Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Feb. 05, 2016 | |
Document and Entity Information: | ||
Entity Registrant Name | SECURITY LAND & DEVELOPMENT CORP | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Entity Central Index Key | 88,572 | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 5,243,107 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
CURRENT ASSETS | ||
Cash | $ 569,671 | $ 412,847 |
Receivables from tenants, net of allowance of $52,255 at both December 31, 2015 and September 30, 2015 | $ 254,277 | 386,469 |
Prepaid property taxes | 23,251 | |
Income taxes receivable | 14,263 | |
Total current assets | $ 823,948 | 836,830 |
INVESTMENT PROPERTIES | ||
Investment properties for lease, net of accumulated depreciation | 7,028,552 | 7,075,175 |
Land and improvements held for investment or development | 3,760,568 | 3,752,863 |
Total Investment Properties | 10,789,120 | 10,828,038 |
OTHER ASSETS | 76,921 | 79,353 |
Total Assets | 11,689,989 | 11,744,221 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 175,184 | $ 282,769 |
Income taxes payable | 43,068 | |
Current maturities of notes payable | 242,091 | $ 239,168 |
Total current liabilities | 460,343 | 521,937 |
LONG-TERM LIABILITIES | ||
Notes payable, less current portion | 2,963,981 | 3,025,458 |
Deferred income taxes | 1,429,690 | 1,413,187 |
Total long-term liabilities | 4,393,671 | 4,438,645 |
Total liabilities | 4,854,014 | 4,960,582 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value $.10 per share; 30,000,000 shares authorized; 5,243,107 shares issued and outstanding | 524,311 | 524,311 |
Additional paid-in capital | 333,216 | 333,216 |
Retained earnings | 5,978,448 | 5,926,112 |
Total Stockholders' Equity | 6,835,975 | 6,783,639 |
Liabilities and Stockholders' Equity | $ 11,689,989 | $ 11,744,221 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Receivables from tenants net of allowance (in dollars) | $ 52,255 | $ 52,255 |
Common Stock, Par Value (in dollars per share) | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 30,000,000 | 30,000,000 |
Common Stock, shares issued | 5,243,107 | 5,243,107 |
Common Stock, shares outstanding | 5,243,107 | 5,243,107 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
OPERATING REVENUES | ||
Rent revenues | $ 410,360 | $ 381,272 |
OPERATING EXPENSES | ||
Depreciation and amortization | 49,056 | 42,311 |
Property taxes | 64,479 | 64,422 |
Payroll and related costs | 84,631 | 21,871 |
Insurance and utilities | 10,967 | 8,771 |
Repairs and maintenance | 7,630 | 16,124 |
Professional services | $ 30,128 | 24,944 |
Bad debt | 2,814 | |
Penalties | 4,518 | |
Other | $ 3,902 | 1,714 |
Total Operating Expenses | 250,793 | 187,489 |
Operating income | 159,567 | 193,783 |
OTHER INCOME (EXPENSE) | ||
Interest expense | (40,528) | $ (44,887) |
Other Income | 7,616 | |
Total other income (expense) | (32,912) | $ (44,887) |
Income before income taxes | 126,655 | 148,896 |
INCOME TAX PROVISION (BENEFIT) | ||
Income tax expense | 57,816 | 60,017 |
Income tax deferred expense (benefit) | 16,503 | (3,497) |
Income taxes provision (benefit) | 74,319 | 56,520 |
Net income | 52,336 | 92,376 |
RETAINED EARNINGS, BEGINNING OF PERIOD | 5,926,112 | 4,433,973 |
RETAINED EARNINGS, END OF PERIOD | $ 5,978,448 | $ 4,526,349 |
PER SHARE DATA | ||
Net income per common share | $ 0.01 | $ 0.02 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
OPERATING ACTIVITIES | ||
Net income | $ 52,336 | $ 92,376 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 49,056 | 42,311 |
Deferred income taxes | 16,503 | (3,497) |
Changes in deferred and accrued amounts: | 105,188 | (5,896) |
Net cash provided by operating activities | 223,083 | $ 125,294 |
INVESTING ACTIVITIES | ||
Additions to investment properties and improvements to property held for development | (7,705) | |
Net cash used in investing activities | (7,705) | |
FINANCING ACTIVITIES | ||
Principal payments on notes payable | (58,554) | $ (160,994) |
Net cash used in financing activities | (58,554) | (160,994) |
Net increase (decrease) in cash | 156,824 | (35,700) |
CASH, BEGINNING OF PERIOD | 412,847 | 65,982 |
CASH, END OF PERIOD | 569,671 | 30,282 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 40,793 | 43,389 |
Cash paid for income taxes | $ 485 | $ 37,902 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1 Basis of Presentation The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q, Article 8 of Regulation S-X and accounting principles generally accepted in the United States of America; therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows. Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited financial statements appearing in our Form 10-K for the year ended September 30, 2015 when reviewing these interim financial statements. The financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Security Land and Development Corporation and its four wholly owned subsidiaries, Royal Palms Motel, Inc., SLDC, LLC, SLDC 2, LLC and SLDC III, LLC (described on a consolidated basis as the Company). Significant intercompany transactions and accounts are eliminated in consolidation. Critical Accounting Policies: Estimates of Useful Lives of Investment Properties for Purposes of Depreciation Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from managements estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties. Evaluation of Long-Lived Assets for Impairment The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount. Estimates of Income Tax Rates Applicable to Deferred Taxes The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from managements estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due. Refer to the Companys Form 10-K for the year ended September 30, 2015 for further information regarding its critical accounting policies. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts (Topic 606). |
Investment Properties
Investment Properties | 3 Months Ended |
Dec. 31, 2015 | |
INVESTMENT PROPERTIES | |
Investment Properties | Note 2 Investment Properties Investment properties leased or held for lease to others under operating leases consisted of the following at December 31, 2015 and September 30, 2015: December 31, September 30, 2015 2015 (unaudited) National Plaza building, land and improvements $ 5,305,419 $ 5,305,419 Evans Ground Lease, land and improvements 2,382,673 2,382,673 Wrightsboro Road Building land and improvements 1,905,875 1,905,875 Commercial land and improvements 3,760,568 3,752,863 13,354,535 13,346,830 Less accumulated depreciation (2,565,415 ) (2,518,792 ) Investment properties for lease, net of depreciation $ 10,789,120 $ 10,828,038 Depreciation expense totaled approximately $48,000 and $40,000 for the three-month periods ended December 31, 2015 and 2014, respectively. National Plaza is a retail strip center located on Washington Road in Augusta Georgia. Approximately 81% of the rentable space at the National Plaza is leased to Publix Supermarkets, Inc., the National Plazas anchor tenant. The Company entered into a long-term ground lease with a major national tenant and its developer in May 2006 on approximately 18 acres of land in Columbia County, Georgia. The agreement required monthly rental payments of $20,833 during the development period, which was completed in January 2007. Following the expiration of the development period, the lease required annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lessee has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years. The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term. In September of 2015 the Company purchased a commercial building consisting of approximately 25,000 square feet of retail space and 27,000 square feet of warehouse space on approximately 3.5 acres of land located on Wrightsboro Road. The retail space is currently leased to a local retailer and rent commenced on October 1, 2015. The related lease term is 10 years with annual rental payments totaling $142,000, paid monthly, increasing to $153,000 at year 6. The warehouse space was available for lease as of September 30, 2015. The Company is recognizing rents on a straight-line basis over the lease term. The Company holds several parcels of land for investment or development purposes, including 19.38 acres of land in North Augusta, South Carolina, purchased in parcels during 2007 and 2008. The Company also owns approximately 85 acres of land in south Richmond County, Georgia and a 1.1 acre parcel along Washington Road in Augusta, Georgia that adjoins the Companys National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,760,568 and $3,752,863 at December 31, 2015 and September 30, 2015, respectively. Refer to the Companys Form 10-K for the year ended September 30, 2015 for further information on operating lease agreements and land held for investment or development purposes. |
Notes Payable
Notes Payable | 3 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 3 Notes Payable Notes payable consisted of the following at: December 31, 2015 September 30, 2015 (unaudited) A note payable to an insurance company collateralized with approximately 18 acres of land in Columbia County, Georgia, and an assignment of the long-term ground lease. The note is payable in monthly installments of $17,896, including principal and interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%. 1,785,381 1,812,690 A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $15,220, including principal and interest, through April 2025, and bears interest at a fixed rate of 4%. The proceeds were used to pay the Companys outstanding income tax liability, four notes payable collateralized by the Companys land held for lease and investment portfolio and one uncollateralized note payable to a shareholder. The proceeds were also used to fund improvements at National Plaza. 1,420,691 1,451,936 3,206,072 3,264,626 Less current maturities (242,091) (239,168) $ 2,963,981 $ 3,025,458 Management of the Company expects future liquidity needs of the Company to be funded from rent revenues, refinancing and the appreciation in investment properties (which can be sold or mortgaged, if necessary). Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $242,091. The Company projects that it will be able to fund the payment of its current maturities of notes payable through cash flows generated from its operations and cash on hand, but there can be no assurance that this will occur. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 4 Income Taxes At September 30, 2015 the Company had income taxes receivable of $14,263 related to the fiscal year 2015. As of December 31, 2015 the Companys outstanding income taxes payable is $43,068, all of which relates to 2016. |
Concentrations
Concentrations | 3 Months Ended |
Dec. 31, 2015 | |
Concentrations | |
Concentrations | Note 5 - Concentrations Substantially all of the Companys assets consist of real estate located in Richmond and Columbia Counties in the state of Georgia and in Aiken County, South Carolina. Substantially all of the Companys revenues are earned from three of the Companys investment properties, National Plaza, the Evans Ground Lease, and Wrightsboro Road Lease, which comprise approximately 50%, 40% and 10% of the Companys revenues, respectively. The anchor tenant for National Plaza, Publix Supermarkets, Inc. (Publix), a regional food supermarket chain, leases approximately 81% of the space at National Plaza. The Company generates approximately 35% of its revenues though its lease with Publix. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6 - Related Party Transactions The Company purchases insurance from an insurance company of which a member of the Companys Board of Directors is President. The Companys Board of Directors believes that the insurance prices obtained from such company were not in excess of prices that would have been paid had the Company obtained this insurance from other sources. The Company hired an attorney who is also a member of the Companys Board of Directors and who also serves as Vice President of the Company, to represent the Company in a legal matter regarding a tenants claim for reimbursement of certain expenses charged. The matter was settled in June 2015. |
Legal Matter
Legal Matter | 3 Months Ended |
Dec. 31, 2015 | |
Legal Matter | |
Legal Matter | Note 7 - Legal Matter In June 2015, the Company settled a legal matter regarding a tenants claim for reimbursement of certain expenses charged to the tenant by the Company. Refer to the Companys Form 10-K for the year ended September 30, 2015 for further information regarding this settlement. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Estimates of Useful Lives of Investment Properties for Purposes of Depreciation | Estimates of Useful Lives of Investment Properties for Purposes of Depreciation Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from managements estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties. |
Evaluation of Long-Lived Assets for Impairment | Evaluation of Long-Lived Assets for Impairment The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount. |
Estimates of Income Tax Rates Applicable to Deferred Taxes | Estimates of Income Tax Rates Applicable to Deferred Taxes The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from managements estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due. Refer to the Companys Form 10-K for the year ended September 30, 2015 for further information regarding its critical accounting policies. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts (Topic 606). |
Investment Properties (Tables)
Investment Properties (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
INVESTMENT PROPERTIES | |
Schedule of Investment properties leased or held for lease | Investment properties leased or held for lease to others under operating leases consisted of the following at December 31, 2015 and September 30, 2015: December 31, September 30, 2015 2015 (unaudited) National Plaza building, land and improvements $ 5,305,419 $ 5,305,419 Evans Ground Lease, land and improvements 2,382,673 2,382,673 Wrightsboro Road Building land and improvements 1,905,875 1,905,875 Commercial land and improvements 3,760,568 3,752,863 13,354,535 13,346,830 Less accumulated depreciation (2,565,415 ) (2,518,792 ) Investment properties for lease, net of depreciation $ 10,789,120 $ 10,828,038 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable and line of credit | Notes payable consisted of the following at: December 31, 2015 September 30, 2015 (unaudited) A note payable to an insurance company collateralized with approximately 18 acres of land in Columbia County, Georgia, and an assignment of the long-term ground lease. The note is payable in monthly installments of $17,896, including principal and interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%. 1,785,381 1,812,690 A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $15,220, including principal and interest, through April 2025, and bears interest at a fixed rate of 4%. The proceeds were used to pay the Companys outstanding income tax liability, four notes payable collateralized by the Companys land held for lease and investment portfolio and one uncollateralized note payable to a shareholder. The proceeds were also used to fund improvements at National Plaza. 1,420,691 1,451,936 3,206,072 3,264,626 Less current maturities (242,091) (239,168) $ 2,963,981 $ 3,025,458 |
Investment Properties, (Details
Investment Properties, (Details) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Real Estate Properties [Line Items] | ||
Investment property gross | $ 13,354,535 | $ 13,346,830 |
Less accumulated depreciation | (2,565,415) | (2,518,792) |
Investment properties for lease, net of depreciation | 10,789,120 | 10,828,038 |
National Plaza building, land and improvements [Member] | ||
Real Estate Properties [Line Items] | ||
Investment property gross | 5,305,419 | 5,305,419 |
Evans Ground Lease, land and improvements [Member] | ||
Real Estate Properties [Line Items] | ||
Investment property gross | 2,382,673 | 2,382,673 |
Wrightsboro Road Building land and improvements [Member] | ||
Real Estate Properties [Line Items] | ||
Investment property gross | 1,905,875 | 1,905,875 |
Commercial land and improvements [Member] | ||
Real Estate Properties [Line Items] | ||
Investment property gross | $ 3,760,568 | $ 3,752,863 |
Investment Properties (Details
Investment Properties (Details Textual) | 1 Months Ended | 3 Months Ended | |||
Dec. 31, 2015USD ($)a | May. 31, 2006USD ($)a | Dec. 31, 2015USD ($)a | Dec. 31, 2014USD ($) | Sep. 30, 2015USD ($) | |
Depreciation expense | $ | $ 48,000 | $ 40,000 | |||
Percentage of National Plaza space leased to Publix Supermarkets, Inc | 81.00% | ||||
Operating lease renewable term | 21 years | ||||
Land and improvements held for investment or development | $ | $ 3,760,568 | $ 3,760,568 | $ 3,752,863 | ||
Lease Agreements [Member] | |||||
Area of land for lease in Columbia County, Georgia | a | 18 | ||||
Monthly rental payments, development period | $ | $ 20,833 | ||||
Annual rental payments | $ | $ 500,000 | ||||
Annual rental payments description | First 5 years | ||||
Percentage of rent increasing in years 6, 11, and 16 | 5.00% | ||||
Renewal period | 21 years | ||||
Renewal period description | Every 5 years thereafter | ||||
Total lease term | 50 years | ||||
Retail Space [Member] | |||||
Minimum rental payment of operating lease | $ | $ 142,000 | $ 142,000 | |||
Renewal period | 10 years | ||||
Purchased of commercial building | a | 25,000 | 25,000 | |||
Increase minimum rental payment after 6 year | $ | $ 153,000 | $ 153,000 | |||
Warehouse Space [Member] | |||||
Purchased of commercial building | a | 27,000 | 27,000 | |||
North Augusta [Member] | |||||
Land and improvements held for investment or development, area | a | 19.38 | 19.38 | |||
South Richmond County [Member] | |||||
Land and improvements held for investment or development, area | a | 85 | 85 | |||
Washington Road In Augusta [Member] | |||||
Land and improvements held for investment or development, area | a | 1.1 | 1.1 |
Notes Payable (Details)
Notes Payable (Details) | 3 Months Ended | |
Dec. 31, 2015USD ($)a | Sep. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||
Total notes payable | $ 3,206,072 | $ 3,264,626 |
Current notes payable | (242,091) | (239,168) |
Noncurrent notes payable | 2,963,981 | 3,025,458 |
Note payable to an insurance company collateralized in Columbia County, Georgia, and an assignment of the long-term ground lease [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable | $ 1,785,381 | 1,812,690 |
Interest rate (in percent) | 5.85% | |
Periodic monthly installments | $ 17,896 | |
Area purchased in adjoining the North Augusta, South Carolina property (in acres) | a | 18 | |
Note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable | $ 1,420,691 | $ 1,451,936 |
Interest rate (in percent) | 4.00% | |
Periodic monthly installments | $ 15,220 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Income Tax Disclosure [Abstract] | ||
Total outstanding income tax payable | $ 43,068 | |
Income Taxes Receivable | $ 14,263 |
Concentrations (Details Textual
Concentrations (Details Textual) - Customer Concentration Risk [Member] | 3 Months Ended |
Dec. 31, 2015a | |
Sales Revenue, Net [Member] | National Plaza building, land and improvements [Member] | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 50.00% |
Sales Revenue, Net [Member] | Evans Ground Lease, land and improvements [Member] | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 40.00% |
Sales Revenue, Net [Member] | Wrightsboro Road Lease[Member] | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 10.00% |
Sales Revenue, Net [Member] | National Plaza and Evans Ground Lease [Member] | |
Concentration Risk [Line Items] | |
Number of investment properties | 3 |
Sales Revenue, Net [Member] | Publix Supermarkets Inc [Member] | National Plaza building, land and improvements [Member] | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 35.00% |
Space Leased [Member] | Publix Supermarkets Inc [Member] | National Plaza building, land and improvements [Member] | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 81.00% |