Promissory Notes

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Promissory Notes

Note 9 – Promissory Notes

The Company had the following promissory notes outstanding as of September 30, 2021 and December 31, 2020, respectively:

			As of September 30,	As of December 31,
			2021	2020
	Interest Rate	Maturity Date
Promissory note issued for $3,407,391 by a financial institution. Note was issued on September 11, 2019 and prepaid without penalty upon the sale of the Walgreen-Cocoa, Florida property on August 31, 2021 which was securing the note.	2.36% adjusted monthly based on 30 day LIBOR plus 225 basis points	9/11/2021	$-	$3,407,391
Promissory note issued for $1,286,664 by a financial institution, interest and principal payments due monthly of approximately $3,800. Note was originally issued on January 15, 2015 and modified on November 30, 2020 and can be prepaid at any time without penalty.  Secured by out Tampa Sherwin-Williams property.	3.72% fixed rate after using SWAP whereas the loan is LIBOR plus 2.75%	8/10/2028	1,286,664	1,286,664
Promissory note issued for $1,275,000 by a financial institution. Note was issued on February 4, 2021 and can be prepaid at any time without penalty. Secured by our GSA-Manteo, North Carolina property.	3.4% adjusted monthly based on 30 day Wall Street Journal Prime Rate with minimum of 3.25%	2/4/2023	1,275,000	-
Promissory note issued for $850,000 by a financial institution. Note was issued on April 21, 2021 and can be prepaid at any time without penalty. Secured by our Irby - Plant City, FL property.	2.75% adjusted monthly based on 30 day Wall Street Journal Prime Rate minus 0.5% with minimum of 3.0% for first 24 months, then U.S. Treasury Securities Rate plus 2.75% with a minimum of 3.25%	12/31/2024	850,000	-
Promissory note issued for $8,260,000 by a financial institution, interest and principal payments due monthly of approximately $41,500. Note was issued on September 30, 2019 and can be prepaid at any time without penalty. Secured by our GSA/Maersk - Norfolk, Virginia property. The interest rate was reduced in March 2021 from 4.25% to 3.5%.	3.50%	9/30/2024	7,861,426	8,022,271
Promissory note issued for $5,216,749 by a financial institution, interest and principal payments due monthly of approximately $27,400. Note was originally issued on October 23, 2017 and modified on September 30, 2019 and can be prepaid at any time without penalty.  Secured by our PRA - Norfolk, Virginia property. The interest rate was reduced in March 2021 from 4.25% to 3.5%.	3.50%	10/23/2024	4,929,070	5,041,935
Promissory note issued for $1,900,000 to a Clearlake Preferred Member, secured by all of the personal and fixture property of the Operating Partnership, interest payments due monthly. Note was issued on December 16, 2019 and was prepaid without penalty on September 30, 2021.	10.00%	12/16/2021	-	1,100,000
Promissory note issued for $11,287,500 by a financial institution, interest only payment is approximately $39,000 and starting April 6, 2021, interest and principal payments due monthly of approximately $55,000. Note was issued on February 11, 2020.  Secured by our Washington, DC, Tampa, FL and Huntsville, AL properties. It cannot be prepaid without a penalty	4.17%	3/6/2030	11,197,268	11,287,500
Less: debt issuance costs, net			(633,647)	(689,190)
			$26,765,781	$29,456,571

The Company amortized debt issuance costs during the three and nine-month periods ended September 30, 2021 and 2020 to interest expense of approximately $30,700 and $94,600 for 2021 and $28,400 and $106,200 for 2020, respectively. The Company paid debt issuance costs for the nine-months ended September 30, 2021 and 2020 of approximately $40,000 and $564,900, respectively.

As of September 30, 2021, the Company had three promissory notes totaling approximately $24.0 million require Debt Service Coverage Ratios (also known as “DSCR”) of 1.25:1.0, one promissory note totaling $1.3 million require DSCR of 1.20:1.0, one promissory note totaling $0.9 million require DSCR of 1.15:1.0 and one promissory note totaling $1.3 million require DSCR of 1.30:1.0. We were in compliance with all covenants as of September 30, 2021.

As of September 30, 2021, the Company’s President has personally guaranteed the repayment of the $11.2 million due under the DC/Tampa/Huntsville loan, the $1.3 million loan secured by our Tampa Sherwin Williams property, the $0.9 million loan secured by our Irby property and the $1.3 million loan secured by our GSA Manteo NC property. The aggregate guaranteed principal amount of these loans total approximately $14.6 million. 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, with an aggregate principal amount of approximately $12.8 million.

The Company modified the Bayport loans in February 2021 for no fees and reduced the associated interest rate from 4.25% to 3.5%. 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 September 30, 2021 are as follows:  

	As of September 30,
	2021
2021 (three months)	$141,575
2022	580,740
2023	1,890,446
2024	12,982,315
2025	251,011
2026 and beyond	11,553,341
	$27,399,428

We intend to repay amounts outstanding under any credit facilities as soon as reasonably possible. No assurance can be given that we will be able to obtain additional credit facilities. We anticipate arranging and utilizing additional revolving credit facilities to potentially fund future acquisitions (following investment of the net proceeds of our offerings), return on investment initiatives and working capital requirements.