10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                               to                              

001-36892
(Commission file number)

JERNIGAN CAPITAL, INC.
(Exact name of registrant as specified in its charter)

Maryland	47-1978772
State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

6410 Poplar Avenue, Suite 650	38119
Memphis, Tennessee	(Zip Code)
(Address of principal executive offices)

(901) 567-9510
Registrant’s telephone number, including area code

Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days.
Yes x   No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x   No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer  x (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨   No x

As of November 12, 2015, 6,162,500 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding.

Table of Contents

	Page
PART I .  FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	37
PART II .  other information	39
Item 1. Legal Proceedings	39
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3. Defaults Upon Senior Securities	40
Item 4. Mine Safety Disclosures	40
Item 5. Other Information	40
Item 6. Exhibits	40

-i-

In this quarterly report on Form 10-Q (“report”), unless the context indicates otherwise, references to “Jernigan Capital,” “we,” “the Company,” “our” and “us” refer to the activities of and the assets and liabilities of the business and operations of Jernigan Capital, Inc.; “operating partnership” refers to Jernigan Capital Operating Partnership LP, a Maryland limited partnership; and “our Manager” refers to JCap Advisors, LLC, a Florida limited liability company.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

JERNIGAN CAPITAL, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2015 and December 31, 2014

(Unaudited)

(in thousands, except share data)

	September 30, 2015			December 31, 2014
	(Unaudited)
Assets:
Cash and cash equivalents	$	68,980		$	1
Restricted cash		-			15
Development property investments at fair value		29,067			-
Operating property loans at fair value		9,536			-
Interest receivable		68			-
Prepaid expenses		98			-
Fixed assets, net		180			-
Total assets	$	107,929		$	16
Liabilities:
Due to Manager	$	516		$	-
Accounts payable, accrued expenses and other liabilities		798			15
Dividends payable		2,157			-
Total liabilities		3,471			15
Equity:
Jernigan Capital, Inc. stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014, respectively;
Common stock, $0.01 par value, 500,000,000 and 1,000 shares authorized at September 30, 2015 and December 31, 2014, respectively; 6,162,500 and 1,000 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		62			-
Additional paid-in capital		110,496			1
Accumulated deficit		(6,408	)		-
Total Jernigan Capital, Inc. stockholders' equity		104,150			1
Non-controlling interests		308			-
Total equity		104,458			1
Total liabilities and equity	$	107,929		$	16

See accompanying notes to consolidated financial statements.

1 

JERNIGAN CAPITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three and nine months ended September 30, 2015

(Unaudited)

(in thousands, except share data)

	Three Months Ended September 30, 2015			Nine Months Ended September 30, 2015
Revenues:
Interest income from investments	$	578		$	735
Net interest income		578			735
Costs and expenses:
General and administrative expenses reimbursable to Manager		791			1,311
General and administrative expenses		422			689
Investment expenses		112			262
Management fees to Manager		414			823
Restructuring costs		220			220
Deferred termination fee to Manager		158			308
Total costs and expenses		2,117			3,613
Operating loss		(1,539	)		(2,878	)
Other income:
Change in fair value of investments		85			656
Other interest income		47			110
Total other income		132			766
Net loss	$	(1,407	)	$	(2,112	)
Basic and diluted net loss per share of common stock	$	(0.24	)	$	(0.55	)
Basic and diluted weighted average shares of common stock outstanding		6,000,000			4,000,330
Dividends declared per share of common stock	$	0.35		$	0.70

See accompanying notes to consolidated financial statements.

2 

JERNIGAN CAPITAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Nine months ended September 30, 2015

(Unaudited)

(Dollars in thousands)

Cash flows from operating activities
Net loss	$	(2,112	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest capitalized on outstanding loans		(439	)
Change in fair market value of investments		(656	)
Stock-based compensation		167
Deferred termination fee to Manager		308
Depreciation		5
Loss on disposal of assets		33
Changes in operating assets and liabilities:
Interest receivable		(68	)
Other assets		(98	)
Due to Manager		516
Accounts payable, accrued expenses, and other liabilities		677
Net cash used in operating activities		(1,667	)
Cash flows from investing activities
Purchase of fixed assets		(218	)
Funding of investments - Development property investments		(27,984	)
Funding of investments - Operating property loans		(9,404	)
Net cash used in investing activities		(37,606	)
Cash flows from financing activities
Dividends paid		(2,139	)
Net proceeds from issuance of common stock		110,391
Net cash provided by financing activities		108,252
Net change in cash and cash equivalents		68,979
Cash and cash equivalents at the beginning of the period		1
Cash and cash equivalents at the end of the period	$	68,980
Supplemental disclosure of non-cash activities:
Accounts payable withheld from loan funding		106
Loans paid off with issuance of new loans		2,420
Retirement of common stock		1
Dividends declared		2,157

See accompanying notes to consolidated financial statements.

3 

JERNIGAN CAPITAL, INC.

CONSOLIDATED STATEMENT OF EQUITY

Nine months ended September 30, 2015

(Unaudited)

(in thousands, except share data)

	Shares			Common Stock		Additional Paid-In-Capital			Accumulated Deficit			Total Stockholders' Equity			Non- Controlling Interests		Total Equity
Balance at December 31, 2014		1,000		$	-	$	1		$	-		$	1		$	-	$	1
Retirement of stock		(1,000	)		-		(1	)		-			(1	)		-		(1	)
Public offering of common stock		5,750,000			58		114,942			-			115,000			-		115,000
Private placement of common stock		250,000			2		4,998			-			5,000			-		5,000
Equity offering costs		-			-		(9,609	)		-			(9,609	)		-		(9,609	)
Issuance of restricted stock		162,500			2		(2	)		-			-			-		-
Stock-based compensation		-			-		167			-			167			-		167
Deferred termination fee to Manager		-			-		-			-			-			308		308
Dividends declared		-			-		-			(4,296	)		(4,296	)		-		(4,296	)
Net loss		-			-		-			(2,112	)		(2,112	)		-		(2,112	)
Balance at September 30, 2015		6,162,500		$	62	$	110,496		$	(6,408	)	$	104,150		$	308	$	104,458

See accompanying notes to consolidated financial statements.

4 

JERNIGAN CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

(in thousands, except share and per share data, percentages and as otherwise indicated)

1. ORGANIZATION AND FORMATION OF THE COMPANY

Jernigan Capital, Inc. (together with its consolidated subsidiaries, the “Company”) makes debt and equity investments in newly-constructed and existing self-storage facilities. The Company is a Maryland corporation that was organized on October 1, 2014. The Company closed its initial public offering of its common stock (the “IPO”) on April 1, 2015, and has used proceeds of the IPO primarily to fund real estate loans to private developers, owners and operators of self-storage facilities. The Company is structured as an Umbrella Partnership REIT (“UPREIT”) and conducts its investment activities through its wholly owned operating partnership, Jernigan Capital Operating Partnership L.P. (the “Operating Partnership”). The Operating Partnership was formed on March 5, 2015 and is a consolidated subsidiary of the Company. The Company is the sole General Partner of the Operating Partnership.

The Company intends to elect to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended, for its taxable year ending December 31, 2015. As a REIT, the Company generally will not be subject to U.S. federal income taxes on REIT taxable income, determined without regard to the deduction for dividends paid and excluded capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements for qualification as a REIT set forth in the Code.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying unaudited interim consolidated financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods included herein.

Substantially all operations are conducted through the Operating Partnership, and all significant intercompany transactions and balances have been eliminated in consolidation.

Correction of an Immaterial Error

During the quarter ended September 30, 2015, the Company identified an immaterial error in its previously issued financial statements and footnotes for the three and six months ended June 30, 2015 related to the accounting treatment of certain of its loan investments.

During the quarter ended June 30, 2015 (the quarter when operations commenced), the Company accounted for all loans using the amortized cost basis and a preferred equity investment using the equity method. During the quarter ended September 30, 2015, the Company further analyzed the documents and agreements governing its development property investment transactions. These development property investments consist of a 49.9% non-controlling Class B membership profits interest in a limited liability company which gives the Company the rights to a 49.9% interest in operating cash flows and sale profits from the financed projects. The Company determined, primarily due to its 49.9% Class B membership profits interests in limited liability companies, that it exercised significant influence over the financial and operating policies of the investees that owned such projects, thereby requiring equity method accounting for its Class B membership profits interests. Due to this, combined with certain other factors including the interest-only terms of the development property investments, the Company concluded that the development property investments, inclusive of any membership interest, should be treated as a single unit of account to which the equity method would apply.

5 

The guidance in the fair value option subsections of Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825-10”), issued by the Financial Accounting Standards Board (“FASB”) permits entities to elect to measure financial instruments and equity method investments at fair value. Upon identification of the immaterial error in the quarter ended September 30, 2015 that the development property investments required equity method accounting, the Company elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for using the equity method, retrospectively to April 9, 2015, the date of the Company’s first loan investment. The Company elected fair value accounting for these financial instruments because it believes such accounting provides investors and others relying on its financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

The Company evaluated the error, both quantitatively and qualitatively, in accordance with ASC 250, Accounting Changes and Error Corrections, and concluded that the previously issued June 30, 2015 consolidated financial statements and footnotes were not materially misstated. As such, the Company has revised the previously issued financial information for the three and six months ended June 30, 2015 in this Quarterly Report on Form 10-Q. This correction resulted in a revised net loss of $0.6 million and $0.7 million and a net loss per share of common stock of $0.10 and $0.25 for the three and six months ended June 30, 2015, respectively. This represents a $0.6 million reduction of the net loss, or a $0.10 and $0.19 reduction in the basic and diluted net loss per share of common stock, for the three and six months ended June 30, 2015, respectively, as compared to the amounts previously stated in the Company’s June 30, 2015 Form 10-Q. The impact of the revision is due to the $0.6 million of unrealized fair value gains on the Company’s loan investments during the three and six months ended June 30, 2015.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Fair Value Measurement

The Company carries certain financial instruments at fair value because it has elected to apply the fair value option on an instrument by instrument basis under ASC 825-10. As of December 31, 2014, the Company’s only financial instrument was cash. As of September 30, 2015, the Company’s financial instruments consisted of cash, development property investments (which are typically comprised of a first mortgage loan, a mezzanine loan, and a 49.9% profits interest in the development project), loans secured by operating properties (“operating property loans”), receivables and payables. See “Correction of an Immaterial Error” in this Note 2 for a discussion of the Company’s election to carry certain instruments at fair value and Note 4, Fair Value of Financial Instruments, to these financial statements for more information.

The following table presents the financial instruments measured at fair value on a recurring basis as of September 30, 2015:

	Fair Value Measurements Using
	Total		Level 1		Level 2		Level 3
Development property investments	$	29,067	$	-	$	-	$	29,067
Operating property loans		9,536		-		-		9,536
Total investments	$	38,603	$	-	$	-	$	38,603

Estimating fair value requires the use of judgment. The types of judgments involved depend upon the availability of observable market information. Management’s judgments include determining the appropriate valuation model to use, estimating unobservable inputs and applying valuation adjustments. See Note 4, Fair Value of Financial Instruments, for additional disclosure on the valuation methodology and significant assumptions, as well as the election of the fair value option for certain financial instruments.

Cash and Cash Equivalents

We consider cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.

6 

Restricted Cash

The Company’s restricted cash balance at December 31, 2014 includes a customer due diligence deposit received in connection with a prospective loan.

Equity Investments

Investments in joint ventures and entities over which the Company exercises significant influence but not control are accounted for using the equity method. In accordance with ASC 825-10, the Company has elected the fair value option of accounting for its equity method investments, which consist of its development property investments.

Loan Investments and Fair Value Option Election

The Company has elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for under the equity method, in order to provide better transparency into the Company’s revenues and value inherent in our equity participation in development projects. Changes in the fair value of these investments are recorded in change in fair value of investments within other income. All direct loan costs are charged to expense as incurred.

A loan will be considered impaired when, based on current information and events, it is probable that the loan will not be collected according to the contractual terms of the loan agreement. Factors to be considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Fixed Assets

Fixed assets are recorded at cost and consist of furniture, office and computer equipment, and software. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from three to seven years. Depreciation expense is included in the “General and administrative expenses reimbursable to Manager” line item on the Consolidated Statements of Operations. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Revenue recognition

Interest income will accrue as earned on a simple interest basis. Accrual of interest will be discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. The Company will recognize income on impaired loans when they are placed into non-accrual status on a cash basis when the loans are both current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company will not recognize income on such loans. Accrued interest generally is reversed when a loan is placed on non-accrual status.

The Company’s loan origination fees are accreted into interest income over the estimated life of the investment using the effective yield method.

Offering Costs

Underwriting commissions and offering costs incurred in connection with the Company’s stock offerings are reflected as a reduction of additional paid-in capital. Offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with the registration and sale of the Company’s common stock.

Organization Costs

Costs incurred to organize the Company were expensed as incurred.

7 

Restructuring Costs

Restructuring costs consist of severance and benefits costs, lease termination costs, and other costs incurred by the Company in conjunction with consolidating its offices and moving its corporate headquarters. The Company recognizes these severance and other charges when the requirements of ASC 420, Exit or Disposal Cost Obligations (“ASC 420”), have been met regarding a plan of termination and when communication has been made to employees. All restructuring activities were completed during the quarter ended September 30, 2015.

Income Taxes

The Company intends to elect to be taxed as a REIT and to comply with the related provisions of the Code commencing with its taxable year ending December 31, 2015. Accordingly, the Company will generally not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. The Company expects to have no taxable income prior to electing REIT status. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements.

Earnings per Share (“EPS”)

Basic EPS includes only the weighted average number of common shares outstanding during the period. Diluted EPS includes the weighted average number of common shares and the dilutive effect of restricted stock and redeemable Operating Partnership units when such instruments are dilutive.

All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are treated as participating in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted EPS must be applied.

Comprehensive Income

For the three and nine months ended September 30, 2015, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Segment Reporting

The Company does not evaluate performance on a relationship specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Sub Topic 310-40)—Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. This ASU clarifies when an in substance repossession or foreclosure occurs and requires disclosure of the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. ASU 2014-04 is effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on future results of operations or financial condition.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect adoption will have a material impact on its consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discount or premiums. The recognition guidance for debt issuance costs are not affected by amendments in this update, which is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect adoption will have a material impact on its consolidated financial statements.

3. INVESTMENTS

The Company’s self-storage investments at September 30, 2015 consist of the following:

Development property investments – The Company funds development loans to finance the ground-up construction of self-storage facilities or major self-storage redevelopment opportunities. Development loans are funded over time as the developer completes the project. These investments are predominantly comprised of a first mortgage loan, a mezzanine loan, and a 49.9% interest in the positive cash flows (including the sale and refinancing proceeds after debt repayment) of the project. The loans are secured by the first mortgages on the projects and first priority security interests in the membership interests of the owners of the projects. Development loans are non-recourse, interest-only loans with a fixed interest rate of 6.9% and a loan term of 72 months.

The Company also has two development loan investments that are comprised of construction loans with a term of 18 months and are interest-only with a fixed interest rate of 6.9% and no equity participation.

8 

The Company also has one investment that is comprised of a first mortgage loan and a preferred equity investment that consists of a 49.9% non-controlling interest in a limited liability company. The capital contributions, distributions and any profits and losses of the entity are allocated in accordance with the terms of the limited liability company agreement.

Operating property loans – The Company also funds loans to finance the acquisition of, refinance existing indebtedness on, or recapitalize operating self-storage facilities. These loans are fully funded at the time of origination, are secured by first mortgages on the projects financed, are interest-only with a fixed interest rate ranging from 5.85% to 6.9%, and generally have a loan term of 72 months.

The Company’s development property investments and operating property loans are collectively referred to herein as the Company’s investment portfolio.

As of September 30, 2015, the aggregate committed principal amount of the Company’s investment portfolio was approximately $138.9 million and outstanding principal was $39.0 million, as described in more detail in the table below:

Closing Date	Metropolitan Statistical Area ("MSA")	Commitment Amount		Funded Prinicpal		Unfunded Commitment		Fair Value
Development property investments:
Loan investments with a profits interest:
4/21/2015	Orlando	$	5,333	$	2,231	$	3,102	$	2,202
4/20/2015	Miami		13,867		1,868		11,999		1,737
5/14/2015	Miami		14,849		2,788		12,061		2,657
6/8/2015	Dallas		7,243		2,819		4,424		2,775
6/10/2015	Atlanta		8,132		3,625		4,507		3,607
6/19/2015	Tampa		5,369		2,308		3,061		2,283
6/26/2015	Atlanta		6,050		2,020		4,030		1,985
6/29/2015	Charlotte		7,624		532		7,092		981
7/2/2015	Milwaukee		7,650		2,458		5,192		2,407
7/31/2015	New Haven		6,930		780		6,150		744
8/10/2015	Pittsburgh		5,266		1,338		3,928		1,350
8/14/2015	Raleigh		8,998		954		8,044		868
9/25/2015	Fort Lauderdale		13,230		1,978		11,252		1,859
9/30/2015	Jacksonville		6,445		791		5,654		763
			116,986		26,490		90,496		26,218
Construction loans:
8/5/2015	West Palm Beach		7,500		1,955		5,545		1,899
8/5/2015	Sarasota		4,792		986		3,806		950
			12,292		2,941		9,351		2,849
	Total		129,278		29,431		99,847		29,067
Operating property loans:
4/9/2015	Detroit		3,182	$	3,182		-		3,165
6/19/2015	New Orleans		2,800		2,800		-		2,778
7/7/2015	Lehigh Valley		3,480		3,480		-		3,443
8/5/2015	Pittsburgh		150		150		-		150
	Total		9,612		9,612		-		9,536
	Total investments	$	138,890	$	39,043	$	99,847	$	38,603

9 

The following table provides a reconciliation of the funded principal to the fair market value of investments at September 30, 2015:

Funded principal	$	39,043
Adjustments:
Unamortized origination fees		(1,096	)
Change in fair value of investments		656
Fair value of investments	$	38,603

The Company has elected the fair value option of accounting for all of its loan investments in order to provide better transparency into its revenues and value inherent in its equity participation in development projects. See Note 4, Fair Value of Financial Instruments, for additional disclosure on the valuation methodology and significant assumptions.

No loans are in non-accrual status as of September 30, 2015.

All of the Company’s development property investments with a profits interest would have been accounted for under the equity method had the Company not elected the fair value option. For the development property investments with a profits interest, the assets and liabilities of the equity method investees approximate $39.5 million and $26.5 million, respectively, at September 30, 2015. These investees had no significant revenues or expenses for the three and nine months ended September 30, 2015 since the developments are all under construction.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value option under ASC 825-10 allows companies to elect the option to report selected financial assets and liabilities at fair value. The Company has elected the fair value option for its development property investments and operating property loan investments because it believes such accounting provides investors and others relying on the Company’s financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

The Company applies ASC 820, Fair Value Measures and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820 defines fair value as the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820 requires the Company to assume that the investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company has considered its principal market as the market for the purchase and sale of self-storage properties, which the Company believes would be the most likely market for the Company’s loan investments given the nature of the collateral securing such loans and the types of borrowers. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820, these inputs are summarized in the three broad levels listed below:

Level 1 —	Quoted prices for identical assets or liabilities in an active market.
Level 2 —	Financial assets and liabilities whose values are based on the following: (i) Quoted prices for similar assets or liabilities in active markets; (ii) Quoted prices for identical or similar assets or liabilities in non-active markets; (iii) Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 —	Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

10 

The carrying values of cash, receivables and payables approximate their fair values due to their short-term nature. These instruments are categorized as Level 1 instruments in the measurement of fair value. The below table summarizes the valuation techniques and inputs used to measure the fair value of items categorized in Level 3 of the fair value hierarchy.

Instrument	Valuation technique and assumptions	Hierarchy classification
Development property investments	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.  The valuation models are calibrated to the total investment net drawn amount as of the issuance date.	Level 3
Development property investments with a profits interest(a)	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests. An option-pricing method (OPM) framework is utilized to calculate the value of the profits interests.	Level 3
Operating property loans	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.	Level 3

^(a) Certain of the Company's development property investments include profits interests.

At September 30, 2015, the Company’s development property investments and operating property loan investments are valued using two different valuation techniques based on the early stage of the Company’s investments. The first valuation technique is an income approach analysis of the debt instrument components of the Company’s investments. The second valuation technique is an option pricing model that is used to determine the fair value of any profits interests associated with an investment. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests. At the issuance date of the development property investments, generally the properties are valued on a cost basis approximating the sum of the net investment drawn amount plus the developer’s equity investment. For one development property investment in which the Company holds a 49.9% Class B membership profits interest, the appraised value of the property collateral was significantly higher than its cost resulting in an unrealized gain. For the Company’s development property investments at or around completion of the construction, the discounted cash flow model used by the Company is expected to encompass the Company’s 49.9% Class B membership profits interest in the operating cash flows of the property and an option pricing model will no longer be necessary. The Company also will consider inputs such as appraisals significantly in excess of the developer’s equity investment, offers to purchase our properties, sales of our properties, or sales of comparable properties in our markets.

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Level 3 Fair Value Measurements

The following table summarizes the significant unobservable inputs the Company used to value its investments categorized within Level 3 as of September 30, 2015. The table is not intended to be all-inclusive, but instead to capture the significant unobservable inputs relevant to the Company’s determination of fair values.

	As of September 30, 2015
		Unobservable Inputs
Asset Category	Primary Valuation Techniques	Input	Estimated Range	Weighted Average
Development property investments	Income approach analysis	Market yields/ discount rate	7.62 - 9.04%		8.53	%
		Exit date	1.35 - 3.99 years
Development property investments with a profits interest (a)	Option pricing model	Volatility	72.49 - 73.18%		72.86	%
		Exit date	3.56 - 3.99 years
Operating property loans	Income approach analysis	Market yields/ discount rate	6.06 - 7.25%		6.81	%
		Exit date	5.59 - 6.84 years

^(a) The valuations for the development property investments with a profits interest do not differ from the development property investments without a profits interest. The development property investment with a profits interest only requires incremental valuation techniques to determine the value of the profits interest. Therefore this line only focuses on the profits interest valuation.

The fair value measurements are sensitive to changes in unobservable inputs. A change in those inputs to a different amount might result in a significantly higher or lower fair value measurement. The following provides a discussion of the impact of changes in each of the unobservable inputs on the fair value measurement.

Market yields – changes in market yields, discount rates or earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) multiples, each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.

Exit date – changes in exit date, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in the exit date assumption may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Volatility – changes in volatility, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in volatility may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate an investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

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The following table presents changes in investments that use Level 3 inputs as of and for the nine months ended September 30, 2015:

	Nine months ended September 30, 2015
Balance as of December 31, 2014	$	-
Net realized gains		-
Net unrealized gains		656
Fundings of principal, net of unamortized origination fees		37,508
Payment-in-kind interest		439
Net transfers in and/or out of Level 3		-
Balance as of September 30, 2015	$	38,603

As of September 30, 2015, the net unrealized appreciation on the investments that use Level 3 inputs was $0.7 million.

For the nine months ended September 30, 2015, all of the change in fair value of investments in the Company’s consolidated statement of operations was attributable to unrealized gains relating to the Company’s Level 3 assets still held as of September 30, 2015.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

5. STOCKHOLDERS’ EQUITY

The Company was organized in Maryland on October 1, 2014, and under the Company’s Articles of Incorporation, as amended, the Company is authorized to issue up to 500,000,000 shares of common stock and 100,000,000 shares of preferred stock. The sole stockholder of the Company prior to the closing of its IPO was the founder and chief executive officer, who is an affiliate of the Company. The founder’s initial capital contribution to the Company was $1,000, made on October 2, 2014, in exchange for 1,000 shares of common stock. These shares were retired effective with the IPO.

Common Stock Offering

On April 1, 2015, the Company closed its IPO and received $93.0 million in proceeds, net of underwriter’s discount. Simultaneously, the Company received $5.0 million in proceeds from the concurrent private placement with an affiliate of its founder. In connection with these transactions, the Company issued 5,000,000 and 250,000 shares of common stock, respectively and the initial 1,000 shares of common stock issued on October 2, 2014 were retired.

On April 9, 2015, the Company completed the sale of shares of common stock to the underwriters of its IPO pursuant to the underwriters’ over-allotment option. The Company issued 750,000 shares of common stock and received $14.0 million, net of underwriters’ discount.

Equity Incentive Plan

In connection with the IPO, the Company established the 2015 Equity Incentive Plan for the purpose of attracting and retaining directors, executive officers, investment professionals and other key personnel and service providers, including officers and employees of the Manager and other affiliates, and to stimulate their efforts toward our continued success, long-term growth and profitability. The 2015 Equity Incentive Plan provides for the grant of stock options, share awards (including restricted common stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity-based awards, including Long-Term Incentive Plan (“LTIP”) units, which are convertible on a one-for-one basis into Operating Partnership (“OP”) Units.  A total of 200,000 shares of common stock are reserved for issuance pursuant to the 2015 Equity Incentive Plan, subject to certain adjustments set forth in the plan. On April 1, 2015, each non-employee director of the Company received an award of 2,500 shares of restricted common stock (total of 10,000 shares) which vest ratably over a three-year period. On June 15, 2015, in connection with the appointment of the Company’s President and Chief Operating Officer, 100,000 shares of restricted common stock were granted, which shares vest ratably over a five-year period. During the quarter ended September 30, 2015, the Company granted 52,500 shares of restricted common stock to executive officers and key employees of the Manager, who provide services to the Company, which shares vest ratably over a three-year period.

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Restricted Stock Awards

The 2015 Equity Incentive Plan permits the issuance of restricted stock awards to employees and non-employee directors. Non-vested shares at September 30, 2015 aggregated 162,500 service-based stock awards, of which none will vest during 2015, 40,833 will vest in 2016, 2017, and 2018, and 20,000 will vest in 2019 and 2020. Non-vested shares are earned over the respective vesting period based on a service condition only. Expenses related to restricted stock awards are charged to compensation expense and are recognized over the vesting period of the awards. For restricted stock issued to non-employee directors of the Company, compensation expense is based on the market value of the shares at the grant date. For restricted stock awards issued to employees of the Manager, compensation expense is remeasured at each reporting date based on the then current value of the Company’s common stock.

The Company recognized approximately $0.1 million and $0.2 million of restricted stock award expenses for the three and nine months ended September 30, 2015, respectively. The Company expects to recognize additional expenses of approximately $0.2 million in 2015, based on measurement of the awards at September 30, 2015 using the Company’s stock price of $17.46. The Company presents stock-based compensation expense in the consolidated statements of operations on the line labeled “General and administrative expenses”.

A summary of changes in the Company’s restricted shares for the three and nine months ended September 30, 2015 is as follows:

	Three months ended September 30, 2015				Nine months ended September 30, 2015
	Shares		Weighted average grant date fair value		Shares		Weighted average grant date fair value
Nonvested at beginning of period		110,000	$	20.67		-	$	-
Granted		52,500		18.82		162,500		20.08
Vested		-		-		-		-
Forfeited		-		-		-		-
Nonvested at end of period		162,500	$	20.08		162,500	$	20.08

Nonvested restricted shares receive dividends which are nonforfeitable.

6. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2015:

Date declared	Record date	Payment date	Per share amount		Total amount
June 3, 2015	July 6, 2015	July 15, 2015	$	0.35	$	2,139
August 27, 2015	October 1, 2015	October 15, 2015	$	0.35	$	2,157

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7. EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share:

	Three months ended September 30, 2015			Nine months ended September 30, 2015
Numerator:
Net loss	$	(1,407	)	$	(2,112	)
Less: Dividends declared on unvested restricted shares		(57	)		(95	)
Net loss attributable to common shareholders	$	(1,464	)	$	(2,207	)
Denominator:
Weighted-average number of common shares – basic		6,000,000			4,000,330
Unvested restricted stock shares (1)		-			-
Redeemable operating partnership units (2)		-			-
Weighted-average number of common shares – diluted		6,000,000			4,000,330
Net loss per share attributable to common stockholders	$	(0.24	)	$	(0.55	)

(1) Anti-dilutive for the three and nine months ended September 30, 2015

(2) A termination fee (see Note 8) payable by the Operating Partnership ("OP") in OP units is anti-dilutive for the three and nine months ended September 30, 2015. The OP units, if issued, would be redeemable into common stock of the Company.

8. RELATED PARTY TRANSACTIONS

The Company’s founder was reimbursed for $0.1 million of organizational costs and $0.1 million of offering costs in April 2015 following the closing of the Company’s IPO.

On April 1, 2015, the Company entered into a management agreement with its Manager. Pursuant to the terms of the management agreement, the Manager will be responsible for (a) the Company’s day-to-day operations, (b) determining investment criteria and strategy in conjunction with the Company’s Board of Directors, (c) sourcing, analyzing, originating, underwriting, structuring, and acquiring the Company’s portfolio investments, and (d) performing portfolio management duties. The Manager has an Investment Committee that approves investments in accordance with the Company’s investment guidelines, investment strategy, and financing strategy.

On April 1, 2015, concurrent with its initial public offering, the Company received $5.0 million in proceeds from the private placement with an affiliate of its founder. In connection with this transaction, the Company issued 250,000 shares of common stock to the affiliate.

The initial term of the management agreement will be five years, with up to a maximum of three, one-year extensions that end on the applicable anniversary of the completion of the Company’s offering. The Company’s independent directors will review the Manager’s performance annually. Following the initial term, the management agreement may be terminated annually upon the affirmative vote of at least two-thirds of the Company’s independent directors based upon: (a) the Manager’s unsatisfactory performance that is materially detrimental to the Company; or (b) the Company’s determination that the management fees payable to the Manager are not fair, subject to the Manager’s right to prevent termination based on unfair fees by accepting a reduction of management fees agreed to by at least two-thirds of the independent directors. The Company will provide its Manager with 180 days’ prior notice of such a termination. Upon such a termination, the Company will pay the Manager a termination fee except as provided below.

No later than 180 days prior to the end of the initial term of the management agreement, the Manager will offer to contribute to the Company’s Operating Partnership at the end of the initial term all of the assets or equity interests in the Manager at the internalization price and on such terms and conditions included in a written offer provided by the Manager.

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Upon receipt of the Manager’s initial internalization offer, a special committee consisting solely of the Company’s independent directors may accept the Manager’s proposal or submit a counter offer to the Manager. If the Manager and the special committee are unable to agree, the Manager and the special committee will repeat this process annually during the term of any extension of the management agreement. Acquisition of the Manager pursuant to this process requires a fairness opinion from a nationally recognized investment banking firm and stockholder approval, in addition to approval by the special committee.

If the Company does not acquire the assets or equity interests of the Manager in an internalization transaction as described above and the management agreement terminates other than for Cause, voluntary non-renewal by the Manager or the Company being required to register as an investment company under the Investment Company Act of 1940, then the Company shall pay to the Manager, on the date on which such termination is effective, a termination fee equal to the greater of (i) three times the sum of the average annual Base Management Fee and Incentive Fee earned by the Manager during the 24-month period prior to such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination, or (ii) the offer price, which will be based on the lesser of (a) the Manager’s earnings before interest, taxes, depreciation and amortization (adjusted for unusual, extraordinary and non-recurring charges and expenses), or “EBITDA” annualized based on the most recent quarter ended, multiplied by a specific multiple, or EBITDA Multiple, depending on the Company’s achieved total annual return, and (b) the Company’s equity market capitalization multiplied by a specific percentage, or Capitalization Percentage, depending on the Company’s achieved total return (the Internalization Price). Any Termination Fee will be payable by the Operating Partnership in OP Units equal to the Termination Fee divided by the average of the daily market price of the Common Stock for the ten consecutive trading days immediately preceding the date of termination within 90 days after occurrence of the event requiring the payment of the Termination Fee. In accordance with ASC 505-50, the Company estimates the deferred termination fee payable and accrues the expense over the term of the management agreement. The Company recorded $0.2 million and $0.3 million of expense for the deferred termination fee for the three and nine months ended September 30, 2015, respectively.

The Company also may terminate the management agreement at any time, including during the initial term, without the payment of any termination fee, with 30 days’ prior written notice from the Board of Directors, for cause. “Cause” is defined as: (i) the Manager’s continued breach of any material provision of the management agreement following a prescribed period; (ii) the occurrence of certain events with respect to the bankruptcy or insolvency of the Manager; (iii) a change of control of the Manager that a majority of the Company’s independent directors determines is materially detrimental to the Company; (iv) the Manager committing fraud against the Company, misappropriating or embezzling the Company’s funds, or acting grossly negligent in the performance of its duties under the management agreement; (v) the dissolution of the Manager; (vi) the Manager fails to provide adequate or appropriate personnel that are reasonably necessary for the Manager to identify investment opportunities for the Company and to manage and develop the Company’s investment portfolio if such default continues uncured for a period of 60 days after written notice thereof, which notice must contain a request that the same be remedied; (vii) the Manager is convicted (including a plea of nolo contendere) of a felony; or (viii) the departure of Mr. Jernigan from the senior management of the Manager, or the Company, during the term of the management agreement other than by reason of death or disability.

The Manager may terminate the management agreement if the Company becomes required to register as an investment company under the 1940 Act, with such termination deemed to occur immediately before such event, in which case the Company would not be required to pay the Manager a termination fee. The Manager may also decline to renew the management agreement by providing the Company with 180 days’ written notice, in which case the Company would not be required to pay a termination fee.

The management agreement provides for the Manager to earn a base management fee and an incentive fee. In addition, the Company will reimburse certain expenses of the Manager, excluding the salaries and cash bonuses of the Manager’s chief executive officer or chief financial officer, and half of the salary of the president and chief operating officer. Certain prepaid expenses and fixed assets are also purchased through the Manager and reimbursed by the Company. In the event that the Company terminates the management agreement per the terms of the agreement, other than for cause or the Company being required to register as an investment company, there will be a termination fee due to the Manager. Amounts reimbursable to the Manager for expenses totaled $0.8 million and $1.3 million during the three and nine months ended September 30, 2015, respectively.

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Management Fees

The Company does not intend to employ personnel. As a result, the Company will rely on the properties, resources and personnel of the Manager to conduct operations. The Company has agreed to pay the Manager a base management fee in an amount equal to 0.375% of the Company’s stockholders’ equity (a 1.5% annual rate) calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, the Company’s stockholder’s equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) any amount that the Company pays to repurchase the Company’s common stock since inception. It also excludes (x) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and (y) one-time events pursuant to changes in GAAP (such as a cumulative change to the Company’s operating results as a result of a codification change pursuant to GAAP), and certain non-cash items not otherwise described above (such as depreciation and amortization), in each case after discussions between the Company’s Manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the base management fee, could be greater or less than the amount of stockholders’ equity shown on the Company’s financial statements. The base management fee is payable independent of the performance of the Company’s portfolio. The base management fee of the Company’s Manager shall be calculated within 30 days after the end of each fiscal quarter and such calculation shall be promptly delivered to the Company. The Company is obligated to pay the base management fee in cash within five business days after delivery of the written statement of the Manager to the Company setting forth the computation of the management fee for such quarter. The base management fee for the three and nine months ended September 30, 2015 was $0.4 million and $0.8 million, respectively.

Incentive Fee

The Manager is entitled to an incentive fee with respect to each fiscal quarter (or part thereof that the management agreement is in effect) in arrears in cash. The incentive fee will be an amount, not less than zero, determined pursuant to the following formula:

IF = .20 times (A minus (B times .08)) minus C

In the foregoing formula:

• A equals our Core Earnings (as defined below) for the previous 12-month period;

• B equals (i) the weighted average of the issue price per share of the Company’s common stock of all of its public offerings of common stock, multiplied by (ii) the weighted average number of all shares of common stock outstanding (including (i) any restricted stock units and any restricted shares of common stock in the previous 12-month period and (ii) shares of common stock issuable upon conversion of outstanding OP Units); and

• C equals the sum of any incentive fees earned by the Manager with respect to the first three fiscal quarters of such previous 12-month period.

Notwithstanding application of the incentive fee formula, no incentive fee shall be paid with respect to any fiscal quarter unless cumulative annual stockholder total return for the four most recently completed fiscal quarters is greater than 8%. Any computed incentive fee earned but not paid because of the foregoing hurdle will accrue until such 8% cumulative annual stockholder total return is achieved. The total return is calculated by adding stock price appreciation (based on the volume-weighted average of the closing price of our common stock on the NYSE (or other applicable trading market) for the last ten consecutive trading days of the applicable computation period minus the volume-weighted average of the closing market price of the Company’s common stock for the last ten consecutive trading days of the period immediately preceding the applicable computation period) plus dividends per share paid during such computation period, divided by the volume-weighted average of the closing market price of the Company’s common stock for the last ten consecutive trading days of the period immediately preceding the applicable computation period. For purposes of computing the Incentive Fee, “Core Earnings” is defined as net income (loss) determined under GAAP, plus non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that we foreclose on any facilities underlying our target investments), any unrealized losses or other non-cash expense items reflected in GAAP net income (loss), less any unrealized gains reflected in GAAP net income. The amount will be adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash charges after discussions between the Manager and the Company’s independent directors and after approval by a majority of the independent directors.

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For purposes of calculating the incentive fee prior to the completion of a 12-month period following this offering, Core Earnings is calculated on the basis of the number of days that the management agreement has been in effect on an annualized basis.

The Manager computes each quarterly installment of the incentive fee within 45 days after the end of the fiscal quarter with respect to which such installment is payable and promptly deliver such calculation to the Company’s Board of Directors. The amount of the installment shown in the calculation is due and payable no later than the date which is five business days after the date of delivery of such computation to the Board of Directors. The calculation generally will be reviewed by the Board of Directors at their regularly scheduled quarterly board meeting. As of September 30, 2015, the Manager has not earned an incentive fee.

9. RESTRUCTURING COSTS

On August 11, 2015, the Company’s Board of Directors approved consolidating its offices and moving the corporate headquarters to Memphis, Tennessee. In connection with the consolidation and moving of the Company’s headquarters, the Company added legal, accounting, loan administration and business development personnel in Memphis and closed its offices in Miami, Florida and Cleveland, Ohio. The consolidation was completed by the end of the third quarter.

Restructuring costs reflected in the accompanying consolidated statements of operations relate primarily to one-time termination benefits. The Company recognizes these severance and other charges when the requirements of ASC 420 have been met regarding a plan of termination and when communication has been made to employees. There were also restructuring costs related to lease termination and fixed asset disposals. During the three and nine months ended September 30, 2015, the Company recorded $0.2 million in restructuring costs in the consolidated statements of operations.

Cost Type	Restructuring costs liability at December 31, 2014		Restructuring costs incurred		Cash payments		Non-cash activity		Restructuring costs liability at September 30, 2015		Total cumulative restructuring costs expected to be incurred
Severance	$	-	$	153	$	56	$	-	$	97	$	153
Fixed asset disposal		-		33		-		33		-		33
Lease termination		-		19		2		-		17		19
Other		-		15		9		-		6		15
Total restructuring costs	$	-	$	220	$	67	$	33	$	120	$	220

10. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than those disclosed below, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the accompanying consolidated financial statements as of and for the three and nine months ended September 30, 2015.

On November 10, 2015, the Company announced that its Board of Directors declared a cash dividend of $0.35 per share of common stock for the quarter ending December 31, 2015. The dividend is payable on January 15, 2016 to stockholders of record on January 1, 2016.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Statements

We make statements in this Quarterly Report on Form 10-Q that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements include, without limitation, statements about our estimates, expectations, predictions and forecasts of our future business plans and financial and operating performance and/or results, as well as statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. When we use the words “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense, we intend to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual financial and operating results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such differences are described in the section entitled “Risk Factors” in this report and in the prospectus relating to our IPO, which was filed with the SEC on March 30, 2015, which factors include, without limitation, the following:

· our ability to successfully source, structure, negotiate and close loans secured by self-storage facilities

· changes in our business strategy and the market’s acceptance of our lending terms

· availability, terms and our rate of deployment of equity and debt capital

· our manager’s ability to hire and retain qualified personnel

· changes in the self-storage industry, interest rates or the general economy

· the degree and nature of our competition

· volatility in the value of our assets carried at fair market value

· general volatility of the capital markets and the market price of our common stock.

Given these uncertainties, undue reliance should not be placed on our forward-looking statements. We assume no duty or responsibility to publicly update or revise any forward-looking statement that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. We urge you to review the disclosures concerning risks in the sections entitled “Risk Factors,” “Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the prospectus relating to our IPO, which was filed with the Securities and Exchange Commission (“SEC”) on March 30, 2015.

Overview

Jernigan Capital, Inc. makes debt and equity investments in newly-constructed and existing self-storage facilities. The Company is a Maryland corporation that was organized on October 1, 2014. We originate self-storage investments through our national network of contacts developed by our origination team, which is comprised of professionals with substantial experience in the self-storage industry. By utilizing our internal origination capabilities and contacts, we are able to: (1) offer financing solutions that meet the unique needs of our customers; (2) have direct access to our customers and enhance our underwriting, structuring and due diligence processes; (3) provide meaningful insight into our customers’ pro forma capital structures and decisions; (4) actively negotiate flexible transaction pricing and terms; and (5) earn origination and structuring fees. Although we seek to internally originate our real estate investments, we may at times source self-storage investments through mortgage brokers and other third parties.

While we maintain the flexibility to structure financing to meet the needs of our customers, since our IPO our self-storage investments have consisted primarily of:

· Development Property Investments:  The Company funds development loans to finance ground-up construction of self-storage facilities or major self-storage redevelopment opportunities, which loans are funded over time as the developer completes the project. Funding of construction draws on development loans typically commences 60 to 90 days following the loan closing, subject to the timing of building permits, which sometimes can be delayed up to 120 days following closing. These loans are secured by first mortgages on the projects and first priority security interests in the membership interests of the owners of the projects, typically have maturities of six years, and typically provide us with a 49.9% interest in the positive cash flows (including sale and refinancing proceeds after debt repayment) of the project; and

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· Operating Property Loans: The Company also funds loans to finance the acquisition of, refinance existing indebtedness on, or recapitalize operating self-storage facilities. These loans are fully funded at the time of origination, are secured by first mortgages on the projects financed, are interest-only with a fixed interest rate ranging from 5.85% to 6.9%, and generally have a loan term of 72 months.

We have funded all of our investments to date with net proceeds from our IPO and concurrent private placement. We also may originate or acquire mezzanine loans, which typically take the form of subordinated loans secured by second mortgages on the underlying facility or loans secured by a pledge of the ownership interests of either the entity owning the facility or a pledge of the ownership interests of the entity that owns the interest in the entity owning the facility. We expect to hold for investment any mezzanine loans we originate or acquire. The majority of loans we originate together with any concurrent mezzanine loans typically range from $5 million to $15 million in committed principal amount, have combined loan-to-value (“LTV”) or loan-to-cost (“LTC”) ratios of up to 90%, and generally have fixed interest rates. We intend to elect and qualify to be taxed as a REIT, commencing with our taxable year ending December 31, 2015. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent that we annually distribute all or substantially all of our taxable income to stockholders and maintain our qualification as a REIT. We also intend to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940.

Factors Impacting Our Operating Results

The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, commercial mortgage loans and other loans in the self-storage industry. Our net interest income, which reflects the accretion of origination fees, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. The objective of the interest method is to arrive at periodic interest income that yields a level rate of return over the loan term. Interest rates will vary according to the type of loan, conditions in the financial markets, credit worthiness of our borrowers, competition and other factors, none of which can be predicted with any certainty. Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by borrowers. In the future we may make additional equity investments in self-storage facilities, either for fee simple ownership by our Operating Partnership or in joint ventures with institutional or other strategic partners. In the event we own self-storage facilities in the future, our operating results will also include rental income and related operating expenses from such self-storage facilities. In that regard, in connection with many of our development loans, we have obtained rights of first refusal in connection with potential future sales of self-storage facilities that we finance. Our results for the three and nine months ended September 30, 2015 also were impacted by changes in accounting methods as discussed below.

Change in Accounting Method of Investments

During the quarter ended June 30, 2015 (the quarter when operations commenced), the Company accounted for all loans using the amortized cost basis and a preferred equity investment using the equity method. During the quarter ended September 30, 2015, the Company further analyzed the documents and agreements governing its development property investment transactions. These development property investments consist of a 49.9% non-controlling Class B membership profits interest in a limited liability company which gives the Company the rights to a 49.9% interest in operating cash flows and sale profits from the financed projects. The Company determined, primarily due to its 49.9% Class B membership profits interests in limited liability companies, that it exercised significant influence over the financial and operating policies of the investees that owned such projects, thereby requiring equity method accounting for its Class B membership profits interests. Due to this, combined with certain other factors including the interest-only terms of the development property investments, the Company concluded that the development property investments, inclusive of any membership interest, should be treated as a single unit of account to which the equity method would apply.

As a result, the Company elected the fair value option for its entire investment portfolio, retrospectively to April 9, 2015, the date of the Company’s first loan investment. The Company elected fair value accounting for these financial instruments because it believes such accounting provides investors and others relying on its financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects. See Note 2 to the Company’s consolidated financial statements for more information regarding the correction of the immaterial error and resulting accounting change.

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Changes in Fair Value of Our Assets

The Company has elected the fair value option of accounting for its development property investments and operating property loans, for which there is not a readily available market value. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate an investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

Changes in Market Interest Rates

With respect to our business operations, increases in interest rates, in general, may over time cause: the interest expense associated with our borrowings to increase; the value of our loan portfolio to decline; interest rates on our floating rate loans to reset, although on a delayed basis, to higher interest rates; and to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to increase. Conversely, decreases in interest rates, in general, may over time cause: the interest expense associated with our borrowings to decrease; the value of our mortgage loan portfolio to increase; interest rates on our floating rate loans to reset, although on a delayed basis, to lower interest rates; and to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to decrease.

Credit Risk

We are subject to varying degrees of credit risk in connection with our target investments. Our Manager seeks to mitigate this risk by seeking to originate or acquire loans of higher quality at appropriate prices given anticipated and unanticipated losses, by utilizing a comprehensive review and selection process and by proactively monitoring originated or acquired loans. Nevertheless, unanticipated credit losses could occur that could adversely impact our operating results.

Market Conditions

We believe that present market conditions are favorable for realizing attractive risk-adjusted returns on investments in self-storage facilities owned by private operators. While construction in the self-storage industry remains low compared to historical averages, the industry is seeing increased construction starts recently and the trend is expected to continue upwards. In addition, the number of purchase and sale transactions has been increasing, fueled by investor appetite for self-storage’s cash flow performance. The key demand factors of the self-storage industry include population mobility and new job creation, both of which are experiencing increases since the recession. These factors have created demand for self-storage, which in turn have developers looking to develop and match demand with supply. The main deterrent for developers is the lack of financing available in the sector. Currently, lenders are only willing to lend up to 70% LTV, whereas our substantial industry knowledge will enable us to make loans at ratios of 90% LTC and LTV.

Recent Developments

On November 10, 2015, the Company announced that its Board of Directors declared a cash dividend of $0.35 per share of common stock for the quarter ending December 31, 2015. The dividend is payable on January 15, 2016 to stockholders of record on January 1, 2016.

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Loans and Other Investing Activity

The Company’s self-storage investments at September 30, 2015 consist of the following:

Development property investments – The Company funds development loans to finance the ground-up construction of self-storage facilities or major self-storage redevelopment opportunities. Development loans are funded over time as the developer completes the project. These investments are predominantly comprised of a first mortgage loan, a mezzanine loan, and a 49.9% interest in the positive cash flows (including the sale and refinancing proceeds after debt repayment) of the project. The loans are secured by the first mortgages on the projects and first priority security interests in the membership interests of the owners of the projects. Development loans are non-recourse, interest-only loans with a fixed interest rate of 6.9% and a loan term of 72 months.

The Company also has two development loan investments that are comprised of construction loans with a term of 18 months and are interest-only with a fixed interest rate of 6.9% and no equity participation.

The Company also has one investment that is comprised of a first mortgage loan and a preferred equity investment that consists of a 49.9% non-controlling interest in a limited liability company. The capital contributions, distributions and any profits and losses of the entity are allocated in accordance with the terms of the limited liability company agreement.

Operating property loans – The Company also funds loans to finance the acquisition of, refinance existing indebtedness on, or recapitalize operating self-storage facilities. These loans are fully funded at the time of origination, are secured by first mortgages on the projects financed, are interest-only with a fixed interest rate ranging from 5.85% to 6.9%, and generally have a loan term of 72 months.

The Company’s development property investments and operating property loans are collectively referred to herein as the Company’s investment portfolio.

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As of September 30, 2015, the aggregate committed principal amount of the Company’s investment portfolio was approximately $138.9 million and outstanding principal was $39.0 million, as described in more detail in the table below:

Closing Date	Metropolitan Statistical Area ("MSA")	Commitment Amount		Funded Prinicpal		Unfunded Commitment		Fair Value
Development property investments:
Loan investments with a profits interest:
4/21/2015	Orlando	$	5,333	$	2,231	$	3,102	$	2,202
4/20/2015	Miami		13,867		1,868		11,999		1,737
5/14/2015	Miami		14,849		2,788		12,061		2,657
6/8/2015	Dallas		7,243		2,819		4,424		2,775
6/10/2015	Atlanta		8,132		3,625		4,507		3,607
6/19/2015	Tampa		5,369		2,308		3,061		2,283
6/26/2015	Atlanta		6,050		2,020		4,030		1,985
6/29/2015	Charlotte		7,624		532		7,092		981
7/2/2015	Milwaukee		7,650		2,458		5,192		2,407
7/31/2015	New Haven		6,930		780		6,150		744
8/10/2015	Pittsburgh		5,266		1,338		3,928		1,350
8/14/2015	Raleigh		8,998		954		8,044		868
9/25/2015	Fort Lauderdale		13,230		1,978		11,252		1,859
9/30/2015	Jacksonville		6,445		791		5,654		763
			116,986		26,490		90,496		26,218
Construction loans:
8/5/2015	West Palm Beach		7,500		1,955		5,545		1,899
8/5/2015	Sarasota		4,792		986		3,806		950
			12,292		2,941		9,351		2,849
	Total		129,278		29,431		99,847		29,067
Operating property loans:
4/9/2015	Detroit		3,182	$	3,182		-		3,165
6/19/2015	New Orleans		2,800		2,800		-		2,778
7/7/2015	Lehigh Valley		3,480		3,480		-		3,443
8/5/2015	Pittsburgh		150		150		-		150
	Total		9,612		9,612		-		9,536
	Total investments	$	138,890	$	39,043	$	99,847	$	38,603

Business Outlook

As of the date of this report, we have executed term sheets for lending transactions involving an aggregate principal amount of approximately $153.3 million. The term sheets are subject to entry into definitive agreements and other contingencies, and there can be no assurance that the loans will close on the terms anticipated, or at all.

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We have funded our loan and other investments to date with proceeds from the IPO and concurrent private placement. As of September 30, 2015, we had unrestricted cash of approximately $69.0 million. Our ability to fund the $99.8 million in unfunded commitments as of September 30, 2015, will require us to obtain additional equity and/or debt financing. We have had preliminary discussions with several financial institutions regarding a credit facility and other debt financing transactions. There can be no assurance, however, that we will procure sufficient financing to fund all of our current and anticipated commitments. Given the funding schedules of our development property investments, we expect our existing cash and cash equivalents will provide sufficient funding of our business through March 31, 2016. See “Liquidity and Capital Resources” below and “Risk Factors” in this report and in the prospectus relating to our IPO, which was filed with the SEC on March 30, 2015.

Critical Accounting Policies

Our financial statements are prepared in accordance with GAAP which requires the use of estimates and assumptions that involve the exercise of judgment as to future uncertainties. In accordance with SEC guidance, the following discussion addresses the accounting policies that we believe apply to us based on the nature of our initial operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments used to prepare our financial statements are based upon reasonable assumptions given the information available to us at that time. Our critical accounting policies and accounting estimates will be expanded over time as we fully implement our strategy. Those accounting policies and estimates that we believe are most critical to an investor’s understanding of our financial results and condition and require complex management judgment are discussed below.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Offering and Organization Costs

Underwriting commissions and costs incurred in connection with the stock offerings are reflected as a reduction of additional paid-in-capital. Costs incurred to organize our Company are expensed as incurred.

Fair Value Measurements

The fair value option under ASC 825-10 allows companies to elect the option to report selected financial assets and liabilities at fair value. The Company has elected the fair value option for its development property investments and operating property loan investments because it believes such accounting provides investors and others relying on our financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

The Company applies ASC 820, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820 defines fair value as the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820 requires the Company to assume that the investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company has considered its principal market as the market for the purchase and sale of self-storage properties, which the Company believes would be the most likely market for the Company’s loan investments given the nature of the collateral securing such loans and the types of borrowers. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820, these inputs are summarized in the three broad levels listed below:

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Level 1 —	Quoted prices for identical assets or liabilities in an active market.
Level 2 —	Financial assets and liabilities whose values are based on the following: (i) Quoted prices for similar assets or liabilities in active markets; (ii) Quoted prices for identical or similar assets or liabilities in non-active markets; (iii) Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 —	Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

The carrying values of cash, receivables and payables approximate their fair values due to their short-term nature. These instruments are categorized as Level 1 instruments in the measurement of fair value. The below table summarizes the valuation techniques and inputs used to measure the fair value of items categorized in Level 3 of the fair value hierarchy.

Instrument	Valuation technique and assumptions	Hierarchy classification
Development property investments	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.  The valuation models are calibrated to the total investment net drawn amount as of the issuance date.	Level 3
Development property investments with a profits interest(a)	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests.	Level 3
	An option-pricing method (OPM) framework is utilized to calculate the value of the profits interests.
Operating property loans	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.	Level 3

^(a) Certain of the Company's development property investments include profits interests.

At September 30, 2015, the Company’s development property investments and operating property loan investments are valued using two different valuation techniques based on the early stage of the Company’s investments. The first valuation technique is an income approach analysis of the debt instrument components of the Company’s investments. The second valuation technique is an option pricing model that is used to determine the fair value of any profits interests associated with an investment. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests. At the issuance date of the development property investments, generally the properties are valued on a cost basis approximating the sum of the net investment drawn amount plus the developer’s equity investment. For one development property investment in which the Company holds a 49.9% Class B membership profits interest, the appraised value of the property collateral was significantly higher than its cost resulting in an unrealized gain. For the Company’s development property investments at or around completion of the construction, the discounted cash flow model used by the Company is expected to encompass the Company’s 49.9% Class B membership profits interest in the operating cash flows of the property and an option pricing model will no longer be necessary. The Company also will consider inputs such as appraisals significantly in excess of the developer’s equity investment, offers to purchase our properties, sales of our properties, or sales of comparable properties in our markets.

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Level 3 Fair Value Measurements

The following table summarizes the significant unobservable inputs the Company used to value its investments categorized within Level 3 as of September 30, 2015. The table is not intended to be all-inclusive, but instead to capture the significant unobservable inputs relevant to the Company’s determination of fair values.

	As of September 30, 2015
		Unobservable Inputs
Asset Category	Primary Valuation Techniques	Input	Estimated Range	Weighted Average
Development property investments	Income approach analysis	Market yields/ discount rate	7.62 - 9.04%		8.53	%
		Exit date	1.35 - 3.99 years
Development property investments with a profits interest (a)	Option pricing model	Volatility	72.49 - 73.18%		72.86	%
		Exit date	3.56 - 3.99 years
Operating property loans	Income approach analysis	Market yields/ discount rate	6.06 - 7.25%		6.81	%
		Exit date	5.59 - 6.84 years

^(a) The valuations for the development property investments with a profits interest do not differ from the development property investments without a profits interest. The development property investment with a profits interest only requires incremental valuation techniques to determine the value of the profits interest. Therefore this line only focuses on the profits interest valuation.

The fair value measurements are sensitive to changes in unobservable inputs. A change in those inputs to a different amount might result in a significantly higher or lower fair value measurement. The following provides a discussion of the impact of changes in each of the unobservable inputs on the fair value measurement.

Market yields – changes in market yields, discount rates or EBITDA multiples, each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.

Exit date – changes in exit date, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in the exit date assumption may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Volatility – changes in volatility, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in volatility may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate an investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

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The following table presents changes in investments that use Level 3 inputs as of and for the nine months ended September 30, 2015:

	Nine months ended September 30, 2015
Balance as of December 31, 2014	$	-
Net realized gains		-
Net unrealized gains		656
Fundings of principal, net of unamortized origination fees		37,508
Payment-in-kind interest		439
Net transfers in and/or out of Level 3		-
Balance as of September 30, 2015	$	38,603

As of September 30, 2015, the net unrealized appreciation on the investments that use Level 3 inputs was $0.7 million.

For the nine months ended September 30, 2015, all of the change in fair value of investments in the Company’s consolidated statement of operations was attributable to unrealized gains relating to the Company’s Level 3 assets still held as of September 30, 2015.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

Equity Incentive Plan

In connection with the IPO, the Company established the 2015 Equity Incentive Plan for the purpose of attracting and retaining non-employee directors, executive officers, investment professionals and other key personnel and service providers, including officers and employees of the Manager and other affiliates, and to stimulate their efforts toward our continued success, long-term growth and profitability. The 2015 Equity Incentive Plan provides for the grant of stock options, share awards (including restricted common stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity-based awards, including Long-Term Incentive Plan (“LTIP”) units, which are convertible on a one-for-one basis into Operating Partnership (“OP”) Units. A total of 200,000 shares of common stock are reserved for issuance pursuant to the 2015 Equity Incentive Plan, subject to certain adjustments set forth in the plan. On April 1, 2015, each non-employee director of the Company received an award of 2,500 shares (total of 10,000) of restricted common stock, which vest ratably over a three-year period. On June 15, 2015, in connection with the appointment of the Company’s President and Chief Operating Officer, 100,000 shares of restricted common stock were granted, which shares vest ratably over a five-year period. During the quarter ended September 30, 2015, the Company granted 52,500 shares of restricted common stock to executive officers and key employees of the Manager, which shares vest ratably over a three-year period.

Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in the debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.

In accordance with FASB ASC Topic 815, “Derivatives and Hedging,” we will measure each derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record such amounts in our consolidated balance sheet as either an asset or liability. For derivatives designated as fair value hedges, derivatives not designated as hedges, or for derivatives designated as cash flow hedges associated with debt for which we elected the fair value option under FASB ASC Topic 825 “Financial Instruments,” the changes in fair value of the derivative instrument will be recorded in earnings. For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative will be reported in other comprehensive income. Changes in the effective portions of cash flow hedges will be recognized in earnings.

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Income Taxes

We intend to elect to be taxed as a REIT and to comply with the related provisions of the Code, commencing with the taxable year ending December 31, 2015. Accordingly, we generally will not be subject to U.S. federal income tax to the extent of our distributions to stockholders and as long as certain asset, income and share ownership tests are met. We expect to have little or no taxable income prior to electing REIT status. To qualify as a REIT, we must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements.

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Sub Topic 310-40)—Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. This ASU clarifies when an in substance repossession or foreclosure occurs and requires disclosure of the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. ASU 2014-04 is effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on future results of operations or financial condition.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect adoption will have a material impact on its consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discount or premiums. The recognition guidance for debt issuance costs are not affected by amendments in this update, which is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect adoption will have a material impact on its consolidated financial statements.

Results of Operations

The following discussion of our results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes thereto. We commenced operations on April 1, 2015 upon closing of our IPO. Prior to that time, we had no operations, and there are no comparable periods for which operating results are presented.

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Three months ended September 30, 2015 (dollars in thousands):

	Three Months Ended September 30, 2015
Revenues:
Interest income from investments	$	578
Net interest income		578
Costs and expenses:
General and administrative expenses reimbursable to Manager		791
General and administrative expenses		422
Investment expenses		112
Management fees to Manager		414
Restructuring costs		220
Deferred termination fee to Manager		158
Total costs and expenses		2,117
Operating loss		(1,539	)
Other income:
Change in fair value of investments		85
Other interest income		47
Total other income		132
Net Loss	$	(1,407	)

Revenues

Interest income from real estate loans consisted of interest earned on development property investments and operating property loans on self-storage properties. Interest rates on the majority of the development property investments and operating property loans are 6.90% for a term of generally 72 months.

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Expenses

The following table provides a detail of general and administrative expenses reimbursable to Manager and general and administrative expenses by natural classification for the three months ended September 30, 2015.

	Three months ended September 30, 2015
Compensation and benefits	$	539
Occupancy		79
Business development		206
Professional fees		382
Other		7
Total	$	1,213

General and Administrative expenses reimbursable to Manager

General and administrative expenses reimbursable to Manager of $0.8 million consisted of expenses incurred by our Manager in operating our business, including, without limitation, office rent, compensation expense for its employees (other than our chief executive officer, chief financial officer, and half the salary for our president and chief operating officer), travel expenses and other business development expenses.

General and Administrative expenses

General and administrative expenses of $0.4 million consisted predominantly of $0.1 million in fees for general corporate legal services from outside counsel, $0.1 million for accounting consulting fees, and $0.1 million of compensation expenses related to restricted stock awards.

Other operating expenses

The investment expenses of $0.1 million consists of legal fees incurred by the Company in connection with the structuring and closing of our loan investments. The management fee of $0.4 million relates to the fee earned by the Manager pursuant to the management agreement. Restructuring costs relate to the exit costs incurred by closing the Miami, Florida and Cleveland, Ohio offices and moving the headquarters to Memphis, Tennessee. These charges were primarily related to the severance of employees and lease termination costs. The deferred termination fee to Manager of $0.2 million represents the accrual over the term of the management agreement of the deferred termination fee payable by the Operating Partnership in OP Units.

Other income

For the three months ended September 30, 2015, we recorded other income of $0.1 million, of which $0.09 million related to the change in fair value of investments and $0.05 million related to other interest income earned on cash and cash equivalents held at financial institutions.

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Nine months ended September 30, 2015 (dollars in thousands):

	Nine Months Ended September 30, 2015
Revenues:
Interest income from investments	$	735
Net interest income		735
Costs and expenses:
General and administrative expenses reimbursable to Manager		1,311
General and administrative expenses		689
Investment expenses		262
Management fees to Manager		823
Restructuring costs		220
Deferred termination fee to Manager		308
Total costs and expenses		3,613
Operating loss		(2,878	)
Other income:
Change in fair value of investments		656
Other interest income		110
Total other income		766
Net Loss	$	(2,112	)

Revenues

Interest income from investments consisted of interest earned on development property investments and operating property loans on self-storage properties. Interest rates on the majority of the development property investments and operating property loans are 6.90% for a term of generally 72 months.

Expenses

The following table provides a detail of general and administrative expenses reimbursable to Manager and general and administrative expenses by natural classification for the nine months ended September 30, 2015.

	Nine months ended September 30, 2015
Compensation and benefits	$	765
Occupancy		130
Business development		390
Professional fees		605
Other		110
Total	$	2,000

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General and Administrative expenses reimbursable to Manager

General and administrative expenses reimbursable to Manager of $1.3 million consisted of expenses incurred by our Manager in operating our business, including, without limitation, office rent, compensation expense for its employees (other than our chief executive officer, chief financial officer, and half the salary for our president and chief operating officer), travel expenses and other business development expenses.

General and Administrative expenses

General and administrative expenses of $0.7 million consisted predominantly of $0.2 million of fees for general corporate legal services from outside counsel, $0.1 million for accounting consulting fees, $0.2 million of compensation expenses related to restricted stock awards, and $0.1 million related to director and officer liability insurance.

Other operating expenses

The investment expenses of $0.3 million consists of legal fees incurred by the Company in connection with the structuring and closing of our loan investments. The management fee of $0.8 million relates to the fee earned by the Manager pursuant to the management agreement. Restructuring costs relate to the exit costs incurred by closing the Miami, Florida and Cleveland, Ohio offices and moving the headquarters to Memphis, Tennessee. These charges were primarily related to the severance of employees and lease termination costs. The deferred termination fee to Manager of $0.3 million represents the accrual over the term of the management agreement of the deferred termination fee payable by the Operating Partnership in OP Units.

Other income

For the nine months ended September 30, 2015, we recorded other income of $0.8 million, of which $0.7 million related to the change in fair value of investments and $0.1 million related to other interest income earned on cash and cash equivalents held at financial institutions.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make distributions to our stockholders and other general business needs. We will use significant cash to originate our target investments, make distributions to our stockholders and fund our operations. As of September 30, 2015, we had unrestricted cash of approximately $69.0 million. In the future, our primary sources of cash will generally consist of unused borrowing capacity under our financing sources, the net proceeds of future offerings, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating results. We expect that our primary sources of financing will be, to the extent available to us, through (a) credit facilities, (b) other sources of private financing, which may include private placements of equity or debt securities and/or joint ventures and (c) public offerings of our equity or debt securities. In the future, we may utilize other sources of financing to the extent available to us. The sources of financing for our target investments are described below.

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Cash Flows

The following table sets forth changes in cash and cash equivalents for the nine months ended September 30, 2015:

	Nine months ended  September 30, 2015
Net loss	$	(2,112	)
Adjustments to reconcile net loss to net cash used in operating activities		445
Net cash used in operating activities		(1,667	)
Net cash used in investing activities		(37,606	)
Net cash provided by financing activities		108,252
Change in cash and cash equivalents	$	68,979

Cash increased by $69.0 million during the nine months ended September 30, 2015. Net cash used in operating activities totaled $1.7 million during the nine months ended September 30, 2015. The primary components of cash used in operations were net loss of $2.1 million and an increase of $0.4 for changes in operating assets and liabilities.

Net cash used in investing activities for the nine months ended September 30, 2015 totaled $37.6 million, and related primarily to the origination of new loans held for investment.

Net cash provided by financing activities for the nine months ended September 30, 2015 totaled $108.3 million and related primarily to the gross proceeds from the issuance of our common stock of $120.0 million, less offering costs of $9.6 million, as well as $2.1 million of dividends paid.

Equity Capital Policies

Subject to applicable law, our Board of Directors has the authority, without further stockholder approval, to issue additional authorized common stock and preferred stock or otherwise raise capital, including through the issuance of senior securities, in any manner and on the terms and for the consideration it deems appropriate, including in exchange for property. Stockholders will have no preemptive right to additional shares issued in any offering, and any offering may cause a dilution of your investment.

Leverage Policies

To date we have funded our loan portfolio exclusively with the proceeds of the IPO and private placement. In the future, we may utilize equity raised in follow-on offerings and/or borrowing against our target investments in accordance with our investment guidelines in order to increase the size of our loan portfolio and potential return to stockholders. Our investment guidelines state that our leverage will generally not exceed 50% of the total value of our loan portfolio. We may borrow up to 100% of the principal value of certain First Mortgage Loans. Our actual leverage will depend on our mix of loans. Our charter and bylaws do not limit the amount of indebtedness we can incur, and our Board of Directors has discretion to deviate from or change our investment guidelines at any time. We will use corporate leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in interest rates. Our financing strategy focuses on the use of match- funded financing structures. This means that we will seek to match the maturities and/or repricing schedules of our financial obligations with those of our loan portfolio to minimize the risk that we will have to refinance our liabilities prior to the maturities of our loans and to reduce the impact of changing interest rates on earnings. We will disclose any material changes to our leverage policies in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Form 10-Q or Form 10-K for the period in which the change was made, or in a Current Report on Form 8- K if required by the rules of the SEC or the Board of Directors deems it advisable, in its sole discretion.

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Policies with Respect to Other Activities

We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers and do not intend to do so. At all times, we intend to make investments in a manner as to qualify as a REIT, unless because of circumstances or changes in the Code or the regulations of the U.S. Department of the Treasury, our Board of Directors determines that it is no longer in our best interest to qualify as a REIT. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act of 1940. We also are subject to the information reporting requirements of the Exchange Act. Pursuant to these requirements, we file periodic reports, proxy statements and other information, including audited consolidated financial statements, with the SEC. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by our independent certified public accountants and with quarterly reports containing unaudited consolidated financial statements for each of the first three quarters of each fiscal year.

Future Revisions in Policies and Strategies

The Board of Directors has the power to modify or waive our investment policies and strategies without the consent of our stockholders to the extent that the Board of Directors (including a majority of our independent directors) determines that a modification or waiver is in the best interest of our stockholders. Among other factors, developments in the market that either affect the policies and strategies mentioned herein or that change our assessment of the market may cause our Board of Directors to revise our policies and strategies.

34 

Contractual Obligations and Commitments

Since the closing of the Company’s initial public offering on April 1, 2015 through September 30, 2015, the Company has committed an aggregate of $138.9 million principal amount in loans, $39.0 million of which has been funded as of September 30, 2015.

Closing Date	Metropolitan Statistical Area ("MSA")	Commitment Amount		Funded Prinicpal		Unfunded Commitment		Fair Value
Development property investments:
Loan investments with a profits interest:
4/21/2015	Orlando	$	5,333	$	2,231	$	3,102	$	2,202
4/20/2015	Miami		13,867		1,868		11,999		1,737
5/14/2015	Miami		14,849		2,788		12,061		2,657
6/8/2015	Dallas		7,243		2,819		4,424		2,775
6/10/2015	Atlanta		8,132		3,625		4,507		3,607
6/19/2015	Tampa		5,369		2,308		3,061		2,283
6/26/2015	Atlanta		6,050		2,020		4,030		1,985
6/29/2015	Charlotte		7,624		532		7,092		981
7/2/2015	Milwaukee		7,650		2,458		5,192		2,407
7/31/2015	New Haven		6,930		780		6,150		744
8/10/2015	Pittsburgh		5,266		1,338		3,928		1,350
8/14/2015	Raleigh		8,998		954		8,044		868
9/25/2015	Fort Lauderdale		13,230		1,978		11,252		1,859
9/30/2015	Jacksonville		6,445		791		5,654		763
			116,986		26,490		90,496		26,218
Construction loans:
8/5/2015	West Palm Beach		7,500		1,955		5,545		1,899
8/5/2015	Sarasota		4,792		986		3,806		950
			12,292		2,941		9,351		2,849
	Total		129,278		29,431		99,847		29,067
Operating property loans:
4/9/2015	Detroit		3,182	$	3,182		-		3,165
6/19/2015	New Orleans		2,800		2,800		-		2,778
7/7/2015	Lehigh Valley		3,480		3,480		-		3,443
8/5/2015	Pittsburgh		150		150		-		150
	Total		9,612		9,612		-		9,536
	Total investments	$	138,890	$	39,043	$	99,847	$	38,603

As of September 30, 2015, we had unrestricted cash of approximately $69.0 million. Our ability to fund the $99.8 million in unfunded commitments as of September 30, 2015, will require us to obtain additional equity and/or debt financing. We have had preliminary discussions with several financial institutions regarding a credit facility and other debt financing transactions. There can be no assurance, however, that we will procure sufficient financing to fund all of our current and anticipated commitments. See “Risk Factors” in this report for a discussion of the Company’s funding needs.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities or VIEs, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities or entered into any commitment or intent to provide additional funding to any such entities.

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Dividends

For the quarter ended September 30, 2015, we declared a dividend to our stockholders of $0.35 per share, payable on October 15, 2015 to stockholders of record on October 1, 2015. We intend to make regular quarterly distributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT annually distribute at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We intend to pay regular quarterly dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our Board of Directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on any secured funding facilities, other lending facilities, repurchase agreements and other debt payable. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. In addition, prior to the time we have fully deployed the net proceeds of the IPO and private placement to originate our target investments, we may fund quarterly distributions out of such net proceeds.

Inflation

Virtually all of our assets and liabilities will be interest rate sensitive in nature. As a result, interest rates and other factors influence our performance far more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. Our financial statements are prepared in accordance with GAAP and our distributions will be determined by our Board of Directors consistent with our obligation to distribute to our stockholders at least 90% of our REIT taxable income on an annual basis in order to maintain our REIT qualification; in each case, our activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risk can be quantified from historical experience and seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake.

Credit Risk

We expect to be subject to varying degrees of credit risk in connection with holding a portfolio of our target investments. We will have exposure to credit risk on our loans. Our Manager will seek to manage credit risk by performing deep credit fundamental analysis of potential assets. Credit risk will also be addressed through our Manager’s on-going review, and investments will be monitored for variance from expected prepayments, defaults, severities, losses and cash flow on a monthly basis. Our investment guidelines do not limit the amount of our equity that may be invested in any type of our target investments. Our investment decisions will depend on prevailing market conditions and may change over time in response to opportunities available in different interest rate, economic and credit environments. As a result, we cannot predict the percentage of our equity that will be invested in any individual target investment at any given time.

Interest Rate Risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We will be subject to interest rate risk in connection with our assets and our related financing obligations. In general, we expect to finance the origination or acquisition of our target investments through financings in the form of borrowings under bank credit facilities (including term loans and revolving facilities in part). We may mitigate interest rate risk through utilization of hedging instruments, primarily interest rate swap agreements. Interest rate swap agreements are intended to serve as a hedge against future interest rate increases on our borrowings. We may also seek to limit the exposure of our borrowings to future fluctuations of interest rates through our use of interest-rate caps and other interest rate hedging instruments.

36 

Interest Rate Mismatch Risk

We may fund a portion of our origination or acquisition of mortgage loans with borrowings that are based on LIBOR, while the interest rates on these loans may be indexed to non-LIBOR or indices, such as U.S. Treasury Yields and other similar index rates. Accordingly, any increase in LIBOR relative to other index rates will generally result in an increase in our borrowing costs that may not be matched by a corresponding increase in the interest earnings on these loans. Any such interest rate index mismatch could adversely affect our profitability, which may negatively impact distributions to our stockholders. To mitigate interest rate mismatches, we may utilize the hedging strategies discussed above.

Our analysis of risks is based on our Manager’s experience, estimates, models and assumptions. These analyses rely on models which employ estimates of fair value and interest rate sensitivity. Actual economic conditions or implementation of decisions by our management may produce results that differ significantly from the estimates and assumptions used in our models and management’s projected results.

Market Risk

Our loans will be reflected at their estimated fair value, with changes in fair market value recorded in our income. The estimated fair value of these investments fluctuates primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of the fixed-rate securities would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of the fixed-rate securities would be expected to increase. As market volatility increases or liquidity decreases, the fair value of our investments may be adversely impacted. If we are unable to readily obtain independent pricing to validate our estimated fair value of any loan investment in our portfolio, the fair value gains or losses recorded in income may be adversely affected.

Real Estate Risk

Self-storage loans are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans or loans, as the case may be, which could also cause us to suffer losses.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. The controls evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer, President and Chief Operating Officer, and Chief Financial Officer. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as this Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that material information related to our company and our consolidated subsidiaries is made known to management, including the Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared.

37 

Internal Control Over Financial Reporting

During the third quarter of 2015, the Manager employed several new key employees as part of its efforts to consolidate its headquarters in Memphis, Tennessee. Included among these new employees was the Company’s Chief Financial Officer, General Counsel, and Corporate Controller.  As a result, the Company implemented additional internal controls during the third quarter that are necessary to monitor our operations and report our financial results including enhancing the review of loan transactions and documents.

38 

PART II. other information

Item 1. Legal Proceedings

Neither we nor any of our affiliates are the subject of any legal or regulatory proceedings. We and our affiliates may be involved, from time to time, in legal proceedings that arise in the ordinary course of business.

Item 1A. Risk Factors

In addition to the information in this report, you should carefully consider the risks relating to our business that we identify in “Risk Factors” in the prospectus related to our IPO dated March 26, 2015, filed with the SEC on March 30, 2015, in accordance with Rule 424(b) of the Securities Act, which is accessible on the SEC’s website at www.sec.gov. This section supplements and updates that discussion.

All of our portfolio investments are recorded at fair value and, as a result, there will be uncertainty as to the value of these investments.

All of our portfolio investments will be in the form of loans and positions or securities that are recorded at fair value and are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We will value these investments quarterly at fair value, which likely will include unobservable inputs. Because such valuations are subjective, the fair value of certain of our assets may fluctuate over short periods of time and our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Factors which might result in a significantly higher or lower fair value measurement include changes in market yields, discount rates, our borrowers’ earnings before interest, income taxes, depreciation, and amortization (“EBITDA”), exit date, volatility, market conditions, and other events. Our results of operations and the value of our common stock could be adversely affected if the value of our investments deteriorates from period to period or if our determinations regarding the fair value of these investments were materially higher than the values that we ultimately realize upon their disposal. The valuation process can be particularly challenging during periods of economic turmoil, such as were experienced during the last financial crisis, making valuations during such times more unpredictable and volatile.

If we cannot obtain additional equity or debt financing, we may be unable to fund our current and anticipated investment portfolio in full and our growth may be limited.

We have funded our loan and other investments to date with proceeds from the IPO and concurrent private placement. As of September 30, 2015, we had unrestricted cash of approximately $69.0 million. Our ability to fund the $99.8 million in unfunded commitments as of September 30, 2015, will require us to obtain additional equity and/or debt capital. We have had preliminary discussions with several financial institutions regarding a credit facility and other debt financing transactions. There can be no assurance, however, that we will procure sufficient financing to fund all of our current and anticipated commitments. Given the funding schedules of our development property investments, we expect our existing cash and cash equivalents will provide sufficient funding of our business through March 31, 2016.

In addition, our growth is dependent on our ability to access additional equity and debt capital. Moreover, part of our business strategy may involve the use of debt financing, such as a credit facility, to increase potential revenues. Our inability to obtain additional equity and/or debt capital, such as a credit facility, on attractive terms, or at all, could adversely impact our ability to fund fully our existing and anticipated portfolio investments and otherwise execute our business strategy, which could adversely affect our growth prospects and future stockholder returns.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

Concurrently with the closing of the IPO on April 1, 2015, pursuant to a private placement agreement dated March 26, 2015, we completed a private placement in which we sold 250,000 shares of our common stock to an affiliate of Mr. Jernigan at a price per share of $20, resulting in total proceeds to the Company of $5.0 million. No underwriting costs were incurred in connection with the private placement. The private placement was made pursuant to the exemption provided under Section 4(a)(2) of the Securities Act, based on representations made by the participant in the private placement.

39 

Use of Proceeds from Registered Securities

On April 1, 2015, we completed the IPO, pursuant to which we sold 5,000,000 shares of our common stock at a price per share of $20 and generated gross proceeds of $100.0 million. On April 9, 2015, we sold an additional 750,000 shares of our common stock at a price per share of $20 to the underwriters of the initial public offering pursuant to the underwriters’ option to purchase additional shares. The aggregate net proceeds to us in the IPO, including the overallotment shares, after deducting the underwriting discount and commissions and expenses payable by us, were approximately $105.0 million. All of the shares were sold pursuant to our registration statement on Form S-11, as amended (File No. 333-203185), that was declared effective by the SEC on March 26, 2015. Raymond James & Associates, Inc. served as the book-running manager for the offering. Robert W. Baird & Co. Incorporated and Wunderlich Securities, Inc. served as co-managers.

As of November 12, 2015, the net proceeds from the IPO had been used as follows: (i) approximately $244 thousand to reimburse Mr. Jernigan for amounts advanced or incurred in connection with the IPO and organization costs; (ii) funding of loan transactions totaling $45.0 million funded of $147.0 million in total commitments, and (iii) approximately $4.3 million in dividends to shareholders. The remaining net proceeds will be used to pay outstanding expenses incurred in connection with the IPO, to fund the loans subject to term sheets as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Outlook”, paying the Manager’s fees, for general corporate purposes, including working capital, and, potentially, paying distributions to the Company’s stockholders.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index, which is incorporated herein by reference, are filed or furnished as part of this Quarterly Report on Form 10-Q.

40 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		JERNIGAN CAPITAL, INC.
Date: November 12, 2015	By:	/s/ Dean Jernigan
		Dean Jernigan
		Chairman and Chief Executive Officer (Principal Executive Officer)
Date: November 12, 2015	By:	/s/ William C. Drummond
		William C. Drummond
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

41 

EXHIBIT INDEX

Exhibit Number	Exhibit Description
10.1	Restricted Stock Agreement with William C. Drummond
10.2	Indemnification Agreement with William C. Drummond
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32.1*	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

42 

EX-10.1

Exhibit 10.1

JERNIGAN CAPITAL, INC. 

2015 EQUITY INCENTIVE PLAN

RESTRICTED Stock AGREEMENT

Jernigan Capital, Inc., a Maryland corporation (the “Company”), hereby grants shares of its common stock, $0.01 par value per share (“Common Stock”), to the Grantee named below, subject to the vesting and other conditions set forth below. Additional terms and conditions of the grant are set forth in this cover sheet and in the attachment (collectively, the “Agreement”) and in the Company’s 2015 Equity Incentive Plan (as amended from time to time, the “Plan”). Capitalized terms used but not defined herein shall have the meanings given them in the Plan.

Name of Grantee: William C. Drummond

Number of Restricted Shares of Common Stock (“Shares”): 25,000

Grant Date: August 11, 2015

Vesting Schedule: Subject to your continuous Service and other limitations set forth in this Agreement and the Plan

One-third of the Shares shall vest on August 11, 2016;

One-third of the Shares shall vest on August 11, 2017; and

One-third of the Shares shall vest on August 11, 2018.

For purposes of this Agreement, the term “vest” shall mean, with respect to any Shares, that such Shares are no longer subject to forfeiture to the Company. Shares that have not vested are deemed “Restricted Stock.”

By your signature below, you agree to all of the terms and conditions described herein, in the attached Agreement and in the Plan, a copy of which is also attached. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this cover sheet or Agreement should appear to be inconsistent. You further agree to refrain from making an election under Code Section 83(b) with regard to the grant of Restricted Stock. You further agree to the venue selection and waiver of a jury trial in accordance with the Agreement.

Grantee:	/s/ William C. Drummond	Date:	August 11, 2015
	(Signature)
Company:	/s/ John A. Good	Date:	August 11, 2015
	(Signature)

Title: President and Chief Operating Officer

Attachment

This is not a stock certificate or a negotiable instrument. 

2

JERNIGAN CAPITAL, INC.

2015 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

Restricted Stock	This Agreement evidences an award of Shares in the number set forth on the cover sheet and subject to the vesting and other conditions set forth herein, in the Plan and on the cover sheet (the “Restricted Stock”).
Transfer of Unvested Restricted Stock	Unvested Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, whether by operation of law or otherwise, nor may the Restricted Stock be made subject to execution, attachment or similar process. If you attempt to do any of these things, the Restricted Stock will immediately become forfeited.
Issuance and Vesting	The Company will issue your Restricted Stock in the name set forth on the cover sheet.
	Your rights under this Restricted Stock grant and this Agreement shall vest in accordance with the vesting schedule set forth on the cover sheet so long as you continue in Service through the vesting dates set forth on the cover sheet, provided, however, that upon the termination of your Service due to your death or Disability the Restricted Stock will become 100% vested.
	For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by your employer in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by Applicable Laws. Your Service terminates in any event when the approved leave ends unless you immediately return to active Service.  Your employer may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan. Notwithstanding the foregoing, the Company may determine, in its discretion, that a leave counts for this purpose even if your employer does not agree.
Change in Control	The Restricted Stock shall be subject to Section 18 of the Plan in the event of a Change in Control, provided, however, that if the Restricted Stock is assumed or continued in connection with a Change in Control, the Restricted Stock will become 100% vested upon your Involuntary Termination within the 12-month period following the consummation of the Change in Control.
	“Involuntary Termination” means the termination of your Service by reason of (i) your involuntary dismissal by the Company or its successor for reasons other than Cause or (ii) your voluntary resignation for Good Reason.

Evidence of Issuance	The issuance of the Shares under the grant of Restricted Stock evidenced by this Agreement shall be evidenced in such a manner as the Company, in its discretion, deems appropriate, including, without limitation, book-entry, direct registration or issuance of one or more share certificates, with any unvested Restricted Stock bearing the appropriate restrictions imposed by this Agreement. As your interest in the Restricted Stock vests, the recordation of the number of Restricted Stock attributable to you will be appropriately modified if necessary.
Forfeiture of Unvested Restricted Stock	Unless the termination of your Service triggers accelerated vesting of your Restricted Stock or other treatment pursuant to the terms of this Agreement, the Plan, or in an employment or any other written agreement between the Company or any Affiliate and you, you will automatically forfeit to the Company all of the unvested Restricted Stock in the event you are no longer providing Service.
Withholding Taxes	You agree as a condition of this grant that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting or receipt of the Restricted Stock. In the event that the Company or any Affiliate determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting or receipt of Shares arising from this grant, you authorize the Company or any Affiliate to require such payments from you, or withhold such amounts from other payments due to you from the Company or any Affiliate (including withholding the delivery of vested Shares otherwise deliverable under this Agreement).
Retention Rights	This Agreement and the grant evidenced hereby do not give you the right to be retained by the Company or any Affiliate in any capacity. Unless otherwise specified in an employment or other written agreement between the Company or any Affiliate and you, the Company or any Affiliate reserves the right to terminate your Service at any time and for any reason.
Stockholder Rights	You will be entitled to receive all dividends or other distributions made on outstanding Shares. No adjustments are made for dividends or other rights if the applicable record date occurs before an appropriate book entry is made (or your certificate is issued), except as described in the Plan.
	Your grant shall be subject to the terms of any applicable agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.
Legends	If and to the extent that the Shares are represented by certificates rather than book entry, all certificates representing the Shares issued under this grant shall, where applicable, have endorsed thereon the following legends:

4

	“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING, FORFEITURE AND OTHER RESTRICTIONS ON TRANSFER OF SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”
	To the extent the Shares are represented by a book entry, such book entry will contain an appropriate legend or restriction similar to the foregoing.
Clawback	If the Company adopts a “clawback” or recoupment policy, this Award will be subject to repayment to the Company to the extent so provided under the terms of such policy.
Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
The Plan	The text of the Plan is incorporated in this Agreement by reference.
	Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan.
	This Agreement and the Plan constitute the entire understanding between you and the Company regarding this grant. Any prior agreements, commitments or negotiations concerning this grant are superseded; except that any written employment, consulting, confidentiality, non-competition, non-solicitation and/or severance agreement between you and the Company or any Affiliate shall supersede this Agreement with respect to its subject matter.
Data Privacy	In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.
	By accepting this grant, you give explicit consent to the Company to process any such personal data.

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Code Section 409A It is intended that this Award comply with Code Section 409A or an exemption to Code Section 409A. To the extent that the Company determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Code Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The nature of any such amendment shall be determined by the Company. For purposes of this Award, a termination of Service only occurs upon an event that would be a Separation from Service within the meaning of Code Section 409A.

By signing this Agreement, you agree to all of the terms and conditions described above and in the Plan.

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EX-10.2

Exhibit 10.2

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (this “Agreement”) is effective as of August 11, 2015, by and between JERNIGAN CAPITAL, INC., a Maryland corporation (the “Company” or the “Indemnitor”) and William C. Drummond (the “Indemnitee”).

WHEREAS, the Indemnitee is an officer of the Company and in such capacities is performing a valuable service for the Company;

WHEREAS, Maryland law permits the Company to enter into contracts with its officers or members of its Board of Directors with respect to indemnification of, and advancement of expenses to, such persons;

WHEREAS, the Articles of Amendment and Restatement of the Company (the “Charter”) provide that the Company shall indemnify and advance expenses to its directors and officers to the maximum extent permitted by Maryland law in effect from time to time;

WHEREAS, the Amended and Restated Bylaws of the Company (the “Bylaws”) provide that each director and officer of the Company shall be indemnified by the Company to the maximum extent permitted by Maryland law in effect from time to time and shall be entitled to advancement of expenses consistent with Maryland law; and

WHEREAS, to induce the Indemnitee to provide services to the Company as an officer and a member of the Board of Directors, and to provide the Indemnitee with specific contractual assurance that indemnification will be available to the Indemnitee regardless of, among other things, any amendment to or revocation of the Charter or the Bylaws, or any acquisition transaction relating to the Company, the Indemnitor desires to provide the Indemnitee with protection against personal liability as set forth herein.

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Indemnitor and the Indemnitee hereby agree as follows:

1. DEFINITIONS.

For purposes of this Agreement:

(a) “Change in Control” shall have the meaning ascribed to it by the Company’s 2015 Equity Incentive Plan or any equity incentive or stock compensation plan adopted by the Board of Directors and approved by the stockholders of the Company that may later replace the Company’s 2015 Equity Incentive Plan.

(b) “Corporate Status” describes the status of a person who is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, partner (limited or general), member, director, employee or agent of any other foreign or domestic corporation, partnership, joint venture, limited liability company, trust, other enterprise (whether conducted for profit or not for profit) or employee benefit plan. The Company shall be deemed to have requested the Indemnitee to serve an employee benefit plan where the performance of the Indemnitee’s duties to the Company also imposes or imposed duties on, or otherwise involves or involved services by, the Indemnitee to the plan or participants or beneficiaries of the plan.

(c) “Expenses” shall include all attorneys’ and paralegals’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(d) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation (including any internal investigation), administrative hearing, or any other proceeding, including appeals therefrom, whether civil, criminal, administrative, or investigative, except one initiated by the Indemnitee pursuant to paragraph 8 of this Agreement to enforce such Indemnitee’s rights under this Agreement.

(e) “Special Legal Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, or in the past two years has been, retained to represent (i) the Indemnitor or the Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.

2. INDEMNIFICATION.

The Indemnitee shall be entitled to the rights of indemnification provided in this paragraph 2 and under applicable law, the Charter, the Bylaws, any other agreement, a vote of stockholders or resolution of the Board of Directors or otherwise if, by reason of such Indemnitee’s Corporate Status, such Indemnitee is, or is threatened to be made, a party to any threatened, pending, or completed Proceeding, including a Proceeding by or in the right of the Company. Unless prohibited by paragraph 13 hereof and subject to the other provisions of this Agreement, the Indemnitee shall be indemnified hereunder, to the maximum extent permitted by Maryland law in effect from time to time, against judgments, penalties, fines, liabilities, and settlements and reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection with such Proceeding or any claim, issue or matter therein; provided, however, that if such Proceeding was initiated by or in the right of the Company, indemnification may not be made in respect of such Proceeding if the Indemnitee shall have been finally adjudged to be liable to the Company. For purposes of this paragraph 2, excise taxes assessed on the Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed fines.

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3. EXPENSES OF A SUCCESSFUL PARTY.

Without limiting the effect of any other provision of this Agreement, including the rights provided for in paragraphs 2 and 4 hereof, and without regard to the provisions of paragraph 6 hereof, to the extent that the Indemnitee is, by reason of such Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding pursuant to a final non-appealable order, such Indemnitee shall be indemnified against all reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection therewith. If the Indemnitee is not wholly successful in such Proceeding pursuant to a final non-appealable order but is successful, on the merits or otherwise, as to one or more but less than all claims, issues, or matters in such Proceeding pursuant to a final non-appealable order, the Indemnitor shall indemnify the Indemnitee against all reasonable Expenses actually incurred by or on behalf of such Indemnitee in connection with each successfully resolved claim, issue or matter. For purposes of this paragraph and without limitation, the termination of any claim, issue or matter in such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

4. ADVANCEMENT OF EXPENSES.

Notwithstanding anything in this Agreement to the contrary, but subject to paragraph 13 hereof, if the Indemnitee is or was or becomes a party to or is otherwise involved in any Proceeding (including as a witness), or is or was threatened to be made a party to or a participant (including as a witness) in any such Proceeding, by reason of the Indemnitee’s Corporate Status, or by reason of (or arising in part out of) any actual or alleged event or occurrence related to the Indemnitee’s Corporate Status, or by reason of any actual or alleged act or omission on the part of the Indemnitee taken or omitted in or relating to the Indemnitee’s Corporate Status, then the Indemnitor shall advance all reasonable Expenses incurred by the Indemnitee in connection with any such Proceeding within twenty (20) days after the receipt by the Indemnitor of a statement from the Indemnitee requesting such advance from time to time, whether prior to or after final disposition of such Proceeding; provided that, such statement shall reasonably evidence the Expenses incurred or to be incurred by the Indemnitee and shall include or be preceded or accompanied by (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Indemnitor as authorized by this Agreement has been met and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amounts advanced if it should ultimately be determined that the standard of conduct has not been met. The undertaking required by clause (ii) of the immediately preceding sentence shall be an unlimited general obligation of the Indemnitee but need not be secured and may be accepted without reference to financial ability to make the repayment.

5. WITNESS EXPENSES.

Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee is, by reason of such Indemnitee’s Corporate Status, a witness for any reason in any Proceeding to which such Indemnitee is not a named defendant or respondent, such Indemnitee shall be indemnified by the Indemnitor against all Expenses actually incurred by or on behalf of such Indemnitee in connection therewith.

6. DETERMINATION OF ENTITLEMENT TO AND AUTHORIZATION OF INDEMNIFICATION.

(a) To obtain indemnification under this Agreement, the Indemnitee shall submit to the Indemnitor a written request, including therewith such documentation and information reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.

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(b) Indemnification under this Agreement may not be made unless authorized for a specific Proceeding after a determination has been made in accordance with this paragraph 6(b) that indemnification of the Indemnitee is permissible in the circumstances because the Indemnitee has met the following standard of conduct: the Indemnitor shall indemnify the Indemnitee in accordance with the provisions of paragraph 2 hereof, unless it is established that: (a) the act or omission of the Indemnitee was material to the matter giving rise to the Proceeding and (x) was committed in bad faith or (y) was the result of active and deliberate dishonesty; (b) the Indemnitee actually received an improper personal benefit in money, property or services; or (c) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Upon receipt by the Indemnitor of the Indemnitee’s written request for indemnification pursuant to subparagraph 6(a), a determination as to whether the applicable standard of conduct has been met shall be made within the period specified in paragraph 6(e): (i) if a Change in Control shall have occurred, by Special Legal Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, with Special Legal Counsel selected by the Indemnitee (the Indemnitee shall give prompt written notice to the Indemnitor advising the Indemnitor of the identity of the Special Legal Counsel so selected); or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the Proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors consisting solely of two or more directors not, at the time, parties to such Proceeding and who were duly designated to act in the matter by a majority vote of the full Board of Directors in which the designated directors who are parties may participate, (B) if the requisite quorum of the full Board of Directors cannot be obtained therefor and the committee cannot be established (or, even if such quorum is obtainable or such committee can be established, if such quorum or committee so directs), by Special Legal Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, with Special Legal Counsel selected by the Board of Directors or a committee of the Board of Directors by vote as set forth in clause (ii)(A) of this paragraph 6(b) (or, if the requisite quorum of the full Board of Directors cannot be obtained therefor and the committee cannot be established, by a majority of the full Board of Directors in which directors who are parties to the Proceeding may participate) (if the Indemnitor selects Special Legal Counsel to make the determination under this clause (ii), the Indemnitor shall give prompt written notice to the Indemnitee advising him or her of the identity of the Special Legal Counsel so selected) or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten (10) days after such determination. Authorization of indemnification and determination as to reasonableness of Expenses shall be made in the same manner as the determination that indemnification is permissible. However, if the determination that indemnification is permissible is made by Special Legal Counsel under clause (ii)(B) above, authorization of indemnification and determination as to reasonableness of Expenses shall be made in the manner specified under clause (ii)(B) above for the selection of such Special Legal Counsel.

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(c) The Indemnitee shall cooperate with the person or entity making such determination with respect to the Indemnitee’s entitlement to indemnification, including providing upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any reasonable costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating shall be borne by the Indemnitor (irrespective of the determination as to the Indemnitee’s entitlement to indemnification) and the Indemnitor hereby indemnifies and agrees to hold the Indemnitee harmless therefrom.

(d) In the event the determination of entitlement to indemnification is to be made by Special Legal Counsel pursuant to paragraph 6(b) hereof, the Indemnitee, or the Indemnitor, as the case may be, may, within seven days after such written notice of selection shall have been given, deliver to the Indemnitor or to the Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the grounds that the Special Legal Counsel so selected does not meet the requirements of “Special Legal Counsel” as defined in paragraph 1 of this Agreement. If such written objection is made, the Special Legal Counsel so selected may not serve as Special Legal Counsel until a court has determined that such objection is without merit. If, within twenty (20) days after submission by the Indemnitee of a written request for indemnification pursuant to paragraph 6(a) hereof, no Special Legal Counsel shall have been selected or, if selected, shall have been objected to, either the Indemnitor or the Indemnitee may petition a court for resolution of any objection which shall have been made by the Indemnitor or the Indemnitee to the other’s selection of Special Legal Counsel and/or for the appointment as Special Legal Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Special Legal Counsel under paragraph 6(b) hereof. The Indemnitor shall pay all reasonable fees and expenses of Special Legal Counsel incurred in connection with acting pursuant to paragraph 6(b) hereof, and all reasonable fees and expenses incident to the selection of such Special Legal Counsel pursuant to this paragraph 6(d). In the event that a determination of entitlement to indemnification is to be made by Special Legal Counsel and such determination shall not have been made and delivered in a written opinion within ninety (90) days after the receipt by the Indemnitor of the Indemnitee’s request in accordance with paragraph 6(a), upon the due commencement of any judicial proceeding in accordance with paragraph 8(a) of this Agreement, Special Legal Counsel shall be discharged and relieved of any further responsibility in such capacity.

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(e) If the person or entity making the determination whether the Indemnitee is entitled to indemnification shall not have made a determination within forty-five (45) days after receipt by the Indemnitor of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification, absent: (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. Such 45-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person or entity making said determination in good faith requires additional time for the obtaining or evaluating of documentation and/or information relating thereto. The foregoing provisions of this paragraph 6(e) shall not apply: (i) if the determination of entitlement to indemnification is to be made by the stockholders and if within fifteen (15) days after receipt by the Indemnitor of the request for such determination the Board of Directors resolves to submit such determination to the stockholders for consideration at an annual or special meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made at such meeting, or (ii) if the determination of entitlement to indemnification is to be made by Special Legal Counsel pursuant to paragraph 6(b) of this Agreement.

7. PRESUMPTIONS.

(a) In making a determination with respect to entitlement or authorization of indemnification hereunder, the person or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement and the Indemnitor shall have the burden of proof to overcome such presumption.

(b) The termination of any Proceeding by conviction, or upon a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

8. REMEDIES.

(a) In the event that: (i) a determination is made in accordance with the provisions of paragraph 6 that the Indemnitee is not entitled to indemnification under this Agreement, or (ii) advancement of reasonable Expenses is not timely made pursuant to this Agreement, or (iii) payment of indemnification due the Indemnitee under this Agreement is not timely made, the Indemnitee shall be entitled to an adjudication in an appropriate court of competent jurisdiction of such Indemnitee’s entitlement to such indemnification or advancement of Expenses.

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(b) In the event that a determination shall have been made pursuant to paragraph 6 of this Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this paragraph 8 shall be conducted in all respects as a de novo trial on the merits. The fact that a determination had been made earlier pursuant to paragraph 6 of this Agreement that the Indemnitee was not entitled to indemnification shall not be taken into account in any judicial proceeding commenced pursuant to this paragraph 8 and the Indemnitee shall not be prejudiced in any way by reason of that adverse determination. In any judicial proceeding commenced pursuant to this paragraph 8, the Indemnitor shall have the burden of proving that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made or deemed to have been made pursuant to this Agreement that the Indemnitee is entitled to indemnification, the Indemnitor shall be bound by such determination in any judicial proceeding commenced pursuant to this paragraph 8, absent: (i) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) The Indemnitor shall be precluded from asserting in any judicial proceeding commenced pursuant to this paragraph 8 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Indemnitor is bound by all the provisions of this Agreement.

(e) In the event that the Indemnitee, pursuant to this paragraph 8, seeks a judicial adjudication of such Indemnitee’s rights under, or to recover damages for breach of, this Agreement, if successful on the merits or otherwise as to all or less than all claims, issues or matters in such judicial adjudication, the Indemnitee shall be entitled to recover from the Indemnitor, and shall be indemnified by the Indemnitor against, any and all reasonable Expenses actually incurred by such Indemnitee in connection with each successfully resolved claim, issue or matter.

9. NOTIFICATION AND DEFENSE OF CLAIMS.

The Indemnitee agrees promptly to notify the Indemnitor in writing upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder, but the failure so to notify the Indemnitor will not relieve the Indemnitor from any liability that the Indemnitor may have to Indemnitee under this Agreement unless the Indemnitor is materially prejudiced thereby. With respect to any such Proceeding as to which Indemnitee notifies the Indemnitor of the commencement thereof:

(a) The Indemnitor will be entitled to participate therein at its own expense.

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(b) Except as otherwise provided below, the Indemnitor will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Indemnitor to Indemnitee of the Indemnitor’s election so to assume the defense thereof, the Indemnitor will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding, but the fees and disbursements of such counsel incurred after notice from the Indemnitor of the Indemnitor’s assumption of the defense thereof shall be at the expense of Indemnitee unless (a) the employment of counsel by Indemnitee has been authorized by the Indemnitor, (b) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Indemnitor and the Indemnitee in the conduct of the defense of such action, (c) such Proceeding seeks penalties or other relief against the Indemnitee with respect to which the Indemnitor could not provide monetary indemnification to the Indemnitee (such as injunctive relief or incarceration) or (d) the Indemnitor shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and disbursements of counsel shall be at the expense of the Indemnitor. The Indemnitor shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Indemnitor, or as to which Indemnitee shall have reached the conclusion specified in clause (b) above, or which involves penalties or other relief against Indemnitee of the type referred to in clause (c) above.

(c) The Indemnitor shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without the Indemnitor’s written consent. The Indemnitor shall not settle any action or claim in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Indemnitor nor Indemnitee will unreasonably withhold or delay consent to any proposed settlement.

10. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE SUBROGATION.

(a) The rights of indemnification and to receive advancement of reasonable Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Charter, the Bylaws, any other agreement, a vote of stockholders, a resolution of the Board of Directors or otherwise, except that any payments otherwise required to be made by the Indemnitor hereunder shall be offset by any and all amounts received by the Indemnitee from any other indemnitor or under one or more liability insurance policies maintained by an indemnitor or otherwise and shall not be duplicative of any other payments received by an Indemnitee from the Indemnitor in respect of the matter giving rise to the indemnity hereunder. No amendment, alteration or repeal of this Agreement or any provision hereof shall be effective as to the Indemnitee with respect to any action taken or omitted by the Indemnitee prior to such amendment, alteration or repeal.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors and officers of the Company, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available and upon any Change in Control the Company shall use commercially reasonable efforts to obtain or arrange for continuation and/or “tail” coverage for the Indemnitee to the maximum extent obtainable at such time.

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(c) In the event of any payment under this Agreement, the Indemnitor shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all actions necessary to secure such rights, including execution of such documents as are necessary to enable the Indemnitor to bring suit to enforce such rights.

(d) The Indemnitor shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement, or otherwise.

11. CONTINUATION OF INDEMNITY.

(a) All agreements and obligations of the Indemnitor contained herein shall continue during the period the Indemnitee is an officer or a member of the Board of Directors of the Company and shall continue thereafter so long as the Indemnitee shall be subject to any threatened, pending or completed Proceeding by reason of such Indemnitee’s Corporate Status and during the period of statute of limitations for any act or omission occurring during the Indemnitee’s term of Corporate Status. This Agreement shall be binding upon the Indemnitor and its respective successors and assigns and shall inure to the benefit of the Indemnitee and such Indemnitee’s heirs, executors and administrators.

(b) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance reasonably satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

12. SEVERABILITY.

If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or unenforceable.

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13. EXCEPTIONS TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.

Notwithstanding any other provisions of this Agreement, the Indemnitee shall not be entitled to indemnification or advancement of reasonable Expenses under this Agreement with respect to (i) any Proceeding initiated by such Indemnitee against the Indemnitor other than a proceeding commenced pursuant to paragraph 8 hereof, or (ii) to the extent applicable, any Proceeding for an accounting of profits arising from the purchase and sale by Indemnitee of securities of the Company in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, rules and regulations promulgated thereunder, or any similar provisions of any federal, state or local statute.

14. NOTICE TO THE COMPANY STOCKHOLDERS.

Any indemnification of, or advancement of reasonable Expenses, to an Indemnitee in accordance with this Agreement, if arising out of a Proceeding by or in the right of the Company, shall be reported in writing to the stockholders of the Company with the notice of the next Company stockholders’ meeting or prior to the meeting.

15. HEADINGS.

The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

16. MODIFICATION AND WAIVER.

No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

17. NOTICES.

All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, if so delivered or mailed, as the case may be, to the following addresses:

If to the Indemnitee, to the address set forth in the records of the Company. 

If to the Indemnitor, to: 

Jernigan Capital, Inc. 

6410 Poplar Avenue, Suite 650 

Memphis, TN 38119 

Attention: Chief Executive Officer

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with a copy (which shall not constitute notice) to: 

Morrison & Foerster LLP 

2000 Pennsylvania Avenue 

Suite 6000 

Washington, DC 20006 

Attention: David Slotkin, Esq. 

Fax: 202-887-1554 

Email: DSlotkin@mofo.com

or to such other address as may have been furnished to the Indemnitee by the Indemnitor or to the Indemnitor by the Indemnitee, as the case may be.

18. GOVERNING LAW.

The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without application of the conflict of laws principles thereof.

19. NO ASSIGNMENTS.

The Indemnitee may not assign its rights or delegate obligations under this Agreement without the prior written consent of the Indemnitor. Any assignment or delegation in violation of this paragraph 19 shall be null and void.

20. NO THIRD-PARTY RIGHTS.

Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns.

21. COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together constitute an agreement binding on all of the parties hereto.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

JERNIGAN CAPITAL, INC.
By:	/s/ John A. Good
Name: John A. Good
Title:  President and Chief Operating Officer
INDEMNITEE:
By:	/s/ William C. Drummond
Name: William C. Drummond
Title: Senior Vice President, Chief Financial Officer and Secretary

Signature Page to Indemnification Agreement

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dean Jernigan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Jernigan Capital, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942] for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015	/s/ DEAN JERNIGAN
	Dean Jernigan
	Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William C. Drummond, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Jernigan Capital, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942] for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015	/s/ WILLIAM C. DRUMMOND
	William C. Drummond
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jernigan Capital, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dean Jernigan, the Chairman and Chief Executive Officer of the Company, and I, William C. Drummond, the Senior Vice President, Chief Financial Officer and Secretary of the Company, certify, to our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2015	/s/ DEAN JERNIGAN
	Dean Jernigan
	Chairman and Chief Executive Officer

/s/ WILLIAM C. DRUMMOND

William C. Drummond

Senior Vice President and Chief Financial Officer

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RESTRUCTURING COSTS (Details Textual) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Restructuring Cost and Reserve [Line Items]
Restructuring Charges, Total	$ 220	$ 220

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STOCKHOLDERS' EQUITY (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Class of Stock [Line Items]
Shares, Nonvested at beginning of period	110,000	0
Shares, Granted	52,500	162,500
Shares, Vested	0	0
Shares, Forfeited	0	0
Shares, Nonvested shares at end of period	162,500	162,500
Weighted average grant date fair value, Nonvested at beginning of year	$ 20.67	$ 0
Weighted average grant date fair value, Granted	18.82	20.08
Weighted average grant date fair value, Vested	0	0
Weighted average grant date fair value, Forfeited	0	0
Weighted average grant date fair value, Nonvested shares at end of period	$ 20.08	$ 20.08

XML

SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Development property investments	$ 29,067	$ 0
Operating property loans	9,536	$ 0
Total investments	38,603
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Development property investments	0
Operating property loans	0
Total investments	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Development property investments	0
Operating property loans	0
Total investments	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Development property investments	29,067
Operating property loans	9,536
Total investments	$ 38,603

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RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 30, 2015	Sep. 30, 2015	Sep. 30, 2015
Related Party Transaction [Line Items]
Annual Rate Of Interest			1.50%
Cumulative Annual Stockholder Total Return		8.00%
Percentage Of Base Management Fee		0.375%	0.375%
Expenses Reimbursed To Manager		$ 0.8	$ 1.3
Base Management Fee		0.4	$ 0.8
Contract Termination Claims, Description			a termination fee equal to the greater of (i) three times the sum of the average annual Base Management Fee and Incentive Fee earned by the Manager during the 24-month period prior to such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination, or (ii) the offer price, which will be based on the lesser of (a) the Managers earnings before interest, taxes, depreciation and amortization (adjusted for unusual, extraordinary and non-recurring charges and expenses), or EBITDA annualized based on the most recent quarter ended, multiplied by a specific multiple, or EBITDA Multiple, depending on the Companys achieved total annual return, and (b) the Companys equity market capitalization multiplied by a specific percentage, or Capitalization Percentage, depending on the Companys achieved total return (the Internalization Price).
Amortization of Other Deferred Charges		$ 0.2	$ 0.3
Private Placement [Member]
Related Party Transaction [Line Items]
Stock Issued During Period, Shares, New Issues	250,000
Founder [Member]
Related Party Transaction [Line Items]
Reimbursement Of Organization Costs	$ 0.1
Reimbursement Of Offering Costs	0.1
Proceeds from Issuance of Private Placement	$ 5.0

XML

INVESTMENTS

9 Months Ended

Sep. 30, 2015

Schedule of Investments [Abstract]

Investment Holdings, Schedule of Investments [Text Block]

3. INVESTMENTS

The Company’s self-storage investments at September 30, 2015 consist of the following:

Development property investments – The Company funds development loans to finance the ground-up construction of self-storage facilities or major self-storage redevelopment opportunities. Development loans are funded over time as the developer completes the project. These investments are predominantly comprised of a first mortgage loan, a mezzanine loan, and a 49.9% interest in the positive cash flows (including the sale and refinancing proceeds after debt repayment) of the project. The loans are secured by the first mortgages on the projects and first priority security interests in the membership interests of the owners of the projects. Development loans are non-recourse, interest-only loans with a fixed interest rate of 6.9% and a loan term of 72 months.

The Company also has two development loan investments that are comprised of construction loans with a term of 18 months and are interest-only with a fixed interest rate of 6.9% and no equity participation.

The Company also has one investment that is comprised of a first mortgage loan and a preferred equity investment that consists of a 49.9% non-controlling interest in a limited liability company. The capital contributions, distributions and any profits and losses of the entity are allocated in accordance with the terms of the limited liability company agreement.

Operating property loans – The Company also funds loans to finance the acquisition of, refinance existing indebtedness on, or recapitalize operating self-storage facilities. These loans are fully funded at the time of origination, are secured by first mortgages on the projects financed, are interest-only with a fixed interest rate ranging from 5.85% to 6.9%, and generally have a loan term of 72  months.

The Company’s development property investments and operating property loans are collectively referred to herein as the Company’s investment portfolio.

As of September 30, 2015, the aggregate committed principal amount of the Company’s investment portfolio was approximately $138.9 million and outstanding principal was $39.0 million, as described in more detail in the table below:

Closing Date	Metropolitan Statistical Area ("MSA")	Commitment Amount		Funded Prinicpal		Unfunded Commitment		Fair Value
Development property investments:
Loan investments with a profits interest:
4/21/2015	Orlando	$	5,333	$	2,231	$	3,102	$	2,202
4/20/2015	Miami		13,867		1,868		11,999		1,737
5/14/2015	Miami		14,849		2,788		12,061		2,657
6/8/2015	Dallas		7,243		2,819		4,424		2,775
6/10/2015	Atlanta		8,132		3,625		4,507		3,607
6/19/2015	Tampa		5,369		2,308		3,061		2,283
6/26/2015	Atlanta		6,050		2,020		4,030		1,985
6/29/2015	Charlotte		7,624		532		7,092		981
7/2/2015	Milwaukee		7,650		2,458		5,192		2,407
7/31/2015	New Haven		6,930		780		6,150		744
8/10/2015	Pittsburgh		5,266		1,338		3,928		1,350
8/14/2015	Raleigh		8,998		954		8,044		868
9/25/2015	Fort Lauderdale		13,230		1,978		11,252		1,859
9/30/2015	Jacksonville		6,445		791		5,654		763
			116,986		26,490		90,496		26,218
Construction loans:
8/5/2015	West Palm Beach		7,500		1,955		5,545		1,899
8/5/2015	Sarasota		4,792		986		3,806		950
			12,292		2,941		9,351		2,849
	Total		129,278		29,431		99,847		29,067
Operating property loans:
4/9/2015	Detroit		3,182	$	3,182		-		3,165
6/19/2015	New Orleans		2,800		2,800		-		2,778
7/7/2015	Lehigh Valley		3,480		3,480		-		3,443
8/5/2015	Pittsburgh		150		150		-		150
	Total		9,612		9,612		-		9,536
	Total investments	$	138,890	$	39,043	$	99,847	$	38,603

 

The following table provides a reconciliation of the funded principal to the fair market value of investments at September 30, 2015:

Funded principal	$	39,043
Adjustments:
Unamortized origination fees		(1,096)
Change in fair value of investments		656
Fair value of investments	$	38,603

The Company has elected the fair value option of accounting for all of its loan investments in order to provide better transparency into its revenues and value inherent in its equity participation in development projects. See Note 4, Fair Value of Financial Instruments, for additional disclosure on the valuation methodology and significant assumptions.

No loans are in non-accrual status as of September 30, 2015.

All of the Company’s development property investments with a profits interest would have been accounted for under the equity method had the Company not elected the fair value option. For the development property investments with a profits interest, the assets and liabilities of the equity method investees approximate $39.5 million and $26.5 million, respectively, at September 30, 2015. These investees had no significant revenues or expenses for the three and nine months ended September 30, 2015 since the developments are all under construction.

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INVESTMENTS (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Schedule of Investments [Line Items]
Term Of Mortgage Loans Receivables	72 months
Investments, Total	$ 39,043
Construction Loans [Member]
Schedule of Investments [Line Items]
Term Of Mortgage Loans Receivables	18 months
Mortgage Loans on Real Estate, Interest Rate	6.90%
First Mortgage [Member]
Schedule of Investments [Line Items]
Equity Method Investment, Ownership Percentage	49.90%
Development Property Investment [Member]
Schedule of Investments [Line Items]
Equity Method Investment, Ownership Percentage	49.90%
Mortgage Loans on Real Estate, Interest Rate	6.90%
Development Property Investment [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Equity Method Investments	$ 39,500
Development Property Investment [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Equity Method Investments	$ 26,500
Operating Property Loans [Member]
Schedule of Investments [Line Items]
Term Of Mortgage Loans Receivables	72 months
Operating Property Loans [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Mortgage Loans on Real Estate, Interest Rate	6.90%
Operating Property Loans [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Mortgage Loans on Real Estate, Interest Rate	5.85%
Total Commitment [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Investments, Total	$ 138,900
Total Commitment [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Investments, Total	$ 39,000

XML

INVESTMENTS (Details 1) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Schedule of Investments [Line Items]
Funded principal	$ 39,043
Adjustments:
Unamortized origination fees	(1,096)
Change in fair value of investments	656
Fair value of investments	$ 38,603

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details)	9 Months Ended
	Sep. 30, 2015
Development Property Investment [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Measurements, Valuation Techniques	Market yields/ discount rate
Development Property Investment [Member] | Minimum [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	7.62%
Development Property Investment [Member] | Maximum [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	9.04%
Development Property Investment [Member] | Weighted Average [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Inputs, Discount Rate	8.53%
Loan Investments With Profits Interest [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Measurements, Valuation Techniques
Loan Investments With Profits Interest [Member] | Option pricing model [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Measurements, Valuation Techniques	Volatility
Loan Investments With Profits Interest [Member] | Minimum [Member] | Option pricing model [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	72.49%
Fair Value Assumptions, Expected Term	3 years 6 months 22 days
Loan Investments With Profits Interest [Member] | Maximum [Member] | Option pricing model [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	73.18%
Fair Value Assumptions, Expected Term	3 years 11 months 26 days
Loan Investments With Profits Interest [Member] | Weighted Average [Member] | Option pricing model [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Inputs, Discount Rate	72.86%
Operating Property Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Measurements, Valuation Techniques	Exit date
Operating Property Loans [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Measurements, Valuation Techniques	Market yields/ discount rate
Operating Property Loans [Member] | Minimum [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	6.06%
Fair Value Assumptions, Expected Term	1 year 5 months 1 day
Operating Property Loans [Member] | Maximum [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Assumptions, Expected Volatility Rate	7.25%
Fair Value Assumptions, Expected Term	6 years 10 months 2 days
Operating Property Loans [Member] | Weighted Average [Member] | Income approach analysis [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value Inputs, Discount Rate	6.81%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance as of December 31, 2014		$ 0	$ 0
Net realized gains			0
Net unrealized gains	$ 85	$ 600	656
Fundings of principal, net of unamortized origination fees			37,508
Payment-in-kind interest			439
Net transfers in and/or out of Level 3			0
Balance as of September 30, 2015	$ 38,603		$ 38,603

XML

SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying unaudited interim consolidated financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods included herein.

Substantially all operations are conducted through the Operating Partnership, and all significant intercompany transactions and balances have been eliminated in consolidation.

Correction of an Immaterial Error

During the quarter ended September 30, 2015, the Company identified an immaterial error in its previously issued financial statements and footnotes for the three and six months ended June 30, 2015 related to the accounting treatment of certain of its loan investments.

During the quarter ended June 30, 2015 (the quarter when operations commenced), the Company accounted for all loans using the amortized cost basis and a preferred equity investment using the equity method. During the quarter ended September 30, 2015, the Company further analyzed the documents and agreements governing its development property investment transactions. These development property investments consist of a 49.9% non-controlling Class B membership profits interest in a limited liability company which gives the Company the rights to a 49.9% interest in operating cash flows and sale profits from the financed projects. The Company determined, primarily due to its 49.9% Class B membership profits interests in limited liability companies, that it exercised significant influence over the financial and operating policies of the investees that owned such projects, thereby requiring equity method accounting for its Class B membership profits interests. Due to this, combined with certain other factors including the interest-only terms of the development property investments, the Company concluded that the development property investments, inclusive of any membership interest, should be treated as a single unit of account to which the equity method would apply.

 

The guidance in the fair value option subsections of Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825-10”), issued by the Financial Accounting Standards Board (“FASB”) permits entities to elect to measure financial instruments and equity method investments at fair value. Upon identification of the immaterial error in the quarter ended September 30, 2015 that the development property investments required equity method accounting, the Company elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for using the equity method, retrospectively to April 9, 2015, the date of the Company’s first loan investment. The Company elected fair value accounting for these financial instruments because it believes such accounting provides investors and others relying on its financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

 

The Company evaluated the error, both quantitatively and qualitatively, in accordance with ASC 250, Accounting Changes and Error Corrections, and concluded that the previously issued June 30, 2015 consolidated financial statements and footnotes were not materially misstated. As such, the Company has revised the previously issued financial information for the three and six months ended June 30, 2015 in this Quarterly Report on Form 10-Q. This correction resulted in a revised net loss of $0.6 million and $0.7 million and a net loss per share of common stock of $0.10 and $0.25 for the three and six months ended June 30, 2015, respectively. This represents a $0.6 million reduction of the net loss, or a $0.10 and $0.19 reduction in the basic and diluted net loss per share of common stock, for the three and six months ended June 30, 2015, respectively, as compared to the amounts previously stated in the Company’s June 30, 2015 Form 10-Q. The impact of the revision is due to the $0.6 million of unrealized fair value gains on the Company’s loan investments during the three and six months ended June 30, 2015.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Fair Value Measurement

The Company carries certain financial instruments at fair value because it has elected to apply the fair value option on an instrument by instrument basis under ASC 825-10. As of December 31, 2014, the Company’s only financial instrument was cash. As of September 30, 2015, the Company’s financial instruments consisted of cash, development property investments (which are typically comprised of a first mortgage loan, a mezzanine loan, and a 49.9% profits interest in the development project), loans secured by operating properties (“operating property loans”), receivables and payables. See “Correction of an Immaterial Error” in this Note 2 for a discussion of the Company’s election to carry certain instruments at fair value and Note 4, Fair Value of Financial Instruments, to these financial statements for more information.

The following table presents the financial instruments measured at fair value on a recurring basis as of September 30, 2015:

	Fair Value Measurements Using
		Total		Level 1		Level 2		Level 3
Development property investments	$	29,067	$	-	$	-	$	29,067
Operating property loans		9,536		-		-		9,536
Total investments	$	38,603	$	-	$	-	$	38,603

Estimating fair value requires the use of judgment. The types of judgments involved depend upon the availability of observable market information. Management’s judgments include determining the appropriate valuation model to use, estimating unobservable inputs and applying valuation adjustments. See Note 4, Fair Value of Financial Instruments, for additional disclosure on the valuation methodology and significant assumptions, as well as the election of the fair value option for certain financial instruments.

Cash and Cash Equivalents

We consider cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.

Restricted Cash

The Company’s restricted cash balance at December 31, 2014 includes a customer due diligence deposit received in connection with a prospective loan.

Equity Investments

Investments in joint ventures and entities over which the Company exercises significant influence but not control are accounted for using the equity method. In accordance with ASC 825-10, the Company has elected the fair value option of accounting for its equity method investments, which consist of its development property investments.

Loan Investments and Fair Value Option Election

The Company has elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for under the equity method, in order to provide better transparency into the Company’s revenues and value inherent in our equity participation in development projects. Changes in the fair value of these investments are recorded in change in fair value of investments within other income. All direct loan costs are charged to expense as incurred. 

A loan will be considered impaired when, based on current information and events, it is probable that the loan will not be collected according to the contractual terms of the loan agreement. Factors to be considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Fixed Assets

Fixed assets are recorded at cost and consist of furniture, office and computer equipment, and software. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from three to seven years. Depreciation expense is included in the “General and administrative expenses reimbursable to Manager” line item on the Consolidated Statements of Operations. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Revenue recognition

Interest income will accrue as earned on a simple interest basis. Accrual of interest will be discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. The Company will recognize income on impaired loans when they are placed into non-accrual status on a cash basis when the loans are both current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company will not recognize income on such loans. Accrued interest generally is reversed when a loan is placed on non-accrual status.

The Company’s loan origination fees are accreted into interest income over the estimated life of the investment using the effective yield method.

Offering Costs

Underwriting commissions and offering costs incurred in connection with the Company’s stock offerings are reflected as a reduction of additional paid-in capital. Offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with the registration and sale of the Company’s common stock.

Organization Costs

Costs incurred to organize the Company were expensed as incurred.

Restructuring Costs

Restructuring costs consist of severance and benefits costs, lease termination costs, and other costs incurred by the Company in conjunction with consolidating its offices and moving its corporate headquarters. The Company recognizes these severance and other charges when the requirements of ASC 420, Exit or Disposal Cost Obligations (“ASC 420”), have been met regarding a plan of termination and when communication has been made to employees. All restructuring activities were completed during the quarter ended September 30, 2015.     

Income Taxes

The Company intends to elect to be taxed as a REIT and to comply with the related provisions of the Code commencing with its taxable year ending December 31, 2015. Accordingly, the Company will generally not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. The Company expects to have no taxable income prior to electing REIT status. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements.

Earnings per Share (“EPS”)

Basic EPS includes only the weighted average number of common shares outstanding during the period. Diluted EPS includes the weighted average number of common shares and the dilutive effect of restricted stock and redeemable Operating Partnership units when such instruments are dilutive.

All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are treated as participating in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted EPS must be applied.

Comprehensive Income

For the three and nine months ended September 30, 2015, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Segment Reporting

The Company does not evaluate performance on a relationship specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.  

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Sub Topic 310-40)—Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. This ASU clarifies when an in substance repossession or foreclosure occurs and requires disclosure of the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. ASU 2014-04 is effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on future results of operations or financial condition.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect adoption will have a material impact on its consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discount or premiums. The recognition guidance for debt issuance costs are not affected by amendments in this update, which is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect adoption will have a material impact on its consolidated financial statements.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Textual) $ in Millions	Sep. 30, 2015 USD ($)
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Investment Owned, Unrecognized Unrealized Appreciation (Depreciation), Net	$ 0.7

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SUBSEQUENT EVENTS (Details Textual) - $ / shares		3 Months Ended	9 Months Ended
	Nov. 10, 2015	Sep. 30, 2015	Sep. 30, 2015
Subsequent Event [Line Items]
Common Stock, Dividends, Per Share, Declared		$ 0.35	$ 0.70
Subsequent Event [Member]
Subsequent Event [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.35

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets:
Cash and cash equivalents	$ 68,980	$ 1
Restricted cash	0	15
Development property investments at fair value	29,067	0
Operating property loans at fair value	9,536	0
Interest receivable	68	0
Prepaid expenses	98	0
Fixed assets, net	180	0
Total assets	107,929	16
Liabilities:
Due to Manager	516	0
Accounts payable, accrued expenses and other liabilities	798	15
Dividends payable	2,157	0
Total liabilities	$ 3,471	$ 15
Jernigan Capital, Inc. stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014, respectively;
Common stock, $0.01 par value, 500,000,000 and 1,000 shares authorized at September 30, 2015 and December 31, 2014, respectively; 6,162,500 and 1,000 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively	$ 62	$ 0
Additional paid-in capital	110,496	1
Accumulated deficit	(6,408)	0
Total Jernigan Capital, Inc. stockholders’ equity	104,150	1
Non-controlling interests	308	0
Total equity	104,458	1
Total liabilities and equity	$ 107,929	$ 16

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CONSOLIDATED STATEMENT OF EQUITY - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total Stockholders' Equity [Member]	Non-Controlling Interests [Member]
Balance at Dec. 31, 2014	$ 1	$ 0	$ 1	$ 0	$ 1	$ 0
Balance (in shares) at Dec. 31, 2014		1,000
Retirement of stock	(1)	$ 0	(1)	0	(1)	0
Retirement of stock (in shares)		(1,000)
Public offering of common stock	115,000	$ 58	114,942	0	115,000	0
Public offering of common stock (in shares)		5,750,000
Private placement of common stock	5,000	$ 2	4,998	0	5,000	0
Private placement of common stock (in shares)		250,000
Equity offering costs	(9,609)	$ 0	(9,609)	0	(9,609)	0
Issuance of restricted stock	0	$ 2	(2)	0	0	0
Issuance of restricted stock (in shares)		162,500
Stock-based compensation	167	$ 0	167	0	167	0
Deferred termination fee to Manager	308	0	0	0	0	308
Dividends declared	(2,157)	0	0	(4,296)	(4,296)	0
Net loss	(2,112)	0	0	(2,112)	(2,112)	0
Balance at Sep. 30, 2015	$ 104,458	$ 62	$ 110,496	$ (6,408)	$ 104,150	$ 308
Balance (in shares) at Sep. 30, 2015		6,162,500

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DIVIDENDS AND DISTRIBUTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Dividends Payable	$ 2,157	$ 0
Dividend Declared [Member]
Class of Stock [Line Items]
Dividends Payable, Date Declared	Jun. 03, 2015
Dividends Payable, Date of Record	Jul. 06, 2015
Dividends Payable, Date to be Paid	Jul. 15, 2015
Dividends Payable, Amount Per Share	$ 0.35
Dividends Payable	$ 2,139
Dividend Declared One [Member]
Class of Stock [Line Items]
Dividends Payable, Date Declared	Aug. 27, 2015
Dividends Payable, Date of Record	Oct. 01, 2015
Dividends Payable, Date to be Paid	Oct. 15, 2015
Dividends Payable, Amount Per Share	$ 0.35
Dividends Payable	$ 2,157

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DIVIDENDS AND DISTRIBUTIONS (Tables)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Schedule of Dividends Payable [Table Text Block]

The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2015:

Date declared	Record date	Payment date	Per share amount		Total amount
June 3, 2015	July 6, 2015	July 15, 2015	$	0.35	$	2,139
August 27, 2015	October 1, 2015	October 15, 2015	$	0.35	$	2,157

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
		Sep. 30, 2015	Sep. 30, 2015
Numerator:
Net loss		$ (1,407)	$ (2,112)
Less: Dividends declared on unvested restricted shares		(57)	(95)
Net loss attributable to common shareholders		$ (1,464)	$ (2,207)
Denominator:
Weighted-average number of common shares - basic		6,000,000	4,000,330
Unvested restricted stock shares	[1]	0	0
Redeemable operating partnership units	[2]	0	0
Weighted-average number of common shares - diluted		6,000,000	4,000,330
Net loss per share attributable to common stockholders		$ (0.24)	$ (0.55)

[1] Anti-dilutive for the three and nine months ended September 30, 2015

[2] A termination fee (see Note 8) payable by the Operating Partnership ("OP") in OP units is anti-dilutive for the three and nine months ended September 30, 2015. The OP units, if issued, would be redeemable into common stock of the Company.

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RESTRUCTURING COSTS (Tables)

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs [Table Text Block]

During the three and nine months ended September 30, 2015, the Company recorded $0.2 million in restructuring costs in the consolidated statements of operations.

	Restructuring								Restructuring		Total cumulative restructuring costs
	costs liability at		Restructuring						costs liability at		expected to be
Cost Type	December 31, 2014		costs incurred		Cash payments		Non-cash activity		September 30, 2015		incurred
Severance	$	-	$	153	$	56	$	-	$	97	$	153
Fixed asset disposal		-		33		-		33		-		33
Lease termination		-		19		2		-		17		19
Other		-		15		9		-		6		15
Total restructuring costs	$	-	$	220	$	67	$	33	$	120	$	220

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ORGANIZATION AND FORMATION OF THE COMPANY

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. ORGANIZATION AND FORMATION OF THE COMPANY

Jernigan Capital, Inc. (together with its consolidated subsidiaries, the “Company”) makes debt and equity investments in newly-constructed and existing self-storage facilities. The Company is a Maryland corporation that was organized on October 1, 2014. The Company closed its initial public offering of its common stock (the “IPO”) on April 1, 2015, and has used proceeds of the IPO primarily to fund real estate loans to private developers, owners and operators of self-storage facilities. The Company is structured as an Umbrella Partnership REIT (“UPREIT”) and conducts its investment activities through its wholly owned operating partnership, Jernigan Capital Operating Partnership L.P. (the “Operating Partnership”). The Operating Partnership was formed on March 5, 2015 and is a consolidated subsidiary of the Company. The Company is the sole General Partner of the Operating Partnership.

The Company intends to elect to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended, for its taxable year ending December 31, 2015. As a REIT, the Company generally will not be subject to U.S. federal income taxes on REIT taxable income, determined without regard to the deduction for dividends paid and excluded capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements for qualification as a REIT set forth in the Code.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Preferred Stock, Par Value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	100,000,000	100,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, Shares Authorized	500,000,000	1,000
Common Stock, Shares Issued	6,162,500	1,000
Common Stock, Shares Outstanding	6,162,500	1,000

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying unaudited interim consolidated financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods included herein.

Substantially all operations are conducted through the Operating Partnership, and all significant intercompany transactions and balances have been eliminated in consolidation.

Correction Of Immaterial Error [Policy Text Block]

Correction of an Immaterial Error

During the quarter ended September 30, 2015, the Company identified an immaterial error in its previously issued financial statements and footnotes for the three and six months ended June 30, 2015 related to the accounting treatment of certain of its loan investments.

During the quarter ended June 30, 2015 (the quarter when operations commenced), the Company accounted for all loans using the amortized cost basis and a preferred equity investment using the equity method. During the quarter ended September 30, 2015, the Company further analyzed the documents and agreements governing its development property investment transactions. These development property investments consist of a 49.9% non-controlling Class B membership profits interest in a limited liability company which gives the Company the rights to a 49.9% interest in operating cash flows and sale profits from the financed projects. The Company determined, primarily due to its 49.9% Class B membership profits interests in limited liability companies, that it exercised significant influence over the financial and operating policies of the investees that owned such projects, thereby requiring equity method accounting for its Class B membership profits interests. Due to this, combined with certain other factors including the interest-only terms of the development property investments, the Company concluded that the development property investments, inclusive of any membership interest, should be treated as a single unit of account to which the equity method would apply.

 

The guidance in the fair value option subsections of Accounting Standards Codification (“ASC”) 825, Financial Instruments (“ASC 825-10”), issued by the Financial Accounting Standards Board (“FASB”) permits entities to elect to measure financial instruments and equity method investments at fair value. Upon identification of the immaterial error in the quarter ended September 30, 2015 that the development property investments required equity method accounting, the Company elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for using the equity method, retrospectively to April 9, 2015, the date of the Company’s first loan investment. The Company elected fair value accounting for these financial instruments because it believes such accounting provides investors and others relying on its financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

 

The Company evaluated the error, both quantitatively and qualitatively, in accordance with ASC 250, Accounting Changes and Error Corrections, and concluded that the previously issued June 30, 2015 consolidated financial statements and footnotes were not materially misstated. As such, the Company has revised the previously issued financial information for the three and six months ended June 30, 2015 in this Quarterly Report on Form 10-Q. This correction resulted in a revised net loss of $0.6 million and $0.7 million and a net loss per share of common stock of $0.10 and $0.25 for the three and six months ended June 30, 2015, respectively. This represents a $0.6 million reduction of the net loss, or a $0.10 and $0.19 reduction in the basic and diluted net loss per share of common stock, for the three and six months ended June 30, 2015, respectively, as compared to the amounts previously stated in the Company’s June 30, 2015 Form 10-Q. The impact of the revision is due to the $0.6 million of unrealized fair value gains on the Company’s loan investments during the three and six months ended June 30, 2015.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurement

The Company carries certain financial instruments at fair value because it has elected to apply the fair value option on an instrument by instrument basis under ASC 825-10. As of December 31, 2014, the Company’s only financial instrument was cash. As of September 30, 2015, the Company’s financial instruments consisted of cash, development property investments (which are typically comprised of a first mortgage loan, a mezzanine loan, and a 49.9% profits interest in the development project), loans secured by operating properties (“operating property loans”), receivables and payables. See “Correction of an Immaterial Error” in this Note 2 for a discussion of the Company’s election to carry certain instruments at fair value and Note 4, Fair Value of Financial Instruments, to these financial statements for more information.

The following table presents the financial instruments measured at fair value on a recurring basis as of September 30, 2015:

	Fair Value Measurements Using
		Total		Level 1		Level 2		Level 3
Development property investments	$	29,067	$	-	$	-	$	29,067
Operating property loans		9,536		-		-		9,536
Total investments	$	38,603	$	-	$	-	$	38,603

Estimating fair value requires the use of judgment. The types of judgments involved depend upon the availability of observable market information. Management’s judgments include determining the appropriate valuation model to use, estimating unobservable inputs and applying valuation adjustments. See Note 4, Fair Value of Financial Instruments, for additional disclosure on the valuation methodology and significant assumptions, as well as the election of the fair value option for certain financial instruments.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

We consider cash, investments in money market accounts and certificates of deposit with original maturities of three months or less to be cash equivalents.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

The Company’s restricted cash balance at December 31, 2014 includes a customer due diligence deposit received in connection with a prospective loan.

Equity Method Investments, Policy [Policy Text Block]

Equity Investments

Investments in joint ventures and entities over which the Company exercises significant influence but not control are accounted for using the equity method. In accordance with ASC 825-10, the Company has elected the fair value option of accounting for its equity method investments, which consist of its development property investments.

Policy Loans Receivable, Policy [Policy Text Block]

Loan Investments and Fair Value Option Election

The Company has elected the fair value option of accounting for all of its loan investments, including those that are required under GAAP to be accounted for under the equity method, in order to provide better transparency into the Company’s revenues and value inherent in our equity participation in development projects. Changes in the fair value of these investments are recorded in change in fair value of investments within other income. All direct loan costs are charged to expense as incurred. 

A loan will be considered impaired when, based on current information and events, it is probable that the loan will not be collected according to the contractual terms of the loan agreement. Factors to be considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Property, Plant and Equipment, Policy [Policy Text Block]

Fixed Assets

Fixed assets are recorded at cost and consist of furniture, office and computer equipment, and software. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, which range from three to seven years. Depreciation expense is included in the “General and administrative expenses reimbursable to Manager” line item on the Consolidated Statements of Operations. Maintenance and repair costs are charged to expense as incurred. Upon sale or retirement, the asset cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is included in income.

Revenue Recognition, Policy [Policy Text Block]

Revenue recognition

Interest income will accrue as earned on a simple interest basis. Accrual of interest will be discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. The Company will recognize income on impaired loans when they are placed into non-accrual status on a cash basis when the loans are both current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company will not recognize income on such loans. Accrued interest generally is reversed when a loan is placed on non-accrual status.

The Company’s loan origination fees are accreted into interest income over the estimated life of the investment using the effective yield method.

Offering Costs [Policy Text Block]

Offering Costs

Underwriting commissions and offering costs incurred in connection with the Company’s stock offerings are reflected as a reduction of additional paid-in capital. Offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with the registration and sale of the Company’s common stock.

Origination Fees and Costs [Policy Text Block]

Organization Costs

Costs incurred to organize the Company were expensed as incurred.

Costs Associated with Exit or Disposal Activities or Restructurings, Policy [Policy Text Block]

Restructuring Costs

Restructuring costs consist of severance and benefits costs, lease termination costs, and other costs incurred by the Company in conjunction with consolidating its offices and moving its corporate headquarters. The Company recognizes these severance and other charges when the requirements of ASC 420, Exit or Disposal Cost Obligations (“ASC 420”), have been met regarding a plan of termination and when communication has been made to employees. All restructuring activities were completed during the quarter ended September 30, 2015.     

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company intends to elect to be taxed as a REIT and to comply with the related provisions of the Code commencing with its taxable year ending December 31, 2015. Accordingly, the Company will generally not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. The Company expects to have no taxable income prior to electing REIT status. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share (“EPS”)

Basic EPS includes only the weighted average number of common shares outstanding during the period. Diluted EPS includes the weighted average number of common shares and the dilutive effect of restricted stock and redeemable Operating Partnership units when such instruments are dilutive.

All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are treated as participating in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted EPS must be applied.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

For the three and nine months ended September 30, 2015, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

The Company does not evaluate performance on a relationship specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Sub Topic 310-40)—Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. This ASU clarifies when an in substance repossession or foreclosure occurs and requires disclosure of the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. ASU 2014-04 is effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on future results of operations or financial condition.

In February 2015, the FASB issued guidance that requires an entity to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities; (2) Eliminate the presumption that a general partner should consolidate a limited partnership; (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. This guidance is effective for public business entities for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect adoption will have a material impact on its consolidated financial statements.

In April 2015, the FASB issued guidance that simplifies presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability, consistent with debt discount or premiums. The recognition guidance for debt issuance costs are not affected by amendments in this update, which is effective for annual reporting periods beginning after December 15, 2015. The Company does not expect adoption will have a material impact on its consolidated financial statements.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 12, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Registrant Name	Jernigan Capital, Inc.
Entity Central Index Key	0001622353
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	JCAP
Entity Common Stock, Shares Outstanding		6,162,500

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

The following table presents the financial instruments measured at fair value on a recurring basis as of September 30, 2015:

	Fair Value Measurements Using
		Total		Level 1		Level 2		Level 3
Development property investments	$	29,067	$	-	$	-	$	29,067
Operating property loans		9,536		-		-		9,536
Total investments	$	38,603	$	-	$	-	$	38,603

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Revenues:
Interest income from investments	$ 578	$ 735
Net interest income	578	735
Costs and expenses:
General and administrative expenses reimbursable to Manager	791	1,311
General and administrative expenses	422	689
Investment expenses	112	262
Management fees to Manager	414	823
Restructuring costs	220	220
Deferred termination fee to Manager	158	308
Total costs and expenses	2,117	3,613
Operating loss	(1,539)	(2,878)
Other income:
Change in fair value of investments	85	656
Other interest income	47	110
Total other income	132	766
Net loss	$ (1,407)	$ (2,112)
Basic and diluted net loss per share of common stock (in dollars per share)	$ (0.24)	$ (0.55)
Basic and diluted weighted average shares of common stock outstanding (in shares)	6,000,000	4,000,330
Dividends declared per share of common stock (in dollars per share)	$ 0.35	$ 0.70

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DIVIDENDS AND DISTRIBUTIONS

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Dividends And Distributions Disclosure [Text Block]

6. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2015:

Date declared	Record date	Payment date	Per share amount		Total amount
June 3, 2015	July 6, 2015	July 15, 2015	$	0.35	$	2,139
August 27, 2015	October 1, 2015	October 15, 2015	$	0.35	$	2,157

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

5. STOCKHOLDERS’ EQUITY

The Company was organized in Maryland on October 1, 2014, and under the Company’s Articles of Incorporation, as amended, the Company is authorized to issue up to 500,000,000 shares of common stock and 100,000,000 shares of preferred stock. The sole stockholder of the Company prior to the closing of its IPO was the founder and chief executive officer, who is an affiliate of the Company. The founder’s initial capital contribution to the Company was $1,000, made on October 2, 2014, in exchange for 1,000 shares of common stock. These shares were retired effective with the IPO.

Common Stock Offering

On April 1, 2015, the Company closed its IPO and received $93.0 million in proceeds, net of underwriter’s discount. Simultaneously, the Company received $5.0 million in proceeds from the concurrent private placement with an affiliate of its founder. In connection with these transactions, the Company issued 5,000,000 and 250,000 shares of common stock, respectively and the initial 1,000 shares of common stock issued on October 2, 2014 were retired.

On April 9, 2015, the Company completed the sale of shares of common stock to the underwriters of its IPO pursuant to the underwriters’ over-allotment option. The Company issued 750,000 shares of common stock and received $14.0 million, net of underwriters’ discount.

Equity Incentive Plan

In connection with the IPO, the Company established the 2015 Equity Incentive Plan for the purpose of attracting and retaining directors, executive officers, investment professionals and other key personnel and service providers, including officers and employees of the Manager and other affiliates, and to stimulate their efforts toward our continued success, long-term growth and profitability. The 2015 Equity Incentive Plan provides for the grant of stock options, share awards (including restricted common stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity-based awards, including Long-Term Incentive Plan (“LTIP”) units, which are convertible on a one-for-one basis into Operating Partnership (“OP”) Units.  A total of 200,000 shares of common stock are reserved for issuance pursuant to the 2015 Equity Incentive Plan, subject to certain adjustments set forth in the plan. On April 1, 2015, each non-employee director of the Company received an award of 2,500 shares of restricted common stock (total of 10,000 shares) which vest ratably over a three-year period. On June 15, 2015, in connection with the appointment of the Company’s President and Chief Operating Officer, 100,000 shares of restricted common stock were granted, which shares vest ratably over a five-year period. During the quarter ended September 30, 2015, the Company granted 52,500 shares of restricted common stock to executive officers and key employees of the Manager, who provide services to the Company, which shares vest ratably over a three-year period.

Restricted Stock Awards

The 2015 Equity Incentive Plan permits the issuance of restricted stock awards to employees and non-employee directors. Non-vested shares at September 30, 2015 aggregated 162,500 service-based stock awards, of which none will vest during 2015, 40,833 will vest in 2016, 2017, and 2018, and 20,000 will vest in 2019 and 2020. Non-vested shares are earned over the respective vesting period based on a service condition only. Expenses related to restricted stock awards are charged to compensation expense and are recognized over the vesting period of the awards. For restricted stock issued to non-employee directors of the Company, compensation expense is based on the market value of the shares at the grant date. For restricted stock awards issued to employees of the Manager, compensation expense is remeasured at each reporting date based on the then current value of the Company’s common stock.

The Company recognized approximately $0.1 million and $0.2 million of restricted stock award expenses for the three and nine months ended September 30, 2015, respectively. The Company expects to recognize additional expenses of approximately $0.2 million in 2015, based on measurement of the awards at September 30, 2015 using the Company’s stock price of $17.46. The Company presents stock-based compensation expense in the consolidated statements of operations on the line labeled “General and administrative expenses”.

A summary of changes in the Company’s restricted shares for the three and nine months ended September 30, 2015 is as follows:

	Three months ended				Nine months ended
	September 30, 2015				September 30, 2015
			Weighted  average grant				Weighted average grant
	Shares		date fair value		Shares		date fair value
Nonvested at beginning of period		110,000	$	20.67		-	$	-
Granted		52,500		18.82		162,500		20.08
Vested		-		-		-		-
Forfeited		-		-		-		-
Nonvested at end of period		162,500	$	20.08		162,500	$	20.08

Nonvested restricted shares receive dividends which are nonforfeitable.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following information sets forth the computations of basic and diluted earnings per common share:

	Three months ended  September 30, 2015		Nine months ended  September 30, 2015
Numerator:
Net loss	$	(1,407)	$	(2,112)
Less: Dividends declared on unvested restricted shares		(57)		(95)
Net loss attributable to common shareholders	$	(1,464)	$	(2,207)
Denominator:
Weighted-average number of common shares – basic		6,000,000		4,000,330
Unvested restricted stock shares (1)		-		-
Redeemable operating partnership units (2)		-		-
Weighted-average number of common shares – diluted		6,000,000		4,000,330
Net loss per share attributable to common stockholders	$	(0.24)	$	(0.55)

(1) Anti-dilutive for the three and nine months ended September 30, 2015

(2) A termination fee (see Note 8) payable by the Operating Partnership ("OP") in OP units is anti-dilutive for the three and nine months ended September 30, 2015. The OP units, if issued, would be redeemable into common stock of the Company.

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Investments [Abstract]

Investment Holdings, Schedule of Investments [Table Text Block]

As of September 30, 2015, the aggregate committed principal amount of the Company’s investment portfolio was approximately $138.9 million and outstanding principal was $39.0 million, as described in more detail in the table below:

Closing Date	Metropolitan Statistical Area ("MSA")	Commitment Amount		Funded Prinicpal		Unfunded Commitment		Fair Value
Development property investments:
Loan investments with a profits interest:
4/21/2015	Orlando	$	5,333	$	2,231	$	3,102	$	2,202
4/20/2015	Miami		13,867		1,868		11,999		1,737
5/14/2015	Miami		14,849		2,788		12,061		2,657
6/8/2015	Dallas		7,243		2,819		4,424		2,775
6/10/2015	Atlanta		8,132		3,625		4,507		3,607
6/19/2015	Tampa		5,369		2,308		3,061		2,283
6/26/2015	Atlanta		6,050		2,020		4,030		1,985
6/29/2015	Charlotte		7,624		532		7,092		981
7/2/2015	Milwaukee		7,650		2,458		5,192		2,407
7/31/2015	New Haven		6,930		780		6,150		744
8/10/2015	Pittsburgh		5,266		1,338		3,928		1,350
8/14/2015	Raleigh		8,998		954		8,044		868
9/25/2015	Fort Lauderdale		13,230		1,978		11,252		1,859
9/30/2015	Jacksonville		6,445		791		5,654		763
			116,986		26,490		90,496		26,218
Construction loans:
8/5/2015	West Palm Beach		7,500		1,955		5,545		1,899
8/5/2015	Sarasota		4,792		986		3,806		950
			12,292		2,941		9,351		2,849
	Total		129,278		29,431		99,847		29,067
Operating property loans:
4/9/2015	Detroit		3,182	$	3,182		-		3,165
6/19/2015	New Orleans		2,800		2,800		-		2,778
7/7/2015	Lehigh Valley		3,480		3,480		-		3,443
8/5/2015	Pittsburgh		150		150		-		150
	Total		9,612		9,612		-		9,536
	Total investments	$	138,890	$	39,043	$	99,847	$	38,603

Schedule Of Changes In Fair Value Of Investments [Table Text Block]

 

The following table provides a reconciliation of the funded principal to the fair market value of investments at September 30, 2015:

Funded principal	$	39,043
Adjustments:
Unamortized origination fees		(1,096)
Change in fair value of investments		656
Fair value of investments	$	38,603

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RESTRUCTURING COSTS

9 Months Ended

Sep. 30, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

9. RESTRUCTURING COSTS

On August 11, 2015, the Company’s Board of Directors approved consolidating its offices and moving the corporate headquarters to Memphis, Tennessee. In connection with the consolidation and moving of the Company’s headquarters, the Company added legal, accounting, loan administration and business development personnel in Memphis and closed its offices in Miami, Florida and Cleveland, Ohio. The consolidation was completed by the end of the third quarter.

Restructuring costs reflected in the accompanying consolidated statements of operations relate primarily to one-time termination benefits. The Company recognizes these severance and other charges when the requirements of ASC 420 have been met regarding a plan of termination and when communication has been made to employees. There were also restructuring costs related to lease termination and fixed asset disposals. During the three and nine months ended September 30, 2015, the Company recorded $0.2 million in restructuring costs in the consolidated statements of operations.

	Restructuring								Restructuring		Total cumulative restructuring costs
	costs liability at		Restructuring						costs liability at		expected to be
Cost Type	December 31, 2014		costs incurred		Cash payments		Non-cash activity		September 30, 2015		incurred
Severance	$	-	$	153	$	56	$	-	$	97	$	153
Fixed asset disposal		-		33		-		33		-		33
Lease termination		-		19		2		-		17		19
Other		-		15		9		-		6		15
Total restructuring costs	$	-	$	220	$	67	$	33	$	120	$	220

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

7. EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share:

	Three months ended  September 30, 2015		Nine months ended  September 30, 2015
Numerator:
Net loss	$	(1,407)	$	(2,112)
Less: Dividends declared on unvested restricted shares		(57)		(95)
Net loss attributable to common shareholders	$	(1,464)	$	(2,207)
Denominator:
Weighted-average number of common shares – basic		6,000,000		4,000,330
Unvested restricted stock shares (1)		-		-
Redeemable operating partnership units (2)		-		-
Weighted-average number of common shares – diluted		6,000,000		4,000,330
Net loss per share attributable to common stockholders	$	(0.24)	$	(0.55)

(1) Anti-dilutive for the three and nine months ended September 30, 2015

(2) A termination fee (see Note 8) payable by the Operating Partnership ("OP") in OP units is anti-dilutive for the three and nine months ended September 30, 2015. The OP units, if issued, would be redeemable into common stock of the Company.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

8. RELATED PARTY TRANSACTIONS

The Company’s founder was reimbursed for $0.1 million of organizational costs and $0.1 million of offering costs in April 2015 following the closing of the Company’s IPO.

On April 1, 2015, the Company entered into a management agreement with its Manager. Pursuant to the terms of the management agreement, the Manager will be responsible for (a) the Company’s day-to-day operations, (b) determining investment criteria and strategy in conjunction with the Company’s Board of Directors, (c) sourcing, analyzing, originating, underwriting, structuring, and acquiring the Company’s portfolio investments, and (d) performing portfolio management duties. The Manager has an Investment Committee that approves investments in accordance with the Company’s investment guidelines, investment strategy, and financing strategy.

On April 1, 2015, concurrent with its initial public offering, the Company received $5.0 million in proceeds from the private placement with an affiliate of its founder. In connection with this transaction, the Company issued 250,000 shares of common stock to the affiliate.

The initial term of the management agreement will be five years, with up to a maximum of three, one-year extensions that end on the applicable anniversary of the completion of the Company’s offering. The Company’s independent directors will review the Manager’s performance annually. Following the initial term, the management agreement may be terminated annually upon the affirmative vote of at least two-thirds of the Company’s independent directors based upon: (a) the Manager’s unsatisfactory performance that is materially detrimental to the Company; or (b) the Company’s determination that the management fees payable to the Manager are not fair, subject to the Manager’s right to prevent termination based on unfair fees by accepting a reduction of management fees agreed to by at least two-thirds of the independent directors. The Company will provide its Manager with 180 days’ prior notice of such a termination. Upon such a termination, the Company will pay the Manager a termination fee except as provided below.

No later than 180 days prior to the end of the initial term of the management agreement, the Manager will offer to contribute to the Company’s Operating Partnership at the end of the initial term all of the assets or equity interests in the Manager at the internalization price and on such terms and conditions included in a written offer provided by the Manager.

Upon receipt of the Manager’s initial internalization offer, a special committee consisting solely of the Company’s independent directors may accept the Manager’s proposal or submit a counter offer to the Manager. If the Manager and the special committee are unable to agree, the Manager and the special committee will repeat this process annually during the term of any extension of the management agreement. Acquisition of the Manager pursuant to this process requires a fairness opinion from a nationally recognized investment banking firm and stockholder approval, in addition to approval by the special committee.

If the Company does not acquire the assets or equity interests of the Manager in an internalization transaction as described above and the management agreement terminates other than for Cause, voluntary non-renewal by the Manager or the Company being required to register as an investment company under the Investment Company Act of 1940, then the Company shall pay to the Manager, on the date on which such termination is effective, a termination fee equal to the greater of (i) three times the sum of the average annual Base Management Fee and Incentive Fee earned by the Manager during the 24-month period prior to such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination, or (ii) the offer price, which will be based on the lesser of (a) the Manager’s earnings before interest, taxes, depreciation and amortization (adjusted for unusual, extraordinary and non-recurring charges and expenses), or “EBITDA” annualized based on the most recent quarter ended, multiplied by a specific multiple, or EBITDA Multiple, depending on the Company’s achieved total annual return, and (b) the Company’s equity market capitalization multiplied by a specific percentage, or Capitalization Percentage, depending on the Company’s achieved total return (the Internalization Price). Any Termination Fee will be payable by the Operating Partnership in OP Units equal to the Termination Fee divided by the average of the daily market price of the Common Stock for the ten consecutive trading days immediately preceding the date of termination within 90 days after occurrence of the event requiring the payment of the Termination Fee. In accordance with ASC 505-50, the Company estimates the deferred termination fee payable and accrues the expense over the term of the management agreement. The Company recorded $0.2 million and $0.3 million of expense for the deferred termination fee for the three and nine months ended September 30, 2015, respectively.

The Company also may terminate the management agreement at any time, including during the initial term, without the payment of any termination fee, with 30 days’ prior written notice from the Board of Directors, for cause. “Cause” is defined as: (i) the Manager’s continued breach of any material provision of the management agreement following a prescribed period; (ii) the occurrence of certain events with respect to the bankruptcy or insolvency of the Manager; (iii) a change of control of the Manager that a majority of the Company’s independent directors determines is materially detrimental to the Company; (iv) the Manager committing fraud against the Company, misappropriating or embezzling the Company’s funds, or acting grossly negligent in the performance of its duties under the management agreement; (v) the dissolution of the Manager; (vi) the Manager fails to provide adequate or appropriate personnel that are reasonably necessary for the Manager to identify investment opportunities for the Company and to manage and develop the Company’s investment portfolio if such default continues uncured for a period of 60 days after written notice thereof, which notice must contain a request that the same be remedied; (vii) the Manager is convicted (including a plea of nolo contendere) of a felony; or (viii) the departure of Mr. Jernigan from the senior management of the Manager, or the Company, during the term of the management agreement other than by reason of death or disability.

The Manager may terminate the management agreement if the Company becomes required to register as an investment company under the 1940 Act, with such termination deemed to occur immediately before such event, in which case the Company would not be required to pay the Manager a termination fee. The Manager may also decline to renew the management agreement by providing the Company with 180 days’ written notice, in which case the Company would not be required to pay a termination fee.

The management agreement provides for the Manager to earn a base management fee and an incentive fee. In addition, the Company will reimburse certain expenses of the Manager, excluding the salaries and cash bonuses of the Manager’s chief executive officer or chief financial officer, and half of the salary of the president and chief operating officer. Certain prepaid expenses and fixed assets are also purchased through the Manager and reimbursed by the Company. In the event that the Company terminates the management agreement per the terms of the agreement, other than for cause or the Company being required to register as an investment company, there will be a termination fee due to the Manager. Amounts reimbursable to the Manager for expenses totaled $0.8 million and $1.3 million during the three and nine months ended September 30, 2015, respectively.

Management Fees

The Company does not intend to employ personnel. As a result, the Company will rely on the properties, resources and personnel of the Manager to conduct operations. The Company has agreed to pay the Manager a base management fee in an amount equal to 0.375% of the Company’s stockholders’ equity (a 1.5% annual rate) calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, the Company’s stockholder’s equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) any amount that the Company pays to repurchase the Company’s common stock since inception. It also excludes (x) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and (y) one-time events pursuant to changes in GAAP (such as a cumulative change to the Company’s operating results as a result of a codification change pursuant to GAAP), and certain non-cash items not otherwise described above (such as depreciation and amortization), in each case after discussions between the Company’s Manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the base management fee, could be greater or less than the amount of stockholders’ equity shown on the Company’s financial statements. The base management fee is payable independent of the performance of the Company’s portfolio. The base management fee of the Company’s Manager shall be calculated within 30 days after the end of each fiscal quarter and such calculation shall be promptly delivered to the Company. The Company is obligated to pay the base management fee in cash within five business days after delivery of the written statement of the Manager to the Company setting forth the computation of the management fee for such quarter. The base management fee for the three and nine months ended September 30, 2015 was $0.4 million and $0.8 million, respectively.

Incentive Fee

The Manager is entitled to an incentive fee with respect to each fiscal quarter (or part thereof that the management agreement is in effect) in arrears in cash. The incentive fee will be an amount, not less than zero, determined pursuant to the following formula:

IF = .20 times (A minus (B times .08)) minus C

In the foregoing formula:

• A equals our Core Earnings (as defined below) for the previous 12-month period;

• B equals (i) the weighted average of the issue price per share of the Company’s common stock of all of its public offerings of common stock, multiplied by (ii) the weighted average number of all shares of common stock outstanding (including (i) any restricted stock units and any restricted shares of common stock in the previous 12-month period and (ii) shares of common stock issuable upon conversion of outstanding OP Units); and

• C equals the sum of any incentive fees earned by the Manager with respect to the first three fiscal quarters of such previous 12-month period.

Notwithstanding application of the incentive fee formula, no incentive fee shall be paid with respect to any fiscal quarter unless cumulative annual stockholder total return for the four most recently completed fiscal quarters is greater than 8%. Any computed incentive fee earned but not paid because of the foregoing hurdle will accrue until such 8% cumulative annual stockholder total return is achieved. The total return is calculated by adding stock price appreciation (based on the volume-weighted average of the closing price of our common stock on the NYSE (or other applicable trading market) for the last ten consecutive trading days of the applicable computation period minus the volume-weighted average of the closing market price of the Company’s common stock for the last ten consecutive trading days of the period immediately preceding the applicable computation period) plus dividends per share paid during such computation period, divided by the volume-weighted average of the closing market price of the Company’s common stock for the last ten consecutive trading days of the period immediately preceding the applicable computation period. For purposes of computing the Incentive Fee, “Core Earnings” is defined as net income (loss) determined under GAAP, plus non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that we foreclose on any facilities underlying our target investments), any unrealized losses or other non-cash expense items reflected in GAAP net income (loss), less any unrealized gains reflected in GAAP net income. The amount will be adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash charges after discussions between the Manager and the Company’s independent directors and after approval by a majority of the independent directors.

For purposes of calculating the incentive fee prior to the completion of a 12-month period following this offering, Core Earnings is calculated on the basis of the number of days that the management agreement has been in effect on an annualized basis.

The Manager computes each quarterly installment of the incentive fee within 45 days after the end of the fiscal quarter with respect to which such installment is payable and promptly deliver such calculation to the Company’s Board of Directors. The amount of the installment shown in the calculation is due and payable no later than the date which is five business days after the date of delivery of such computation to the Board of Directors. The calculation generally will be reviewed by the Board of Directors at their regularly scheduled quarterly board meeting. As of September 30, 2015, the Manager has not earned an incentive fee.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events [Text Block]

10. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than those disclosed below, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the accompanying consolidated financial statements as of and for the three and nine months ended September 30, 2015.

On November 10, 2015, the Company announced that its Board of Directors declared a cash dividend of $0.35 per share of common stock for the quarter ending December 31, 2015. The dividend is payable on January 15, 2016 to stockholders of record on January 1, 2016.

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STOCKHOLDERS' EQUITY (Details Textual) - USD ($)	1 Months Ended			3 Months Ended	9 Months Ended
	Jun. 15, 2015	Apr. 30, 2015	Oct. 31, 2014	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014	Oct. 02, 2014	Oct. 01, 2014
Class of Stock [Line Items]
Common Stock, Shares Authorized				500,000,000	500,000,000	1,000		500,000,000
Common Stock, Shares, Issued				6,162,500	6,162,500	1,000
Preferred Stock, Shares Authorized				100,000,000	100,000,000	100,000,000		100,000,000
Capital							$ 1,000
Proceeds from Issuance Initial Public Offering		$ 93,000,000
Proceeds from Issuance of Common Stock					$ 110,391,000
Restricted Stock or Unit Expense				$ 100,000	$ 200,000
Share Price				$ 17.46	$ 17.46
Expected Restricted Stock or Unit Expense					$ 200,000
Restricted Stock [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				52,500	162,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				0	0
Restricted Stock [Member] | Share Based Compensation Award Tranche Four [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period					20,000
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period					40,833
Director [Member] | Restricted Stock [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		2,500
2015 Equity Incentive Plan [Member]
Class of Stock [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance		200,000
2015 Equity Incentive Plan [Member] | Restricted Stock [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	100,000	10,000
Founder [Member]
Class of Stock [Line Items]
Proceeds from Issuance of Private Placement		$ 5,000,000
IPO [Member]
Class of Stock [Line Items]
Common Stock, Shares, Issued		5,000,000
Private Placement [Member]
Class of Stock [Line Items]
Common Stock, Shares, Issued		250,000
Stock Issued During Period, Shares, New Issues		250,000
Over-Allotment Option [Member]
Class of Stock [Line Items]
Proceeds from Issuance of Common Stock		$ 14,000,000
Common Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues					5,750,000
Common Stock [Member] | IPO [Member]
Class of Stock [Line Items]
Common Stock, Shares, Issued		1,000
Stock Issued During Period, Shares, New Issues			1,000
Common Stock [Member] | Over-Allotment Option [Member]
Class of Stock [Line Items]
Sale of Stock, Number of Shares Issued in Transaction		750,000

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STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

A summary of changes in the Company’s restricted shares for the three and nine months ended September 30, 2015 is as follows:

	Three months ended				Nine months ended
	September 30, 2015				September 30, 2015
			Weighted  average grant				Weighted average grant
	Shares		date fair value		Shares		date fair value
Nonvested at beginning of period		110,000	$	20.67		-	$	-
Granted		52,500		18.82		162,500		20.08
Vested		-		-		-		-
Forfeited		-		-		-		-
Nonvested at end of period		162,500	$	20.08		162,500	$	20.08

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SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	Sep. 30, 2015
Significant Accounting Policies [Line Items]
Percentage Of Taxable Income Distributed				90.00%
Quantifying Misstatement in Current Year Financial Statements, Amount				$ 0
Quantifying Misstatement In Current Year Financial Statements Per Share				$ 0
Unrealized Gain (Loss) on Investments, Total	$ 85,000		$ 600,000	$ 656,000
Net Income (Loss) Attributable to Parent	$ (1,407,000)			$ (2,112,000)
Earnings Per Share, Basic and Diluted, Total	$ (0.24)			$ (0.55)
Increase Decrease In Net Loss Incurred		$ 600,000	$ 600,000
Decrease In Basic Net Loss Per Share		$ 0.10
Decrease In Diluted Net Loss Per Share			$ 0.19
Scenario, Previously Reported [Member]
Significant Accounting Policies [Line Items]
Net Income (Loss) Attributable to Parent		$ 600,000	$ 700,000
Earnings Per Share, Basic and Diluted, Total		$ 0.10	$ 0.25
Development Property Investment [Member]
Significant Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	49.90%			49.90%

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CONSOLIDATED STATEMENT OF CASH FLOWS $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Cash flows from operating activities
Net loss	$ (2,112)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest capitalized on outstanding loans	(439)
Change in fair market value of investments	(656)
Stock-based compensation	167
Deferred termination fee to Manager	308
Depreciation	5
Loss on disposal of assets	33
Changes in operating assets and liabilities:
Interest receivable	(68)
Other assets	(98)
Due to Manager	516
Accounts payable, accrued expenses, and other liabilities	677
Net cash used in operating activities	(1,667)
Cash flows from investing activities
Purchase of fixed assets	(218)
Funding of investments - Development property investments	(27,984)
Funding of investments - Operating property loans	(9,404)
Net cash used in investing activities	(37,606)
Cash flows from financing activities
Dividends paid	(2,139)
Net proceeds from issuance of common stock	110,391
Net cash provided by financing activities	108,252
Net change in cash and cash equivalents	68,979
Cash and cash equivalents at the beginning of the period	1
Cash and cash equivalents at the end of the period	68,980
Supplemental disclosure of non-cash activities:
Accounts payable withheld from loan funding	106
Loans paid off with issuance of new loans	2,420
Retirement of common stock	1
Dividends declared	$ 2,157

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value option under ASC 825-10 allows companies to elect the option to report selected financial assets and liabilities at fair value. The Company has elected the fair value option for its development property investments and operating property loan investments because it believes such accounting provides investors and others relying on the Company’s financial statements with a more transparent view of its revenues and value inherent in its equity participation in development projects.

The Company applies ASC 820, Fair Value Measures and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820 defines fair value as the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820 requires the Company to assume that the investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company has considered its principal market as the market for the purchase and sale of self-storage properties, which the Company believes would be the most likely market for the Company’s loan investments given the nature of the collateral securing such loans and the types of borrowers. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820, these inputs are summarized in the three broad levels listed below:

Level 1 —	Quoted prices for identical assets or liabilities in an active market.
Level 2 —	Financial assets and liabilities whose values are based on the following: (i) Quoted prices for similar assets or liabilities in active markets; (ii) Quoted prices for identical or similar assets or liabilities in non-active markets; (iii) Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 —	Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

The carrying values of cash, receivables and payables approximate their fair values due to their short-term nature. These instruments are categorized as Level 1 instruments in the measurement of fair value. The below table summarizes the valuation techniques and inputs used to measure the fair value of items categorized in Level 3 of the fair value hierarchy.

Instrument	Valuation technique and assumptions	Hierarchy classification
Development property investments	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.  The valuation models are calibrated to the total investment net drawn amount as of the issuance date.	Level 3
Development property investments with a profits interest(a)	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests. An option-pricing method (OPM) framework is utilized to calculate the value of the profits interests.	Level 3
Operating property loans	Valuations are based using an Income Approach analysis, using the discounted cash flow method model, capturing the prepayment penalty / call price schedule as applicable.	Level 3

^(a) Certain of the Company's development property investments include profits interests.

At September 30, 2015, the Company’s development property investments and operating property loan investments are valued using two different valuation techniques based on the early stage of the Company’s investments. The first valuation technique is an income approach analysis of the debt instrument components of the Company’s investments. The second valuation technique is an option pricing model that is used to determine the fair value of any profits interests associated with an investment. The valuation models are calibrated to the total investment net drawn amount as of the issuance date factoring in the value of the profits interests. At the issuance date of the development property investments, generally the properties are valued on a cost basis approximating the sum of the net investment drawn amount plus the developer’s equity investment. For one development property investment in which the Company holds a 49.9% Class B membership profits interest, the appraised value of the property collateral was significantly higher than its cost resulting in an unrealized gain. For the Company’s development property investments at or around completion of the construction, the discounted cash flow model used by the Company is expected to encompass the Company’s 49.9% Class B membership profits interest in the operating cash flows of the property and an option pricing model will no longer be necessary. The Company also will consider inputs such as appraisals significantly in excess of the developer’s equity investment, offers to purchase our properties, sales of our properties, or sales of comparable properties in our markets.

Level 3 Fair Value Measurements

The following table summarizes the significant unobservable inputs the Company used to value its investments categorized within Level 3 as of September 30, 2015. The table is not intended to be all-inclusive, but instead to capture the significant unobservable inputs relevant to the Company’s determination of fair values.

	As of September 30, 2015
		Unobservable Inputs
Asset Category	Primary Valuation Techniques	Input	Estimated Range	Weighted Average
Development property investments	Income approach analysis	Market yields/ discount rate	7.62 - 9.04%	8.53	%
		Exit date	1.35 - 3.99 years
Development property investments with a profits interest (a)	Option pricing model	Volatility	72.49 - 73.18%	72.86	%
		Exit date	3.56 - 3.99 years
Operating property loans	Income approach analysis	Market yields/ discount rate	6.06 - 7.25%	6.81	%
		Exit date	5.59 - 6.84 years

^(a) The valuations for the development property investments with a profits interest do not differ from the development property investments without a profits interest. The development property investment with a profits interest only requires incremental valuation techniques to determine the value of the profits interest. Therefore this line only focuses on the profits interest valuation.

The fair value measurements are sensitive to changes in unobservable inputs. A change in those inputs to a different amount might result in a significantly higher or lower fair value measurement. The following provides a discussion of the impact of changes in each of the unobservable inputs on the fair value measurement.

Market yields – changes in market yields, discount rates or earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) multiples, each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.

Exit date – changes in exit date, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in the exit date assumption may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Volatility – changes in volatility, in isolation and all else equal, may change the fair value of certain of the Company’s investments that have profits interests. Generally, an increase in volatility may result in an increase in the fair value of the profits interests in certain of the Company’s investments.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate an investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

The following table presents changes in investments that use Level 3 inputs as of and for the nine months ended September 30, 2015: 

	Nine months ended
	September 30, 2015
Balance as of December 31, 2014	$	-
Net realized gains		-
Net unrealized gains		656
Fundings of principal, net of unamortized origination fees		37,508
Payment-in-kind interest		439
Net transfers in and/or out of Level 3		-
Balance as of September 30, 2015	$	38,603

As of September 30, 2015, the net unrealized appreciation on the investments that use Level 3 inputs was $0.7 million.

For the nine months ended September 30, 2015, all of the change in fair value of investments in the Company’s consolidated statement of operations was attributable to unrealized gains relating to the Company’s Level 3 assets still held as of September 30, 2015.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

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INVESTMENTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Commitment Amount	$ 138,890
Funded Prinicpal	39,043
Unfunded Commitment	99,847
Development property investments, Fair Value	29,067	$ 0
Operating property loans, Fair Value	9,536	$ 0
Investments, Fair Value Disclosure, Total	38,603
Investments, Total	39,043
Operating Property Loan [Member]
Schedule of Investments [Line Items]
Commitment Amount	9,612
Unfunded Commitment	0
Loans Pledged as Collateral	9,612
Operating property loans, Fair Value	9,536
Development Property Investment [Member]
Schedule of Investments [Line Items]
Commitment Amount	129,278
Funded Prinicpal	29,431
Unfunded Commitment	99,847
Development property investments, Fair Value	29,067
Development Property Investment [Member] | Construction Loans [Member]
Schedule of Investments [Line Items]
Commitment Amount	12,292
Funded Prinicpal	2,941
Unfunded Commitment	9,351
Development property investments, Fair Value	2,849
Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Commitment Amount	116,986
Funded Prinicpal	26,490
Unfunded Commitment	90,496
Development property investments, Fair Value	$ 26,218
Investment Portfolio One [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	4/21/2015
Metropolitan Statistical Area (MSA)	Orlando
Commitment Amount	$ 5,333
Funded Prinicpal	2,231
Unfunded Commitment	3,102
Development property investments, Fair Value	$ 2,202
Investment Portfolio Two [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	4/20/2015
Metropolitan Statistical Area (MSA)	Miami
Commitment Amount	$ 13,867
Funded Prinicpal	1,868
Unfunded Commitment	11,999
Development property investments, Fair Value	$ 1,737
Investment Portfolio Three [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	5/14/2015
Metropolitan Statistical Area (MSA)	Miami
Commitment Amount	$ 14,849
Funded Prinicpal	2,788
Unfunded Commitment	12,061
Development property investments, Fair Value	$ 2,657
Investment Portfolio Four [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	6/8/2015
Metropolitan Statistical Area (MSA)	Dallas
Commitment Amount	$ 7,243
Funded Prinicpal	2,819
Unfunded Commitment	4,424
Development property investments, Fair Value	$ 2,775
Investment Portfolio Five [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	6/10/2015
Metropolitan Statistical Area (MSA)	Atlanta
Commitment Amount	$ 8,132
Funded Prinicpal	3,625
Unfunded Commitment	4,507
Development property investments, Fair Value	$ 3,607
Investment Portfolio Six [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	6/19/2015
Metropolitan Statistical Area (MSA)	Tampa
Commitment Amount	$ 5,369
Funded Prinicpal	2,308
Unfunded Commitment	3,061
Development property investments, Fair Value	$ 2,283
Investment Portfolio Seven [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	6/26/2015
Metropolitan Statistical Area (MSA)	Atlanta
Commitment Amount	$ 6,050
Funded Prinicpal	2,020
Unfunded Commitment	4,030
Development property investments, Fair Value	$ 1,985
Investment Portfolio Eight [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	6/29/2015
Metropolitan Statistical Area (MSA)	Charlotte
Commitment Amount	$ 7,624
Funded Prinicpal	532
Unfunded Commitment	7,092
Development property investments, Fair Value	$ 981
Investment Portfolio Nine [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	7/2/2015
Metropolitan Statistical Area (MSA)	Milwaukee
Commitment Amount	$ 7,650
Funded Prinicpal	2,458
Unfunded Commitment	5,192
Development property investments, Fair Value	$ 2,407
Investment Portfolio Ten [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	7/31/2015
Metropolitan Statistical Area (MSA)	New Haven
Commitment Amount	$ 6,930
Funded Prinicpal	780
Unfunded Commitment	6,150
Development property investments, Fair Value	$ 744
Investment Portfolio Eleven [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	8/10/2015
Metropolitan Statistical Area (MSA)	Pittsburgh
Commitment Amount	$ 5,266
Funded Prinicpal	1,338
Unfunded Commitment	3,928
Development property investments, Fair Value	$ 1,350
Investment Portfolio Twelve [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	8/14/2015
Metropolitan Statistical Area (MSA)	Raleigh
Commitment Amount	$ 8,998
Funded Prinicpal	954
Unfunded Commitment	8,044
Development property investments, Fair Value	$ 868
Investment Portfolio Thirteen [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	9/25/2015
Metropolitan Statistical Area (MSA)	Fort Lauderdale
Commitment Amount	$ 13,230
Funded Prinicpal	1,978
Unfunded Commitment	11,252
Development property investments, Fair Value	$ 1,859
Investment Portfolio Fourteen [Member] | Development Property Investment [Member] | Loan Investments With Profit Interest [Member]
Schedule of Investments [Line Items]
Closing Date	9/30/2015
Metropolitan Statistical Area (MSA)	Jacksonville
Commitment Amount	$ 6,445
Funded Prinicpal	791
Unfunded Commitment	5,654
Development property investments, Fair Value	$ 763
Investment Portfolio Fifteen [Member] | Development Property Investment [Member] | Construction Loans [Member]
Schedule of Investments [Line Items]
Closing Date	8/5/2015
Metropolitan Statistical Area (MSA)	West Palm Beach
Commitment Amount	$ 7,500
Funded Prinicpal	1,955
Unfunded Commitment	5,545
Development property investments, Fair Value	$ 1,899
Investment Portfolio Sixteen [Member] | Development Property Investment [Member] | Construction Loans [Member]
Schedule of Investments [Line Items]
Closing Date	8/5/2015
Metropolitan Statistical Area (MSA)	Sarasota
Commitment Amount	$ 4,792
Funded Prinicpal	986
Unfunded Commitment	3,806
Development property investments, Fair Value	$ 950
Investment Portfolio Seventeen [Member] | Operating Property Loan [Member]
Schedule of Investments [Line Items]
Closing Date	4/9/2015
Metropolitan Statistical Area (MSA)	Detroit
Commitment Amount	$ 3,182
Unfunded Commitment	0
Loans Pledged as Collateral	3,182
Operating property loans, Fair Value	$ 3,165
Investment Portfolio Eighteen [Member] | Operating Property Loan [Member]
Schedule of Investments [Line Items]
Closing Date	6/19/2015
Metropolitan Statistical Area (MSA)	New Orleans
Commitment Amount	$ 2,800
Unfunded Commitment	0
Loans Pledged as Collateral	2,800
Operating property loans, Fair Value	$ 2,778
Investment Portfolio Nineteen [Member] | Operating Property Loan [Member]
Schedule of Investments [Line Items]
Closing Date	7/7/2015
Metropolitan Statistical Area (MSA)	Lehigh Valley
Commitment Amount	$ 3,480
Unfunded Commitment	0
Loans Pledged as Collateral	3,480
Operating property loans, Fair Value	$ 3,443
Investment Portfolio Twenty [Member] | Operating Property Loan [Member]
Schedule of Investments [Line Items]
Closing Date	8/5/2015
Metropolitan Statistical Area (MSA)	Pittsburgh
Commitment Amount	$ 150
Unfunded Commitment	0
Loans Pledged as Collateral	150
Operating property loans, Fair Value	$ 150

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RESTRUCTURING COSTS (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring costs liability, Beginning Balance		$ 0
Restructuring costs	$ 220	220
Cash payments		67
Non-cash activity		33
Restructuring costs liability, Ending Balance	120	120
Total cumulative restructuring costs expected to be incurred	220	220
Severance
Restructuring Cost and Reserve [Line Items]
Restructuring costs liability, Beginning Balance		0
Restructuring costs		153
Cash payments		56
Non-cash activity		0
Restructuring costs liability, Ending Balance	97	97
Total cumulative restructuring costs expected to be incurred	153	153
Fixed asset disposal
Restructuring Cost and Reserve [Line Items]
Restructuring costs liability, Beginning Balance		0
Restructuring costs		33
Cash payments		0
Non-cash activity		33
Restructuring costs liability, Ending Balance	0	0
Total cumulative restructuring costs expected to be incurred	33	33
Lease termination
Restructuring Cost and Reserve [Line Items]
Restructuring costs liability, Beginning Balance		0
Restructuring costs		19
Cash payments		2
Non-cash activity		0
Restructuring costs liability, Ending Balance	17	17
Total cumulative restructuring costs expected to be incurred	19	19
Other
Restructuring Cost and Reserve [Line Items]
Restructuring costs liability, Beginning Balance		0
Restructuring costs		15
Cash payments		9
Non-cash activity		0
Restructuring costs liability, Ending Balance	6	6
Total cumulative restructuring costs expected to be incurred	$ 15	$ 15

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

The table is not intended to be all-inclusive, but instead to capture the significant unobservable inputs relevant to the Company’s determination of fair values.

	As of September 30, 2015
		Unobservable Inputs
Asset Category	Primary Valuation Techniques	Input	Estimated Range	Weighted Average
Development property investments	Income approach analysis	Market yields/ discount rate	7.62 - 9.04%	8.53	%
		Exit date	1.35 - 3.99 years
Development property investments with a profits interest (a)	Option pricing model	Volatility	72.49 - 73.18%	72.86	%
		Exit date	3.56 - 3.99 years
Operating property loans	Income approach analysis	Market yields/ discount rate	6.06 - 7.25%	6.81	%
		Exit date	5.59 - 6.84 years

^(a) The valuations for the development property investments with a profits interest do not differ from the development property investments without a profits interest. The development property investment with a profits interest only requires incremental valuation techniques to determine the value of the profits interest. Therefore this line only focuses on the profits interest valuation.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table presents changes in investments that use Level 3 inputs as of and for the nine months ended September 30, 2015: 

	Nine months ended
	September 30, 2015
Balance as of December 31, 2014	$	-
Net realized gains		-
Net unrealized gains		656
Fundings of principal, net of unamortized origination fees		37,508
Payment-in-kind interest		439
Net transfers in and/or out of Level 3		-
Balance as of September 30, 2015	$	38,603