Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 09, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ck0001690012 | |
Entity Registrant Name | InPoint Commercial Real Estate Income, Inc. | |
Entity Central Index Key | 1,690,012 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 892,674 |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 10,917,497 | $ 511,854 |
Real estate securities at fair value | 10,583,860 | 5,433,480 |
Deferred offering costs | 1,547,064 | 967,448 |
Accrued interest receivable | 32,046 | 13,652 |
Prepaid expenses | 17,875 | |
Other assets | 500 | |
Total assets | 23,098,842 | 6,926,434 |
Liabilities: | ||
Repurchase agreements—real estate securities | 6,370,000 | |
Due to related parties | 1,547,582 | 995,716 |
Interest payable | 7,680 | |
Distributions payable | 82,179 | 33,230 |
Accrued expenses | 146,652 | 19,167 |
Total liabilities | 8,154,093 | 1,048,113 |
Stockholders’ Equity: | ||
Class P common stock, $0.001 par value, 450,000,000 shares authorized, 614,859 and 237,700 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 615 | 238 |
Additional paid in capital (net of offering costs of $678,398 and $0 at June 30, 2017 and December 31, 2016, respectively) | 15,443,748 | 5,942,262 |
Distributions in excess of earnings | (499,614) | (64,179) |
Total stockholders’ equity | 14,944,749 | 5,878,321 |
Total liabilities and shareholders’ equity | $ 23,098,842 | $ 6,926,434 |
CONSOLIDATED BALANCE SHEETS (u3
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares, issued | 614,859 | 237,700 |
Common stock, shares, outstanding | 614,859 | 237,700 |
Additional paid in capital, offering costs | $ 678,398 | $ 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Interest income: | ||
Interest income | $ 148,305 | $ 250,044 |
Less: Interest expense | (41,323) | (51,738) |
Net interest income | 106,982 | 198,306 |
Operating expenses: | ||
Administration expense | 28,750 | 57,500 |
Directors compensation | 19,850 | 40,600 |
Professional service fees | 209,522 | 230,334 |
Other expenses | 7,257 | 29,809 |
Total operating expenses | 265,379 | 358,243 |
Other income (loss): | ||
Unrealized gain (loss) in value of real estate securities | (18,520) | 70,913 |
Total other income (loss) | (18,520) | 70,913 |
Net loss | $ (176,917) | $ (89,024) |
Net loss per share basic and diluted | $ (0.40) | $ (0.25) |
Weighted average number of shares outstanding, basic and diluted | 442,029 | 361,740 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - 6 months ended Jun. 30, 2017 - USD ($) | Total | Common Stock | Additional Paid in Capital | Distributions in Excess of Earnings |
Balance at Dec. 31, 2016 | $ 5,878,321 | $ 238 | $ 5,942,262 | $ (64,179) |
Balance, shares at Dec. 31, 2016 | 237,700 | |||
Proceeds from offering | 10,180,261 | $ 377 | 10,179,884 | |
Proceeds from offering, shares | 377,159 | |||
Offering costs | (678,398) | (678,398) | ||
Net loss | (89,024) | (89,024) | ||
Distributions declared | (346,411) | (346,411) | ||
Balance at Jun. 30, 2017 | $ 14,944,749 | $ 615 | $ 15,443,748 | $ (499,614) |
Balance, shares at Jun. 30, 2017 | 614,859 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended |
Jun. 30, 2017 | |
Cash flows from operating activities | |
Net loss | $ (89,024) |
Adjustments to reconcile net loss to cash used in operations: | |
Net unrealized gain on real estate securities | (70,913) |
Amortization of bond premium | 45,533 |
Changes in assets and liabilities: | |
Accrued interest receivable | (18,394) |
Prepaid expenses | (17,875) |
Interest payable | 7,680 |
Accrued expenses | 127,485 |
Due to related parties | (27,750) |
Other assets | (500) |
Net cash used in operating activities | (43,758) |
Cash flows from investing activities: | |
Purchase of real estate securities | (5,125,000) |
Net cash used in investing activities | (5,125,000) |
Cash flows from financing activities: | |
Proceeds from issuance of common stock | 10,180,261 |
Payment of offering costs | (678,398) |
Proceeds from repurchase agreements | 26,291,000 |
Principal repayments of repurchase agreements | (19,921,000) |
Distributions paid | (297,462) |
Net cash provided by financing activities | 15,574,401 |
Net change in cash and cash equivalents | 10,405,643 |
Cash and cash equivalents beginning of period | 511,854 |
Cash and cash equivalents end of period | 10,917,497 |
Supplemental disclosure of cash flow information: | |
Change in deferred offering costs and accrued offering expenses, included in due to related parties | 579,616 |
Cash paid for interest | 44,058 |
Distributions payable | $ 82,179 |
Organization and Business Opera
Organization and Business Operations | 6 Months Ended |
Jun. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Business Operations | Note 1 – Organization and Business Operations InPoint Commercial Real Estate Income, Inc. (the “Company”) was incorporated in Maryland on September 13, 2016 to originate, acquire and manage a diversified portfolio of commercial real estate (“CRE”) investments primarily comprised of (i) CRE debt, including first mortgage loans, subordinate mortgage and mezzanine loans, and participations in such loans and (ii) CRE securities, such as commercial mortgage-backed securities (“CMBS”), senior unsecured debt of publicly traded real estate investment trusts (“REITs”), and collateralized debt obligation notes. The Company may also invest in select equity investments in single-tenant, net leased properties. Substantially all of the Company’s business is conducted through InPoint REIT Operating Partnership, LP (the “OP”), a Delaware limited partnership. The Company is the sole general partner and directly or indirectly holds all of the limited partner interests in the OP. The Company is externally managed by Inland InPoint Advisor, LLC (the “Advisor”), a Delaware limited liability company formed in August 2016 that is a wholly-owned indirect subsidiary of Inland Real Estate Investment Corporation, a member of The Inland Real Estate Group of Companies, Inc. The Advisor is responsible for coordinating the management of the day-to-day operations and originating, acquiring and managing the Company’s CRE investment portfolio, subject to the supervision of the Company’s board of directors. The Advisor performs its duties and responsibilities as the Company’s fiduciary pursuant to an advisory agreement dated October 25, 2016 between the Company and the Advisor (the “Advisory Agreement”). The Advisor has delegated certain of its duties to SPCRE InPoint Advisors, LLC (the “Sub-Advisor”), a Delaware limited liability company formed in September 2016 that is a wholly-owned subsidiary of Sound Point CRE Management, LP, pursuant to a sub-advisory agreement between the Advisor and the Sub-Advisor. Among other duties, the Sub-Advisor has the authority to identify, negotiate, acquire and originate the Company’s investments and provide portfolio management, disposition, property management and leasing services to the Company. Notwithstanding such delegation to the Sub-Advisor or affiliates of the Sub-Advisor or Advisor, the Advisor retains ultimate responsibility for the performance of all the matters entrusted to it under the Advisory Agreement, including those duties which the Advisor has not delegated to the Sub-Advisor such as (i) valuation of the Company’s assets and calculation of the Company’s net asset value; (ii) management of the Company’s day-to-day operations, including the hiring and supervising of its employees, if any; (iii) preparation of stockholder reports and communications and arrangement of the Company’s annual stockholder meeting; and (iv) advising the Company regarding its initial qualification as a REIT for U.S. federal income tax purposes and monitoring its ongoing compliance with the REIT qualification requirements thereafter. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements and related footnotes have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reported periods. Actual results could differ from such estimates. Principles of Consolidation The Company consolidates all entities that the Company controls through either majority ownership or voting rights. The accompanying consolidated financial statements include the accounts of the Company and the OP. All intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. Cash and Cash Equivalents Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions with original maturities of three months or less. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limits and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage limits. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance. Real Estate Securities at Fair Value The Company’s real estate securities are comprised of CMBS and are accounted for in accordance with ASC Topic 320, Investments — Debt and Equity Securities Financial Instruments The Company records its transactions in securities on a trade date basis and recognizes realized gains and losses on securities transactions on an identified cost basis. Interest Income Interest income on CMBS, which includes accretion of discounts and amortization of premiums on such CMBS, is recognized over the life of the investment using the effective interest method. Management estimates, at the time of purchase, the future expected cash flows and determines the effective interest rate based on these estimated cash flows and the Company’s purchase price. As needed, these estimated cash flows are updated and a revised yield is computed based on the current amortized cost of the investment. In estimating these cash flows, there are a number of assumptions that are subject to uncertainties and contingencies, including the rate and timing of principal payments (prepayments, repurchases, defaults and liquidations), the pass through or coupon rate and interest rate fluctuations. In addition, management must use its judgment to estimate interest payment shortfalls due to delinquencies on the underlying mortgage loans. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact management’s estimates and its interest income. Fair Value Measurements The Company estimates fair value using available market information and valuation methodologies it believes to be appropriate for these purposes. The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 825 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: • Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level III - Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The determination of where an asset or liability falls in the above hierarchy requires judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Real estate securities are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar real estate securities and the spreads used in the prior valuation. The Company obtains current market spread information where available and uses this information in evaluating and validating the market price of all real estate securities. Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy. As of June 30, 2017 and December 31, 2016, the Company received third-party quotes on each real estate security used in determining the fair value, all of which have been classified as Level II due to the observable nature of all significant inputs. Organization and Offering Expenses On October 25, 2016, the Company commenced an ongoing private offering (the “Offering”) of up to $500,000,000 in Class P Shares of common stock (the “Class P Shares”), pursuant to a private placement memorandum dated October 25, 2016. The purchase price per Class P Share is equal to $25.00 (the “Transaction Price”) plus applicable selling commissions, dealer manager fees and organization and offering expenses, resulting in a total purchase price of $27.38 per Class P Share if maximum selling commissions, dealer manager fees and organization and offering expenses are paid. Inland Securities Corporation (the “Dealer Manager”), an affiliate of the Advisor, is the dealer manager for the Offering. Organization and offering expenses include all expenses incurred in connection with the Offering. Organization and offering expenses (other than selling commissions and the dealer manager fee) of the Company may be paid by the Advisor, Sub-Advisor, the Dealer Manager, or their respective affiliates on behalf of the Company and subsequently reimbursed by the Company. Offering expenses are deferred and a payable to the Advisor or Sub-Advisor until shares are sold in the Offering, at which point the expense reimbursement is paid from additional paid-in capital. These expenses include but are not limited to: (i) reimbursing the Dealer Manager and participating broker-dealers for bona fide out-of-pocket, itemized and detailed due diligence expenses incurred by these entities, (ii) expenses for printing, engraving and mailing, charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts, and (iii) expenses of qualifying the sale of the shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees and expenses. The Company is obligated to reimburse the Advisor, the Sub-Advisor and their respective affiliates, as applicable, for organization and offering expenses paid by them on behalf of the Company to the extent organization and offering expenses (excluding selling commissions and the dealer manager fee) incurred by the Company in the Offering do not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering. As a result, these expenses are only a liability of the Company to the extent aggregate organization and offering expenses do not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering, determined at the end of the Offering. Repurchase Agreements – Real Estate Securities The Company enters into Master Repurchase Agreements (each, an “MRA”) that allow the Company to sell real estate securities while providing a fixed repurchase price for the same real estate securities in the future. The repurchase contracts on each security under an MRA generally mature in 30 to 90 days and terms are adjusted for current market rates as necessary. Repurchase agreements are being accounted for as secured borrowings since the Company maintains effective control of the financed assets. Under the MRAs, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls. The Company intends to maintain a level of liquidity that will enable the Company to meet margin calls. In addition, the MRAs are generally subject to certain financial covenants. The Company was in compliance with all financial covenant requirements as of June 30, 2017. Income Taxes The Company intends to qualify as a REIT under the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ending December 31, 2017. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal income tax to the extent it distributes its REIT taxable income, subject to certain adjustments, to its stockholders. Subsequently, if the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. The Company had no uncertain tax positions as of June 30, 2017 and December 31, 2016. The Company expects no significant increases or decreases in uncertain tax positions due to changes in tax positions within one year of June 30, 2017 or December 31, 2016. The Company had no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the three and six-months ended June 30, 2017 or 2016. As of June 30, 2017, returns for the calendar year 2016 remain subject to examination by U.S. and various state and local tax jurisdictions. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences and are attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance is established for uncertainties relating to realization of deferred tax assets. As of December 31, 2016, the Company had a deferred tax asset of $10,832, related to organization and start-up costs, which are capitalized for income tax purposes, and a current net operating loss, and an unrealized loss in value of real estate securities. A valuation allowance in the amount of $10,832 was recorded due to current uncertainty of realization. As of June 30, 2017, the Company has reversed deferred tax assets and the valuation allowance related to its activities. As a REIT, the Company is not expected to pay federal income tax at the REIT level, but instead a dividends paid deduction will generally offset its taxable income. As a result, while the Company will still be permitted to use net operating losses to offset its REIT taxable income, the Company generally does not expect to pay taxes on its REIT taxable income, and therefore does not expect to be able to realize such deferred tax assets. Distributions Payable Distributions payable represent distributions declared as of the balance sheet date which are payable to stockholders. Per Share Data The Company calculates basic and diluted earnings per share by dividing net income attributable to the Company for the period by the weighted-average number of shares of common stock outstanding for that period. 1 |
Real Estate Securities
Real Estate Securities | 6 Months Ended |
Jun. 30, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Real Estate Securities | Note 3 – Real Estate Securities The following is a summary of the Company’s real estate securities as of June 30, 2017: Interest Rate Maturity Date Par Value Fair Value CMBS 1 LIBOR + 4.6500 % November/2018 $ 5,400,000 $ 5,485,860 CMBS 2 LIBOR + 6.9878 % May/2018 $ 5,000,000 5,098,000 Total $ 10,400,000 $ 10,583,860 The Company classified its CMBS as available-for-sale as of June 30, 2017. These investments are reported at fair value in the consolidated balance sheets with changes in fair value recorded in other income or loss in the consolidated statements of operations. The following table shows the amortized cost, unrealized gains/losses and fair value of the Company’s CMBS investments as of June 30, 2017: Amortized Cost Unrealized Gains Unrealized Losses Fair Value CMBS 1 $ 5,429,529 $ 56,331 — $ 5,485,860 CMBS 2 $ 5,088,657 $ 9,343 — 5,098,000 Total $ 10,518,186 $ 65,674 — $ 10,583,860 The following is a summary of the Company’s real estate securities as of December 31, 2016: Number of Investments Interest Rate Maturity Date Par Value Fair Value CMBS 1 1 LIBOR + 4.6500% November/2018 $ 5,400,000 $ 5,433,480 The Company classified its CMBS as available-for-sale as of December 31, 2016. These investments are reported at fair value in the consolidated balance sheets with changes in fair value recorded in other income or loss in the consolidated statements of operations. The following table shows the amortized cost, unrealized gains/losses and fair value of the Company’s CMBS investments as of December 31, 2016: Amortized Cost Unrealized Gains Unrealized Losses Fair Value CMBS 1 $ 5,438,719 — $ (5,239 ) $ 5,433,480 As of June 30, 2017, the Company held two CMBS with a total carrying value of $10,583,860 with a total unrealized gain of $65,674. As of December 31, 2016, the Company held one CMBS with a carrying value of $5,433,480 with an unrealized loss of $5,239. No position had an unrealized loss for a period greater than 12 months. The Company did not have any realized gains or losses during the six-month periods ended June 30, 2017 and 2016. |
Repurchase Agreements-Real Esta
Repurchase Agreements-Real Estate Securities | 6 Months Ended |
Jun. 30, 2017 | |
Banking And Thrift [Abstract] | |
Repurchase Agreements-Real Estate Securities | Note 4 – Repurchase Agreements—Real Estate Securities As of June 30, 2017, the Company had entered into one MRA and had two outstanding repurchase agreements, as described in the table below. The Company had not entered into any MRAs and did not have any outstanding repurchase agreements as of December 31, 2016. Weighted Average Counterparty Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity Counterparty 1 $ 6,370,000 $ 7,680 $ 10,400,000 3.15857 % 13 |
Shareholders Equity
Shareholders Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders Equity | Note 5 – Stockholders Equity During the six-month period ended June 30, 2017, the Company issued 377,159 shares of Class P common stock at an average of $26.99 per share with total net proceeds of $9,501,863 after selling costs of $678,398. In addition, the Company incurred $579,616 in reimbursable deferred offering costs that are payable to the Advisor and Sub-Advisor from future stock issuance. Distributions Declared The table below sets forth the distributions declared for Class P Shares during the six-month period ended June 30, 2017. Distributions Declared Per Share Date Declared Distribution Period Daily Distribution Amount Date of Payment February 22, 2017 March 1, 2017 through March 31, 2017 $ 0.005260274 April 3, 2017 February 22, 2017 April 1, 2017 through April 30, 2017 $ 0.005260274 May 1, 2017 February 22, 2017 May 1, 2017 through May 31, 2017 $ 0.005260274 June 1, 2017 May 31, 2017 June 1, 2017 through June 30, 2017 $ 0.005260274 July 5, 2017 May 31, 2017 July 1, 2017 through July 31, 2017 $ 0.005260274 August 1, 2017 May 31, 2017 August 1, 2017 through August 31, 2017 $ 0.005260274 On or before September 7, 2017 Distributions Paid The table below sets forth the distributions paid on the Class P common stock during the six-month period ended June 30, 2017. Distribution Period Payment Date Distribution Amount December 2016 January 3, 2017 $ 33,230 January 2017 February 1, 2017 40,572 February 2017 March 1, 2017 40,661 March 2017 April 3, 2017 52,273 April 2017 May 1, 2017 59,276 May 2017 June 1, 2017 71,450 Total $ 297,462 During the six-month period ended June 30, 2017, the Company declared distributions of $346,411 and paid cash distributions of $297,462. As of June 30, 2017, distributions declared but not yet paid amounted to $82,179. There were no distributions declared or paid during the six-month period ended June 30, 2016, as the Company was not incorporated until September 2016. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 6 – Net Loss Per Share The following table is a summary of the basic and diluted net loss per share computation for the six-month periods ended June 30, 2017 and 2016: Three-month period ended June 30, Six-month period ended June 30, 2017 2016 2017 2016 Net loss $ (176,917 ) — $ (89,024 ) — Weighted average shares outstanding, basic and diluted 442,029 — 361,740 — Net loss per share, basic and diluted $ (0.40 ) — $ (0.25 ) — |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 – Commitments and Contingencies Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time. |
Transactions with Related Parti
Transactions with Related Parties | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Note 8 – Transactions with Related Parties As of June 30, 2017, the Advisor had invested $1.0 million in the Company through the purchase of 40,040 shares of Class P common stock. The purchase price per Class P Share for the Advisor’s investment was the Transaction Price, with no payment of selling commissions, dealer manager fees or organization and offering expenses. The Advisor has agreed pursuant to its subscription agreement that, for so long as it or its affiliate is serving as the Advisor, (i) it will not sell or transfer at least 8,000 of the Class P Shares that it has purchased, accounting for $200,000 of its investment, to an unaffiliated third party; (ii) it will not be eligible to submit a request for these 40,040 Class P Shares pursuant to the Company’s share repurchase program prior to the fifth anniversary of the date on which such shares were purchased; and (iii) repurchase requests made for these shares will only be accepted (a) on the last business day of a calendar quarter, (b) after all repurchase requests from all other stockholders for such quarter have been accepted and (c) to the extent that such repurchases do not cause total repurchases in the quarter in which they are being repurchased to exceed that quarter’s repurchase cap. As of June 30, 2017, Sound Point Capital Management, LP (“Sound Point”), an affiliate of the Sub-Advisor, had invested $3.0 million in the Company through the purchase of 120,000 shares of Class P common stock. The purchase price per Class P Share for this investment was the Transaction Price, with no payment of selling commissions, dealer manager fees or organization and offering expenses. Sound Point has agreed pursuant to its subscription agreement that, for so long as the Sub-Advisor or its affiliate is serving as the Sub-Advisor, (i) it will not be eligible to submit a request for the repurchase of these 120,000 shares pursuant to the Company’s share repurchase program prior to the fifth anniversary of the date on which such shares were purchased; and (ii) repurchase requests made for these shares will only be accepted (a) on the last business day of a calendar quarter, (b) after all repurchase requests from all other stockholders for such quarter have been accepted and (c) to the extent that such repurchases do not cause total repurchases in the quarter in which they are being repurchased to exceed that quarter’s repurchase cap. The following table summarizes the Company’s related party transactions for the six-month periods ended June 30, 2017 and 2016: Six-month period ended June 30, Payable as of June 30, 2017 2016 2017 2016 Organization and offering expense reimbursement ( 1) $ 645,784 $ — $ 1,547,064 $ — Selling commissions and dealer manager fee ( 2) 612,229 — — — Advisory fee ( 3) — — — — Operating expense reimbursement ( 4) 213,053 — 518 — Total $ 1,471,066 $ — $ 1,547,582 $ — (1) The Company reimburses the Advisor, the Sub-Advisor and their respective affiliates for costs and other expenses related to the Offering, provided that aggregate reimbursements of such costs and expenses shall not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering. Offering costs are offset against stockholders’ equity when paid. Unpaid amounts are recorded as deferred offering costs and included in due to related parties in these consolidated balance sheets. (2) The Dealer Manager, an affiliate of the Advisor, receives selling commissions up to 5%, and a dealer manager fee up to 3% of the Transaction Price for each Class P Share sold in the Offering, the majority of which is paid to third-party broker-dealers. (3) The Company pays the Advisor an advisory fee comprised of (1) a fixed component and (2) a performance component. The fixed component of the advisory fee is paid quarterly in arrears in an amount equal to 1/4th of 1.5% of the average aggregate value of the Company’s assets over such quarter, where the value of each asset shall be the value determined in accordance with the Company’s valuation policies or, if such value has not yet been determined, the book value of the asset. If, in any given calendar quarter ending on or prior to December 31, 2017, the modified funds from operations (“MFFO”), which is a non-GAAP supplemental financial performance measure, is less than the aggregate distributions payable to stockholders for such quarter, then a portion of the fixed component of the advisory fee otherwise payable with respect to that quarter shall be deferred in an amount equal to the distributions payable for that quarter minus the MFFO for that quarter, provided that such deferred amount shall not exceed 25% of the fixed component of the advisory fee otherwise payable with respect to that quarter. Deferred portions of the fixed component of the advisory fee will be paid to the Advisor to the extent that MFFO exceeds distributions paid or payable to stockholders for a future calendar quarter, but only to the extent of such excess. The performance component of the advisory fee is calculated and paid annually with respect to the Class P Shares, such that for any year in which the Company’s total return per Class P Share exceeds 7% per annum, the Advisor will receive 20% of the excess total return allocable to the Class P Shares; provided that in no event will the performance component of the advisory fee exceed 15% of the aggregate total return allocable to Class P Shares for such year. The Advisor has waived the advisory fee for the six-month period ended June 30, 2017. (4) The Company reimburses the Advisor or its affiliates for out-of-pocket expenses that it incurs in connection with providing services to the Company, provided that the Company does not reimburse overhead costs, including rent and utilities or personnel costs (including salaries, bonuses, benefits and severance payments). |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 9 – Fair Value of Financial Instruments The following table presents the Company’s financial instruments carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy (see Note 2 – Summary of Significant Accounting Policies Total Level I Level II Level III Real estate securities $ 10,583,860 — $ 10,583,860 — |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 – Subsequent Events The Company has evaluated subsequent events through August 10, 2017, the date the financial statements were issued, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following transactions: Sale of Common Stock As of August 9, 2017, the Company had 892,674 shares of common stock outstanding and had raised proceeds from the Offering since June 30, 2017 and since inception as follows: Source of Capital July 1, 2017 through August 9, 2017 Total Class P Shares $ 7,455,535 $ 23,578,295 Distributions Declared The table below sets forth the distributions declared for Class P Shares. Distributions Declared Per Share Date Declared Distribution Period Daily Distribution Amount Date of Payment August 9, 2017 September 1, 2017 through September 30, 2017 $ 0.005260274 On or before October 7, 2017 August 9, 2017 October 1, 2017 through October 31, 2017 $ 0.005260274 On or before November 7, 2017 August 9, 2017 November 1, 2017 through November 30, 2017 $ 0.005260274 On or before December 7, 2017 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying consolidated financial statements and related footnotes have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reported periods. Actual results could differ from such estimates. 1 |
Principles of Consolidation | Principles of Consolidation The Company consolidates all entities that the Company controls through either majority ownership or voting rights. The accompanying consolidated financial statements include the accounts of the Company and the OP. All intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions with original maturities of three months or less. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limits and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage limits. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance. |
Real Estate Securities at Fair Value | Real Estate Securities at Fair Value The Company’s real estate securities are comprised of CMBS and are accounted for in accordance with ASC Topic 320, Investments — Debt and Equity Securities Financial Instruments The Company records its transactions in securities on a trade date basis and recognizes realized gains and losses on securities transactions on an identified cost basis. |
Interest Income | Interest Income Interest income on CMBS, which includes accretion of discounts and amortization of premiums on such CMBS, is recognized over the life of the investment using the effective interest method. Management estimates, at the time of purchase, the future expected cash flows and determines the effective interest rate based on these estimated cash flows and the Company’s purchase price. As needed, these estimated cash flows are updated and a revised yield is computed based on the current amortized cost of the investment. In estimating these cash flows, there are a number of assumptions that are subject to uncertainties and contingencies, including the rate and timing of principal payments (prepayments, repurchases, defaults and liquidations), the pass through or coupon rate and interest rate fluctuations. In addition, management must use its judgment to estimate interest payment shortfalls due to delinquencies on the underlying mortgage loans. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact management’s estimates and its interest income. |
Fair Value Measurements | Fair Value Measurements The Company estimates fair value using available market information and valuation methodologies it believes to be appropriate for these purposes. The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 825 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: • Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level III - Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The determination of where an asset or liability falls in the above hierarchy requires judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Real estate securities are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar real estate securities and the spreads used in the prior valuation. The Company obtains current market spread information where available and uses this information in evaluating and validating the market price of all real estate securities. Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy. As of June 30, 2017 and December 31, 2016, the Company received third-party quotes on each real estate security used in determining the fair value, all of which have been classified as Level II due to the observable nature of all significant inputs. |
Organization And Offering Expenses | Organization and Offering Expenses On October 25, 2016, the Company commenced an ongoing private offering (the “Offering”) of up to $500,000,000 in Class P Shares of common stock (the “Class P Shares”), pursuant to a private placement memorandum dated October 25, 2016. The purchase price per Class P Share is equal to $25.00 (the “Transaction Price”) plus applicable selling commissions, dealer manager fees and organization and offering expenses, resulting in a total purchase price of $27.38 per Class P Share if maximum selling commissions, dealer manager fees and organization and offering expenses are paid. Inland Securities Corporation (the “Dealer Manager”), an affiliate of the Advisor, is the dealer manager for the Offering. Organization and offering expenses include all expenses incurred in connection with the Offering. Organization and offering expenses (other than selling commissions and the dealer manager fee) of the Company may be paid by the Advisor, Sub-Advisor, the Dealer Manager, or their respective affiliates on behalf of the Company and subsequently reimbursed by the Company. Offering expenses are deferred and a payable to the Advisor or Sub-Advisor until shares are sold in the Offering, at which point the expense reimbursement is paid from additional paid-in capital. These expenses include but are not limited to: (i) reimbursing the Dealer Manager and participating broker-dealers for bona fide out-of-pocket, itemized and detailed due diligence expenses incurred by these entities, (ii) expenses for printing, engraving and mailing, charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts, and (iii) expenses of qualifying the sale of the shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees and expenses. The Company is obligated to reimburse the Advisor, the Sub-Advisor and their respective affiliates, as applicable, for organization and offering expenses paid by them on behalf of the Company to the extent organization and offering expenses (excluding selling commissions and the dealer manager fee) incurred by the Company in the Offering do not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering. As a result, these expenses are only a liability of the Company to the extent aggregate organization and offering expenses do not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering, determined at the end of the Offering. |
Repurchase Agreements – Real Estate Securities | Repurchase Agreements – Real Estate Securities The Company enters into Master Repurchase Agreements (each, an “MRA”) that allow the Company to sell real estate securities while providing a fixed repurchase price for the same real estate securities in the future. The repurchase contracts on each security under an MRA generally mature in 30 to 90 days and terms are adjusted for current market rates as necessary. Repurchase agreements are being accounted for as secured borrowings since the Company maintains effective control of the financed assets. Under the MRAs, the respective lender retains the right to mark the underlying collateral to fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls. The Company intends to maintain a level of liquidity that will enable the Company to meet margin calls. In addition, the MRAs are generally subject to certain financial covenants. The Company was in compliance with all financial covenant requirements as of June 30, 2017. |
Income Taxes | Income Taxes The Company intends to qualify as a REIT under the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ending December 31, 2017. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal income tax to the extent it distributes its REIT taxable income, subject to certain adjustments, to its stockholders. Subsequently, if the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. The Company had no uncertain tax positions as of June 30, 2017 and December 31, 2016. The Company expects no significant increases or decreases in uncertain tax positions due to changes in tax positions within one year of June 30, 2017 or December 31, 2016. The Company had no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the three and six-months ended June 30, 2017 or 2016. As of June 30, 2017, returns for the calendar year 2016 remain subject to examination by U.S. and various state and local tax jurisdictions. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences and are attributable to (1) differences between the financial statement carrying amounts and their respective tax bases, and (2) net operating losses. A valuation allowance is established for uncertainties relating to realization of deferred tax assets. As of December 31, 2016, the Company had a deferred tax asset of $10,832, related to organization and start-up costs, which are capitalized for income tax purposes, and a current net operating loss, and an unrealized loss in value of real estate securities. A valuation allowance in the amount of $10,832 was recorded due to current uncertainty of realization. As of June 30, 2017, the Company has reversed deferred tax assets and the valuation allowance related to its activities. As a REIT, the Company is not expected to pay federal income tax at the REIT level, but instead a dividends paid deduction will generally offset its taxable income. As a result, while the Company will still be permitted to use net operating losses to offset its REIT taxable income, the Company generally does not expect to pay taxes on its REIT taxable income, and therefore does not expect to be able to realize such deferred tax assets. |
Distributions Payable | Distributions Payable Distributions payable represent distributions declared as of the balance sheet date which are payable to stockholders. |
Per Share Data | Per Share Data The Company calculates basic and diluted earnings per share by dividing net income attributable to the Company for the period by the weighted-average number of shares of common stock outstanding for that period. |
Real Estate Securities (Tables)
Real Estate Securities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Company’s Real Estate Securities | The following is a summary of the Company’s real estate securities as of June 30, 2017: Interest Rate Maturity Date Par Value Fair Value CMBS 1 LIBOR + 4.6500 % November/2018 $ 5,400,000 $ 5,485,860 CMBS 2 LIBOR + 6.9878 % May/2018 $ 5,000,000 5,098,000 Total $ 10,400,000 $ 10,583,860 The following is a summary of the Company’s real estate securities as of December 31, 2016: Number of Investments Interest Rate Maturity Date Par Value Fair Value CMBS 1 1 LIBOR + 4.6500% November/2018 $ 5,400,000 $ 5,433,480 |
Summary of Amortized Cost, Unrealized Gains/Losses and Fair Value of Investments | The following table shows the amortized cost, unrealized gains/losses and fair value of the Company’s CMBS investments as of June 30, 2017: Amortized Cost Unrealized Gains Unrealized Losses Fair Value CMBS 1 $ 5,429,529 $ 56,331 — $ 5,485,860 CMBS 2 $ 5,088,657 $ 9,343 — 5,098,000 Total $ 10,518,186 $ 65,674 — $ 10,583,860 The following table shows the amortized cost, unrealized gains/losses and fair value of the Company’s CMBS investments as of December 31, 2016: Amortized Cost Unrealized Gains Unrealized Losses Fair Value CMBS 1 $ 5,438,719 — $ (5,239 ) $ 5,433,480 |
Repurchase Agreements-Real Es19
Repurchase Agreements-Real Estate Securities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Banking And Thrift [Abstract] | |
Schedule of Outstanding Repurchase Agreements | As of June 30, 2017, the Company had entered into one MRA and had two outstanding repurchase agreements, as described in the table below. The Company had not entered into any MRAs and did not have any outstanding repurchase agreements as of December 31, 2016. Weighted Average Counterparty Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity Counterparty 1 $ 6,370,000 $ 7,680 $ 10,400,000 3.15857 % 13 |
Shareholders Equity (Tables)
Shareholders Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of Distributions Declared | The table below sets forth the distributions declared for Class P Shares during the six-month period ended June 30, 2017. Distributions Declared Per Share Date Declared Distribution Period Daily Distribution Amount Date of Payment February 22, 2017 March 1, 2017 through March 31, 2017 $ 0.005260274 April 3, 2017 February 22, 2017 April 1, 2017 through April 30, 2017 $ 0.005260274 May 1, 2017 February 22, 2017 May 1, 2017 through May 31, 2017 $ 0.005260274 June 1, 2017 May 31, 2017 June 1, 2017 through June 30, 2017 $ 0.005260274 July 5, 2017 May 31, 2017 July 1, 2017 through July 31, 2017 $ 0.005260274 August 1, 2017 May 31, 2017 August 1, 2017 through August 31, 2017 $ 0.005260274 On or before September 7, 2017 |
Schedule of Distributions Paid | The table below sets forth the distributions paid on the Class P common stock during the six-month period ended June 30, 2017. Distribution Period Payment Date Distribution Amount December 2016 January 3, 2017 $ 33,230 January 2017 February 1, 2017 40,572 February 2017 March 1, 2017 40,661 March 2017 April 3, 2017 52,273 April 2017 May 1, 2017 59,276 May 2017 June 1, 2017 71,450 Total $ 297,462 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Net Loss Per Share | The following table is a summary of the basic and diluted net loss per share computation for the six-month periods ended June 30, 2017 and 2016: Three-month period ended June 30, Six-month period ended June 30, 2017 2016 2017 2016 Net loss $ (176,917 ) — $ (89,024 ) — Weighted average shares outstanding, basic and diluted 442,029 — 361,740 — Net loss per share, basic and diluted $ (0.40 ) — $ (0.25 ) — |
Transactions with Related Par22
Transactions with Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The following table summarizes the Company’s related party transactions for the six-month periods ended June 30, 2017 and 2016: Six-month period ended June 30, Payable as of June 30, 2017 2016 2017 2016 Organization and offering expense reimbursement ( 1) $ 645,784 $ — $ 1,547,064 $ — Selling commissions and dealer manager fee ( 2) 612,229 — — — Advisory fee ( 3) — — — — Operating expense reimbursement ( 4) 213,053 — 518 — Total $ 1,471,066 $ — $ 1,547,582 $ — (1) The Company reimburses the Advisor, the Sub-Advisor and their respective affiliates for costs and other expenses related to the Offering, provided that aggregate reimbursements of such costs and expenses shall not exceed the organization and offering expenses paid by investors in connection with the sale of Class P Shares in the Offering. Offering costs are offset against stockholders’ equity when paid. Unpaid amounts are recorded as deferred offering costs and included in due to related parties in these consolidated balance sheets. (2) The Dealer Manager, an affiliate of the Advisor, receives selling commissions up to 5%, and a dealer manager fee up to 3% of the Transaction Price for each Class P Share sold in the Offering, the majority of which is paid to third-party broker-dealers. (3) The Company pays the Advisor an advisory fee comprised of (1) a fixed component and (2) a performance component. The fixed component of the advisory fee is paid quarterly in arrears in an amount equal to 1/4th of 1.5% of the average aggregate value of the Company’s assets over such quarter, where the value of each asset shall be the value determined in accordance with the Company’s valuation policies or, if such value has not yet been determined, the book value of the asset. If, in any given calendar quarter ending on or prior to December 31, 2017, the modified funds from operations (“MFFO”), which is a non-GAAP supplemental financial performance measure, is less than the aggregate distributions payable to stockholders for such quarter, then a portion of the fixed component of the advisory fee otherwise payable with respect to that quarter shall be deferred in an amount equal to the distributions payable for that quarter minus the MFFO for that quarter, provided that such deferred amount shall not exceed 25% of the fixed component of the advisory fee otherwise payable with respect to that quarter. Deferred portions of the fixed component of the advisory fee will be paid to the Advisor to the extent that MFFO exceeds distributions paid or payable to stockholders for a future calendar quarter, but only to the extent of such excess. The performance component of the advisory fee is calculated and paid annually with respect to the Class P Shares, such that for any year in which the Company’s total return per Class P Share exceeds 7% per annum, the Advisor will receive 20% of the excess total return allocable to the Class P Shares; provided that in no event will the performance component of the advisory fee exceed 15% of the aggregate total return allocable to Class P Shares for such year. The Advisor has waived the advisory fee for the six-month period ended June 30, 2017. (4) The Company reimburses the Advisor or its affiliates for out-of-pocket expenses that it incurs in connection with providing services to the Company, provided that the Company does not reimburse overhead costs, including rent and utilities or personnel costs (including salaries, bonuses, benefits and severance payments). |
Fair Value of Financial Instr23
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments Carried at Fair Value in Consolidated Balance Sheets | The following table presents the Company’s financial instruments carried at fair value in the consolidated balance sheets by its level in the fair value hierarchy (see Note 2 – Summary of Significant Accounting Policies Total Level I Level II Level III Real estate securities $ 10,583,860 — $ 10,583,860 — |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Common Stock Outstanding and Proceeds from Offering | As of August 9, 2017, the Company had 892,674 shares of common stock outstanding and had raised proceeds from the Offering since June 30, 2017 and since inception as follows: Source of Capital July 1, 2017 through August 9, 2017 Total Class P Shares $ 7,455,535 $ 23,578,295 |
Schedule of Distributions Declared | The table below sets forth the distributions declared for Class P Shares. Distributions Declared Per Share Date Declared Distribution Period Daily Distribution Amount Date of Payment August 9, 2017 September 1, 2017 through September 30, 2017 $ 0.005260274 On or before October 7, 2017 August 9, 2017 October 1, 2017 through October 31, 2017 $ 0.005260274 On or before November 7, 2017 August 9, 2017 November 1, 2017 through November 30, 2017 $ 0.005260274 On or before December 7, 2017 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | Oct. 25, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Disclosures [Line Items] | |||||||
Cash and cash equivalents, description | Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions with original maturities of three months or less. | ||||||
Uncertain tax positions | $ 0 | $ 0 | $ 0 | $ 0 | |||
Uncertain tax positions, period increase (decrease) | $ 0 | 0 | |||||
Uncertain tax positions, income tax interest or penalties | $ 0 | $ 0 | $ 0 | $ 0 | |||
Deferred tax assets | 10,832 | ||||||
Deferred tax assets, valuation allowance | $ 10,832 | ||||||
Class P Common Stock | |||||||
Summary Of Significant Accounting Policies Disclosures [Line Items] | |||||||
Shares issued excluding issuance cost price per share | $ 25 | ||||||
Shares issued, price per share | $ 27.38 | ||||||
Maximum | MRA | |||||||
Summary Of Significant Accounting Policies Disclosures [Line Items] | |||||||
Repurchase agreement maturity term on real estate securities | 90 days | ||||||
Maximum | Class P Common Stock | |||||||
Summary Of Significant Accounting Policies Disclosures [Line Items] | |||||||
Common stock private placement offering | 500,000,000 | ||||||
Minimum | MRA | |||||||
Summary Of Significant Accounting Policies Disclosures [Line Items] | |||||||
Repurchase agreement maturity term on real estate securities | 30 days |
Real Estate Securities - Summar
Real Estate Securities - Summary of Company's Real Estate Securities (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017USD ($)Investment | Dec. 31, 2016USD ($)Investment | |
Schedule Of Available For Sale Securities [Line Items] | ||
Par Value | $ 10,400,000 | |
Fair Value | $ 10,583,860 | |
Number of Investments | Investment | 2 | |
CMBS 1 | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity Date | 2018-11 | 2018-11 |
Par Value | $ 5,400,000 | $ 5,400,000 |
Fair Value | $ 5,485,860 | $ 5,433,480 |
Number of Investments | Investment | 1 | |
CMBS 1 | LIBOR | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Interest Rate | 4.65% | 4.65% |
CMBS 2 | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity Date | 2018-05 | |
Par Value | $ 5,000,000 | |
Fair Value | $ 5,098,000 | |
CMBS 2 | LIBOR | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Interest Rate | 6.9878% |
Real Estate Securities - Summ27
Real Estate Securities - Summary of Amortized Cost, Unrealized Gains/Losses and Fair Value of Investments (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 10,518,186 | |
Unrealized Gains | 65,674 | |
Real estate securities at fair value | 10,583,860 | $ 5,433,480 |
CMBS 1 | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 5,429,529 | 5,438,719 |
Unrealized Gains | 56,331 | |
Unrealized Losses | (5,239) | |
Real estate securities at fair value | 5,485,860 | $ 5,433,480 |
CMBS 2 | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 5,088,657 | |
Unrealized Gains | 9,343 | |
Real estate securities at fair value | $ 5,098,000 |
Real Estate Securities - Additi
Real Estate Securities - Additional Information (Details) | 6 Months Ended | ||
Jun. 30, 2017USD ($)Investment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($)Investment | |
Schedule Of Available For Sale Securities [Line Items] | |||
Number of investments | Investment | 2 | ||
Carrying value of investments | $ 10,583,860 | $ 5,433,480 | |
Unrealized gain | $ 65,674 | ||
Number of positions in unrealized loss for a period greater than 12 months | Investment | 0 | ||
Realized gains or losses | $ 0 | $ 0 | |
CMBS 1 | |||
Schedule Of Available For Sale Securities [Line Items] | |||
Number of investments | Investment | 1 | ||
Carrying value of investments | 5,485,860 | $ 5,433,480 | |
Unrealized gain | $ 56,331 | ||
Unrealized loss | $ 5,239 |
Repurchase Agreements-Real Es29
Repurchase Agreements-Real Estate Securities - Additional Information (Details) - Agreement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Payables And Accruals [Abstract] | ||
Number of outstanding repurchase agreements | 2 | 0 |
Number of master repurchase agreements | 1 | 0 |
Repurchase Agreements-Real Es30
Repurchase Agreements-Real Estate Securities - Schedule of Outstanding Repurchase Agreements (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Assets Sold Under Agreements To Repurchase [Line Items] | |
Amount Outstanding | $ 6,370,000 |
Accrued Interest Payable | 7,680 |
Counterparty 1 | |
Assets Sold Under Agreements To Repurchase [Line Items] | |
Amount Outstanding | 6,370,000 |
Accrued Interest Payable | 7,680 |
Collateral Pledged | $ 10,400,000 |
Weighted Average Interest Rate | 3.15857% |
Weighted Average Days to Maturity | 13 days |
Stockholders Equity - Additiona
Stockholders Equity - Additional Information (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Class Of Stock [Line Items] | |||
Proceeds from issuance of common stock | $ 10,180,261 | ||
Common stock. selling costs | 678,398 | ||
Deferred offering costs | 1,547,064 | $ 967,448 | |
Cash distributions paid | 297,462 | ||
Distributions declared but not yet paid | $ 82,179 | $ 33,230 | |
Class P Common Stock | |||
Class Of Stock [Line Items] | |||
Common stock, shares issued | 377,159 | ||
Common stock issued, average price per share | $ 26.99 | ||
Proceeds from issuance of common stock | $ 9,501,863 | ||
Common stock. selling costs | 678,398 | ||
Deferred offering costs | 579,616 | ||
Distribution Amount | 297,462 | ||
Distributions declared but not yet paid | 82,179 | ||
Class P Common Stock | Dividend Declared | |||
Class Of Stock [Line Items] | |||
Distribution Amount | 346,411 | $ 0 | |
Cash distributions paid | $ 297,462 | $ 0 |
Stockholders Equity - Schedule
Stockholders Equity - Schedule of Distributions Declared (Details) - Class P Common Stock | 6 Months Ended |
Jun. 30, 2017$ / shares | |
March 1, 2017 through March 31, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | Feb. 22, 2017 |
Distribution Period | March 1, 2017 through March 31, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | Apr. 3, 2017 |
April 1, 2017 through April 30, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | Feb. 22, 2017 |
Distribution Period | April 1, 2017 through April 30, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | May 1, 2017 |
May 1, 2017 through May 31, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | Feb. 22, 2017 |
Distribution Period | May 1, 2017 through May 31, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | Jun. 1, 2017 |
June 1, 2017 through June 30, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | May 31, 2017 |
Distribution Period | June 1, 2017 through June 30, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | Jul. 5, 2017 |
July 1, 2017 through July 31, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | May 31, 2017 |
Distribution Period | July 1, 2017 through July 31, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | Aug. 1, 2017 |
August 1, 2017 through August 31, 2017 | |
Dividends Payable [Line Items] | |
Date Declared | May 31, 2017 |
Distribution Period | August 1, 2017 through August 31, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | On or before September 7, 2017 |
Stockholders Equity - Schedul33
Stockholders Equity - Schedule of Distributions Paid (Details) - Class P Common Stock | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Dividends Payable [Line Items] | |
Distribution Amount | $ 297,462 |
December 2,016 | |
Dividends Payable [Line Items] | |
Distribution Period | 2016-12 |
Date of Payment | Jan. 3, 2017 |
Distribution Amount | $ 33,230 |
January 2,017 | |
Dividends Payable [Line Items] | |
Distribution Period | 2017-01 |
Date of Payment | Feb. 1, 2017 |
Distribution Amount | $ 40,572 |
February 2,017 | |
Dividends Payable [Line Items] | |
Distribution Period | 2017-02 |
Date of Payment | Mar. 1, 2017 |
Distribution Amount | $ 40,661 |
March 2,017 | |
Dividends Payable [Line Items] | |
Distribution Period | 2017-03 |
Date of Payment | Apr. 3, 2017 |
Distribution Amount | $ 52,273 |
April 2,017 | |
Dividends Payable [Line Items] | |
Distribution Period | 2017-04 |
Date of Payment | May 1, 2017 |
Distribution Amount | $ 59,276 |
May 2,017 | |
Dividends Payable [Line Items] | |
Distribution Period | 2017-05 |
Date of Payment | Jun. 1, 2017 |
Distribution Amount | $ 71,450 |
Net Loss Per Share - Summary of
Net Loss Per Share - Summary of Basic and Diluted Net Loss Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (176,917) | $ (89,024) |
Weighted average number of shares outstanding, basic and diluted | 442,029 | 361,740 |
Net loss per share basic and diluted | $ (0.40) | $ (0.25) |
Transactions with Related Par35
Transactions with Related Parties - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Proceeds from issuance of common stock | $ 10,180,261 | |
Common stock, shares, issued | 614,859 | 237,700 |
Class P Common Stock | ||
Related Party Transaction [Line Items] | ||
Proceeds from issuance of common stock | $ 9,501,863 | |
Advisor | Class P Common Stock | ||
Related Party Transaction [Line Items] | ||
Proceeds from issuance of common stock | $ 1,000,000 | |
Common stock, shares, issued | 40,040 | |
Payment of selling commissions | $ 0 | |
Payment of dealer manager fees | 0 | |
Payment of organization and offering expenses | $ 0 | |
Subscription agreement, minimum number of shares to be held | 8,000 | |
Subscription agreement, value of minimum number of shares to be held | $ 200,000 | |
Description of subscription agreement | The Advisor has agreed pursuant to its subscription agreement that, for so long as it or its affiliate is serving as the Advisor, (i) it will not sell or transfer at least 8,000 of the Class P Shares that it has purchased, accounting for $200,000 of its investment, to an unaffiliated third party; (ii) it will not be eligible to submit a request for these 40,040 Class P Shares pursuant to the Company’s share repurchase program prior to the fifth anniversary of the date on which such shares were purchased; and (iii) repurchase requests made for these shares will only be accepted (a) on the last business day of a calendar quarter, (b) after all repurchase requests from all other stockholders for such quarter have been accepted and (c) to the extent that such repurchases do not cause total repurchases in the quarter in which they are being repurchased to exceed that quarter’s repurchase cap | |
Sub-Advisor | Class P Common Stock | ||
Related Party Transaction [Line Items] | ||
Proceeds from issuance of common stock | $ 3,000,000 | |
Common stock, shares, issued | 120,000 | |
Payment of selling commissions | $ 0 | |
Payment of dealer manager fees | 0 | |
Payment of organization and offering expenses | $ 0 | |
Description of subscription agreement | Sound Point has agreed pursuant to its subscription agreement that, for so long as the Sub-Advisor or its affiliate is serving as the Sub-Advisor, (i) it will not be eligible to submit a request for the repurchase of these 120,000 shares pursuant to the Company’s share repurchase program prior to the fifth anniversary of the date on which such shares were purchased; and (ii) repurchase requests made for these shares will only be accepted (a) on the last business day of a calendar quarter, (b) after all repurchase requests from all other stockholders for such quarter have been accepted and (c) to the extent that such repurchases do not cause total repurchases in the quarter in which they are being repurchased to exceed that quarter’s repurchase cap. |
Transactions with Related Par36
Transactions with Related Parties - Summary of Related Party Transactions (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Total, payable | $ 1,547,582 | $ 995,716 |
Advisor | ||
Related Party Transaction [Line Items] | ||
Organization and offering expense reimbursement | 645,784 | |
Selling commissions and dealer manager fee | 612,229 | |
Operating expense reimbursement | 213,053 | |
Total | 1,471,066 | |
Organization and offering expense reimbursement, payable | 1,547,064 | |
Operating expense reimbursement, payable | 518 | |
Total, payable | $ 1,547,582 |
Transactions with Related Par37
Transactions with Related Parties - Summary of Related Party Transactions (Parenthetical) (Details) - Advisor | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transaction [Line Items] | |
Percentage of average aggregate value of assets | 1.50% |
Percentage of maximum fixed component of advisory fee | 25.00% |
Percentage of minimum total return per share | 7.00% |
Percentage of excess total return | 20.00% |
Percentage of aggregate total return | 15.00% |
Maximum | |
Related Party Transaction [Line Items] | |
Percentage of selling commission | 5.00% |
Percentage of dealer manager fee | 3.00% |
Fair Value of Financial Instr38
Fair Value of Financial Instruments - Financial Instruments Carried at Fair Value in Consolidated Balance Sheets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Real estate securities at fair value | $ 10,583,860 | $ 5,433,480 |
Fair Value Measurements, Recurring | Real Estate Securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Real estate securities at fair value | 10,583,860 | |
Fair Value Measurements, Recurring | Real Estate Securities | Level II | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Real estate securities at fair value | $ 10,583,860 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - shares | Aug. 09, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||
Common stock, shares, outstanding | 614,859 | 237,700 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Common stock, shares, outstanding | 892,674 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Common Stock Outstanding and Proceeds from Offering (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended |
Aug. 09, 2017 | Jun. 30, 2017 | Aug. 09, 2017 | |
Subsequent Event [Line Items] | |||
Proceeds from issuance of common stock | $ 10,180,261 | ||
Class P Common Stock | |||
Subsequent Event [Line Items] | |||
Proceeds from issuance of common stock | $ 9,501,863 | ||
Class P Common Stock | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Proceeds from issuance of common stock | $ 7,455,535 | $ 23,578,295 |
Subsequent Events - Schedule 41
Subsequent Events - Schedule of Distributions Declared (Details) - Subsequent Event - Class P Common Stock | Aug. 09, 2017$ / shares |
September 1, 2017 through September 30, 2017 | |
Subsequent Event [Line Items] | |
Date Declared | Aug. 9, 2017 |
Distribution Period | September 1, 2017 through September 30, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | On or before October 7, 2017 |
October 1, 2017 through October 31, 2017 | |
Subsequent Event [Line Items] | |
Date Declared | Aug. 9, 2017 |
Distribution Period | October 1, 2017 through October 31, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | On or before November 7, 2017 |
November 1, 2017 through November 30, 2017 | |
Subsequent Event [Line Items] | |
Date Declared | Aug. 9, 2017 |
Distribution Period | November 1, 2017 through November 30, 2017 |
Daily Distribution Amount | $ 0.005260274 |
Date of Payment | On or before December 7, 2017 |