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INVESTMENTS IN REAL ESTATE
 3 Months Ended
Sep. 30, 2021
INVESTMENTS IN REAL ESTATE [Abstract]  
INVESTMENTS IN REAL ESTATE
NOTE 3 – INVESTMENTS IN REAL ESTATE
 
The following tables provide summary information regarding the Company’s operating properties, which are owned through the Company’s subsidiaries: the Operating Partnership, Madison and PVT.
 
Consolidated Operating Properties
 
Property Name:
Addison Corporate Center
Commodore Apartments
Pon de Leo Apartments
Property Owner:
The Operating Partnership
Madison-PVT Partners LLC
PVT-Madison Partners LLC
Location:
Windsor, CT
Oakland, CA
Oakland, CA
Number of Tenants:
6
48
39
Year Built:
1980
1912
1929
Ownership Interest:
100%
100%
100%
 
As of September 30, 2021, the Company was in the closing stage of acquiring another property in Hollywood California through a newly established company, Hollywood Hillview Owner, LLC and had funded $7,620,000 to the escrow account. The amount has been recorded as investment acquisition advance in the consolidated balance sheet as of September 30, 2021. The acquisition closed on October 4, 2021, and the Company is in the process of allocating the costs in accordance with ASC 805.
 
Operating Leases:
 
The Company’s real estate assets are leased to tenants under operating leases that contain varying terms and expirations. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company does not require a security deposit from tenants on its commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants, but security deposits generally are not individually significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of the security deposit. Security deposits received in cash related to tenant leases are included in other accrued liabilities in the accompanying consolidated balance sheet and were immaterial as of September 30, 2021.
The following table presents the components of income from real estate operations for the three months ended September 30, 2021:
 
Lease Income - Operating leases
  
$
2,270,918
  
Variable lease income (1)
    
451,664
  
   
$
2,722,582
  


(1)
Primarily includes tenant reimbursements for utilities and common area maintenance.
 
As of September 30, 2021, the future minimum rental income from the Company’s real estate properties under non-cancelable operating leases are as follows:
 
Year ended June 30,:
  
Rental Income
  
2022
  
$
4,093,473
  
2023
    
3,149,778
  
2024
    
2,970,929
  
2025
    
3,045,674
  
2026
    
2,155,746
  
Thereafter
    
4,740,890
  
Total
  
$
20,156,490
  
 
Lease Intangibles, Above-Market Lease Assets and Below-Market Lease Liabilities, Net
 
As of September 30, 2021, the Company’s acquired lease intangibles, above-market lease assets and below-market lease liabilities, were as follows:
 
   
Lease Intangibles
    
Above-Market Lease
Asset
    
Below-Market Lease
Liabilities
  
                   
Cost
  
$
5,141,279
    
$
447,663
    
$
937,452
  
Accumulated amortization
    
(1,453,293
)
    
(95,928
)
    
(173,494
)
Total
  
$
3,687,986
    
$
351,735
    
$
763,958
  
                         
Weighted average amortization period (years)
    
3.1
      
3.5
      
3.4
  
 
As of June 30, 2021, the Company’s acquired lease intangibles, above-market lease assets and below-market lease liabilities, were as follows:
 
   
Lease Intangibles
    
Above-Market Lease
Asset
    
Below-Market Lease
Liabilities
  
                   
Cost
  
$
5,141,279
    
$
447,663
    
$
937,452
  
Accumulated amortization
    
(1,086,485
)
    
(63,952
)
    
(99,139
)
Total
  
$
4,054,794
    
$
383,711
    
$
838,313
  
                         
Weighted average amortization period (years)
    
3.1
      
3.5
      
3.4
  

The Company’s amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the three months ended September 30, 2021, were as follows:
 

  
Three Months Ended
September 30, 2021
  

 
Lease Intangibles
    
Above-Market
Lease Asset
    
Below-Market Lease
Liabilities
  
Amortization
  
$
366,808
    
$
31,976
     $ (74,355 )

The Company did not have lease intangibles as of September 30, 2020. Therefore, it did not have any amortization.

The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:
 
   
Year Ended June 30, :
  
   
2022 (remainder)
    
2023
    
2024
    
2025
    
2026
     Thereafter
 
In-place leases, to be included in amortization
  
$
1,094,292
    
$
1,437,991
    
$
823,807
    
$
59,515
    
$
59,515
     $
212,866  
                                                 
Above-market lease intangibles
  
$
95,927
    
$
127,904
    
$
127,904
    
$
-
    
$
-
     $
-  
Below-market lease liabilities
    
(212,553
)
    
(267,695
)
    
(217,763
)
    
(65,947
)
    
-
       -  
Total to be included in revenue from tenants
  
$
(116,626
)
  
$
(139,791
)
  
$
(89,859
)
  
$
(65,947
)
  
$
-
     $
 -