Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 08, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
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 | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,209,957 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 16,094 | $ 1,406 |
Real estate securities at fair value | 84,618 | 25,993 |
Commercial mortgage loans at cost, net of allowance for loan loss of $0 | 157,232 | 32,094 |
Deferred debt finance costs | 634 | |
Deferred offering costs | 772 | 1,503 |
Accrued interest receivable | 624 | 142 |
Prepaid expenses and other assets | 10 | 4 |
Total assets | 259,984 | 61,142 |
Liabilities: | ||
Due to related parties | 1,615 | 1,512 |
Loan fees payable | 150 | 40 |
Interest payable | 206 | 24 |
Distributions payable | 728 | 258 |
Accrued expenses | 171 | 210 |
Total liabilities | 145,093 | 19,157 |
Stockholders’ Equity: | ||
Class P common stock, $0.001 par value, 450,000,000 shares authorized, 4,730,950 and 1,733,392 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 5 | 2 |
Additional paid in capital (net of offering costs of $9,318 and $2,919 at September 30, 2018 and December 31, 2017, respectively) | 118,383 | 43,428 |
Distributions in excess of earnings | (3,497) | (1,445) |
Total stockholders’ equity | 114,891 | 41,985 |
Total liabilities and stockholders’ equity | 259,984 | 61,142 |
Real Estate Securities | ||
Liabilities: | ||
Repurchase agreements | 54,621 | 17,113 |
Interest payable | 66 | $ 24 |
Commercial Mortgage Loans | ||
Liabilities: | ||
Repurchase agreements | $ 87,602 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Allowance for loan loss | $ 0 | $ 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares, issued | 4,730,950 | 1,733,392 |
Common stock, shares, outstanding | 4,730,950 | 1,733,392 |
Additional paid in capital, offering costs | $ 9,318,000 | $ 2,919,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Interest income: | ||||
Interest income | $ 3,364 | $ 304 | $ 6,180 | $ 554 |
Less: Interest expense | (1,271) | (49) | (2,079) | (101) |
Net interest income | 2,093 | 255 | 4,101 | 453 |
Operating expenses: | ||||
Advisory fee | 840 | 1,379 | ||
Debt finance costs | 122 | 309 | ||
Administration expense | 28 | 86 | ||
Directors compensation | 21 | 21 | 63 | 61 |
Professional service fees | 69 | 98 | 276 | 328 |
Other expenses | 73 | 38 | 188 | 68 |
Total operating expenses | 1,125 | 185 | 2,215 | 543 |
Other income (loss): | ||||
Unrealized gain (loss) in value of real estate securities | 336 | (50) | 457 | 21 |
Other interest income | 36 | 36 | ||
Total other income (loss) | 372 | (50) | 493 | 21 |
Net income (loss) before income taxes | 1,340 | 20 | 2,379 | (69) |
Income tax provision | 56 | 56 | ||
Net income (loss) | $ 1,340 | $ (36) | $ 2,379 | $ (125) |
Net income (loss) per share basic and diluted | $ 0.32 | $ (0.04) | $ 0.77 | $ (0.23) |
Weighted average number of shares | ||||
Basic | 4,159,656 | 910,390 | 3,074,194 | 546,430 |
Diluted | 4,159,839 | 910,390 | 3,074,311 | 546,430 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid in Capital | Distributions in Excess of Earnings |
Balance at Dec. 31, 2017 | $ 41,985 | $ 2 | $ 43,428 | $ (1,445) |
Balance, shares at Dec. 31, 2017 | 1,733,392 | |||
Proceeds from issuance of common stock | 81,351 | $ 3 | 81,348 | |
Proceeds from issuance of common stock, shares | 2,997,558 | |||
Offering costs | (6,399) | (6,399) | ||
Net income | 2,379 | 2,379 | ||
Distributions declared | (4,431) | (4,431) | ||
Equity based compensation | 6 | 6 | ||
Balance at Sep. 30, 2018 | $ 114,891 | $ 5 | $ 118,383 | $ (3,497) |
Balance, shares at Sep. 30, 2018 | 4,730,950 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net income (loss) | $ 2,379 | $ (125) |
Adjustments to reconcile net income (loss) to cash provided by operations: | ||
Net unrealized gain on real estate securities | (457) | (21) |
Amortization of equity based compensation | 6 | |
Amortization of debt finance costs | 309 | |
Amortization of bond (discount) premium | (208) | 140 |
Amortization of deferred exit fees | (69) | |
Changes in assets and liabilities: | ||
Accrued interest receivable | (482) | (26) |
Deferred debt finance costs | (943) | |
Accrued expenses | 254 | 243 |
Due to related parties | 833 | (28) |
Prepaid expenses and other assets | (6) | (11) |
Net cash provided by operating activities | 1,616 | 172 |
Cash flows from investing activities: | ||
Origination of commercial loans | (125,069) | (7,500) |
Purchase of real estate securities | (61,341) | (26,204) |
Real estate securities sold | 2,996 | 5,000 |
Real estate securities principal pay-down | 385 | |
Net cash used in investing activities | (183,029) | (28,704) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 81,351 | 24,057 |
Payment of offering costs | (6,399) | (1,708) |
Proceeds from repurchase agreements | 412,617 | 54,228 |
Principal repayments of repurchase agreements | (287,507) | (45,292) |
Distributions paid | (3,961) | (653) |
Net cash provided by financing activities | 196,101 | 30,632 |
Net change in cash and cash equivalents | 14,688 | 2,100 |
Cash and cash equivalents beginning of period | 1,406 | 512 |
Cash and cash equivalents end of period | 16,094 | 2,612 |
Supplemental disclosure of cash flow information: | ||
Change in deferred offering costs and accrued offering expenses, included in due to related parties | (730) | 543 |
Cash paid for interest | 1,897 | 100 |
Distributions payable | $ 728 | $ 170 |
Organization and Business Opera
Organization and Business Operations | 9 Months Ended |
Sep. 30, 2018 | |
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 (“Credit Loans”), and participations in such loans and (ii) CRE securities, such as commercial mortgage-backed securities, 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 among the Company, the Advisor and the OP (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 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 | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Disclosures discussing all significant accounting policies are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2018, under the heading Note 2 - Summary of Significant Accounting Policies. There have been no changes to the Company’s significant accounting policies for the three and nine-months ended September 30, 2018, except as noted below. 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. Commercial Mortgage Loans Held for Investment and Allowance for Loan Losses Commercial mortgage loans are held for investment purposes and are anticipated to be held until maturity. Accordingly, they are carried at cost, net of unamortized loan fees and origination costs, and premiums or discounts. Commercial mortgage loans that are deemed to be impaired will be carried at amortized cost less a specific allowance for loan losses. Interest income is recorded on the accrual basis and related discounts, premiums and net deferred fees or costs on investments are amortized over the life of the investment using the effective interest method. Amortization is reflected as an adjustment to interest income in the Company’s consolidated statements of operations. Upon measurement of impairment, the Company records an allowance for loan losses to reduce the carrying value of the loan with a corresponding charge through the provision for loan losses on the Company’s consolidated statements of operations. The allowance for loan losses reflects management's estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The Company uses a uniform process for determining its allowance for loan losses. The allowance for loan losses includes an asset-specific component and may include a general, formula-based component when the portfolio is determined to be of sufficient size to warrant such a reserve. The asset-specific reserve component relates to reserves for losses on individual impaired loans. The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. This assessment is made on an individual loan basis each quarter based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan. For collateral dependent impaired loans, impairment is measured using the estimated fair value of collateral less the estimated cost to sell. Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred. The Advisor generally will use the income approach through internally developed valuation models to estimate the fair value of the collateral for such loans. In more limited cases, the Advisor will obtain external “as is” appraisals for loan collateral, generally when third party participations exist. General reserves are recorded when (i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The Company’s policy is to estimate loss rates based on actual losses experienced, if any, or based on historical realized losses experienced in the industry if the Company has not experienced any losses. Current collateral and economic conditions affecting the probability and severity of losses are taken into account when establishing the allowance for loan losses. The Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability. The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Ratings range from “1” to “5” with “1” representing the lowest risk of loss and “5” representing the highest risk of loss. Loans are generally placed on non-accrual status when principal or interest payments are past due 90 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment regarding the borrower's ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2018 and December 31, 2017, the Company has not recorded any allowance for loan losses as the Company did not consider a loan loss to be probable. Equity-Based Compensation In accordance with the Company’s Independent Director Restricted Share Plan (the “RSP”), restricted shares are issued to independent directors as compensation. The Company recognizes expense related to the fair value of equity-based compensation awards as operating expense in the consolidated statements of operations. The Company recognizes expense based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 10 – "Equity-Based Compensation" for further information. Income Taxes The Company operated in a manner that allowed the Company to qualify as a REIT for U.S. federal income tax purposes commencing with the tax year ending December 31, 2017. 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 September 30, 2018 or December 31, 2017. The Company expects no significant increases or decreases in uncertain tax positions due to changes in tax positions within one year of September 30, 2018. The Company had no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the three and nine-months ended September 30, 2018 or 2017. As of September 30, 2018, returns for the calendar years 2016 and 2017 remain subject to examination by U.S. and various state and local tax jurisdictions. For the three and nine-months ended September 30, 2018, the Company incurred no current income tax expense. For the three and nine months ended September 30, 2017, the Company incurred $56 in current income tax expense. Accounting Pronouncements Recently Issued but Not Yet Effective In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for financial assets carried at amortized cost. ASU 2016-13 eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. ASU 2016-13 is effective for SEC filers for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact ASU 2016-13 will have on its allowance for loan losses estimate. |
Real Estate Securities
Real Estate Securities | 9 Months Ended |
Sep. 30, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Real Estate Securities | Note 3 – Real Estate Securities The Company classified its real estate securities as available-for-sale. 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 summarizes the Company’s real estate securities as of September 30, 2018 and December 31, 2017: As of Weighted Average Coupon Weighted Average Years to Maturity Par Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value September 30, 2018 5.3 % 1.5 $ 85,273 $ 84,126 $ 492 $ — $ 84,618 December 31, 2017 2.9 % 1.7 $ 25,958 $ 25,958 $ 36 $ (1 ) $ 25,993 As of September 30, 2018, the amortized cost was less than par value due to three real estate securities purchased at a discount. There were no real estate securities in an unrealized loss position for greater than one year as of September 30, 2018 or December 31, 2017. The Company did not have any realized gains or losses during the three and nine-months ended September 30, 2018 and 2017. |
Commercial Mortgage Loans Held
Commercial Mortgage Loans Held for Investment | 9 Months Ended |
Sep. 30, 2018 | |
Mortgage Loans On Real Estate [Abstract] | |
Commercial Mortgage Loans Held for Investment | InPoint Commercial Real Estate Income, Inc. Notes to Consolidated Financial Statements (continued) September 30, 2018 (Unaudited, dollar amounts in thousands, except share data) Note 4 – Commercial Mortgage Loans Held for Investment The following is a summary of the Company’s commercial mortgage loans held for investment as of September 30, 2018: Number of Loans Principal Balance Unamortized (fees)/costs, net Carrying Value Weighted Average Coupon Weighted Average Years to Maturity First mortgage loans 10 $ 148,070 $ (1,338 ) $ 146,732 6.0 % 2.5 Credit loans 2 10,500 — 10,500 9.2 % 7.7 Total and average 12 $ 158,570 $ (1,338 ) $ 157,232 6.2 % 2.8 The following is a summary of the Company’s commercial mortgage loans held for investment as of December 31, 2017: Number of Loans Principal Balance Unamortized (fees)/costs, net Carrying Value Weighted Average Coupon Weighted Average Years to Maturity First mortgage loans 2 $ 24,951 $ (357 ) $ 24,594 6.1 % 3.0 Credit loans 1 7,500 — 7,500 9.2 % 9.8 Total and average 3 $ 32,451 $ (357 ) $ 32,094 6.8 % 4.6 Credit Characteristics As part of the Company’s process for monitoring the credit quality of its loans, it performs a quarterly asset review of the loan portfolio and assigns risk ratings to each of its loans. Risk factors include payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. To determine the likelihood of loss, the loans are rated on a 5-point scale as follows: Investment Grade Investment Grade Definition 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing loan requiring closer monitoring. Trends and risk factors show some deterioration. Collection of principal and interest is still expected. 4 Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. All commercial mortgage loans are assigned an initial risk rating of 2 at origination. The Company reviews all loans on a quarterly basis and updates the ratings based on current performance information. The weighted average risk rating for the loan portfolio was a 2 as of September 30, 2018 and December 31, 2017. As of September 30, 2018, eleven loans were risk rated 2 and one was risk rated 3. As of December 31, 2017, all loans were risk rated 2. The Company has not recorded any allowance for loan losses as the Company did not consider a loan loss to be probable. |
Repurchase Agreements
Repurchase Agreements | 9 Months Ended |
Sep. 30, 2018 | |
Banking And Thrift [Abstract] | |
Repurchase Agreements | Note 5 – Repurchase Agreements Commercial Mortgage Loans On February 15, 2018, a wholly-owned subsidiary of The details of the Repo Facility as of September 30, 2018 are as follows: Weighted Average Committed Financing Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity $ 175,000 $ 87,602 $ 139 $ 118,650 4.41 % 317 The Company had not entered into the Repo Facility or any master repurchase agreement for commercial mortgage loans as of December 31, 2017. Real Estate Securities As of September 30, 2018 and December 31, 2017, the Company had entered into one master repurchase agreement f Weighted Average Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity As of September 30, 2018 $ 54,621 $ 66 $ 74,646 3.55 % 16 As of December 31, 2017 $ 17,113 $ 24 $ 19,946 2.27 % 7 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Note 6 – Stockholders’ Equity During the nine-months ended September 30, 2018, pursuant to a private offering (the “Offering”), the Company issued 2,997,558 shares of Class P common stock (“Class P Shares”) at an average price of $27.14 per share with total net proceeds of $74,952 after offering costs of $6,399. In addition, the Company incurred $389 in reimbursable deferred offering costs that are payable to the Advisor and Sub-Advisor from future stock issuances. Distributions The Company currently pays distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.005260274 per Class P Share based on a 365-day year. The table below presents the distributions paid and declared during the three and nine-months ended September 30, 2018 and 2017. As of September 30, 2018, distributions declared but not yet paid amounted to $728. Three-months ended September 30, Nine-months ended September 30, 2018 2017 2018 2017 Distributions paid $ 1,808 $ 356 $ 3,961 $ 653 Distributions declared $ 2,020 $ 441 $ 4,431 $ 789 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Note 7 – Net Income (Loss) Per Share The following table is a summary of the basic and diluted net income (loss) per share computation for the three and nine-months ended September 30, 2018 and 2017: Three-months ended September 30, Nine-months ended September 30, 2018 2017 2018 2017 Net income (loss) $ 1,340 $ (36 ) $ 2,379 $ (125 ) Weighted average shares outstanding, basic 4,159,656 910,390 3,074,194 546,430 Weighted average shares outstanding, diluted 4,159,839 910,390 3,074,311 546,430 Net income (loss) per share, basic and diluted $ 0.32 $ (0.04 ) $ 0.77 $ (0.23 ) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8 – 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 | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Note 9 – Transactions with Related Parties As of September 30, 2018, the Advisor had invested $1,000 in the Company through the purchase of 40,040 Class P Shares. The purchase price per Class P Share for the Advisor’s investment was $25.00 (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 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 September 30, 2018, Sound Point Capital Management, LP (“Sound Point”), an affiliate of the Sub-Advisor, had invested $3,000 in the Company through the purchase of 120,000 Class P Shares. 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 three and nine-months ended September 30, 2018 and 2017: Three-months ended September 30, Nine-months ended September 30, Payable as of 2018 2017 2018 2017 September 30, 2018 December 31, 2017 Organization and offering expense reimbursement ( 1) $ 113 $ 191 $ 389 $ 837 $ 772 $ 1,503 Selling commissions and dealer manager fee ( 2) 2,236 802 5,280 1,414 — — Advisory fee ( 3) 840 — 1,379 — 840 — Operating expense reimbursement ( 4) 3 2 8 215 3 9 Total $ 3,192 $ 995 $ 7,056 $ 2,466 $ 1,615 $ 1,512 (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) Inland Securities Corporation, the Company’s dealer manager and 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. 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 waived the advisory fee for all periods prior to April 1, 2018. As a result, there was no advisory fee for the three and nine months ended September 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). |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-Based Compensation | Note 10 – Equity-Based Compensation On March 1, 2018, the Company granted each of its three independent directors 400 restricted Class P Shares for a total of 1,200 Class P Shares with a total value of $30. The restricted Class P Shares will vest in equal one-third increments on March 1, 2019, 2020 and 2021. Under the RSP, restricted shares generally vest over a three year vesting period from the date of the grant, subject to the specific terms of the grant. Restricted shares are included in common stock outstanding on the date of vesting. The grant-date value of the restricted shares is amortized over the vesting period representing the requisite service period. Compensation expense associated with the restricted shares issued to the independent directors was $3 and $6, in the aggregate, for the three and nine-months ended September 30, 2018, respectively. As of September 30, 2018, the Company had $24 of unrecognized compensation expense related to the unvested restricted shares, in the aggregate. The weighted average remaining period that compensation expense related to unvested restricted shares will be recognized is 2.42 years. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 11 – 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 September 30, 2018 December 31, 2017 Total Level I Level II Level III Total Level I Level II Level III Real estate securities $ 84,618 — $ 84,618 — $ 25,993 — $ 25,993 — The Company did not transfer any assets within fair value levels during the nine months ended September 30, 2018 or during the year ended December 31, 2017. As discussed in Note 2 of the Annual Report, GAAP requires the disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. The following table details the carrying amount and fair value of the financial instruments described in Note 2 of the Annual Report: September 30, 2018 December 31, 2017 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial assets Cash and cash equivalents $ 16,094 $ 16,094 $ 1,406 $ 1,406 Commercial mortgage loans, net 157,232 159,199 32,094 32,094 Total $ 173,326 $ 175,293 $ 33,500 $ 33,500 Financial liabilities Repurchase agreements - real estate securities $ 54,621 $ 54,621 $ 17,113 $ 17,113 Repurchase agreements - commercial mortgage loans 87,602 87,602 — — Total $ 142,223 $ 142,223 $ 17,113 $ 17,113 The following describes our methods for estimating the fair value for financial instruments: • The estimated fair value of cash and cash equivalents was based on the bank balance and was a Level 1 fair value measurement. • The estimated fair value of commercial mortgage loans, net is a Level 3 fair value measurement. The Sub-Advisor estimates the fair values of commercial loans by analyzing interest rate spreads on loans based on various factors including capitalization rates, occupancy rates, sponsorship, geographic concentration, collateral type, market conditions and actions of other lenders. • The estimated fair value of repurchase agreements is a Level 3 fair value measurement based on an expected present value technique. This method discounts future estimated cash flows using rates we determined best reflect current market interest rates that would be offered for repurchase agreements with similar characteristics and credit quality. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 – Subsequent Events The Company has evaluated subsequent events through November 9, 2018, 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 November 8, 2018, the Company had 5,209,957 shares of common stock outstanding and had raised proceeds from the Offering since September 30, 2018 and since inception as follows: Source of Capital October 1, 2018 through November 8, 2018 Total Class P Shares $ 13,017 $ 140,716 Distributions The Company’s board of directors declared distributions payable to stockholders of record of Class P Shares each day beginning on the close of business December 1, 2018 through the close of business March 31, 2019. Through that date distributions were declared in a daily amount equal to $0.005260274 per Class P Share, based on a 365-day period. The table below sets forth the distributions paid in cash monthly in arrears: Distribution Period Month Distribution Paid Distribution Amount September 2018 October 2018 $ 728 October 2018 November 2018 $ 800 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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. Commercial Mortgage Loans Held for Investment and Allowance for Loan Losses Commercial mortgage loans are held for investment purposes and are anticipated to be held until maturity. Accordingly, they are carried at cost, net of unamortized loan fees and origination costs, and premiums or discounts. Commercial mortgage loans that are deemed to be impaired will be carried at amortized cost less a specific allowance for loan losses. Interest income is recorded on the accrual basis and related discounts, premiums and net deferred fees or costs on investments are amortized over the life of the investment using the effective interest method. Amortization is reflected as an adjustment to interest income in the Company’s consolidated statements of operations. Upon measurement of impairment, the Company records an allowance for loan losses to reduce the carrying value of the loan with a corresponding charge through the provision for loan losses on the Company’s consolidated statements of operations. The allowance for loan losses reflects management's estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The Company uses a uniform process for determining its allowance for loan losses. The allowance for loan losses includes an asset-specific component and may include a general, formula-based component when the portfolio is determined to be of sufficient size to warrant such a reserve. The asset-specific reserve component relates to reserves for losses on individual impaired loans. The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. This assessment is made on an individual loan basis each quarter based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan. For collateral dependent impaired loans, impairment is measured using the estimated fair value of collateral less the estimated cost to sell. Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and they are updated if circumstances indicate that a significant change in value has occurred. The Advisor generally will use the income approach through internally developed valuation models to estimate the fair value of the collateral for such loans. In more limited cases, the Advisor will obtain external “as is” appraisals for loan collateral, generally when third party participations exist. General reserves are recorded when (i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The Company’s policy is to estimate loss rates based on actual losses experienced, if any, or based on historical realized losses experienced in the industry if the Company has not experienced any losses. Current collateral and economic conditions affecting the probability and severity of losses are taken into account when establishing the allowance for loan losses. The Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability. The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Ratings range from “1” to “5” with “1” representing the lowest risk of loss and “5” representing the highest risk of loss. Loans are generally placed on non-accrual status when principal or interest payments are past due 90 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment regarding the borrower's ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2018 and December 31, 2017, the Company has not recorded any allowance for loan losses as the Company did not consider a loan loss to be probable. |
Equity-Based Compensation | Equity-Based Compensation In accordance with the Company’s Independent Director Restricted Share Plan (the “RSP”), restricted shares are issued to independent directors as compensation. The Company recognizes expense related to the fair value of equity-based compensation awards as operating expense in the consolidated statements of operations. The Company recognizes expense based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 10 – "Equity-Based Compensation" for further information. |
Income Taxes | Income Taxes The Company operated in a manner that allowed the Company to qualify as a REIT for U.S. federal income tax purposes commencing with the tax year ending December 31, 2017. 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 September 30, 2018 or December 31, 2017. The Company expects no significant increases or decreases in uncertain tax positions due to changes in tax positions within one year of September 30, 2018. The Company had no interest or penalties relating to income taxes recognized in the consolidated statements of operations for the three and nine-months ended September 30, 2018 or 2017. As of September 30, 2018, returns for the calendar years 2016 and 2017 remain subject to examination by U.S. and various state and local tax jurisdictions. For the three and nine-months ended September 30, 2018, the Company incurred no current income tax expense. For the three and nine months ended September 30, 2017, the Company incurred $56 in current income tax expense. |
Accounting Pronouncements Recently Issued but Not Yet Effective | Accounting Pronouncements Recently Issued but Not Yet Effective In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes how entities measure credit losses for financial assets carried at amortized cost. ASU 2016-13 eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. ASU 2016-13 is effective for SEC filers for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact ASU 2016-13 will have on its allowance for loan losses estimate. |
Real Estate Securities (Tables)
Real Estate Securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Company's Real Estate Securities | The following table summarizes the Company’s real estate securities as of September 30, 2018 and December 31, 2017: As of Weighted Average Coupon Weighted Average Years to Maturity Par Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value September 30, 2018 5.3 % 1.5 $ 85,273 $ 84,126 $ 492 $ — $ 84,618 December 31, 2017 2.9 % 1.7 $ 25,958 $ 25,958 $ 36 $ (1 ) $ 25,993 |
Commercial Mortgage Loans Hel_2
Commercial Mortgage Loans Held for Investment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Mortgage Loans On Real Estate [Abstract] | |
Schedule of Commercial Mortgage Loans Held for Investment | The following is a summary of the Company’s commercial mortgage loans held for investment as of September 30, 2018: Number of Loans Principal Balance Unamortized (fees)/costs, net Carrying Value Weighted Average Coupon Weighted Average Years to Maturity First mortgage loans 10 $ 148,070 $ (1,338 ) $ 146,732 6.0 % 2.5 Credit loans 2 10,500 — 10,500 9.2 % 7.7 Total and average 12 $ 158,570 $ (1,338 ) $ 157,232 6.2 % 2.8 The following is a summary of the Company’s commercial mortgage loans held for investment as of December 31, 2017: Number of Loans Principal Balance Unamortized (fees)/costs, net Carrying Value Weighted Average Coupon Weighted Average Years to Maturity First mortgage loans 2 $ 24,951 $ (357 ) $ 24,594 6.1 % 3.0 Credit loans 1 7,500 — 7,500 9.2 % 9.8 Total and average 3 $ 32,451 $ (357 ) $ 32,094 6.8 % 4.6 |
Summary of Investment Grade of Loans Loss | As part of the Company’s process for monitoring the credit quality of its loans, it performs a quarterly asset review of the loan portfolio and assigns risk ratings to each of its loans. Risk factors include payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location, as well as national and regional economic factors. To determine the likelihood of loss, the loans are rated on a 5-point scale as follows: Investment Grade Investment Grade Definition 1 Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. 2 Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Performing loan requiring closer monitoring. Trends and risk factors show some deterioration. Collection of principal and interest is still expected. 4 Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative. 5 Underperforming investment with expected loss of interest and some principal. |
Repurchase Agreements (Tables)
Repurchase Agreements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commercial Mortgage Loans | |
Repurchase Agreement [Line Items] | |
Schedule of Outstanding Repurchase Agreements | The details of the Repo Facility as of September 30, 2018 are as follows: Weighted Average Committed Financing Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity $ 175,000 $ 87,602 $ 139 $ 118,650 4.41 % 317 |
Real Estate Securities | |
Repurchase Agreement [Line Items] | |
Schedule of Outstanding Repurchase Agreements | As of September 30, 2018 and December 31, 2017, the Company had entered into one master repurchase agreement f Weighted Average Amount Outstanding Accrued Interest Payable Collateral Pledged Interest Rate Days to Maturity As of September 30, 2018 $ 54,621 $ 66 $ 74,646 3.55 % 16 As of December 31, 2017 $ 17,113 $ 24 $ 19,946 2.27 % 7 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Distributions Paid and Declared | The table below presents the distributions paid and declared during the three and nine-months ended September 30, 2018 and 2017. Three-months ended September 30, Nine-months ended September 30, 2018 2017 2018 2017 Distributions paid $ 1,808 $ 356 $ 3,961 $ 653 Distributions declared $ 2,020 $ 441 $ 4,431 $ 789 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Net Income (Loss) Per Share | The following table is a summary of the basic and diluted net income (loss) per share computation for the three and nine-months ended September 30, 2018 and 2017: Three-months ended September 30, Nine-months ended September 30, 2018 2017 2018 2017 Net income (loss) $ 1,340 $ (36 ) $ 2,379 $ (125 ) Weighted average shares outstanding, basic 4,159,656 910,390 3,074,194 546,430 Weighted average shares outstanding, diluted 4,159,839 910,390 3,074,311 546,430 Net income (loss) per share, basic and diluted $ 0.32 $ (0.04 ) $ 0.77 $ (0.23 ) |
Transactions with Related Par_2
Transactions with Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Related Party Transactions | The following table summarizes the Company’s related party transactions for the three and nine-months ended September 30, 2018 and 2017: Three-months ended September 30, Nine-months ended September 30, Payable as of 2018 2017 2018 2017 September 30, 2018 December 31, 2017 Organization and offering expense reimbursement ( 1) $ 113 $ 191 $ 389 $ 837 $ 772 $ 1,503 Selling commissions and dealer manager fee ( 2) 2,236 802 5,280 1,414 — — Advisory fee ( 3) 840 — 1,379 — 840 — Operating expense reimbursement ( 4) 3 2 8 215 3 9 Total $ 3,192 $ 995 $ 7,056 $ 2,466 $ 1,615 $ 1,512 (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) Inland Securities Corporation, the Company’s dealer manager and 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. 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 waived the advisory fee for all periods prior to April 1, 2018. As a result, there was no advisory fee for the three and nine months ended September 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 Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 December 31, 2017 Total Level I Level II Level III Total Level I Level II Level III Real estate securities $ 84,618 — $ 84,618 — $ 25,993 — $ 25,993 — |
Schedule of Carrying Amount and Fair Value of Financial Instruments | The following table details the carrying amount and fair value of the financial instruments described in Note 2 of the Annual Report: September 30, 2018 December 31, 2017 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial assets Cash and cash equivalents $ 16,094 $ 16,094 $ 1,406 $ 1,406 Commercial mortgage loans, net 157,232 159,199 32,094 32,094 Total $ 173,326 $ 175,293 $ 33,500 $ 33,500 Financial liabilities Repurchase agreements - real estate securities $ 54,621 $ 54,621 $ 17,113 $ 17,113 Repurchase agreements - commercial mortgage loans 87,602 87,602 — — Total $ 142,223 $ 142,223 $ 17,113 $ 17,113 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Schedule of Common Stock Outstanding and Proceeds from Offering | As of November 8, 2018, the Company had 5,209,957 shares of common stock outstanding and had raised proceeds from the Offering since September 30, 2018 and since inception as follows: Source of Capital October 1, 2018 through November 8, 2018 Total Class P Shares $ 13,017 $ 140,716 |
Subsequent Dividends Paid In Cash Monthly in Arrears | The table below sets forth the distributions paid in cash monthly in arrears: Distribution Period Month Distribution Paid Distribution Amount September 2018 October 2018 $ 728 October 2018 November 2018 $ 800 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||||||
Uncertain tax positions | $ 0 | $ 0 | $ 0 | $ 0 | ||
Uncertain tax positions, period increase (decrease) | $ 0 | |||||
Uncertain tax positions, income tax interest or penalties | 0 | $ 0 | 0 | $ 0 | ||
Current income tax expense | $ 0 | $ 56,000 | $ 0 | $ 56,000 |
Real Estate Securities - Summar
Real Estate Securities - Summary of Company's Real Estate Securities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investments Debt And Equity Securities [Abstract] | ||
Weighted Average Coupon | 5.30% | 2.90% |
Weighted Average Years to Maturity | 1 year 6 months | 1 year 8 months 12 days |
Par Value | $ 85,273,000 | $ 25,958,000 |
Amortized Cost | 84,126,000 | 25,958,000 |
Unrealized Gains | 492,000 | 36,000 |
Unrealized Losses | (1,000) | |
Real estate securities at fair value | $ 84,618,000 | $ 25,993,000 |
Real Estate Securities - Additi
Real Estate Securities - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)Security | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Security | Sep. 30, 2017USD ($) | Dec. 31, 2017Security | |
Investments Debt And Equity Securities [Abstract] | |||||
Number of available for sale securities purchased at a discount | 3 | 3 | |||
Number of real estate securities in unrealized loss for a period greater than one year | 0 | 0 | 0 | ||
Realized gains or losses | $ | $ 0 | $ 0 | $ 0 | $ 0 |
Commercial Mortgage Loans Hel_3
Commercial Mortgage Loans Held for Investment - Summary of Commercial Mortgage Loans held for Investment (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)Loan | Dec. 31, 2017USD ($)Loan | |
Mortgage Loans On Real Estate [Line Items] | ||
Number of Loans | Loan | 12 | 3 |
Principal Balance | $ 158,570 | $ 32,451 |
Unamortized (fees)/costs, net | (1,338) | (357) |
Carrying Value | $ 157,232 | $ 32,094 |
Weighted Average Coupon | 6.20% | 6.80% |
Weighted Average Years to Maturity | 2 years 9 months 18 days | 4 years 7 months 6 days |
First Mortgage Loans [Member] | ||
Mortgage Loans On Real Estate [Line Items] | ||
Number of Loans | Loan | 10 | 2 |
Principal Balance | $ 148,070 | $ 24,951 |
Unamortized (fees)/costs, net | (1,338) | (357) |
Carrying Value | $ 146,732 | $ 24,594 |
Weighted Average Coupon | 6.00% | 6.10% |
Weighted Average Years to Maturity | 2 years 6 months | 3 years |
Credit Loans [Member] | ||
Mortgage Loans On Real Estate [Line Items] | ||
Number of Loans | Loan | 2 | 1 |
Principal Balance | $ 10,500 | $ 7,500 |
Carrying Value | $ 10,500 | $ 7,500 |
Weighted Average Coupon | 9.20% | 9.20% |
Weighted Average Years to Maturity | 7 years 8 months 12 days | 9 years 9 months 18 days |
Commercial Mortgage Loans Hel_4
Commercial Mortgage Loans Held for Investment - Summary of Investment Grade of Loans Loss (Details) - Commercial Mortgage Loans | 9 Months Ended |
Sep. 30, 2018 | |
Investment Grade One | |
Financing Receivable Recorded Investment [Line Items] | |
Description of Investment Grade | Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable. |
Investment Grade Two | |
Financing Receivable Recorded Investment [Line Items] | |
Description of Investment Grade | Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. |
Investment Grade Three | |
Financing Receivable Recorded Investment [Line Items] | |
Description of Investment Grade | Performing loan requiring closer monitoring. Trends and risk factors show some deterioration. Collection of principal and interest is still expected. |
Investment Grade Four | |
Financing Receivable Recorded Investment [Line Items] | |
Description of Investment Grade | Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative. |
Investment Grade Five | |
Financing Receivable Recorded Investment [Line Items] | |
Description of Investment Grade | Underperforming investment with expected loss of interest and some principal. |
Commercial Mortgage Loans Hel_5
Commercial Mortgage Loans Held for Investment - Additional Information (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)LoanRating | Dec. 31, 2017USD ($)Rating | |
Mortgage Loans On Real Estate [Abstract] | ||
Number of loans risk rated two | 11 | |
Number of loans risk rated three | 1 | |
Weighted average risk rating | Rating | 2 | 2 |
Allowance for loan losses | $ | $ 0 | $ 0 |
Repurchase Agreements - Additio
Repurchase Agreements - Additional Information (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2018USD ($) | Sep. 30, 2018Agreement | Dec. 31, 2017Agreement | Jul. 31, 2018USD ($) | |
Commercial Mortgage Loans | ||||
Repurchase Agreement [Line Items] | ||||
Repurchase agreement in advances loan | $ | $ 175,000,000 | $ 100,000,000 | ||
Repurchase agreement, maximum possible adjustment in loans | $ | $ 250,000,000 | |||
Extended maturity date | Aug. 13, 2019 | |||
Commercial Mortgage Loans | LIBOR | ||||
Repurchase Agreement [Line Items] | ||||
Interest rate | 2.25% | |||
Real Estate Securities | ||||
Repurchase Agreement [Line Items] | ||||
Number of outstanding repurchase agreements | Agreement | 1 | 1 | ||
Real Estate Securities | CRE Securities MRA | ||||
Repurchase Agreement [Line Items] | ||||
Number of master repurchase agreements | Agreement | 10 | 2 |
Repurchase Agreements - Schedul
Repurchase Agreements - Schedule of Outstanding Repurchase Agreements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Assets Sold Under Agreements To Repurchase [Line Items] | ||
Interest payable | $ 206 | $ 24 |
Commercial Mortgage Loans | ||
Assets Sold Under Agreements To Repurchase [Line Items] | ||
Amount Outstanding | 87,602 | |
Commercial Mortgage Loans | Repo Facility | ||
Assets Sold Under Agreements To Repurchase [Line Items] | ||
Committed Financing | 175,000 | |
Amount Outstanding | 87,602 | |
Interest payable | 139 | |
Collateral Pledged | $ 118,650 | |
Weighted Average Interest Rate | 4.41% | |
Weighted Average Days to Maturity | 317 days | |
Real Estate Securities | ||
Assets Sold Under Agreements To Repurchase [Line Items] | ||
Amount Outstanding | $ 54,621 | 17,113 |
Interest payable | 66 | 24 |
Collateral Pledged | $ 74,646 | $ 19,946 |
Weighted Average Interest Rate | 3.55% | 2.27% |
Weighted Average Days to Maturity | 16 days | 7 days |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Class Of Stock [Line Items] | |||
Proceeds from issuance of common stock | $ 81,351 | $ 24,057 | |
Common stock, offering costs | 6,399 | 1,708 | |
Deferred offering costs | 772 | $ 1,503 | |
Distributions declared but not yet paid | $ 728 | $ 170 | $ 258 |
Class P Common Stock | |||
Class Of Stock [Line Items] | |||
Common stock, shares issued | 2,997,558 | ||
Common stock issued, average price per share | $ 27.14 | ||
Proceeds from issuance of common stock | $ 74,952 | ||
Common stock, offering costs | 6,399 | ||
Deferred offering costs | $ 389 | ||
Daily distribution amount | $ 0.005260274 | ||
Distributions declared but not yet paid | $ 728 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Distributions Paid and Declared (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Dividends Payable [Line Items] | ||||
Distributions paid | $ 3,961 | $ 653 | ||
Class P Common Stock | ||||
Dividends Payable [Line Items] | ||||
Distributions paid | $ 1,808 | $ 356 | 3,961 | 653 |
Distributions declared | $ 2,020 | $ 441 | $ 4,431 | $ 789 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Summary of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 1,340 | $ (36) | $ 2,379 | $ (125) |
Weighted average shares outstanding, basic | 4,159,656 | 910,390 | 3,074,194 | 546,430 |
Weighted average shares outstanding, diluted | 4,159,839 | 910,390 | 3,074,311 | 546,430 |
Net income (loss) per share, basic and diluted | $ 0.32 | $ (0.04) | $ 0.77 | $ (0.23) |
Transactions with Related Par_3
Transactions with Related Parties - Additional Information (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||
Proceeds from issuance of common stock | $ 81,351,000 | $ 24,057,000 | |
Common stock, shares, issued | 4,730,950 | 1,733,392 | |
Class P Common Stock | |||
Related Party Transaction [Line Items] | |||
Proceeds from issuance of common stock | $ 74,952,000 | ||
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 | ||
Common stock, purchase price per share | $ 25 | ||
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 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 Par_4
Transactions with Related Parties - Summary of Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Advisory fee | $ 840 | $ 1,379 | |||
Total, payable | 1,615 | 1,615 | $ 1,512 | ||
Advisor | |||||
Related Party Transaction [Line Items] | |||||
Organization and offering expense reimbursement | 113 | $ 191 | 389 | $ 837 | |
Selling commissions and dealer manager fee | 2,236 | 802 | 5,280 | 1,414 | |
Advisory fee | 840 | 0 | 1,379 | 0 | |
Operating expense reimbursement | 3 | 2 | 8 | 215 | |
Total | 3,192 | $ 995 | 7,056 | $ 2,466 | |
Organization and offering expense reimbursement, payable | 772 | 772 | 1,503 | ||
Advisory fee, payable | 840 | 840 | |||
Operating expense reimbursement, payable | 3 | 3 | 9 | ||
Total, payable | $ 1,615 | $ 1,615 | $ 1,512 |
Transactions with Related Par_5
Transactions with Related Parties - Summary of Related Party Transactions (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Advisory fee | $ 840 | $ 1,379 | ||
Advisor | ||||
Related Party Transaction [Line Items] | ||||
Percentage of average aggregate value of assets | 1.50% | |||
Percentage of minimum total return per share | 7.00% | |||
Percentage of excess total return | 20.00% | |||
Percentage of aggregate total return | 15.00% | |||
Advisory fee | $ 840 | $ 0 | $ 1,379 | $ 0 |
Advisor | Maximum | ||||
Related Party Transaction [Line Items] | ||||
Percentage of selling commission | 5.00% | |||
Percentage of dealer manager fee | 3.00% |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) $ in Thousands | Mar. 01, 2018USD ($)Directorshares | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) |
Restricted Shares | Indipendent Directors | RSP | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Compensation expense | $ | $ 3 | $ 6 | |
Unrecognized compensation cost | $ | $ 24 | $ 24 | |
Weighted average remaining period that compensation expense recognizable | 2 years 5 months 1 day | ||
Common Stock | Director Stock Awards | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of independent directors | Director | 3 | ||
Restricted shares value | $ | $ 30 | ||
Restricted shares award vest percentage | 0.333% | ||
Restricted shares description | The restricted Class P Shares will vest in equal one-third increments on March 1, 2019, 2020 and 2021 | ||
Common Stock | Director Stock Awards | Independent Director One | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted shares | 400 | ||
Common Stock | Director Stock Awards | Independent Director Two | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted shares | 400 | ||
Common Stock | Director Stock Awards | Independent Director Three | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted shares | 400 | ||
Common Stock | Director Stock Awards | Independent Directors | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of restricted shares | 1,200 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial Instruments Carried at Fair Value in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Real estate securities at fair value | $ 84,618 | $ 25,993 |
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 | 84,618 | 25,993 |
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 | $ 84,618 | $ 25,993 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | ||
Fair value assets transfers from level 1 to level 2 amount | $ 0 | $ 0 |
Fair value assets transfers from level 2 to level 1 amount | 0 | 0 |
Fair value assets transfers to level 3 amount | 0 | 0 |
Fair value assets transfers out of level 3 amount | $ 0 | $ 0 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Schedule of Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Financial assets | ||
Cash and cash equivalents | $ 16,094 | $ 1,406 |
Commercial mortgage loans, net | 157,232 | 32,094 |
Total | 173,326 | 33,500 |
Financial liabilities | ||
Total | 142,223 | 17,113 |
Carrying Amount | Real Estate Securities | ||
Financial liabilities | ||
Repurchase agreements | 54,621 | 17,113 |
Carrying Amount | Commercial Mortgage Loans | ||
Financial liabilities | ||
Repurchase agreements | 87,602 | |
Estimated Fair Value | ||
Financial assets | ||
Cash and cash equivalents | 16,094 | 1,406 |
Commercial mortgage loans, net | 159,199 | 32,094 |
Total | 175,293 | 33,500 |
Financial liabilities | ||
Total | 142,223 | 17,113 |
Estimated Fair Value | Real Estate Securities | ||
Financial liabilities | ||
Repurchase agreements | 54,621 | $ 17,113 |
Estimated Fair Value | Commercial Mortgage Loans | ||
Financial liabilities | ||
Repurchase agreements | $ 87,602 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2018 | Nov. 08, 2018 | Dec. 31, 2017 | |
Subsequent Event [Line Items] | |||
Common stock, shares, outstanding | 4,730,950 | 1,733,392 | |
Class P Common Stock | |||
Subsequent Event [Line Items] | |||
Distribution Period Start Date | Dec. 1, 2018 | ||
Distribution Period End Date | Mar. 31, 2019 | ||
Daily distribution amount | $ 0.005260274 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Common stock, shares, outstanding | 5,209,957 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Common Stock Outstanding and Proceeds from Offering (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 26 Months Ended | |
Nov. 08, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 08, 2018 | |
Subsequent Event [Line Items] | ||||
Proceeds from issuance of common stock | $ 81,351 | $ 24,057 | ||
Class P Common Stock | ||||
Subsequent Event [Line Items] | ||||
Proceeds from issuance of common stock | $ 74,952 | |||
Class P Common Stock | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Proceeds from issuance of common stock | $ 13,017 | $ 140,716 |
Subsequent Events - Subsequent
Subsequent Events - Subsequent Distributions Paid in Cash Monthly in Arrears (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | |
Subsequent Event [Line Items] | |||
Distribution Amount | $ 728 | $ 258 | $ 170 |
Class P Common Stock | |||
Subsequent Event [Line Items] | |||
Distribution Amount | $ 728 | ||
Class P Common Stock | September 2018 | |||
Subsequent Event [Line Items] | |||
Distribution Period | September 2,018 | ||
Month Distribution Paid | 2018-10 | ||
Distribution Amount | $ 728 | ||
Class P Common Stock | October 2018 | |||
Subsequent Event [Line Items] | |||
Distribution Period | October 2,018 | ||
Month Distribution Paid | 2018-11 | ||
Distribution Amount | $ 800 |