10-Q 1 tpr093020form10q.htm FORM 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, 2020

Or

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

For the transition period from _________ to _________

Commission File Number: 000-55760


THE PARKING REIT, INC.
(Exact name of registrant as specified in its charter)

MARYLAND
 
47-3945882
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)

9130 WEST POST ROAD SUITE 200, LAS VEGAS, NV 89148
 (Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, including Area Code: (702) 534-5577

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading symbols(s)
Name of each exchange on which registered
N/A
N/A
N/A

Indicate by check mark whether the registrant (1) has filed all reports required 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 reports), 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, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] No [   ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]
Accelerated filer [   ]
Non-accelerated filer [X]
Smaller reporting company [X]
Emerging growth company [X]
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [   ] No [ X ]

As of November 16, 2020, the registrant had 7,327,696 shares of common stock outstanding.

TABLE OF CONTENTS

   
Page
     
 
     
     
 
     
 
     
 
     
 
     
 
     
     
     
     
 
     
     
     
     
     
     
     
     
 
     
 
EXHIBIT 31.1
 
     
 
EXHIBIT 31.2
 
     
 
EXHIBIT 32
 



PART I
ITEM 1. FINANCIAL STATEMENTS

THE PARKING REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

   
As of September 30,
   
As of December 31,
 
   
2020
   
2019
 
   
(unaudited)
       
ASSETS
 
Investments in real estate
           
Land and improvements
 
$
128,284,000
   
$
136,607,000
 
Buildings and improvements
   
163,668,000
     
170,276,000
 
Construction in progress
   
1,151,000
     
714,000
 
Intangible assets
   
2,107,000
     
2,288,000
 
     
295,210,000
     
309,885,000
 
Accumulated depreciation
   
(15,789,000
)
   
(12,049,000
)
Total investments in real estate, net
   
279,421,000
     
297,836,000
 
                 
Fixed Assets, net of accumulated depreciation of $69,000 and $42,000 as of September 30, 2020 and December 31, 2019, respectively
   
72,000
     
21,000
 
Assets held for sale, net of accumulated depreciation of $212,000
   
--
     
3,288,000
 
Cash
   
3,466,000
     
7,707,000
 
Cash – restricted
   
3,428,000
     
3,937,000
 
Prepaid expenses
   
1,746,000
     
1,679,000
 
Accounts receivable, net
   
2,832,000
     
929,000
 
Investment in DST
   
2,931,000
     
2,836,000
 
Right of use leased asset
   
1,309,000
     
--
 
Due from related parties
   
1,000
     
--
 
Other assets
   
190,000
     
111,000
 
Total assets
 
$
295,396,000
   
$
318,344,000
 
LIABILITIES AND EQUITY
 
Liabilities
               
Notes payable, net of unamortized loan issuance costs of approximately $1.3 million and $1.8 million as of September 30, 2020 and December 31, 2019, respectively
 
$
158,191,000
   
$
159,120,000
 
Accounts payable and accrued liabilities
   
10,551,000
     
10,883,000
 
Right of use lease liability
   
1,309,000
     
--
 
Deferred management internalization
   
17,800,000
     
17,800,000
 
Security deposits
   
138,000
     
138,000
 
Due to related parties
   
--
     
54,000
 
Deferred revenue
   
122,000
     
104,000
 
Total liabilities
   
188,111,000
     
188,099,000
 
Commitments and contingencies
   
--
     
--
 
Equity
               
The Parking REIT, Inc. Stockholders’ Equity
               
Preferred stock Series A, $0.0001 par value, 50,000 shares authorized, 2,862 shares issued and outstanding (stated liquidation value of $2,862,000 as of September 30, 2020 and December 31, 2019)
   
--
     
--
 
Preferred stock Series 1, $0.0001 par value, 97,000 shares authorized, 39,811 shares issued and outstanding (stated liquidation value of $39,811,000 as of September 30, 2020 and December 31, 2019)
   
--
     
--
 
Non-voting, non-participating convertible stock, $0.0001 par value, 1,000 shares authorized, no shares issued and outstanding
   
--
     
--
 
Common stock, $0.0001 par value, 98,999,000 shares authorized, 7,327,696 and 7,332,811 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
   
--
     
--
 
Additional paid-in capital
   
191,759,000
     
194,137,000
 
Accumulated deficit
   
(86,520,000
)
   
(66,511,000
)
Total The Parking REIT, Inc. Shareholders’ Equity
   
105,239,000
     
127,626,000
 
Non-controlling interest
   
2,046,000
     
2,619,000
 
Total equity
   
107,285,000
     
130,245,000
 
Total liabilities and equity
 
$
295,396,000
   
$
318,344,000
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE PARKING REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

   
For the Three Months Ended September 30,
   
For the Nine Months Ended
September 30,
 
   
2020
   
2019
   
2020
   
2019
 
Revenues
                       
Base rent income
 
$
3,132,000
   
$
5,036,000
   
$
11,525,000
   
$
15,126,000
 
Management income
   
303,000
     
--
     
596,000
     
--
 
Percentage rent income
   
75,000
     
1,045,000
     
402,000
     
1,756,000
 
Total revenues
   
3,510,000
     
6,081,000
     
12,523,000
     
16,882,000
 
                                 
Operating expenses
                               
Property taxes
   
955,000
     
734,000
     
2,460,000
     
2,254,000
 
Property operating expense
   
263,000
     
421,000
     
1,374,000
     
1,157,000
 
Asset management expense – related party
   
--
     
--
     
--
     
854,000
 
General and administrative
   
1,452,000
     
1,625,000
     
4,681,000
     
3,737,000
 
Professional fees, net of reimbursement of insurance proceeds
   
384,000
     
3,869,000
     
592,000
     
5,598,000
 
Management Internalization
   
--
     
--
     
--
     
32,004,000
 
Acquisition expenses
   
--
     
1,000
     
3,000
     
251,000
 
Depreciation and amortization
   
1,305,000
     
1,285,000
     
3,948,000
     
3,876,000
 
Impairment
   
6,475,000
     
500,000
     
14,115,000
     
1,452,000
 
Total operating expenses
   
10,834,000
     
8,435,000
     
27,173,000
     
51,183,000
 
                                 
Loss from operations
   
(7,324,000
)
   
(2,354,000
)
   
(14,650,000
)
   
(34,301,000
)
                                 
Other income (expense)
                               
Interest expense
   
(2,326,000
)
   
(2,375,000
)
   
(6,910,000
)
   
(7,164,000
)
Gain from sale of investment in real estate
   
--
     
2,294,000
     
694,000
     
2,294,000
 
Other Income
   
--
     
50,000
     
151,000
     
81,000
 
Income from DST
   
44,000
     
52,000
     
143,000
     
170,000
 
Total other income (expense)
   
(2,282,000
)
   
21,000
     
(5,922,000
)
   
(4,619,000
)
                                 
Net loss
   
(9,606,000
)
   
(2,333,000
)
   
(20,572,000
)
   
(38,920,000
)
Less net income (expense) attributable to non-controlling interest
   
(530,000
)
   
62,000
     
(563,000
)
   
62,000
 
Net loss attributable to The Parking REIT, Inc.’s stockholders
 
$
(9,076,000
)
 
$
(2,395,000
)
 
$
(20,009,000
)
 
$
(38,982,000
)
                                 
Preferred stock distributions declared - Series A
   
(54,000
)
   
(54,000
)
   
(162,000
)
   
(162,000
)
Preferred stock distributions declared - Series 1
   
(696,000
)
   
(696,000
)
   
(2,088,000
)
   
(2,088,000
)
Net loss attributable to The Parking REIT, Inc.’s common stockholders
 
$
(9,826,000
)
 
$
(3,145,000
)
 
$
(22,259,000
)
 
$
(41,232,000
)
                                 
Basic and diluted loss per weighted average common share:
                               
Net loss per share attributable to The Parking REIT, Inc.’s common stockholders - basic and diluted
 
$
(1.34
)
 
$
(0.45
)
 
$
(3.04
)
 
$
(6.06
)
Distributions declared per common share
 
$
--
   
$
--
   
$
--
   
$
--
 
Weighted average common shares outstanding, basic and diluted
   
7,327,697
     
6,933,520
     
7,329,499
     
6,804,228
 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
THE PARKING REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(UNAUDITED)

   
Preferred stock
   
Common stock
                         
   
Number of Shares
   
Par Value
   
Number of Shares
   
Par Value
   
Additional Paid-in Capital
   
Accumulated Deficit
   
Non-controlling interest
   
Total
 
Balance, December 31, 2019
   
42,673
   
$
--
     
7,332,811
   
$
--
   
$
194,137,000
   
$
(66,511,000
)
 
$
2,619,000
   
$
130,245,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
(10,000
)
   
(10,000
)
Redeemed Shares
   
--
     
--
     
(2,741
)
   
--
     
(68,000
)
   
--
     
--
     
(68,000
)
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net loss
   
--
     
--
     
--
     
--
     
--
     
(1,150,000
)
   
(5,000
)
   
(1,155,000
)
Balance, March 31, 2020
   
42,673
   
$
--
     
7,330,070
   
$
--
   
$
193,319,000
   
$
(67,661,000
)
 
$
2,604,000
   
$
128,262,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Issuance of common stock
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Redeemed Shares
   
--
     
--
     
(2,374
)
   
--
     
(60,000
)
   
--
     
--
     
(60,000
)
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net (loss)
   
--
     
--
     
--
     
--
     
--
     
(9,783,000
)
   
(28,000
)
   
(9,811,000
)
Balance, June 30, 2020
   
42,673
   
$
--
     
7,327,696
   
$
--
   
$
192,509,000
   
$
(77,444,000
)
 
$
2,576,000
   
$
117,641,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Issuance of common stock
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Redeemed Shares
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net (loss)
   
--
     
--
     
--
     
--
     
--
     
(9,076,000
)
   
(530,000
)
   
(9,606,000
)
Balance, September 30, 2020
   
42,673
   
$
--
     
7,327,696
   
$
--
   
$
191,759,000
   
$
(86,520,000
)
 
$
2,046,000
   
$
107,285,000
 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


THE PARKING REIT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)

   
Preferred stock
   
Common stock
                         
   
Number of Shares
   
Par Value
   
Number of Shares
   
Par Value
   
Additional Paid-in Capital
   
Accumulated Deficit
   
Non-controlling interest
   
Total
 
Balance, December 31, 2018
   
42,673
   
$
--
     
6,542,797
   
$
--
   
$
183,382,000
   
$
(23,953,000
)
 
$
2,691,000
   
$
162,120,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
(11,000
)
   
(11,000
)
Redeemed shares
   
--
     
--
     
(2,433
)
   
--
     
(60,000
)
   
--
     
--
     
(60,000
)
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net loss
   
--
     
--
     
--
     
--
     
--
     
(1,753,000
)
   
(1,000
)
   
(1,754,000
)
Balance, March 31, 2019
   
42,673
   
$
--
     
6,540,364
   
$
--
   
$
182,572,000
   
$
(25,706,000
)
   
2,679,000
   
$
159,545,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
(15,000
)
   
(15,000
)
Issuance of common stock
   
--
     
--
     
400,000
     
--
     
7,000,000
     
--
     
--
     
7,000,000
 
Redeemed shares
   
--
     
--
     
(6,430
)
   
--
     
(157,000
)
   
--
     
--
     
(157,000
)
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net income (loss)
   
--
     
--
     
--
     
--
     
--
     
(34,834,000
)
   
1,000
     
(34,833,000
)
Balance, June 30, 2019
   
42,673
   
$
--
     
6,933,934
   
$
--
   
$
188,665,000
   
$
(60,540,000
)
 
$
2,665,000
   
$
130,790,000
 
Distributions to non-controlling interest
   
--
     
--
     
--
     
--
     
--
     
--
     
(16,000
)
   
(16,000
)
Issuance of common stock
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Redeemed shares
   
--
     
--
     
(681
)
   
--
     
(17,000
)
   
--
     
--
     
(17,000
)
Distributions – Series A
   
--
     
--
     
--
     
--
     
(54,000
)
   
--
     
--
     
(54,000
)
Distributions – Series 1
   
--
     
--
     
--
     
--
     
(696,000
)
   
--
     
--
     
(696,000
)
Net income (loss)
   
--
     
--
     
--
     
--
     
--
     
(2,395,000
)
   
62,000
     
(2,333,000
)
Balance, September 30, 2019
   
42,673
   
$
--
     
6,933,253
   
$
--
   
$
187,898,000
   
$
(62,935,000
)
 
$
2,711,000
   
$
127,674,000
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE PARKING REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
   
For The Nine Months Ended September 30,
 
   
2020
   
2019
 
Cash flows from operating activities:
           
Net Loss
 
$
(20,572,000
)
 
$
(38,920,000
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization expense
   
3,948,000
     
3,876,000
 
Amortization of loan costs
   
614,000
     
688,000
 
Amortization of right of use lease assets
   
84,000
     
--
 
Gain from sale of investment in real estate
   
(694,000
)
   
(2,294,000
)
Deferred management internalization consideration
   
--
     
31,800,000
 
Impairment
   
14,115,000
     
1,452,000
 
Income from DST
   
(143,000
)
   
(170,000
)
Changes in operating assets and liabilities
               
Due to/from related parties
   
(55,000
)
   
3,000
 
Accounts payable
   
(1,786,000
)
   
2,638,000
 
Lease liability
   
(84,000
)
   
--
 
Loan fees
   
(44,000
)
   
(275,000
)
Assets held for sale
   
--
     
(54,000
)
Security deposits
   
--
     
--
 
Other assets
   
(79,000
)
   
(33,000
)
Deferred revenue
   
18,000
     
106,000
 
Accounts receivable
   
(603,000
)
   
(305,000
)
Prepaid expenses
   
(67,000
)
   
(1,715,000
)
Net cash used in operating activities
   
(5,348,000
)
   
(3,203,000
)
Cash flows from investing activities:
               
Building improvements
   
(921,000
)
   
(1,324,000
)
Fixed asset purchase
   
(78,000
)
   
--
 
Proceeds from Investments
   
48,000
     
152,000
 
Proceeds from sale of investment in real estate
   
1,436,000
     
3,674,000
 
Payment of deposit made for purchase of investment in real estate or debt
   
--
     
(97,000
)
Deposits applied to purchase of investment in real estate or debt
   
--
     
97,000
 
Net cash provided by investing activities
   
485,000
     
2,502,000
 
Cash flows from financing activities
               
Proceeds from notes payable
   
3,545,000
     
9,181,000
 
Payments on notes payable
   
(2,544,000
)
   
(5,666,000
)
Distribution to non-controlling interest
   
(10,000
)
   
(42,000
)
Redeemed shares
   
(128,000
)
   
(234,000
)
Preferred dividends paid to stockholders
   
(750,000
)
   
(2,250,000
)
Net cash provided by financing activities
   
113,000
     
989,000
 
Net change in cash and cash equivalents and restricted cash
   
(4,750,000
)
   
288,000
 
Cash and cash equivalents and restricted cash, beginning of period
   
11,644,000
     
9,435,000
 
Cash and cash equivalents and restricted cash, end of period
 
$
6,894,000
   
$
9,723,000
 
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
               
Cash and cash equivalents at beginning of period
 
$
7,707,000
   
$
5,106,000
 
Restricted cash at beginning of period
   
3,937,000
     
4,329,000
 
Cash and cash equivalents and restricted cash at beginning of period
 
$
11,644,000
   
$
9,435,000
 
Cash and cash equivalents at end of period
 
$
3,466,000
   
$
6,358,000
 
Restricted cash at end of period
   
3,428,000
     
3,365,000
 
Cash and cash equivalents and restricted cash at end of period
 
$
6,894,000
   
$
9,723,000
 
Supplemental disclosures of cash flow information:
               
Interest Paid
 
$
6,297,000
   
$
6,477,000
 
Non-cash investing and financing activities:
               
Dividends declared not yet paid
 
$
1,751,000
   
$
250,000
 
Deposits applied to purchase of investment in real estate or financing
 
$
--
   
$
(97,000
)
Deferred management internalization
 
$
--
   
$
24,800,000
 
Issuance of common stock – internalization
 
$
--
   
$
7,000,000
 
Payments on note payable through sale of investment in real estate
 
$
(2,500,000
)
 
$
(2,000,000
)
Recognition of use lease asset / liability
 
$
1,393,000
   
$
--
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

THE PARKING REIT, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(UNAUDITED)

Note A — Organization and Business Operations

The Parking REIT, Inc., formerly known as MVP REIT II, Inc. (the “Company,” “we,” “us” or “our”), is a Maryland corporation formed on May 4, 2015 and has elected to be taxed, and subject to the discussion below under the heading Income Taxes in Note B, has operated in a manner that allowed the Company to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2017 through December 31, 2019.  As a result of the COVID-19 pandemic, the Company has entered into temporary lease amendments with some of its tenants. The income generated under these lease amendments do not constitute qualifying REIT income for purposes of the REIT gross income tests, and, as a result, the Company was not in compliance with the annual REIT income tests for the quarters ended June 30, 2020 and September 30, 2020.  These REIT income tests are measured on an annual basis, and we are evaluating options and strategies that may enable us to maintain our REIT status for our taxable year ending December 31, 2020 notwithstanding our inability to comply with these income tests in the past two quarters.  If implemented, these options and strategies, may have negative ancillary impacts on our business and operations, including potentially increasing our overall tax liability.  If we determine that the potential negative impacts of these options outweigh the benefits of potentially maintaining our REIT status, we may choose not to implement any of these options.  Moreover, even if we choose to implement any of these options, no assurances can be given that our implementation will be successful  or that these options will in fact enable us to maintain our status as a REIT for our taxable year ending December 31, 2020.  Accordingly, unless we choose, and are able, to successfully implement an alternative operating strategy, it is highly likely that the Company will no longer qualify as a REIT for the year ending December 31, 2020.  If we fail to qualify as a REIT for our taxable year ended December 31, 2020, we would no longer be required to make distributions of our annual taxable income in order to maintain our REIT status and any distributions we make would not be deductible.  Moreover, unless entitled to relief under specific statutory or administrative provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following 2020.  We believe that we may not be entitled to this statutory relief, and there can be no assurances that we will be able to obtain such relief.

The Company was formed to focus primarily on investments in parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada. To a lesser extent, the Company may also invest in parking properties that contain other sources of rental income, potentially including office, retail, storage, residential, billboard or cell towers.

The Company is the sole general partner of MVP REIT II Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”). The Company owns substantially all of its assets and conducts substantially all of its operations through the Operating Partnership. The Company’s wholly owned subsidiary, MVP REIT II Holdings, LLC, is the sole limited partner of the Operating Partnership. The operating agreement provides that the Operating Partnership is operated in a manner that enables the Company to (1) satisfy the requirements to qualify and maintain qualification as a REIT for federal income tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership is not classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Code”), which classification could result in the Operating Partnership being taxed as a corporation.

The Company utilizes an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) structure to enable the Company to acquire real property in exchange for limited partnership interests in the Operating Partnership from owners who desire to defer taxable gain that would otherwise normally be recognized by them upon the disposition of their real property or transfer of their real property to the Company in exchange for shares of the Company’s common stock or cash.

The Company’s former advisor is MVP Realty Advisors, LLC, dba The Parking REIT Advisors (the “former Advisor”), a Nevada limited liability company, which is owned 60% by Vestin Realty Mortgage II, Inc. (“VRM II”) and 40% by Vestin Realty Mortgage I, Inc. (“VRM I”). Prior to the Internalization (as defined below), the former Advisor was responsible for managing the Company’s affairs on a day-to-day basis and for identifying and making investments on the Company’s behalf pursuant to a second amended and restated advisory agreement among the Company, the Operating Partnership and the former Advisor (the “Amended and Restated Advisory Agreement”), which became effective upon consummation of the Merger (as such term is defined below). VRM II and VRM I are Maryland corporations that trade on the OTC pink sheets and were managed by Vestin Mortgage, LLC, an affiliate of the former Advisor, prior to being internalized in January 2018.

As part of the Company’s initial capitalization, 8,000 shares of common stock were sold for $200,000 to an affiliate of the former Advisor (as defined below).


Merger of MVP REIT with Merger Sub, LLC

On May 26, 2017, the Company, MVP REIT, Inc., a Maryland corporation (“MVP I”), MVP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), and the former Advisor entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which MVP I would merge with and into Merger Sub (the “Merger”). On December 15, 2017, the Merger was consummated. Following the Merger, the Company contributed 100% of its equity interests in Merger Sub to the Operating Partnership.

At the effective time of the Merger, each share of MVP I common stock, par value $0.001 per share, that was issued and outstanding immediately prior to the Merger (the “MVP I Common Stock”), was converted into the right to receive 0.365 shares of Company common stock. A total of approximately 3.9 million shares of Company common stock were issued to former MVP I stockholders, and former MVP I stockholders, immediately following the Merger, owned approximately 59.7% of the Company's common stock. The Company was subsequently renamed “The Parking REIT, Inc.”

Capitalization

As of September 30, 2020, the Company had 7,327,696 shares of common stock issued and outstanding. On December 31, 2016, the Company ceased all selling efforts for the initial public offering of its common stock (the “Common Stock Offering”). The Company accepted additional subscriptions through March 31, 2017, the last day of the Common Stock Offering. In connection with its formation, the Company sold 8,000 shares of common stock to MVP Capital Partners II, LLC (the “Sponsor”) for $200,000.

On October 27, 2016, the Company filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary to the charter of the Company classifying and designating 50,000 shares of Series A Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series A”). The Company commenced a private placement of the shares of Series A, together with warrants to acquire the Company’s common stock, to accredited investors on November 1, 2016 and closed the offering on March 24, 2017. The Company raised approximately $2.5 million, net of offering costs, in the Series A private placement and had 2,862 Series A shares issued and outstanding as of September 30, 2020.

On March 29, 2017, the Company filed with the State Department of Assessments and Taxation of Maryland, Articles Supplementary to the charter of the Company classifying and designating 97,000 shares of its authorized capital stock as shares of Series 1 Convertible Redeemable Preferred Stock par value $0.0001 per share (the “Series 1”). On April 7, 2017, the Company commenced a private placement of shares of Series 1, together with warrants to acquire the Company’s common stock to accredited investors and closed the offering on January 31, 2018. The Company raised approximately $36.0 million, net of offering costs, in the Series 1 private placements and had 39,811 Series 1 shares issued and outstanding as of September 30, 2020.

Note B — Summary of Significant Accounting Policies

Basis of Accounting

The accompanying unaudited condensed consolidated financial statements of the Company are prepared on the accrual basis of accounting and in accordance with principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The condensed consolidated balance sheet as of December 31, 2019 contained herein has been derived from the audited financial statements as of December 31, 2019 but does not include all disclosures required by GAAP.

Liquidity Matters

The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. For the nine months ended September 30, 2020, the Company had a net loss of $20.6 million and had $6.9 million in cash, cash equivalents and restricted cash. In connection with preparing the condensed consolidated financial statements for the three and nine months ended September 30, 2020, management evaluated the extent of the impact from the COVID-19 pandemic on the Company’s business and its future liquidity for the next twelve months through November 16, 2021.

Management has implemented the following plan to address the Company’s liquidity over the next twelve months plus a day from the filing of this Quarterly Report:

The Company completed the sale of the San Jose, California garage on May 26, 2020 at the contract price of $4.1 million. See Note I – Disposition of Investment in Real Estate of this Quarterly Report for additional information.
On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series A Preferred stock, however, such distributions will continue to accrue in accordance with the terms of the Series A.
On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series 1 Preferred Stock, however, such distributions will continue to accrue in accordance with the terms of the Series 1.
On March 24, 2020, the Board of Directors suspended all repurchases, even in the case of a shareholder’s death.
The Company is continuing to have discussions with its lenders in light of the current economic conditions and entered into one loan modification during the quarter ended June 30, 2020 and five loan modifications during the quarter ended September 30, 2020.
While the Company is currently unable to completely estimate the impact that the COVID-19 pandemic and efforts to contain its spread will have on the Company’s business and on its tenants, as of September 30, 2020, the Company has entered into thirty-five lease amendments with eight tenants/operators. The terms of such lease amendments generally provide for one of (i) a reduction in rent for a period of four to seven months, (ii) conversion of the lease to a management agreement pursuant to which the operator will receive a monthly fee; or (iii) extension of the lease.
The Company applied for the Paycheck Protection Program loan, guaranteed by the Small Business Administration (“SBA”), through Key Bank National Association, Inc., on April 3, 2020. This loan program is for companies with 500 or less employees, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Trump on March 27, 2020. On April 23, 2020 the Company received the funding for its CARES Act loan of approximately $348,000. Because these funds were used exclusively for employee payroll management expects this loan will not be required to be paid back under the terms of the CARES Act.
The Company is in preliminary discussions with LoanCore to exercise the one-year extension option in the loan agreement to extend the maturity of this loan on terms the Company can satisfy; however, there can be no assurance this option will be exercised.  If the Company is unable to extend the maturity date and is unable to repay the loan at maturity, the lenders could foreclose upon the collateral securing the loan, in which case the Company would lose its significant amount of equity value in such collateral. See Company Indebtedness in Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
The Company has plans to dispose of an asset within the next twelve months. Management disposed of two assets in 2019 and one asset during the nine - months ended September 30, 2020.

If the Company raises additional funds by issuing equity securities, its stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and require significant debt service payments, which diverts resources from other activities. If the Company is unable to obtain additional financing, it may be required to significantly scale back its business and operations.  The Company’s ability to raise additional capital will also be impacted by the recent outbreak of COVID-19.

Based on this current business plan, the Company believes its existing cash, anticipated cash collections and cash inflows is sufficient to conduct planned operations for one year from the issuance of the September 30, 2020 financial statements.


Consolidation

The Company’s consolidated financial statements include its accounts, the accounts of the Company’s assets that were sold during 2020 and 2019 (as applicable), the accounts of its subsidiaries, Operating Partnership and all of the following subsidiaries. All intercompany profits and losses, balances and transactions are eliminated in consolidation. The following list includes the subsidiaries that are included in the Company’s consolidated financial statements, not the number of properties owned by the Company at September 30, 2020 and 2019.

MVP PF Memphis Poplar 2013, LLC
MVP Indianapolis Meridian Lot, LLC
White Front Garage Partners, LLC
MVP PF St. Louis 2013, LLC
MVP Milwaukee Clybourn, LLC
Cleveland Lincoln Garage, LLC
Mabley Place Garage, LLC
MVP Milwaukee Arena Lot, LLC
MVP Houston Preston, LLC
MVP Denver Sherman, LLC
MVP Clarksburg Lot, LLC
MVP Houston San Jacinto Lot, LLC
MVP Fort Worth Taylor, LLC
MVP Denver Sherman 1935, LLC
MVP Detroit Center Garage, LLC
MVP Milwaukee Old World, LLC
MVP Bridgeport Fairfield Garage, LLC
St. Louis Broadway, LLC
MVP Houston Saks Garage, LLC
West 9th Street Properties II, LLC
St. Louis Seventh & Cerre, LLC
MVP Milwaukee Wells, LLC
MVP San Jose 88 Garage, LLC
MVP Preferred Parking, LLC
MVP Wildwood NJ Lot, LLC
MCI 1372 Street, LLC
MVP Raider Park Garage, LLC
MVP Indianapolis City Park, LLC
MVP Cincinnati Race Street, LLC
MVP New Orleans Rampart, LLC
MVP Indianapolis WA Street Lot, LLC
MVP St. Louis Washington, LLC
MVP Hawaii Marks Garage, LLC
Minneapolis City Parking, LLC
MVP St. Paul Holiday Garage, LLC
 
MVP Minneapolis Venture, LLC
MVP Louisville Station Broadway, LLC
 

Under GAAP, the Company’s consolidated financial statements will also include the accounts of its consolidated subsidiaries and joint ventures in which the Company is the primary beneficiary, or in which the Company has a controlling interest. In determining whether the Company has a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, the Company’s management considers factors such as an entity’s purpose and design and the Company’s ability to direct the activities of the entity that most significantly impacts the entity’s economic performance, ownership interest, board representation, management representation, authority to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which it will absorb the majority of the entity’s expected losses, if they occur, or receive the majority of the expected residual returns, if they occur, or both.

Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method. The Company's share of its equity method investees' earnings or losses is included in other income in the accompanying condensed consolidated statements of operations. Investments in which the Company is not able to exercise significant influence over the investee are accounted for under the cost method.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and derivative financial instruments and hedging activities, as applicable.

Concentration

The Company had fourteen and sixteen parking tenants/operators during the nine months ended September 30, 2020 and 2019, respectively. One tenant/operator, SP Plus Corporation (Nasdaq: SP) (“SP+”), represented 61.0% of the Company’s base parking rental revenue for the nine months ended September 30, 2020.

SP+ is one of the largest providers of parking management in the United States. As of September 30, 2020, SP+ managed approximately 3,200 locations in North America.


Below is a table that summarizes parking rent by tenant/operator as a percentage of the Company’s total base parking rental revenue for the periods presented:

   
For The Nine Months Ended September 30,
 
Parking Tenant
 
2020
   
2019
 
SP +
   
61.0
%
   
58.1
%
Premier Parking
   
15.9
%
   
16.3
%
Denison
   
6.4
%
   
2.4
%
ISOM Management
   
5.1
%
   
4.1
%
Interstate Parking
   
2.8
%
   
2.9
%
342 N Rampart
   
2.0
%
   
3.1
%
TNSH, LLC
   
1.5
%
   
1.2
%
Best Park
   
1.4
%
   
0.3
%
St. Louis Parking
   
1.3
%
   
2.1
%
Lanier
   
1.0
%
   
2.6
%
ABM
   
0.7
%
   
4.3
%
Riverside Parking
   
0.6
%
   
1.0
%
Denver School
   
0.2
%
   
0.2
%
Secure
   
0.1
%
   
0.1
%
Premium Parking
   
--
     
1.3
%

In addition, the Company had concentrations in various cities based on parking rental revenue for the nine months ended September 30, 2020 and 2019, as well as concentrations in various cities based on the real estate the Company owned as September 30, 2020 and December 31, 2019. The below tables summarize this information by city.

City Concentration for Parking Rental Revenue
 
   
For the Nine Months Ended September 30,
 
   
2020
   
2019
 
Detroit
   
24.3
%
   
17.4
%
Houston
   
12.2
%
   
12.8
%
Fort Worth
   
10.1
%
   
7.8
%
Cincinnati
   
8.2
%
   
8.9
%
Indianapolis
   
6.4
%
   
6.2
%
Lubbock
   
5.1
%
   
4.1
%
Cleveland
   
4.5
%
   
6.9
%
Honolulu
   
4.4
%
   
4.8
%
Milwaukee
   
3.7
%
   
3.2
%
Nashville
   
3.7
%
   
3.5
%
St. Louis
   
3.6
%
   
5.2
%
Minneapolis
   
2.9
%
   
4.1
%
St Paul
   
2.8
%
   
2.9
%
New Orleans
   
2.0
%
   
3.1
%
Bridgeport
   
1.4
%
   
2.1
%
Memphis
   
1.4
%
   
1.6
%
San Jose
   
1.0
%
   
2.3
%
Denver
   
0.7
%
   
0.8
%
Louisville
   
0.6
%
   
1.0
%
Clarksburg
   
0.4
%
   
0.3
%
Wildwood
   
0.3
%
   
0.4
%
Canton
   
0.3
%
   
0.2
%
Ft. Lauderdale
   
--
     
0.4
%

Real Estate Investment Concentration by City
 
       
   
As of September 30, 2020
   
As of December 31, 2019
 
Detroit
   
18.9
%
   
17.6
%
Houston
   
11.6
%
   
12.0
%
Fort Worth
   
9.3
%
   
8.8
%
Cincinnati
   
8.1
%
   
8.7
%
Honolulu
   
6.7
%
   
6.7
%
Indianapolis
   
6.1
%
   
5.8
%
Cleveland
   
5.7
%
   
6.2
%
Lubbock
   
4.5
%
   
3.7
%
St Louis
   
4.2
%
   
4.4
%
Minneapolis
   
3.9
%
   
4.4
%
Nashville
   
3.9
%
   
3.7
%
Milwaukee
   
3.8
%
   
3.8
%
St Paul
   
2.8
%
   
2.7
%
Bridgeport
   
2.8
%
   
2.6
%
New Orleans
   
2.6
%
   
2.6
%
Memphis
   
1.2
%
   
1.3
%
San Jose
   
1.2
%
   
1.1
%
Denver
   
1.1
%
   
1.0
%
Louisville
   
1.0
%
   
1.0
%
Clarksburg
   
0.2
%
   
0.2
%
Canton
   
0.2
%
   
0.2
%
Wildwood
   
0.2
%
   
0.4
%
Fort Lauderdale
   
--
     
1.1
%

Acquisitions

The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any. Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred within operating expenses in the consolidated statement of operations.

Impairment of Long-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, the property is written down to fair value and an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.

The Company recorded impairment charges of approximately $6.5 million and $0.5 million for the three months ended September 30, 2020 and 2019, respectively.  The Company recorded impairment charges of approximately $14.1 million and $1.5 million for the nine months ended September 30, 2020 and 2019, respectively.  These charges were recorded to write down the carrying value of these assets to their current appraised values net of estimated closing costs.  The appraisals were performed by independent third-party appraisers primarily using the income capitalization approach based on the contracted rent to be received from the operator or the sales comparison approach. The income capitalization approach reflects the property’s income-producing capabilities based on the assumption that value is created by the expectation of benefits to be derived in the future. The sales comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate value.
The following is a summary of the impairments for the nine months ended September 30, 2020:

Property
 
Impairment
 
Valuation Method
Mabley Place Garage
 
$
3,000,000
 
Income Capitalization
MVP Houston Saks
 
$
2,500,000
 
Income Capitalization
MVP Milwaukee Wells
 
$
620,000
 
Sales Comparison
MVP Wildwood NJ Lot
 
$
535,000
 
Sales Comparison
MVP Indianapolis Meridian
 
$
50,000
 
Income Capitalization
MVP Clarksburg Lot
 
$
90,000
 
Income Capitalization
Minneapolis City Parking
 
$
320,000
 
Sales Comparison
33740 Crown Colony
 
$
95,000
 
Income Capitalization
MVP St Louis Washington
 
$
1,320,000
 
Income Capitalization
MVP Cincinnati Race Street
 
$
500,000
 
Income Capitalization
MVP Louisville Broadway
 
$
100,000
 
Income Capitalization
Cleveland Lincoln Garage
 
$
2,725,000
 
Income Capitalization
MVP Preferred Parking
 
$
740,000
 
Sales Comparison
MVP New Orleans Rampart
 
$
270,000
 
Income Capitalization
MVP Hawaii Marks Garage
 
$
1,250,000
 
Income Capitalization
Total
 
$
14,115,000
   

The following is a summary of the impairments for the nine months ended September 30, 2019:

Property
 
2019 Impairment
 
Valuation Method
MVP Memphis Court
 
$
558,000
 
Sales Comparison
Minneapolis City Parking
 
$
500,000
 
Income Capitalization
MVP San Jose 88 Garage
 
$
344,000
 
Income Capitalization
MVP St Louis Washington
 
$
50,000
 
Income Capitalization
Total
 
$
1,452,000
   

Cash

The Company maintains a significant portion of its cash deposits at KeyBank, which are held by the Company’s subsidiaries allowing the Company to maximize FDIC insurance coverage. The balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) under the same ownership category of $250,000. As of September 30, 2020, and December 31, 2019, the Company had approximately $0.7 million and $2.7 million, respectively, in excess of the federally insured limits. As of the date of this filing, the Company has not experienced any losses on cash deposits.

Restricted Cash

Restricted cash primarily consists of escrowed tenant improvement funds, real estate taxes, capital improvement funds, insurance premiums and other amounts required to be escrowed pursuant to loan agreements.

Revenue Recognition

The Company's revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since many of the Company's leases will provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. Percentage rents will be recorded when earned and certain thresholds have been met.

The Company will continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. If the collectability of a receivable is in doubt, the Company will record an increase in the Company's allowance for uncollectible accounts or record a direct write-off of the receivable after exhaustive efforts at collection.

Advertising Costs

Advertising costs incurred in the normal course of operations are expensed as incurred. During the three and nine months ended September 30, 2020 and 2019, the Company had no advertising costs.


Investments in Real Estate and Fixed Assets

Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Purchase Price Allocation

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company's analysis of comparable properties in the Company's portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable. The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company will include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Estimates of costs to execute similar leases including leasing commissions, legal and other related expenses are also utilized.

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease.

The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company's evaluation of the specific characteristics of each tenant’s lease and the Company's overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.

The value of in-place leases is amortized to expense over the initial term of the respective leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

In making estimates of fair values for purposes of allocating purchase price, the Company will utilize several sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company will also consider information obtained about each property as a result of the Company's pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.


Organization, Offering and Related Costs

Certain organization and offering costs will be incurred by the former Advisor. Pursuant to the terms of the Amended and Restated Advisory Agreement, the Company will not reimburse the Advisor for these out of pocket costs and future organization and offering costs it may incur. Such costs shall include legal, accounting, printing and other offering expenses, including marketing, and direct expenses of the former Advisor’s employees and employees of the former Advisor’s affiliates and others.

All direct offering costs incurred and or paid by the Company that are directly attributable to a proposed or actual offering, including sales commissions, if any, were charged against the gross proceeds of the Common Stock Offering and recorded as an offset to additional paid-in-capital. All indirect costs will be expensed as incurred.

Stock-Based Compensation

The Company has a stock-based incentive award plan, which is accounted for under the guidance for share based payments. The expense for such awards will be included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met (See Note G — Stock-Based Compensation).

Income Taxes

Commencing with its taxable year ended December 31, 2017 through December 31, 2019, and subject to the discussion below relating to the Company’s REIT status from and after January 1, 2020, the Company has operated in a manner to qualify as a REIT under Sections 856 to 860 of the Code. A REIT is generally not subject to federal income tax on that portion of its REIT taxable income, which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed and provided that certain other requirements are met. The Company’s REIT taxable income may substantially exceed or be less than the income calculated according to GAAP. In addition, the Company will be subjected to corporate income tax to the extent that less than 100% of the net taxable income is distributed, including any net capital gain.

The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has not recorded any uncertain tax positions as of September 30, 2020.

A full valuation allowance for deferred tax assets was provided since the Company believes that it is more likely than not that it will not realize the benefits of its deferred tax assets. A change in circumstances may cause the Company to change its judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized. The Company would generally report any change in the valuation allowance through its income statement in the period in which such changes in circumstances occur. As long as the Company continues to qualify as a REIT, it will generally not be subject to corporate level federal income taxes on earnings distributed to its stockholders and therefore may not realize any benefit from deferred tax assets arising during 2019 or any prior period in which the Company maintained its status as a REIT. The Company intends to distribute at least 100% of its taxable income annually for every year in which the Company is a REIT.

As of September 30, 2020, as a result of the COVID-19 pandemic, the Company has entered into temporary lease amendments with some of its tenants. The Company was compelled to make certain of these amendments in response to challenging market conditions faced by its lessees and operating partners due to the significant negative impact of COVID-19 on demand for parking in many of the markets in which the Company owns properties, particularly in major population centers.  At the time the leases were amended, the Company intended for the amendments to be temporary and did not believe that the amendments would cause the Company to fail its REIT income tests for the 2020 year.  Because the COVID-19 pandemic has continued to negatively impact the Company and its operating partners and lessees longer than anticipated, the Company has not yet been able to amend all of its agreements back to their original form. The income generated under these lease amendments do not constitute qualifying REIT income for purposes of the REIT gross income tests.  As a result, the Company was not in compliance with the annual REIT income tests for the quarters ended June 30, 2020 and September 30, 2020.   These REIT income tests are measured on an annual basis, and we are evaluating options and strategies that may enable us to maintain our REIT status for our taxable year ending December 31, 2020 notwithstanding our inability to comply with these income tests in the past two quarters.  If implemented, these options and strategies may have negative ancillary impacts on our business and operations, including potentially increasing our overall tax liability.  If we determine that the potential negative impacts of these options outweigh the benefits of potentially maintaining our REIT status, we may choose not to implement any of these options.  Moreover, even if we choose to implement any of these options, no assurances can be given that our implementation will be successful  or that these options will in fact enable us to maintain our status as a REIT for our taxable year ending December 31, 2020.  Accordingly, unless we choose, and are able, to successfully implement an alternative operating strategy, it is highly likely that the Company will no longer qualify as a REIT for the year ending December 31, 2020.  If we fail to qualify as a REIT for our taxable year ended December 31, 2020, we would no longer be required to make distributions of our annual taxable income in order to maintain our REIT status and any distributions we make would not be deductible by us.  Moreover, unless entitled to relief under specific statutory or administrative provisions, we would be ineligible to elect to be treated as a REIT for the four taxable years following 2020.  We believe that we may not be entitled to this statutory relief, and there can be no assurances that we will be able to obtain such relief.

Given projected losses in 2020, as well as the potential tax benefit of net operating loss carryforwards that the Company does not anticipate utilizing as long as it maintains its status as a REIT, the Company will continue to evaluate its current and deferred income tax situation (including the appropriateness of recording a deferred tax asset for net operating losses) throughout the year as there is additional clarity about the impact of the COVID-19 pandemic to the Company’s ongoing operations, including whether the Company can maintain its REIT status for the 2020 year.

Per Share Data

The Company calculates basic income (loss) per share by dividing net income (loss) for the period by weighted-average shares of its common stock outstanding for the respective period. Diluted income per share considers the effect of dilutive instruments, such as stock options and convertible stock, but uses the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. The Company had no outstanding common share equivalents during the three and nine months ended September 30, 2020 and 2019.

There is a potential for dilution from the Company’s Series A Convertible Redeemable Preferred Stock which may be converted into the Company’s common stock at any time. As of September 30, 2020, there were 2,862 shares of the Series A Convertible Redeemable Preferred Stock issued and outstanding. As of filing date, the Company has not received any requests to convert.

There is a potential for dilution from the Company’s Series 1 Convertible Redeemable Preferred Stock which may be converted upon a holder’s election into the Company’s common stock at any time. As of September 30, 2020, there were 39,811 shares of the Series 1 Convertible Redeemable Preferred Stock issued and outstanding. As of filing date, the Company has not received any requests to convert.

Each share of Series A preferred stock and Series 1 preferred stock will convert into the number of shares of the Company’s common stock determined by dividing (i) the stated value per Series A share or Series 1 share of $1,000 (as may be adjusted pursuant to the applicable articles supplementary) plus any accrued but unpaid dividends to, but not including, the conversion date by (ii) the conversion price. The conversion price is equal to the net asset value per share of the Company’s common stock; provided that if a “Listing Event” (as defined in the applicable articles supplementary) occurs, the conversion price will be 100% of the volume weighted average price per share of the Company’s common stock for the 20 trading days prior to the delivery date of the conversion notice. The Company will have the right (but not the obligation) to redeem any Series A or Series 1 shares that are subject to a conversion notice on the terms set forth in the applicable articles supplementary.

Accounting and Auditing Standards Applicable to “Emerging Growth Companies”

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Company remains an “emerging growth company,” which is expected to be through December 31, 2020, the Company is not required to (1) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (2) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”), requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. The Company intends to take advantage of such extended transition period. Since the Company will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, the Company’s financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If the Company were to subsequently elect to instead comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

Non-controlling Interests

The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.


Note C — Commitments and Contingencies

Environmental Matters

Investments in real property create the potential for environmental liability on the part of the owner or operator of such real property. If hazardous substances are discovered on or emanating from a property, the owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous substances. The Company has obtained a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants on each of the properties and, in certain instances, has conducted additional investigation, including a Phase II environmental assessment. Furthermore, the Company has adopted a policy of conducting a Phase I environmental study on each property acquired and any additional investigation as warranted.

During the Company’s predecessor’s due diligence of a property purchased on December 15, 2017 (originally purchased by predecessor on March 31, 2015) and located in Milwaukee, it was discovered that the soil and ground water at the subject property had been impacted by the site’s historical use as a printing press as well as neighboring property uses. As a result, the Company retained a local environmental engineer to seek a closure letter or similar certificate of no further action from the State of Wisconsin due to the Company’s use of the property as a parking lot. As of September 30, 2020, management has not received the closure letter, however the Company does not anticipate a material adverse effect related to this environmental matter.

The Company believes that it complies, in all material respects, with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Furthermore, as of September 30, 2020, the Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations. The Company, however, cannot predict the impact of any unforeseen environmental contingencies or new or changed laws or regulations on properties in which the Company holds an interest, or on properties that may be acquired directly or indirectly in the future.

Note D – Investments in Real Estate

As of September 30, 2020, the Company had the following Investments in Real Estate that were consolidated on the Company’s balance sheet:

Property Name
Location
Date Acquired
Property Type
 
# Spaces
   
Property Size (Acres)
   
Retail Sq. Ft
   
Investment Amount
 
Parking Tenant / Operator
MVP Cleveland West 9th (1)
Cleveland, OH
5/11/2016
Lot
   
260
     
2
     
N/A
   
$
5,845,000
 
SP +
33740 Crown Colony (1)
Cleveland, OH
5/17/2016
Lot
   
82
     
0.54
     
N/A
   
$
2,954,000
 
SP +
MCI 1372 Street
Canton, OH
7/8/2016
Lot
   
66
     
0.44
     
N/A
   
$
700,000
 
ABM
MVP Cincinnati Race Street Garage
Cincinnati, OH
7/8/2016
Garage
   
350
     
0.63
     
N/A
   
$
5,848,000
 
SP +
MVP St. Louis Washington
St Louis, MO
7/18/2016
Lot
   
63
     
0.39
     
N/A
   
$
1,637,000
 
SP +
MVP St. Paul Holiday Garage
St Paul, MN
8/12/2016
Garage
   
285
     
0.85
     
N/A
   
$
8,396,000
 
Interstate Parking
MVP Louisville Station Broadway
Louisville, KY
8/23/2016
Lot
   
165
     
1.25
     
N/A
   
$
3,007,000
 
Riverside Parking
White Front Garage Partners
Nashville, TN
9/30/2016
Garage
   
155
     
0.26
     
N/A
   
$
11,672,000
 
Premier Parking
Cleveland Lincoln Garage
Cleveland, OH
10/19/2016
Garage
   
536
     
1.14
     
45,272
   
$
8,272,000
 
SP +
MVP Houston Preston Lot
Houston, TX
11/22/2016
Lot
   
46
     
0.23
     
N/A
   
$
2,820,000
 
Premier Parking
MVP Houston San Jacinto Lot
Houston, TX
11/22/2016
Lot
   
85
     
0.65
     
240
   
$
3,250,000
 
Premier Parking
MVP Detroit Center Garage
Detroit, MI
2/1/2017
Garage
   
1,275
     
1.28
     
N/A
   
$
55,477,000
 
SP +
St. Louis Broadway
St Louis, MO
5/6/2017
Lot
   
161
     
0.96
     
N/A
   
$
2,400,000
 
St. Louis Parking
St. Louis Seventh & Cerre
St Louis, MO
5/6/2017
Lot
   
174
     
1.06
     
N/A
   
$
3,300,000
 
St. Louis Parking
MVP Preferred Parking (4)
Houston, TX
8/1/2017
Garage/Lot
   
528
     
0.98
     
784
   
$
20,479,000
 
Premier Parking
MVP Raider Park Garage
Lubbock, TX
11/21/2017
Garage
   
1,495
     
2.15
     
20,536
   
$
13,517,000
 
ISOM Management
MVP PF Memphis Poplar
Memphis, TN
12/15/2017
Lot
   
127
     
0.87
     
N/A
   
$
3,669,000
 
Best Park
MVP PF St. Louis
St Louis, MO
12/15/2017
Lot
   
183
     
1.22
     
N/A
   
$
5,041,000
 
SP +
Mabley Place Garage (2)
Cincinnati, OH
12/15/2017
Garage
   
775
     
0.9
     
8,400
   
$
18,210,000
 
SP +

                                     
MVP Denver Sherman
Denver, CO
12/15/2017
Lot
   
28
     
0.14
     
N/A
   
$
705,000
   
Denver School
 
MVP Fort Worth Taylor
Fort Worth, TX
12/15/2017
Garage
   
1,013
     
1.18
     
11,828
   
$
27,663,000
   
SP +
 
MVP Milwaukee Old World
Milwaukee, WI
12/15/2017
Lot
   
54
     
0.26
     
N/A
   
$
2,044,000
   
SP +
 
MVP Houston Saks Garage
Houston, TX
12/15/2017
Garage
   
265
     
0.36
     
5,000
   
$
7,923,000
   
Premier Parking
 
MVP Milwaukee Wells
Milwaukee, WI
12/15/2017
Lot
   
148
     
1.07
     
N/A
   
$
4,463,000
   
Symphony
 
MVP Wildwood NJ Lot 1 (3)
Wildwood, NJ
12/15/2017
Lot
   
29
     
0.26
     
N/A
   
$
278,000
   
SP +
 
MVP Wildwood NJ Lot 2 (3)
Wildwood, NJ
12/15/2017
Lot
   
45
     
0.31
     
N/A
   
$
419,000
   
SP+
 
MVP Indianapolis City Park
Indianapolis, IN
12/15/2017
Garage
   
370
     
0.47
     
N/A
   
$
10,934,000
   
Denison
 
MVP Indianapolis WA Street
Indianapolis, IN
12/15/2017
Lot
   
141
     
1.07
     
N/A
   
$
5,749,000
   
Denison
 
MVP Minneapolis Venture
Minneapolis, MN
12/15/2017
Lot
   
195
     
1.65
     
N/A
   
$
4,013,000
     
N/A
 
Minneapolis City Parking
Minneapolis, MN
12/15/2017
Lot
   
268
     
1.98
     
N/A
   
$
7,718,000
   
SP +
 
MVP Indianapolis Meridian
Indianapolis, IN
12/15/2017
Lot
   
36
     
0.24
     
N/A
   
$
1,551,000
   
Denison
 
MVP Milwaukee Clybourn
Milwaukee, WI
12/15/2017
Lot
   
15
     
0.06
     
N/A
   
$
262,000
   
Secure
 
MVP Milwaukee Arena Lot
Milwaukee, WI
12/15/2017
Lot
   
75
     
1.11
     
N/A
   
$
4,631,000
   
SP +
 
MVP Clarksburg Lot
Clarksburg, WV
12/15/2017
Lot
   
94
     
0.81
     
N/A
   
$
625,000
   
ABM
 
MVP Denver Sherman 1935
Denver, CO
12/15/2017
Lot
   
72
     
0.43
     
N/A
   
$
2,533,000
   
SP +
 
MVP Bridgeport Fairfield
Bridgeport, CT
12/15/2017
Garage
   
878
     
1.01
     
4,349
   
$
8,268,000
   
SP +
 
MVP New Orleans Rampart
New Orleans, LA
2/1/2018
Lot
   
78
     
0.44
     
N/A
   
$
7,835,000
   
342 N. Rampart
 
MVP Hawaii Marks Garage
Honolulu, HI
6/21/2018
Garage
   
311
     
0.77
     
16,205
   
$
19,951,000
   
SP +
 
Construction in progress
                             
$
1,151,000
         
Total Investment in real estate and fixed assets
                           
$
295,210,000
         

(1)
These properties are held by West 9th St. Properties II, LLC.
(2)
The Company holds an 83.3% undivided interest in the Mabley Place Garage pursuant to a tenancy-in-common agreement and is the Managing Co-Owner of the property.
(3)
These properties are held by MVP Wildwood NJ Lot, LLC.
(4)
MVP Preferred Parking, LLC holds a Garage and a Parking Lot.

Note E — Related Party Transactions and Arrangements

The transactions described in this Note were approved by a majority of the Company’s board of directors (including a majority of the independent directors) not otherwise interested in such transactions as fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from unaffiliated third parties.

Ownership of Company Stock

As of September 30, 2020, the Sponsor owned 9,108 shares, VRM II owned 844,960 shares and VRM I owned 456,834 shares of the Company’s outstanding common stock.

Ownership of the Former Advisor

VRM I and VRM II own 40% and 60%, respectively, of the former Advisor. Neither VRM I nor VRM II paid any up-front consideration for these ownership interests, but each agreed to be responsible for its proportionate share of future expenses of the former Advisor.

Note F — Economic Dependency

Under various agreements, the Company has engaged or will engage the former Advisor and its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition services, the sale of shares of the Company’s securities available for issuance, as well as other administrative responsibilities for the Company, including accounting services and investor relations. In addition, the Sponsor paid selling commissions in connection with the sale of the Company’s shares in the Common Stock Offering and the former Advisor paid the Company’s organization and offering expenses.

As a result of these relationships, the Company is dependent upon the former Advisor and its affiliates. If these companies are unable to provide the Company with the respective services, including loan guaranties, the Company may be required to find alternative providers of these services.


Note G — Stock-Based Compensation

Long-Term Incentive Plan

The Company’s board of directors has adopted a long-term incentive plan which the Company may use to attract and retain qualified directors, officers, employees and consultants. The Company’s long-term incentive plan will offer these individuals an opportunity to participate in the Company’s growth through awards in the form of, or based on, the Company’s common stock. The Company currently anticipates that it will not issue awards under the Company’s long-term incentive plan, although it may do so in the future, including possible equity grants to the Company’s independent directors as a form of compensation.

The long-term incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or deferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, officers, employees and consultants of the Company and the Company’s affiliates selected by the board of directors for participation in the Company’s long-term incentive plan. Stock options granted under the long-term incentive plan will not exceed an amount equal to 10% of the outstanding shares of the Company’s common stock on the date of grant of any such stock options. Stock options may not have an exercise price that is less than the fair market value of a share of the Company’s common stock on the date of grant.

The Company’s board of directors or a committee appointed by its board of directors will administer the long-term incentive plan, with sole authority to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the long-term incentive plan if the grant or vesting of the awards would jeopardize the Company’s status as a REIT under the Code or otherwise violate the ownership and transfer restrictions imposed under its charter. Unless otherwise determined by the Company’s board of directors, no award granted under the long-term incentive plan will be transferable except through the laws of descent and distribution.

The Company has authorized and reserved an aggregate maximum number of 500,000 common shares for issuance under the long-term incentive plan. In the event of a transaction between the Company and its stockholders that causes the per-share value of the Company’s common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the long-term incentive plan will be adjusted proportionately and the board of directors will make such adjustments to the long-term incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the long-term incentive plan will automatically be adjusted proportionately and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.

The Company’s board of directors may in its sole discretion at any time determine that all or a portion of a participant’s awards will become fully vested. The board may discriminate among participants or among awards in exercising such discretion. The long-term incentive plan will automatically expire on the tenth anniversary of the date on which it is approved by the board of directors and stockholders, unless extended or earlier terminated by the board of directors. The Company’s board of directors may terminate the long-term incentive plan at any time. The expiration or other termination of the long-term incentive plan will not, without the participant’s consent, have an adverse impact on any award that is outstanding at the time the long-term incentive plan expires or is terminated. The board of directors may amend the long-term incentive plan at any time, but no amendment will adversely affect any award without the participant’s consent and no amendment to the long-term incentive plan will be effective without the approval of the Company’s stockholders if such approval is required by any law, regulation or rule applicable to the long-term incentive plan. During the three and nine months ended September 30, 2020 and 2019, no grants were made under the long-term incentive plan.

Note H – Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases – (Topic 842). This update will require lessees to recognize all leases with terms greater than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. This update maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The basic principle is that leases of all types convey the right to direct the use and obtain substantially all the economic benefits of an identified asset, meaning they create an asset and liability for lessees. Lessees will classify leases as either finance leases (comparable to current capital leases) or operating leases (comparable to current operating leases). Costs for a finance lease will be split between amortization and interest expense, with a single lease expense reported for operating leases. This update also will require both qualitative and quantitative disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; however, early adoption is permitted. The Company has determined that the provisions of ASU 2016-02 may result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities for leases in the future however the Company was not a lessee on any lease agreements at December 31, 2018. During the first quarter 2019, the Company adopted ASU 2016-02.  See Note M – Right of Use Leased Asset and Lease Liability for discussion of the impact of ASU 2016-02 on the Company’s unaudited condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. During the first quarter 2020, the Company adopted ASU 2016-13 and such adoption did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The objective of ASU 2017-12 is to expand hedge accounting for both financial (interest rate) and commodity risks and create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. ASU 2017-12 will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods in the year of adoption. Early adoption is permitted for any interim or annual period. During the first quarter 2019, the Company adopted ASU 2017-12 and such adoption did not have a material impact on the Company's unaudited condensed consolidated financial statements.

Note I — Disposition of Investment in Real Estate

On May 26, 2020, the Company, through an entity wholly owned by the Company, sold a parking garage in San Jose, California for cash consideration of $4.1 million to UC 88 Garage Owner LLC, a third-party buyer.  The Company used $2.5 million of the proceeds to pay off the existing promissory note secured by the MVP San Jose 88 Garage, LLC. The property was originally purchased in June 2016 for approximately $3.6 million. The gain on sale is approximately $0.7 million.

The following is summary of the results of operations related to the parking garage in San Jose for the three and nine months ended September 30, 2020:

   
For the Three Months Ended September 30,
   
For the Nine Months Ended September 30,
 
   
2020
   
2019
   
2020
   
2019
 
Revenue
 
$
--
   
$
113,000
   
$
113,000
   
$
338,000
 
Expenses *
   
--
     
102,000
     
191,000
     
705,000
 
Income/(Loss) from assets held for sale, net of income taxes
 
$
--
   
$
11,000
   
$
(78,000
)
 
$
(367,000
)
*Includes $343,000 impairment in 2019

Note J — Notes Payable

As of September 30, 2020, the principal balances on notes payable are as follows:

Property
 
Original Debt Amount
   
Monthly Payment
   
Balance as of 09/30/20
 
Lender
Term
 
Interest Rate
 
Loan Maturity
MVP Cincinnati Race Street, LLC (6)
 
$
2,550,000
   
Interest Only
   
$
2,550,000
 
Multiple
1 Year
   
7.50
%
4/30/2021
MVP Wildwood NJ Lot, LLC (6)
 
$
1,000,000
   
Interest Only
   
$
1,000,000
 
Tigges Construction Co.
1 Year
   
7.50
%
4/30/2021
The Parking REIT D&O Insurance
 
$
1,185,000
   
$
150,000
   
$
744,000
 
MetaBank
1 Year
   
3.60
%
2/28/2021
Minneapolis Venture (6)
 
$
2,000,000
   
Interest Only
   
$
2,000,000
 
Multiple
1 Year
   
8.00
%
04/30/2021
MVP Raider Park Garage, LLC (4)
 
$
7,400,000
   
Interest Only
   
$
7,400,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP New Orleans Rampart, LLC (4)
 
$
5,300,000
   
Interest Only
   
$
5,300,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP Hawaii Marks Garage, LLC (4)
 
$
13,500,000
   
Interest Only
   
$
13,500,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP Milwaukee Wells, LLC (4)
 
$
2,700,000
   
Interest Only
   
$
2,700,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP Indianapolis City Park, LLC (4)
 
$
7,200,000
   
Interest Only
   
$
7,200,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP Indianapolis WA Street, LLC (4)
 
$
3,400,000
   
Interest Only
   
$
3,400,000
 
LoanCore
2 Year
 
Variable
 
12/9/2020
MVP Clarksburg Lot (6)
 
$
476,000
   
Interest Only
   
$
476,000
 
Multiple
1 Year
   
7.50
%
5/21/2021
MCI 1372 Street (6)
 
$
574,000
   
Interest Only
   
$
574,000
 
Multiple
1 Year
   
7.50
%
5/27/2021
MVP Milwaukee Old World (6)
 
$
771,000
   
Interest Only
   
$
771,000
 
Multiple
1 Year
   
7.50
%
5/27/2021

MVP Milwaukee Clybourn (6)
 
$
191,000
   
Interest Only
   
$
191,000
 
Multiple
1 Year
   
7.50
%
5/27/2021
SBA PPP Loan
 
$
348,000
   
$
14,700
   
$
348,000
 
Small Business Administration
2 Year
   
1.00
%
10/22/2022
MVP Memphis Poplar (3)
 
$
1,800,000
   
Interest Only
   
$
1,800,000
 
LoanCore
5 Year
   
5.38
%
3/6/2024
MVP St. Louis (3)
 
$
3,700,000
   
Interest Only
   
$
3,700,000
 
LoanCore
5 Year
   
5.38
%
3/6/2024
Mabley Place Garage, LLC (8)
 
$
9,000,000
   
$
44,000
   
$
8,052,000
 
Barclays
10 year
   
4.25
%
12/6/2024
MVP Houston Saks Garage, LLC
 
$
3,650,000
   
$
20,000
   
$
3,189,000
 
Barclays Bank PLC
10 year
   
4.25
%
8/6/2025
Minneapolis City Parking, LLC (7)
 
$
5,250,000
   
$
29,000
   
$
4,694,000
 
American National Insurance, of NY
10 year
   
4.50
%
5/1/2026
MVP Bridgeport Fairfield Garage, LLC (5)
 
$
4,400,000
   
$
23,000
   
$
3,965,000
 
FBL Financial Group, Inc.
10 year
   
4.00
%
8/1/2026
West 9th Properties II, LLC (7)
 
$
5,300,000
   
$
30,000
   
$
4,808,000
 
American National Insurance Co.
10 year
   
4.50
%
11/1/2026
MVP Fort Worth Taylor, LLC (7)
 
$
13,150,000
   
$
73,000
   
$
11,959,000
 
American National Insurance, of NY
10 year
   
4.50
%
12/1/2026
MVP Detroit Center Garage, LLC
 
$
31,500,000
   
$
194,000
   
$
29,212,000
 
Bank of America
10 year
   
5.52
%
2/1/2027
MVP St. Louis Washington, LLC (1)
 
$
1,380,000
   
$
8,000
   
$
1,341,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
St. Paul Holiday Garage, LLC (1)
 
$
4,132,000
   
$
24,000
   
$
4,013,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
Cleveland Lincoln Garage, LLC (1)
 
$
3,999,000
   
$
23,000
   
$
3,884,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
MVP Denver Sherman, LLC (1)
 
$
286,000
   
$
2,000
   
$
277,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
MVP Milwaukee Arena Lot, LLC (1)
 
$
2,142,000
   
$
12,000
   
$
2,081,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
MVP Denver Sherman 1935, LLC (1)
 
$
762,000
   
$
4,000
   
$
740,000
 
KeyBank
10 year *
   
4.90
%
5/1/2027
MVP Louisville Broadway Station, LLC (2)
 
$
1,682,000
   
Interest Only
   
$
1,682,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
MVP Whitefront Garage, LLC (2)
 
$
6,454,000
   
Interest Only
   
$
6,454,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
MVP Houston Preston Lot, LLC (2)
 
$
1,627,000
   
Interest Only
   
$
1,627,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
MVP Houston San Jacinto Lot, LLC (2)
 
$
1,820,000
   
Interest Only
   
$
1,820,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
St. Louis Broadway, LLC (2)
 
$
1,671,000
   
Interest Only
   
$
1,671,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
St. Louis Seventh & Cerre, LLC (2)
 
$
2,057,000
   
Interest Only
   
$
2,057,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
MVP Indianapolis Meridian Lot, LLC (2)
 
$
938,000
   
Interest Only
   
$
938,000
 
Cantor Commercial Real Estate
10 year **
   
5.03
%
5/6/2027
MVP Preferred Parking, LLC
 
$
11,330,000
   
Interest Only
   
$
11,330,000
 
Key Bank
10 year **
   
5.02
%
8/1/2027
Less unamortized loan issuance costs
                 
(1,257,000
)
                
                   
$
158,191,000
                  
(1)
The Company issued a promissory note to KeyBank for $12.7 million secured by a pool of properties, including (i) MVP Denver Sherman, LLC, (ii) MVP Denver Sherman 1935, LLC, (iii) MVP Milwaukee Arena, LLC, (iv) MVP St. Louis Washington, LLC, (v) St. Paul Holiday Garage, LLC and (vi) Cleveland Lincoln Garage, LLC.
(2)
The Company issued a promissory note to Cantor Commercial Real Estate Lending, L.P. (“CCRE”) for $16.25 million secured by a pool of properties, including (i) MVP Indianapolis Meridian Lot, LLC, (ii) MVP Louisville Station Broadway, LLC, (iii) MVP White Front Garage Partners, LLC, (iv) MVP Houston Preston Lot, LLC, (v) MVP Houston San Jacinto Lot, LLC, (vi) St. Louis Broadway Group, LLC, and (vii) St. Louis Seventh & Cerre, LLC.
(3)
On February 8, 2019, subsidiaries of the Company, consisting of MVP PF St. Louis 2013, LLC (“MVP St. Louis”), and MVP PF Memphis Poplar 2013 (“MVP Memphis Poplar”), LLC entered into a loan agreement, dated as of February 8, 2019, with LoanCore Capital Credit REIT LLC (“LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan MVP St. Louis and MVP Memphis Poplar $5.5 million to repay and discharge the outstanding KeyBank loan agreement. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by MVP St. Louis and MVP Memphis Poplar.

(4)
On November 30, 2018, subsidiaries of the Company, consisting of MVP Hawaii Marks Garage, LLC, MVP Indianapolis City Park Garage, LLC, MVP Indianapolis Washington Street Lot, LLC, MVP New Orleans Rampart, LLC, MVP Raider Park Garage, LLC, and MVP Milwaukee Wells LLC (the “Borrowers”) entered into a loan agreement, dated as of November 30, 2018 (the “Loan Agreement”), with LoanCore Capital Credit REIT LLC (the “LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan the Borrowers $39.5 million to repay and discharge the outstanding KeyBank Revolving Credit Facility. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by the Borrowers (the “Properties”). The loan bears interest at a floating rate equal to the sum of one-month LIBOR plus 3.65%, subject to a LIBOR minimum of 1.95%. Additionally, the Borrowers were required to purchase an Interest Rate Protection Agreement which caps its maximum LIBOR at 3.50% for the duration of the loan. Payments are interest-only for the duration of the loan, with the $39.5 million principal repayment due in a balloon payment due on December 9, 2020, with an option to extend the term until December 9, 2021 subject to certain conditions and payment obligations. The Borrowers have the right to prepay all or any part of the loan, subject to payment of any applicable Spread Maintenance Premium and Exit Fee (as defined in the Loan Agreement). The loan is also subject to mandatory prepayment upon certain events of Insured Casualty or Condemnation (as defined in the Loan Agreement). The Borrowers made customary representations and warranties to LoanCore and agreed to maintain certain covenants under the Loan Agreement, including but not limited to, covenants involving their existence; property taxes and other charges; access to properties, repairs, maintenance and alterations; performance of other agreements; environmental matters; title to properties; leases; estoppel statements; management of the Properties; special purpose bankruptcy remote entity status; change in business or operation of the Properties; debt cancellation; affiliate transactions; indebtedness of the Borrowers limited to Permitted Indebtedness (as defined in the Loan Agreement); ground lease reserve relating to MVP New Orleans’ Property; property cash flow allocation; liens on the Properties; ERISA matters; approval of major contracts; payments upon a sale of a Property; and insurance, notice and reporting obligations as set forth in the loan agreement. The Loan Agreement contains customary events of default and indemnification obligations. The loan proceeds were used to repay and discharge the KeyBank Credit Agreement, dated as of December 29, 2017, as amended, per the terms outlined in the third amendment to the Credit Agreement dated September 28, 2018, as previously filed on Form 8-K on October 2, 2018 and incorporated herein by reference. The Company is in preliminary discussions with LoanCore to exercise the one-year extension option in the loan agreement to extend the maturity of this loan; however, there can be no assurance this option will be exercised.  If the Company is unable to extend the maturity date and is unable to repay the loan at maturity, the lenders could foreclose upon the collateral securing the loan, in which case the Company would lose its significant amount of equity value in such collateral. On July 9, 2020, the Company entered into a loan modification agreement with LoanCore Capital Credit REIT, LLC for the following notes payable: (i) MVP Raider Park Garage, LLC, (ii) MVP New Orleans Rampart, LLC, (iii) MVP Hawaii Marks Garage, LLC, (iv) MVP Milwaukee Wells, LLC, (v) MVP Indianapolis City Park, LLC, (vi) MVP Indianapolis WA Street, LLC. The Agreement defers a portion of the required monthly interest payments from June 2020 through November 2020 and reduces the LIBOR Floor from 1.95% to 0.50%, the Modified LIBOR Floor.
(5)
Due to the impact of COVID-19, on May 12, 2020, the Company entered into a Loan Modification Agreement with Farm Bureau Life Insurance Company providing for a ninety-day interest-only period commencing with the payment due June 1, 2020 and continuing through the payment due August 1, 2020. During the interest only period, the monthly installments due under the Note are modified to provide for payment of accrued interest only in the amount of $13,384.
(6)
Loan agreement provides automatic six-month extensions.
(7)
On July 31, 2020, the Company entered into three loan modification agreements with American National Insurance Company (“ANICO”) for the following three loans: (i) Minneapolis City Parking, LLC, (ii) West 9th Properties II, LLC and (iii) MVP Fort Worth Taylor, LLC. The Company has entered into an Escrow Agreement with ANICO in which $950,000 in condemnation proceeds from the City of Minneapolis shall be used to pay the monthly principal and interest due each note, beginning with the payment due May 1, 2020, until the termination date.
(8)
On August 4, 2020, the Company’s wholly owned subsidiary (Mabley Place Garage, LLC) entered into a loan modification agreement with Wells Fargo Bank, National Association, as Trustee for the Benefit of the Registered Holders of JPMBB Commercial Mortgage Securities Trust 2015-C27 (the “Lender”). Under the terms of the agreement, the Lender will permit the Company to apply funds in an amount up to $43,000 per month from a replacement reserve account, to the extent there are sufficient funds available, to pay all or any portion of the monthly debt service payment amount then due for the May, June, July and August 2020 payment dates.
 * 2 Year Interest Only
** 10 Year Interest Only

Total interest expense incurred for each of the three months ended September 30, 2020 and 2019 was approximately $2.1 million. Total loan amortization cost for each of the three months ended September 30, 2020 and 2019, was approximately $0.2 million. Total interest expense incurred for the nine months ended September 30, 2020 and 2019, was approximately $6.3 million and $6.5 million, respectively. Total loan amortization cost for the nine months ended September 30, 2020 and 2019, was approximately $0.6 million and $0.7 million, respectively.


As of September 30, 2020, future principal payments on notes payable are as follows:

2020
 
$
48,654,000
 
2021
   
2,087,000
 
2022
   
2,252,000
 
2023
   
2,498,000
 
2024
   
15,283,000
 
Thereafter
   
88,674,000
 
Less unamortized loan issuance costs
   
(1,257,000
)
Total
 
$
158,191,000
 

The following table shows notes payable paid in full during the nine months ended September 30, 2020:

Property
 
Original Debt Amount
   
Monthly Payment
   
Balance as of 09/30/20
 
Lender
Term
 
Interest Rate
 
Loan Maturity
MVP San Jose 88 Garage, LLC
 
$
1,645,000
   
Interest Only
     
--
 
Multiple
1 Year
   
7.50
%
6/30/2020
The Parking REIT D&O Insurance
 
$
1,681,000
   
$
171,000
     
--
 
MetaBank
1 Year
   
8.00
%
4/30/2020

Note K — Fair Value

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:

1.
Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
2.
Level 2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.
3.
Level 3 – Model-derived valuations with unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

The Company's financial instruments include cash and cash equivalents, restricted cash, accounts payable and accrued expenses. Due to their short maturities, the carrying amounts of these assets and liabilities approximate fair value.

Assets and liabilities measured at fair value Level 3 on a non-recurring basis may include Assets Held for Sale.

Note L – Investment In DST

On May 31, 2017, the Company, through a wholly owned subsidiary of its Operating Partnership, purchased a 51.0% beneficial interest in MVP St. Louis Cardinal Lot, DST, a Delaware Statutory Trust (“MVP St. Louis”), for approximately $2.8 million. MVP St. Louis is the owner of a 2.56-acre, 376-vehicle commercial parking lot located at 500 South Broadway, St. Louis, Missouri 63103, known as the Cardinal Lot (the “Property”), which is adjacent to Busch Stadium, the home of the St. Louis Cardinals major league baseball team. The Property was purchased by MVP St. Louis from an unaffiliated seller for a purchase price of $11,350,000, plus payment of closing costs, financing costs, and related transactional costs.

Concurrently with the acquisition of the Property, MVP St. Louis obtained a first mortgage loan from Cantor Commercial Real Estate Lending, L.P (“St. Louis Lender”), in the principal amount of $6,000,000, with a 10-year, interest-only term at a fixed interest rate of 5.25%, resulting in an annual debt service payment of $315,000 (the “St. Louis Loan”). MVP St. Louis used the Company’s investment to fund a portion of the purchase price for the Property. The remaining equity portion was funded through short-term investments by VRM II, an affiliate of the former Advisor, pending the private placements of additional beneficial interest in MVP St. Louis exempt from registration under the Securities Act. VRM II and Michael V. Shustek, the Company’s Chairman and Chief Executive Officer, provided non-recourse carveout guaranties of the loan and environmental indemnities of St. Louis Lender.


Also, concurrently with the acquisition of the Property, MVP St. Louis, as landlord, entered into a 10-year master lease (the “St. Louis Master Lease”), with MVP St. Louis Cardinal Lot Master Tenant, LLC, an affiliate of the former Advisor, as tenant, (the “St. Louis Master Tenant”). St. Louis Master Tenant, in turn, concurrently entered into a 10-year sublease with Premier Parking of Missouri, LLC. The St. Louis Master Lease provides for annual rent payable monthly to MVP St. Louis, consisting of base rent in an amount to pay debt service on the St. Louis Loan, stated rent of $414,000 and potential bonus rent equal to a share of the revenues payable under the sublease in excess of a threshold. The Company will be entitled to its proportionate share of the rent payments based on its ownership interest. Under the St. Louis Master Lease, MVP St. Louis is responsible for capital expenditures and the St. Louis Master Tenant is responsible for taxes, insurance and operating expenses.  For the three months ended September 30, 2020 and 2019, distributions received were none and $52,000 respectively.  For the nine months ended September 30, 2020 and 2019, distributions received were $34,000 and $170,000, respectively.

The Company conducted an analysis and concluded that the 51% investment in the DST should not be consolidated. As a DST, the entity is subject to the Variable Interest Entity (“VIE”) Model under ASC 810-10.

As stated in ASC 810: “A controlling financial interest in the VIE model requires both of the following:

a. The power to direct the activities that most significantly impact the VIE’s economic performance
b. The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.”

As a VIE, the DST is governed in a manner similar to a limited partnership (i.e., there are trustees and there is no board) and the Company, as a beneficial owner, lacks the power through voting rights or otherwise to direct the activities of the DST that most significantly impact the entity’s economic performance. Specifically, the beneficial interest owners do not have the rights set forth in ASC 810-10-15-14(b)(1)(ii) – the beneficial owners can only remove the trustees if the trustees have engaged in fraud or gross negligence with respect to the trust and the beneficial owners have no substantive participating rights over the trustees.

The former Advisor was the advisor to the Company. The Company is controlled by its independent board of directors and its shareholders. In addition, the former Advisor is the 100% direct/indirect owner of the MVP Parking DST, LLC (“DST Sponsor”), the MVP St. Louis Cardinal Lot Signature Trustee, LLC (“Signature Trustee”) and MVP St. Louis Cardinal Lot Master Tenant, LLC (the “Master Tenant”), who have no direct or indirect ownership in the Company. The Signature Trustee and the Master Tenant can direct the most significant activities of the DST.

The former Advisor controls and consolidates the Signature Trustee, the Master Tenant, and the DST Sponsor. The Company concluded the Master Tenant/property management agreement exposes the Master Tenant to funding operating losses of the Property. As such, that agreement should be considered a variable interest in DST (ASC 810-10-55-37 and 810-10-55-37C). Accordingly, the former Advisor has a variable interest in the DST (through the master tenant/property manager) and has power over the significant activities of the DST (through the Signature Trustee and the master tenant/property manager). Accordingly, the Company believes that the Master Tenant is the primary beneficiary of the DST, which is ultimately owned and controlled by the former Advisor. In addition, the Company does not have the power to direct or change the activities of the Trust and shares income and losses pari passu with the other owners. As such, the Company accounts for its investment under the equity method and does not consolidate its investment in the DST.

Summarized Balance Sheets—Unconsolidated Real Estate Affiliates—Equity Method Investments

   
September 30, 2020
   
December 31, 2019
 
   
(Unaudited)
   
(Unaudited)
 
ASSETS
 
Investments in real estate and fixed assets
 
$
11,512,000
   
$
11,512,000
 
Cash
   
1,000
     
28,000
 
Cash – restricted
   
31,000
     
24,000
 
Due from related parties
   
158,000
     
--
 
Prepaid expenses
   
12,000
     
10,000
 
Total assets
 
$
11,714,000
   
$
11,574,000
 


LIABILITIES AND EQUITY
 
Liabilities
           
Notes payable, net of unamortized loan issuance costs of approximately $47,000 and $46,000 as of September 30, 2020 and December 31, 2019, respectively
 
$
5,953,000
   
$
5,954,000
 
Accounts payable and accrued liabilities
   
303,000
     
93,000
 
Due to related party
   
--
     
57,000
 
Total liabilities
   
6,256,000
     
6,104,000
 
Equity
               
Member’s equity
   
6,129,000
     
6,129,000
 
  Offering costs
   
(574,000
)
   
(574,000
)
  Accumulated earnings
   
1,220,000
     
952,000
 
  Distributions to members
   
(1,317,000
)
   
(1,037,000
)
Total equity
   
5,458,000
     
5,470,000
 
Total liabilities and equity
 
$
11,714,000
   
$
11,574,000
 

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

 
For the Three Months Ended September 30,
   
For the Nine Months Ended September 30,
 
   
2020
   
2019
   
2020
   
2019