.42% |
Weighted Average Remaining Term (in years) | 2 years 4 months 10 days | 3 years 4 months 6 days |
Interest Rate Swaps | Minimum | (LIBOR) | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Interest Rate (as a percent) | 1.21% | 1.21% |
Interest Rate Swaps | Maximum | (LIBOR) | ||
Derivatives, Fair Value [Line Items] | ||
Fixed Interest Rate (as a percent) | 2.27% | 2.28% |
INTEREST RATE SWAP DERIVATIVE_3
INTEREST RATE SWAP DERIVATIVES - Fair Value of Derivative Instruments (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Derivatives, Fair Value [Line Items] | ||
Fair Value, Assets | $ 404,267 | $ 321,450 |
Fair Value, Liabilities | $ 0 | $ (18,998) |
Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | 8 | 8 |
Interest Rate Swaps | Assets: Interest rate swap derivatives, at fair value | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | 8 | 7 |
Fair Value, Assets | $ 404,267 | $ 321,450 |
Liability - Interest rate swap derivatives, at fair value | Interest Rate Swaps | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | 0 | 1 |
Fair Value, Liabilities | $ 0 | $ (18,998) |
INTEREST RATE SWAP DERIVATIVE_4
INTEREST RATE SWAP DERIVATIVES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Derivatives, Fair Value [Line Items] | ||
Unrealized Gain (Loss) on Derivatives | $ 101,815 | $ 228,533 |
Minimum | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 20,546,330 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Share-based Compensation | $ 178,022 | $ 134,000 |
Related Party Transaction, Expense Reimbursed Of Gross Offerings | 3.00% | |
Organization and Offering Expenses | $ 2,796,198 | |
Ground Leases, Term of Contract | 10 years | |
Ownership percentage | 20.00% | |
Rich Uncles Nnn Reit Inc | ||
Related Party Transaction [Line Items] | ||
Investment Owned, Balance, Shares | 403,980 | 364,352 |
Ownership percentage | 4.80% | 4.40% |
Rich Uncles, LLC | ||
Related Party Transaction [Line Items] | ||
Repayments of Related Party Debt | $ 2,796,198 | $ 2,687,407 |
Organization and Offering Expenses | ||
Related Party Transaction [Line Items] | ||
Incurred | 2,796,198 | 2,687,350 |
Organization and Offering Expenses Payable | $ 0 | 57 |
Advisor fees, Acquisition fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 3.00% | |
Asset management fees | ||
Related Party Transaction [Line Items] | ||
Incurred | $ 810,471 | 758,555 |
Related Party Transaction, Rate | 0.05% | |
Advisor fees, Financing fee | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 1.00% | |
Property management fees | ||
Related Party Transaction [Line Items] | ||
Incurred | $ 100,771 | 98,246 |
Related Party Transaction, Rate | 1.50% | |
Reimbursable operating expenses | ||
Related Party Transaction [Line Items] | ||
Incurred | $ 370,186 | $ 102,080 |
Related Party Transaction, Rate | 6.00% | |
Reimbursable operating expenses | Advisor or Affiliates | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 3.00% | |
Leasing Commission Fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 3.00% | |
Leasing Commission Fees | Advisor or Affiliates | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 6.00% | |
Operating Expenses | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expense Reimbursement Percentage to Average Invested Assets | 2.00% | 2.00% |
Related Party Transaction, Expense Reimbursement Percentage to Net Income | 25.00% | 25.00% |
Maximum | Advisor fees, Acquisition fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Rate | 6.00% |
RELATED PARTY TRANSACTIONS - Sc
RELATED PARTY TRANSACTIONS - Schedule of Related party transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Receivable | $ 0 | $ 0 |
Payable | 59,992 | 51,518 |
Asset management fees | ||
Related Party Transaction [Line Items] | ||
Incurred | 810,471 | 758,555 |
Receivable | 0 | 0 |
Payable | 0 | 3,513 |
Other operating expense reimbursement | ||
Related Party Transaction [Line Items] | ||
Incurred | 0 | 0 |
Receivable | 0 | 0 |
Payable | 0 | 47,948 |
Reimbursable operating expenses | ||
Related Party Transaction [Line Items] | ||
Incurred | 370,186 | 102,080 |
Receivable | 0 | 0 |
Payable | 0 | 0 |
Fees to affiliates | ||
Related Party Transaction [Line Items] | ||
Incurred | 1,180,657 | 860,635 |
Property management fees | ||
Related Party Transaction [Line Items] | ||
Incurred | 100,771 | 98,246 |
Receivable | 0 | 0 |
Payable | 0 | 0 |
Directors and officers insurance and other reimbursements | ||
Related Party Transaction [Line Items] | ||
Incurred | 92,624 | 0 |
Receivable | 0 | 0 |
Payable | 59,992 | 0 |
Disposition fees | ||
Related Party Transaction [Line Items] | ||
Incurred | 0 | 103,020 |
Receivable | 0 | 0 |
Payable | 0 | 0 |
Reimbursable organizational and offering expenses | ||
Related Party Transaction [Line Items] | ||
Incurred | 108,790 | 173,281 |
Receivable | 0 | 0 |
Payable | 0 | 57 |
Acquisition fees | ||
Related Party Transaction [Line Items] | ||
Incurred | 0 | 671,270 |
Receivable | 0 | 0 |
Payable | 0 | 0 |
Financing coordination fees | ||
Related Party Transaction [Line Items] | ||
Incurred | 0 | 100,156 |
Receivable | 0 | 0 |
Payable | 0 | 0 |
Due from NNN REIT | ||
Related Party Transaction [Line Items] | ||
Incurred | 0 | 48,418 |
Receivable | 0 | 0 |
Payable | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Payments for Tenant Improvements | $ 207,000 | $ 553,088 |
Restricted Cash and Cash Equivalents | $ 462,140 | $ 462,140 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - USD ($) | Jan. 22, 2019 | Mar. 09, 2019 | Mar. 31, 2019 | Mar. 26, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 21, 2019 | Feb. 08, 2019 | Mar. 31, 2016 |
Subsequent Event [Line Items] | |||||||||
Real estate investment, liquidation value | $ 147,480,776 | ||||||||
Ownership percentage | 20.00% | ||||||||
Amount paid for acquisition of real estate before financing | $ 0 | $ 30,699,222 | |||||||
Chevron Gas Station | |||||||||
Subsequent Event [Line Items] | |||||||||
Ownership percentage | 29.86% | ||||||||
Subsequent event | |||||||||
Subsequent Event [Line Items] | |||||||||
Dividends Payable (in USD per share) | $ 0.0020380 | ||||||||
Dividends Payable | $ 1,566,932 | ||||||||
Dividend Reinvested | $ 1,085,126 | ||||||||
Stock Repurchased During Period | $ 880,404 | ||||||||
Subsequent event | Chevron Gas Station | |||||||||
Subsequent Event [Line Items] | |||||||||
Ownership percentage | 29.86% | 29.86% | |||||||
Mortgages | Subsequent event | |||||||||
Subsequent Event [Line Items] | |||||||||
Stock Repurchased During Period (in shares) | 82,589 | ||||||||
Forecast | |||||||||
Subsequent Event [Line Items] | |||||||||
Disposition fee | $ 4,424,400 | ||||||||
Subordinated participation fee | $ 1,239,400 | ||||||||
Forecast | Chevron Gas Station | |||||||||
Subsequent Event [Line Items] | |||||||||
Amount paid for acquisition of real estate before financing | $ 1,000,000 |
Schedule III-Real Estate Asse_2
Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization - Schedule of Properties (Details) - USD ($) | 1 Months Ended | ||||||
Mar. 08, 2019 | Mar. 31, 2016 | Feb. 21, 2019 | Feb. 08, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Ownership percentage | 20.00% | ||||||
Ownership Percentage | 1.00% | ||||||
Encumbrances | $ 62,593,028 | ||||||
Land | 29,896,957 | ||||||
Buildings and Improvements | 109,005,928 | ||||||
Total | 138,902,885 | ||||||
Costs Capitalized Subsequent to Acquisition | 1,243,215 | ||||||
Land | 29,691,681 | ||||||
Buildings and Improvements | 110,454,420 | ||||||
Total | 140,146,101 | $ 140,453,591 | $ 109,260,489 | ||||
Accumulated Depreciation and Amortization | (15,070,564) | (9,286,921) | $ (3,797,990) | ||||
Net | $ 125,075,537 | $ 32,841,536 | |||||
Proceeds from Sale of Real Estate | $ 1,000,000 | ||||||
Chase Bank and Great Clips (2) | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 1,866,364 | ||||||
Land | 649,633 | ||||||
Buildings and Improvements | 3,178,601 | ||||||
Total | 3,828,234 | ||||||
Costs Capitalized Subsequent to Acquisition | (862,190) | ||||||
Land | 444,358 | ||||||
Buildings and Improvements | 2,521,688 | ||||||
Total | 2,966,046 | ||||||
Accumulated Depreciation and Amortization | (1,117,265) | ||||||
Net | $ 1,848,781 | ||||||
Chevron Gas Station | San Jose, CA | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 0 | ||||||
Land | 1,844,383 | ||||||
Buildings and Improvements | 930,617 | ||||||
Total | 2,775,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 1,844,383 | ||||||
Buildings and Improvements | 930,617 | ||||||
Total | 2,775,000 | ||||||
Accumulated Depreciation and Amortization | (140,514) | ||||||
Net | $ 2,634,486 | ||||||
Chevron Gas Station | Roseville, CA | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 0 | ||||||
Land | 602,375 | ||||||
Buildings and Improvements | 2,197,625 | ||||||
Total | 2,800,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 602,375 | ||||||
Buildings and Improvements | 2,197,625 | ||||||
Total | 2,800,000 | ||||||
Accumulated Depreciation and Amortization | (314,569) | ||||||
Net | $ 2,485,431 | ||||||
Levins | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 2,125,703 | ||||||
Land | 598,913 | ||||||
Buildings and Improvements | 3,151,087 | ||||||
Total | 3,750,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 2,500 | ||||||
Land | 598,913 | ||||||
Buildings and Improvements | 3,153,587 | ||||||
Total | 3,752,500 | ||||||
Accumulated Depreciation and Amortization | (718,814) | ||||||
Net | $ 3,033,686 | ||||||
Island Pacific Supermarket | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 1,932,973 | ||||||
Land | 958,328 | ||||||
Buildings and Improvements | 2,761,672 | ||||||
Total | 3,720,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 958,328 | ||||||
Buildings and Improvements | 2,761,672 | ||||||
Total | 3,720,000 | ||||||
Accumulated Depreciation and Amortization | (529,099) | ||||||
Net | $ 3,190,901 | ||||||
Dollar General | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 2,378,106 | ||||||
Land | 2,218,862 | ||||||
Buildings and Improvements | 3,102,725 | ||||||
Total | 5,321,587 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 2,218,862 | ||||||
Buildings and Improvements | 3,102,725 | ||||||
Total | 5,321,587 | ||||||
Accumulated Depreciation and Amortization | (600,123) | ||||||
Net | $ 4,721,464 | ||||||
Rite Aid | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 3,744,915 | ||||||
Land | 2,049,596 | ||||||
Buildings and Improvements | 5,582,136 | ||||||
Total | 7,631,732 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 2,049,595 | ||||||
Buildings and Improvements | 5,582,136 | ||||||
Total | 7,631,731 | ||||||
Accumulated Depreciation and Amortization | (725,662) | ||||||
Net | $ 6,906,069 | ||||||
PMI Preclinical | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 4,213,887 | ||||||
Land | 2,940,133 | ||||||
Buildings and Improvements | 5,979,867 | ||||||
Total | 8,920,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 2,940,133 | ||||||
Buildings and Improvements | 5,979,867 | ||||||
Total | 8,920,000 | ||||||
Accumulated Depreciation and Amortization | (625,375) | ||||||
Net | $ 8,294,625 | ||||||
EcoThrift | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 2,703,239 | ||||||
Land | 1,594,857 | ||||||
Buildings and Improvements | 3,433,865 | ||||||
Total | 5,028,722 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 1,594,857 | ||||||
Buildings and Improvements | 3,433,865 | ||||||
Total | 5,028,722 | ||||||
Accumulated Depreciation and Amortization | (676,158) | ||||||
Net | $ 4,352,564 | ||||||
GSA (MSHA) | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 1,839,454 | ||||||
Land | 286,380 | ||||||
Buildings and Improvements | 3,168,497 | ||||||
Total | 3,454,877 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 286,380 | ||||||
Buildings and Improvements | 3,168,497 | ||||||
Total | 3,454,877 | ||||||
Accumulated Depreciation and Amortization | (390,068) | ||||||
Net | $ 3,064,809 | ||||||
PreK San Antonio | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 5,239,125 | ||||||
Land | 509,476 | ||||||
Buildings and Improvements | 12,935,515 | ||||||
Total | 13,444,991 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 509,476 | ||||||
Buildings and Improvements | 12,935,515 | ||||||
Total | 13,444,991 | ||||||
Accumulated Depreciation and Amortization | (2,473,019) | ||||||
Net | $ 10,971,972 | ||||||
Dollar Tree | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 0 | ||||||
Land | 255,989 | ||||||
Buildings and Improvements | 1,199,011 | ||||||
Total | 1,455,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 47,723 | ||||||
Land | 255,989 | ||||||
Buildings and Improvements | 1,246,734 | ||||||
Total | 1,502,723 | ||||||
Accumulated Depreciation and Amortization | (251,940) | ||||||
Net | $ 1,250,783 | ||||||
Dinan Cars | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 2,764,937 | ||||||
Land | 724,994 | ||||||
Buildings and Improvements | 4,581,006 | ||||||
Total | 5,306,000 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 724,994 | ||||||
Buildings and Improvements | 4,581,006 | ||||||
Total | 5,306,000 | ||||||
Accumulated Depreciation and Amortization | (966,415) | ||||||
Net | $ 4,339,585 | ||||||
ITW Rippey | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 3,182,786 | ||||||
Land | 429,668 | ||||||
Buildings and Improvements | 6,155,852 | ||||||
Total | 6,585,520 | ||||||
Costs Capitalized Subsequent to Acquisition | 121,778 | ||||||
Land | 429,668 | ||||||
Buildings and Improvements | 6,277,630 | ||||||
Total | 6,707,298 | ||||||
Accumulated Depreciation and Amortization | (701,075) | ||||||
Net | $ 6,006,223 | ||||||
Solar Turbines | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 2,908,224 | ||||||
Land | 3,081,332 | ||||||
Buildings and Improvements | 2,789,586 | ||||||
Total | 5,870,918 | ||||||
Costs Capitalized Subsequent to Acquisition | 257,778 | ||||||
Land | 3,081,332 | ||||||
Buildings and Improvements | 3,047,364 | ||||||
Total | 6,128,696 | ||||||
Accumulated Depreciation and Amortization | (475,261) | ||||||
Net | $ 5,653,435 | ||||||
Amec Foster | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 3,557,204 | ||||||
Land | 3,551,615 | ||||||
Buildings and Improvements | 2,631,320 | ||||||
Total | 6,182,935 | ||||||
Costs Capitalized Subsequent to Acquisition | 1,313,397 | ||||||
Land | 3,551,615 | ||||||
Buildings and Improvements | 3,944,717 | ||||||
Total | 7,496,332 | ||||||
Accumulated Depreciation and Amortization | (586,075) | ||||||
Net | $ 6,910,257 | ||||||
Dollar General Big Spring | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 621,737 | ||||||
Land | 337,204 | ||||||
Buildings and Improvements | 937,401 | ||||||
Total | 1,274,605 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 337,204 | ||||||
Buildings and Improvements | 937,401 | ||||||
Total | 1,274,605 | ||||||
Accumulated Depreciation and Amortization | (64,545) | ||||||
Net | $ 1,210,060 | ||||||
Gap | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 3,714,623 | ||||||
Land | 1,661,831 | ||||||
Buildings and Improvements | 6,224,989 | ||||||
Total | 7,886,820 | ||||||
Costs Capitalized Subsequent to Acquisition | 11,281 | ||||||
Land | 1,661,831 | ||||||
Buildings and Improvements | 6,236,270 | ||||||
Total | 7,898,101 | ||||||
Accumulated Depreciation and Amortization | (652,721) | ||||||
Net | $ 7,245,380 | ||||||
L-3 Communications | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 5,380,085 | ||||||
Land | 2,504,578 | ||||||
Buildings and Improvements | 8,918,971 | ||||||
Total | 11,423,549 | ||||||
Costs Capitalized Subsequent to Acquisition | 350,948 | ||||||
Land | 2,504,578 | ||||||
Buildings and Improvements | 9,269,919 | ||||||
Total | 11,774,497 | ||||||
Accumulated Depreciation and Amortization | (787,194) | ||||||
Net | $ 10,987,303 | ||||||
Sutter Health | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 14,419,666 | ||||||
Land | 2,172,442 | ||||||
Buildings and Improvements | 24,954,448 | ||||||
Total | 27,126,890 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 2,172,442 | ||||||
Buildings and Improvements | 24,954,448 | ||||||
Total | 27,126,890 | ||||||
Accumulated Depreciation and Amortization | (2,076,277) | ||||||
Net | $ 25,050,613 | ||||||
Walgreens | |||||||
Ownership Percentage | 100.00% | ||||||
Encumbrances | $ 0 | ||||||
Land | 924,368 | ||||||
Buildings and Improvements | 4,191,137 | ||||||
Total | 5,115,505 | ||||||
Costs Capitalized Subsequent to Acquisition | 0 | ||||||
Land | 924,368 | ||||||
Buildings and Improvements | 4,191,137 | ||||||
Total | 5,115,505 | ||||||
Accumulated Depreciation and Amortization | (198,395) | ||||||
Net | $ 4,917,110 | ||||||
Subsequent event | |||||||
Proceeds from Sale of Real Estate | $ 1,000,000 | ||||||
Chevron Gas Station | |||||||
Ownership percentage | 29.86% | ||||||
Chevron Gas Station | Subsequent event | |||||||
Ownership percentage | 29.86% | 29.86% |
Schedule III-Real Estate Asse_3
Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Federal income tax basis | $ 136,000,000 |
Chevron Gas Station | |
Real estate, undivided ownership percentage | 70.14% |
Building | Minimum | |
Useful life (in years) | 15 years |
Building | Maximum | |
Useful life (in years) | 52 years |
Building Improvements | Minimum | |
Useful life (in years) | 5 years |
Building Improvements | Maximum | |
Useful life (in years) | 21 years |
Tenant Improvement | |
Useful life (in years) | 15 years |
Tenant Improvement | Maximum | |
Useful life (in years) | 15 years |
Schedule III-Real Estate Asse_4
Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization [Schedule] Schedule III-Real Estate Assets and Accumulated Depreciation and Amortization - Accumulated Depreciation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real estate investments: | ||
Balance at beginning of year | $ 140,453,591 | $ 109,260,489 |
Acquisitions | 0 | 32,291,338 |
Improvements to real estate | 554,700 | 1,501,764 |
Reserve | (862,190) | 0 |
Dispositions | 0 | (2,600,000) |
Balance at end of year | 140,146,101 | 140,453,591 |
Accumulated depreciation and amortization: | ||
Balance at beginning of year | (9,286,921) | (3,797,990) |
Depreciation and amortization expense | (5,783,643) | (5,645,451) |
Dispositions | 0 | 156,520 |
Balance at end of year | $ (15,070,564) | $ (9,286,921) |