Promissory Notes

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Promissory Notes

Note 9 – Promissory Notes

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

			As of December 31,			As of December 31,
	Interest Rate	Maturity Date	2021			2020
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.	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 only due monthly of approximately $3,800 until December 2023. Note was originally issued on January 15, 2015 and assumed 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.	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.	Wall Street Journal Prime Rate minus 0.5% with minimum of 3.0% for the first 24 months; thereafter, weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of three years on April 21, 2023, plus 2.75% with a minimum of 3.25%	12/31/2024		850,000			—
Promissory note issued for $2,350,000 by a financial institution. Note was issued on December 28, 2021 and can be prepaid at any time without penalty. Secured by our Best Buy - Grand Junction, CO property.	Wall Street Journal Prime Rate with minimum of 3.25%	12/28/2023		2,350,000			—
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		7,805,524			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		4,889,670			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		11,150,130			11,287,500
Less: debt issuance costs, net				(637,693	)		(689,190	)
			$	28,969,295		$	29,456,571

The Company amortized debt issuance costs during the year ended December 31, 2021 and 2020 to interest expense of approximately $120,300 and $134,900, respectively. The Company paid debt issuance costs for the year ended December 31, 2021 and 2020 of approximately $69,800 and $589,100, respectively.

As of December 31, 2021, we had one promissory note totaling approximately $2.4 million requiring Debt Service Coverage Ratios (also known as “DSCR”) of 1.50:1.0, one promissory note totaling $1.3 million requiring DSCR of 1.30:1.0, three promissory note totaling $23.8 million requiring DSCR of 1.25:1.0, one promissory note totaling $1.3 million requiring DSCR of 1.20:1.0, one promissory note totaling $0.9 million requiring DSCR of 1.15:1.0. We were in compliance with all covenants as of December 31, 2021.

As of December 31, 2021, the Company’s President has personally guaranteed the repayment of the $11.1 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, the $1.3 million loan secured by our GSA Manteo NC property and the $2.4 million loan secured by our Best Buy Grand Junction, CO property. The aggregate guaranteed principal amount of these loans total approximately $16.9 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 (the “Bayport loans”), with an aggregate principal amount of approximately $12.7 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 December 31, 2021 are as follows:  

	As of December 31,
	2021
2022	$	580,740
2023		4,240,446
2024		12,981,450
2025		251,011
2026		261,675
2027 and beyond		11,291,666
	$	29,606,988

On October 26, 2021, the Operating Partnership entered into a Commitment Letter with American Momentum Bank (the “Lender”) for a $25 million master credit facility (the “Facility”) to be used for the acquisition of income producing real estate properties.  Borrowings under the Facility will accrue interest at a variable rate equal to the Wall Street Journal Prime rate, adjusted monthly, subject to a floor interest rate of 3.25% per annum.  At each loan closing under the Facility, the borrower shall pay the Lender a commitment fee equal to 0.50% of the applicable loan amount.  Each loan will have an interest-only payment term for twenty-four months from the applicable loan closing date and all interest and principal outstanding shall be due and payable in full two years from the applicable loan closing date.  Each loan will be secured by the real estate property acquired and the associated rental income and payment will be guaranteed by the Operating Partnership. David Sobelman, the Company’s Chairman, President and Chief Executive Officer, will be required to execute a non-recourse guarantee in connection with each loan that is subject to standard “bad-boy” carve out provisions.  Each loan agreement under the Facility will require the borrower to maintain a debt service coverage ratio of not less than 1.50 to 1.00 over the term of the loan and will contain customary affirmative covenants, negative covenants and events of default.  Should any event of default occur, the loan commitments under the Facility may be terminated and any outstanding borrowings, together with accrued interest, could be declared immediately due and payable.  All loans under the Facility must close before October 26, 2023, two years after the closing date of the initial loan.  The Facility is voidable at the option of the Lender in specified circumstances, including a material adverse change in the Company’s financial condition and upon any changes in management of the Company that are unacceptable to the Lender. As of December 31, 2021, the Company has borrowed approximately $2.4 million under the facility.