Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

Note 9 – Debt

The Company had the following mortgage loans outstanding as of December 31, 2022 and December 31, 2021, respectively:

Mortgage Loans Secured By (Tenant-Location)	Loan Amount			Interest Rate				Maturity Date	2022			2021			Debt Service Coverage Ratios ("DSCR") Required
7-11 - Washington, DC; Starbucks-South Tampa, FL; and Pratt & Whitney-Huntsville, Alabama	$	11,287,500	(a)		4.17	%		3/6/2030	$	10,957,829		$	11,150,130			1.25
GSA & Maersk - Norfolk, Virginia		8,260,000			3.50	%		9/30/2024		7,578,304			7,805,524			1.25
PRA Holdings, Inc. - Norfolk, Virginia		5,216,749			3.50	%		10/23/2024		4,728,462			4,889,670			1.25
Sherwin-Williams - Tampa, Florida		1,286,664			3.72	%	(b)	8/10/2028		1,286,664			1,286,664			1.20
GSA - Manteo, North Carolina		928,728	(c)		3.85	%	(d)	3/31/2032		928,728			1,275,000			1.50
Irby Construction - Plant City , Florida		928,728	(c)		3.85	%	(d)	3/31/2032		928,728			850,000			1.50
Best Buy - Grand Junction, Colorado		2,552,644	(c)		3.85	%	(d)	3/31/2032		2,552,644			2,350,000			1.50
Fresenius - Chicago, Illinois		1,727,108	(c)		3.85	%	(d)	3/31/2032		1,727,108			-			1.50
Starbucks - North Tampa, Florida		1,298,047	(c)		3.85	%	(d)	3/31/2032		1,298,047			-			1.50
Kohls - Tucson, Arizona		3,964,745	(c)		3.85	%	(d)	3/31/2032		3,964,745			-			1.50
	$	37,450,913							$	35,951,259		$	29,606,988
Less Debt Issuance Costs, net										(717,381	)		(637,693	)
									$	35,233,878		$	28,969,295

(a) Loan subject to prepayment penalty

(b) Fixed via interest rate swap

(c) One loan in the amount of $11.4 million secured by six properties and allocated to each property based on each property's appraised value.

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

The Company amortized debt issuance costs to interest expense during the twelve months ended December 31, 2022 and 2021 of $118,930 and $120,343, respectively. The Company paid debt issuance costs for the twelve months ended December 31, 2022 and 2021 of $342,647 and $69,780, respectively.

Each mortgage loan requires the Company to maintain certain debt service coverage ratios as noted above. In addition, one mortgage loan, encumbered by six properties and requiring a 1.50 DSCR, requires the Company to maintain a 54% loan to fair market stabilized value ratio. Fair market stabilized value shall be determined by the lender by reference to acceptable guides and indices or appraisals from time to time at its discretion. As of December 31, 2022, the Company was in compliance with all covenants.

The Company’s President and CEO has personally guaranteed the repayment of the $11.0 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, FL mortgage loan. In addition, the Company’s President and CEO has also provided a guaranty of the Borrower’s nonrecourse carveout liabilities and obligations in favor of the lender for the GSA & MAERSK and PRA Holdings, Inc. - Norfolk, VA mortgage loans ("Bayport loans") with an aggregate principal amount of $12.3 million as well as six mortgage loans secured by the remaining properties within the portfolio with an aggregate principal amount of $11.4 million.

During the twelve months ended December 31, 2022, the Company incurred a guaranty fee expense payable to the Company's President and CEO of $128,901 recorded to interest expense. No guaranty fee expense was incurred during the twelve months ended December 31, 2021.

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. 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.

On April 1, 2022, the Company entered into two mortgage loan agreements with an aggregate balance of $13.5 million as of December 31, 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 allocated to each property based on each property's appraised value, 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 twelve months ended December 31, 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 refinanced mortgage loans including a prepayment penalty incurred of $21,000.

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. On September 9, 2022, the Company and AMB combined the prior AMB commitment letters entered into in October 2021 and May 2022 into a single Commitment Letter, and have amended the rate index used for borrowing to be a variable rate equal to the 30-Day CME Term SOFR Rate, plus a margin of 2.40%, adjusted monthly, subject to a floor interest rate of 3.25% per annum. All other terms under the prior commitment letters remained materially the same. As of December 31, 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.

On August 9, 2022 the Company and Operating Partnership entered a Redemption Agreement with a unit holder. As such, the Company recorded an Other payable - related party in the amount of $2,912,300 upon execution of the Redemption Agreement entered into July 20, 2022 and made the first installment payment of $325,000 on September 13, 2022 with a remaining balance of $2,587,300 outstanding as of December 31, 2022.

On October 14, 2022, the Company entered into a loan transaction that is evidenced by a secured non-convertible promissory note to Brown Family Enterprises, LLC, a preferred equity partner and therefore a related party, for $1,500,000 that is due on October 14, 2024, and bears a fixed interest rate of 9%, simple interest. Interest is payable monthly. The loan may be repaid without penalty at any time. The loan is secured by the Operating Partnership’s equity interest in its current direct subsidiaries that hold real estate assets pursuant to the terms of a security agreement between the Operating Partnership and Brown Family Enterprises, LLC.

Minimum required principal payments on the Company’s debt for subsequent years ending December 31 are as follows:

	Mortgage Loans		Other Payable - Related Party		Loan Payable - Related Party		Total as of December 31, 2022
2023	$	785,524	$	777,460	$	-	$	1,562,984
2024		12,427,090		1,809,840		1,500,000		15,736,930
2025		546,280		-		-		546,280
2026		568,514		-		-		568,514
2027		591,656		-		-		591,656
Thereafter		21,032,195		-		-		21,032,195
	$	35,951,259	$	2,587,300	$	1,500,000	$	40,038,559