Real Estate Investments

12 Months Ended

Dec. 31, 2021

(4) Real Estate Investments –

The Partnership leases its properties to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Partnership is responsible for repairs to the structural components of the building, the roof, and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 18 years. The leases provide the tenants with two to six five-year renewal options subject to the same terms and conditions as the primary term.

The Partnership's properties are commercial, single-tenant buildings. The Jared Jewelry store was constructed in 2001 and acquired in 2004. The Family Dollar store was constructed and acquired in 2012. There have been no costs capitalized as improvements subsequent to the acquisitions.

The cost of the property not held for sale and related accumulated depreciation at December 31, 2021 is as follows:


Property	Land		Buildings		Total		Accumulated Depreciation

Family Dollar, Mobile, AL		$300,000		$635,489		$935,489		$200,362

For the years ended December 31, 2021 and 2020, the Partnership recognized depreciation expense of $138,906 and $246,696, respectively.

The following schedule presents the cost and related accumulated amortization of acquired lease intangibles not held for sale at December 31:


		2021			2020
		Cost	Accumulated Amortization		Cost		Accumulated Amortization
In-Place Lease Intangibles (weighted average life of 6 and 70 months, respectively)	$	190,845	181,218	$	1,174,241	$	507,331

Above-Market Lease Intangibles (weighted average life of 6 and 18 months, respectively)		284,566	270,221		284,566		241,525
Acquired Intangible Lease Assets	$	475,411	451,439	$	1,458,807	$	748,856

Acquired Below-Market Lease Intangibles (weighted average life of 0 and 106 months, respectively)	$	0	0	$	444,840	$	70,612

For the years ended December 31, 2021 and 2020, the value of in-place lease intangibles amortized to expense was $55,248 and $115,640, the decrease to rental income for above-market leases was $28,696 and $28,696, and the increase to rental income for below-market leases was $17,650 and $42,368, respectively.

For lease intangibles not held for sale at December 31, 2021, the estimated amortization for the next five years is as follows:


	Amortization Expense for In-Place Lease Intangibles		Decrease to Rental Income for Above-Market Leases		Increase to Rental Income for Below-Market Leases

2022	$	9,627	$	14,345	$	0
2023		0		0		0
2024		0		0		0
2025		0		0		0
2026		0		0		0
	$	9,627	$	14,345	$	0

In March 2021, the Partnership entered into an agreement to sell the Dollar Tree store in Indianapolis, Indiana to an unrelated third party. On April 20, 2021, the sale closed with the Partnership receiving net proceeds of $1,608,689, which resulted in a net gain of $187,451. At the time of sale, the cost and related accumulated depreciation and amortization was $1,739,074 and $317,836, respectively.

In May 2021, the Partnership entered into an agreement to sell the Fresenius Medical Center in Green, Ohio to an unrelated third party. On June 29, 2021, the sale closed with the Partnership receiving net proceeds of $2,560,199, which resulted in a net gain of $725,566. At the time of sale, the cost and related accumulated depreciation and amortization was $2,360,000 and $525,367, respectively.

In May 2021, the Partnership entered into an agreement to sell 2.36 acres of land in Fredericksburg, Virginia to an unrelated third party. Based on its long-lived asset valuation analysis, the Partnership determined the land was impaired. As a result, in the second quarter of 2021, the Partnership recognized real estate impairment of $133,134 to decrease the carrying value to the estimated fair value of $3,022,000. The charge was recorded against the cost of the land. On July 23, 2021, the sale closed with the Partnership receiving net proceeds of $3,010,150, which resulted in a net loss of $11,850. At the time of sale, the cost and related accumulated amortization was $3,032,763 and $10,763, respectively.

In July 2021, the Partnership entered into an agreement to sell its 70% interest in the Staples retail store in Vernon Hills, Illinois to an unrelated third party. Based on its long-lived asset valuation analysis, the Partnership determined the Staples store was impaired. As a result, in the second quarter of 2021, the Partnership recognized real estate impairment of $413,789 to decrease the carrying value to the estimated fair value of $2,156,000. The charge was recorded against the cost of the land and building. On September 10, 2021, the sale closed with the Partnership receiving net proceeds of $2,108,832, which resulted in a net loss of $47,168. At the time of the sale, the cost and related accumulated depreciation and amortization was $3,300,849 and $1,144,849, respectively.

In July 2021, the Partnership entered into an agreement with the tenant of the Jared Jewelry store in Hanover, Maryland to extend the lease term seven years to end on January 21, 2029. As part of the agreement, the annual rent will decrease from $224,340 to $167,500 effective February 1, 2022.

In December 2021, the Partnership entered into an agreement to sell its 50% interest in the Jared Jewelry store in Hanover, Maryland to an unrelated third party. On February 14, 2022, the sale closed with the Partnership receiving net proceeds of approximately $2,464,000, which resulted in a net gain of approximately $1,147,000. At the time of sale, the cost and related accumulated depreciation was $1,989,105 and $672,124, respectively.

For properties owned as of December 31, 2021, the minimum future rent payments required by the leases are as follows:

2022	$	232,200
2023		167,500
2024		167,500
2025		167,500
2026		167,500
Thereafter		348,959
	$	1,251,159

There were no contingent rents recognized in 2021 and 2020.