Note 6 - Real Estate and Related Assets

9 Months Ended

Sep. 30, 2012

Notes

Note 6 - Real Estate and Related Assets

NOTE 6 – Real Estate and Related Assets

Real estate assets together with real estate related intangible assets and liabilities as of September 30, 2012 consisted of:

	Cost	Useful Life	Accumulated Depreciation / Amortization	Net Book Value
Land	$  1,280,000			$  1,280,000
Buildings	1,130,292	20	$         86,493	1,043,799
Improvements	529,387	7	115,732	413,655
Subtotal real estate assets	2,939,679		202,225	2,737,454
Real estate related intangible assets:
Leases in place value	1,624,052	7	355,043	1,269,009
Unamortized tenant improvement allowances	530,444	12	67,652	462,792
Real estate intangible assets	2,154,496		422,695	1,731,801
Total real estate assets	$  5,094,175		$       624,920	$  4,469,255
Below market lease value acquired	$  (769,175)	12	$      (98,099)	$   (671,076)

Depreciation and amortization expense was $102,850 and $306,312 for the three and nine months ended September 30, 2012, respectively. $16,145 and $48,084 in capitalized below market rents were amortized as an increase to rental income during the three and nine months ended September 30, 2012, respectively.

The Property is 100% leased to the General Services Administration (GSA) of the United States pursuant to a lease dated January 9, 2006.  The initial term of the GSA lease runs from January 18, 2008 until January 18, 2018 with an optional five year renewal period from January 2018 to January 2023.  The base rent during the initial term is $746,464 annually and includes a provision of $123,099 annually for the reimbursement of tenant improvement allowances.  The base rent during the renewal term is $623,365. Although the Company is responsible for Property operating expenses, the lease includes a provision for reimbursement of certain operating expenses that exceed a baseline.  This base is subject to annual adjustment on March 1^st of each year based on the Cost of Living Index (COLI).  The operating expense base was adjusted on March 1, 2012 resulting in an annual increase to the provision for reimbursement in the amount of $6,281.