Tenant in Common Investment

9 Months Ended

Sep. 30, 2022

Tenant In Common Investment [Abstract]

Tenant in Common Investment

Note 12 – Tenant in Common Investment

On August 13, 2021, the Company entered into a tenancy-in-common (“TIC”) structure whereby the TIC acquired a 15,288 square foot single tenant building in Rockford, IL for total consideration of approximately $4.5 million. The Company acquired a 36.8% interest in the TIC acquisition with Sunny Ridge HHP, LLC (“Sunny Ridge”) holding the remaining TIC interest. Funding for the Company’s interest was primarily funded through a Redeemable Non-Controlling Interest Contribution from Mr. Hornstrom to one of the Company's subsidiaries for $0.65 million. The remainder of the purchase price of the property was funded by Sunny Ridge of $1.2 million and debt financing of approximately $2.7 million. Mr. Hornstrom owns 50% of Sunny Ridge and also contributed $600,000 of $950,000 Redeemable Non-Controlling Interest contribution for the Plant City, FL property.

On April 1, 2022, the TIC refinanced the debt reducing the total debt outstanding to $2.1 million with an interest rate of 3.85% from April 1, 2022 through and until March 31, 2027. Effective April 1, 2027, the interest rate adjusts to the 5-year Treasury plus 2.5% and 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 note if they become due as a result of certain “bad-boy” provisions, individually and on behalf of the Operating Partnership. The promissory note requires the TIC to maintain a debt service coverage ratio of 1.50:1:00 in addition to a 54% loan to value ratio. As of September 30, 2022, the Company was in compliance with all covenants.

In conjunction with the refinancing of the debt, the Company contributed $455,888 to the TIC increasing the Company's ownership to 50% interest and reducing Sunny Ridge's interest to 50%. The Rockford, IL property was accounted for under the equity method and as of September 30, 2022 it had a value of $1,204,811.

The condensed income statements for the three and nine months ended September 30, 2022 are as follows:

	Three Months ended September 30,				Three Months ended June 30,					Three Months ended March 31,				Nine Months ended September 30,
	2022		2021		2022			2021		2022		2021		2022			2021
Total revenue	$	93,139	$	48,757	$	93,139		$	-	$	93,139	$	-	$	279,417		$	48,757
Total expenses	$	62,581	$	35,862	$	64,213		$	-	$	69,924	$	-	$	196,718		$	35,862
Operating income		30,558		12,895		28,926			-		23,215		-		82,699			12,895
Loss on debt extinguishment		-		-		(31,851	)		-		-		-		(31,851	)		-
Net income	$	30,558	$	12,895	$	(2,925	)	$	-	$	23,215	$	-	$	50,848		$	12,895
GIP, LP's Share	$	16,751	$	4,750	$	(1,462	)	$	-	$	8,552	$	-	$	23,841		$	4,750

The condensed balance sheets of the tenant in common investment as of September 30, 2022 and December 31, 2021, respectively, are as follows:

	As of September 30,		As of June 30,		As of December 31,
	2022		2022		2021
Net real estate investments	$	4,532,624	$	4,562,129	$	4,621,135
Deferred rent asset		6,851		5,270		2,108
Prepaid expenses		858		1,492		522
Due from tenant-in-common		245,579		237,956		47,350
Total Assets	$	4,785,912	$	4,806,847	$	4,671,115
Accounts payable (including related party) and accrued expenses	$	262,214	$	270,343	$	19,292
Prepaid rent		29,900		-		-
Acquired lease intangible liabilities, net		37,419		39,277		42,993
Mortgage loan, net of unamortized debt issuance costs		2,087,794		2,087,466		2,677,446
Total Liabilities	$	2,417,327	$	2,397,086	$	2,739,731
GIP, LP	$	1,204,811	$	1,188,061	$	725,082
SUNNY RIDGE MHP, LLC		1,163,774		1,221,700		1,206,302
Total Tenant in Common Equity	$	2,368,585	$	2,409,761	$	1,931,384
Total Liabilities and Tenant in Common Equity	$	4,785,912	$	4,806,847	$	4,671,115