Mortgage Loans

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Mortgage Loans

Note 10 – Mortgage Loans

On April 1, 2022, the Company entered into two loan agreements with an aggregate balance of $13.5 million as of June 30, 2022 to refinance seven of the Company's properties. The loan agreements consist of one loan in the amount of $11.4 million secured by six properties, and one loan in the amount of $2.1 million on the property held in the tenant in common investment at an interest rate of 3.85% from April 1, 2022 through and until March 31, 2027. Effective April 1, 2027 and through the maturity date of March 31, 2032, the interest rate adjusts to the 5-year Treasury plus 2.5% and is subject to a floor of 3.85%. The Company’s CEO entered into a

guaranty agreement pursuant to which he guaranteed the payment obligations under the promissory notes if they become due as a result of certain “bad-boy” provisions, individually and on behalf of the Operating Partnership. During the three months ended June 30, 2022, the Company incurred a loss on debt extinguishment of $144,029 related to the write off of unamortized debt issuance costs previously incurred on these mortgage loans that were refinanced in addition to a prepayment penalty incurred of $21,000.

The Company had the following promissory notes outstanding as of June 30, 2022 and December 31, 2021, respectively:

Mortgage Loans Secured By (Tenant-Location)	Loan Amount			Interest Rate				Maturity Date	June 30, 2022			December 31, 2021			Debt Service Coverage Ratios ("DSCR") Required
7-11 - Washington, DC; Starbucks-South Tampa, FL; and Pratt & Whitney-Huntsville, AL	$	11,287,500	*		4.17	%		3/6/2030	$	11,054,353		$	11,150,130			1.25
GSA & Maersk - Norfolk, Virginia		8,260,000			3.50	%		9/30/2024		7,691,504			7,805,524			1.25
PRA Holdings, Inc. - Norfolk, Virginia		5,216,749			3.50	%		10/23/2024		4,809,481			4,889,670			1.25
Sherwin-Williams - Tampa, Florida		1,286,664			3.72	%	***	8/10/2028		1,286,664			1,286,664			1.20
GSA - Manteo, North Carolina		928,728			3.85	%	**	3/31/2032		928,728			1,275,000			1.50
Irby Construction - Plant City , Florida		928,728			3.85	%	**	3/31/2032		928,728			850,000			1.50
Best Buy - Grand Junction, Colorado		2,552,644			3.85	%	**	3/31/2032		2,552,644			2,350,000			1.50
Fresenius - Chicago, Illinois		1,727,108			3.85	%	**	3/31/2032		1,727,108			-			1.50
Starbucks - North Tampa, Florida		1,298,047			3.85	%	**	3/31/2032		1,298,047			-			1.50
Kohls - Tucson, Arizona		3,964,745			3.85	%	**	3/31/2032		3,964,745			-			1.50
		37,450,913								36,242,002			29,606,988
								Less Debt Issuance Costs		(786,490	)		(637,693	)
										35,455,512			28,969,295

*Loan subject to prepayment penalty

**Adjustment effective April 1, 2027 equal to 5-year Treasury plus 2.5% and subject to a floor of 3.85%

***Fixed via interest rate swap

The Company amortized debt issuance costs during the six months ended June 30, 2022 and 2021 to interest expense of approximately $61,606 and $63,922, respectively. The Company paid debt issuance costs for the six months ended June 30, 2022 and 2021 of approximately $354,432 and $39,991, respectively.

Each promissory note requires the Company to maintain certain debt service coverage ratios as noted above. In addition, one promissory note, encumbered by six properties, require the Company to maintain a 54% loan to value ratio. As of June 30, 2022, the Company was in compliance with all covenants.

The Company’s President has personally guaranteed the repayment of the $11.1 million due under the 7-11 - Washington, DC; Starbucks-South Tampa, FL; and Pratt & Whitney-Huntsville, AL loan as well as the $1.3 million loan secured by the Company's Sherwin-Williams - Tampa, Florida property. In addition, the Company’s President has also provided a guaranty of the Borrower’s nonrecourse carveout liabilities and obligations in favor of the lender for the Norfolk, Virginia property loans (the “Bayport loans”) with an aggregate principal amount of $12,500,985. The Company modified the Bayport loans in March 2021 for no fees and reduced the associated interest rate from 4.25% to 3.50%. The Company determined that the debt modification was not substantial under ASC 470-50.

Minimum required principal payments on the Company’s debt as of June 30, 2022 are as follows:

	As of June 30,
	2022
2022	$	291,328
2023		785,524
2024		12,427,090
2025		546,280
2026		568,514
Thereafter		21,623,266
	$	36,242,002

On May 9, 2022, the Operating Partnership amended the current Commitment Letter with American Momentum Bank (the “Lender”), by entering into a new commitment letter, to increase the available Borrowings under the Facility from $25.0 million to $50.0 million to be used for the acquisition of income producing real estate properties under the same terms as provided by the agreement entered into on October 26, 2021. The new Commitment Letter will become effective contingent upon the Company completing a future capital raise of $25.0 million or more, and prior to such time, the current Commitment Letter will remain in place. As of June 30, 2022 the Company did not have an outstanding balance on the Facility and as of December 31, 2021 the Company had borrowed approximately $2.4 million, respectively, under the Facility.