Note L - Variable Interest Entities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

Note L – Variable Interest Entities

The Company, through a wholly owned subsidiary of its Operating Partnership, owns a 51.0% beneficial interest in MVP St. Louis Cardinal Lot, DST, a Delaware Statutory Trust (“MVP St. Louis”). MVP St. Louis is the owner of a 2.56-acre, 376-vehicle commercial parking lot, known as the Cardinal Lot.

At the time of the initial investment, the Company conducted an analysis and concluded that the 51% investment in the DST should not be consolidated, as the Company was not the primary beneficiary because the power to direct the activities that most significantly impact the economic performance of MVP St. Louis was held by MVP Parking DST, LLC (the “Manager”) and certain subsidiaries of the Manager.  The investment in MVP St. Louis was accounted for using the equity method of accounting through August 25, 2021.

In connection with the Closing, the former advisor of the Company, MVP Realty Advisors, LLC ("MVPRA”) transferred ownership of the Manager to Manuel Chavez, III, the Chief Executive Officer of the Company. This change in structure was deemed a reconsideration event and therefore the Company reevaluated whether it had control. Based on the Company's evaluation, the Company began consolidating the investment in MVP St. Louis and MVP St. Louis Cardinal Lot Master Tenant, LLC, which had total assets and liabilities of approximately $12.0 million and approximately $6.2 million, respectively, as of August 25, 2021.  These assets and liabilities were recorded at fair value as of the date of consolidation, and a gain of $360,000 was recognized in the consolidated statement of operations.

Amounts related to MVP St. Louis included in the consolidated balance sheet are as follows:

	June 30, 2022
	(Unaudited)
ASSETS
Investments in real estate	$	11,795,000
Cash		32,000
Cash – restricted		462,000
Accounts receivable		320,000
Prepaid expenses		13,000
Total assets	$	12,622,000
LIABILITIES
Notes payable	$	5,966,000
Accounts payable and accrued liabilities		326,000
Total liabilities	$	6,292,000

Summarized Statements of Operations—Unconsolidated Real Estate Affiliates—Equity Method Investments

	For the three months ended June 30, 2021			For the six months ended June 30, 2021
Revenue	$	183,000		$	365,000
Expenses		(167,000	)		(366,000	)
Net income (loss)	$	16,000		$	(1,000	)