DUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20162019

Or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 333-205893
000-55760


MVPTHE PARKING REIT, II, INC.
(Exact name of registrant as specified in its charter)


MARYLAND 47-3945882
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

8880 W. Sunset Road Suite 240, Las Vegas,9130 WEST POST ROAD SUITE 200, LAS VEGAS, NV 89148
(Address (Address of Principal Executive Offices) (Zip Code)

Registrant'sRegistrant’s Telephone Number: (858) 369-7959

Number, including Area Code: (702) 534-5577
Securities registered pursuant to Section 12(b) of the Act:

NoneNone
(Title of each class)classTrading Symbol(s)(Name of each exchange on which registered)registered
N/AN/AN/A

Securities registered pursuant to Section 12(g) of the Act:

NoneCommon Stock, $0.0001 Par Value
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]
Accelerated filer [  ]
Non-accelerated filer [  ]
Smaller reporting company [ X ]
Emerging growth company [ X ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant'sregistrant’s most recently completed second fiscal quarter.

Class  
Market Value as of
June 30, 2016
Common Stock, $0.0001 Par Value $24,359,590
    
There is no established market for the Registrant's shares of common stock. On May 28, 2019, the board of directors of the Registrant approved an estimated net asset value per share of the Registrant's common stock of $25.10. However, current market disruptions relating to COVID-19 have significantly and adversely impacted the market for a wide variety of real estate assets as well as the supply of debt financing for real estate assets. As a result, we believe that the value of our assets might have been impacted since the World Health Organization declared the outbreak of the COVID-19 pandemic on March 11, 2020. However, we cannot determine the ultimate impact, if any, on our estimate of net asset value per share as of the filing date of this report. There were approximately 6,001,300 shares of common stock held by non-affiliates at June 30, 2019, the last business day of the registrant's most recently completed second fiscal quarter.

Indicate the number of shares outstanding of each of the registrant'sregistrant’s classes of common stock, as of the latest practicable date.

Class  
Number of Shares Outstanding
As of March 21, 201730, 2020
Common Stock, $0.0001 Par Value
  2,490,685
7,330,071


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 3828
 
3828
 
3930
 
3930
   
  
 
ITEM 5.
MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
3930
 4532
 
4533
 6250
 
6351
 
8997
 
8997
 
8998
   
  
 
8998
 
94104
 
95107
 
96108
 
99110
   
  
 111
111
  
101112
EXHIBIT INDEX
102

Special Note Regarding Forward-Looking Statements

Certain statements included in this annual report on Form 10-K (this "Annual Report"“Annual Report”) that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential"“may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

·the fact that we have a limited operating history, as our operations began in 2016;
the fact that the Company has a limited operating history, as property operations began in 2016;
·the fact that we have experienced net losses since inception and may continue to experience additional losses;
the fact that the Company has experienced net losses since inception and may continue to experience additional losses;
·our ability to effectively raise and deploy the proceeds raised in our offerings;
the performance of properties the Company has acquired or may acquire or loans the Company has made or may make that are secured by real property;
·the performance of properties the Company has acquired or may acquire or loans the Company has made or may make that are secured by real property;
changes in economic conditions generally and the real estate and debt markets specifically;
·changes in economic conditions generally and the real estate and debt markets specifically;
legislative or regulatory changes, including changes to the laws governing the taxation of real estate investment trusts (“REITs”);
·legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs);
the outcome of pending litigation or investigations;
·potential damage and costs arising from natural disasters, terrorism and other extraordinary events, including extraordinary events affecting parking facilities included in our portfolio;
potential damage and costs arising from natural disasters, terrorism and other extraordinary events, including extraordinary events affecting parking facilities included in the Company’s portfolio;
·
risks inherent in the real estate business, including ability to secure leases or parking management contracts at favorable terms, tenant defaults, potential liability relating to environmental matters and the lack of liquidity of real estate investments;
·competitive factors that may limit our ability to make investments or attract and retain tenants;
competitive factors that may limit the Company’s ability to make investments or attract and retain tenants;
·our ability to generate sufficient cash flows to pay distributions to our stockholders;
the Company’s ability to generate sufficient cash flows to pay distributions to the Company’s stockholders;
·our failure to maintain our status as a REIT;
the Company’s failure to maintain status as a REIT;
·the availability of capital and debt financing generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;
the Company’s ability to successfully integrate pending transactions and implement an operating strategy;
·interest rates; and
the Company’s ability to list shares of common stock on a national securities exchange or complete another liquidity event;
·changes to generally accepted accounting principles, or GAAP.
the availability of capital and debt financing generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions, covenants and requirements of that debt;
changes in interest rates;
changes to generally accepted accounting principles, or GAAP;
the impact on our business and those of our tenants from epidemics, pandemics or outbreaks of an illness, disease or virus (including COVID-19); and
potential adverse impacts from changes to the U.S. tax laws.

Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed upon on any forward-looking statements included herein. All forward-looking statements are made as of the date of this Annual Report, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertakethe Company undertakes no obligation to publicly update or revise any forward-looking statements made after the date of this Annual Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Annual Report, including, without limitation, the risks described under "Risk Factors," the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Annual Report will be achieved.

This Annual Report may include market data and forecasts with respect to the REIT industry. Although the Company is responsible for all of the disclosure contained in this Annual Report, in some cases the Company relies on and refers to market data and certain industry forecasts that were obtained from third party surveys, market research, consultant surveys, publicly available information and industry publications and surveys that the Company believes to be reliable.

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Table of Contents


PART I

ITEM 1. BUSINESS

General

The Parking REIT, Inc., formerly known as MVP REIT II, Inc. (the "Company," "we," "us,"(the “Company,” “we,” “us” or "our"“our”), is a Maryland corporation formed on May 4, 2015 and intendshas elected to be taxed, and has operated in a manner that will allow the Company to qualify as a real estate investment trust ("REIT"(“REIT”) for U.S. federal income tax purposes beginning with the taxable year endingended December 31, 2016. As of2017; therefore, it is the Company’s intention to file its income tax return as a REIT for the year ended December 31, 2016, the Company ceased all selling efforts for the initial public offering (the "Offering") of its common stock, $0.0001 par value per share, at $25.00 per share, pursuant to a registration statement on Form S-11 filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended.  As of December 31, 2016, the Company raised approximately $56.4 million in the Offering before payment of deferred offering costs of approximately $1.1 million, contribution from the Sponsor of approximately $1.1 million and cash distributions of approximately $274,000.  The Company has also registered $50 million in shares of common stock for issuance pursuant to a distribution reinvestment plan (the "DRIP") under which common stock holders may elect to have their distributions reinvested in additional shares of common stock at $25.00 per share.

On November 1, 2016, the Company commenced a private placement offering to accredited investors for up to $50 million in shares (the "Preferred Shares") of the Company's Series A Convertible Redeemable Preferred Stock, par value $0.0001 per share, together with warrants (the "Warrants") to acquire the Company's common stock, par value $0.0001 per share (the "Common Stock," together with the Preferred Shares and the Warrants, collectively, the "Securities"), pursuant to the terms set forth in a private placement memorandum, dated as of November 1, 2016  (the "Private Placement"). The maximum offering amount shall not exceed, at any time during the offering, 60% of the total value of the Common Stock issued and outstanding.  As of March 21, 2017, the Company's Common Stock issued and outstanding totaled 2,490,685 million Shares.  The Private Placement is expected to continue until all of the Shares are sold or two years from the date of the first purchase of the Shares, whichever occurs first.  The Securities have not been registered under the Securities Act of 1933, as amended (the "Act") and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration provided by Section 4(a) (2) of the Securities Act and by Rule 506(c) of Regulation D promulgated thereunder by the Securities and Exchange Commission (the "SEC"). The Company has filed file a Form D with the SEC in accordance with the requirements of Regulation D.2019.

The Company was formed to focus primarily on investments in parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada. No more than 10% of the proceeds of the Offering will be used for investment in Canadian properties.  States. To a lesser extent, the Company may also invest in parking properties that contain other than parking facilities. MVP Realty Advisor, LLC (the "Advisor"), is the Company's affiliated advisor.sources of rental income, potentially including office, retail, storage, residential, billboards or cell towers.

The Company is the sole general partner of MVP REIT II Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”). The Company owns substantially all of its assets and conducts substantially all of its operations through the Operating Partnership. The Company’s wholly owned subsidiary, MVP REIT II Holdings, LLC, is the sole limited partner of the Operating Partnership. The operating agreement provides that the Operating Partnership is operated in a manner that enables the Company to (1) satisfy the requirements to qualify and maintain qualification as a REIT for federal income tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership is not classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Code”), which classification could result in the Operating Partnership being taxed as a corporation.

The Company utilizes an Umbrella Partnership Real Estate Investment Trust ("UPREIT"(“UPREIT”) structure to enable usthe Company to acquire real property in exchange for limited partnership interests in the Company's operating partnershipOperating Partnership from owners who desire to defer taxable gain that would otherwise normally be recognized by them upon the disposition of their real property or transfer of their real property to usthe Company in exchange for shares of the Company'sCompany’s common stock or cash.

As part of the Company's initial capitalization, the Company sold 8,000 shares of common stock for $200,000 to MVP Capital Partners II, LLC ("MVP CP II" or the "Sponsor"), an entity owned sixty percent (60%) by Vestin Realty Mortgage II, Inc., a Maryland corporation and NASDAQ-listed company that has provided notice of its intent to delist from Nasdaq on or about March 30, 2017 ("VRM II"), and the remaining forty percent (40%) is owned by Vestin Realty Mortgage I, Inc., a Maryland corporation and NASDAQ-listed company ("VRM I"), both which are managed by Vestin Mortgage, LLC.  The Company also sold 5,000 shares of common stock to VRM II in the Offering.
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The Company'sCompany’s former advisor is MVP Realty Advisors, LLC, dba The Parking REIT Advisors (the "Advisor"“former Advisor”), a Nevada limited liability company, which is owned 60% by Vestin Realty Mortgage II, Inc. (“VRM IIII”) and 40% by Vestin Realty Mortgage I, Inc. (“VRM I. TheI”). Prior to the Internalization (as defined below), the former Advisor iswas responsible for managing the Company'sCompany’s affairs on a day-to-day basis and for identifying and making investments on the Company'sCompany’s behalf pursuant to ana second amended and restated advisory agreement betweenamong the Company, the Operating Partnership and the former Advisor (the "Advisory Agreement"“Amended and Restated Advisory Agreement”). The Company has no paid employees.VRM II and VRM I are Maryland corporations that trade on the OTC pink sheets and were managed by Vestin Mortgage, LLC, an affiliate of the former Advisor, prior to being internalized in January 2018.

As part of March 21, 2017, the Company had raised approximately $60.1 and $2.7 million fromCompany’s initial capitalization, 8,000 shares of common stock were sold for $200,000 to an affiliate of the Company's common and preferred stock offerings, respectively, and purchased approximately $114 million in parking assets.former Advisor.

The Company has retained the Advisor to manage its affairs on a day-to-day basis.  During 2016, the Company had the following highlights:

Investment Objectives

The Company'sCompany’s primary investment objectives are to:

·preserve, protect and return stockholders' capital contributions;
preserve capital;
·provide periodic distributions once the Company has acquired a substantial portfolio of investments; and
·realize growth in the value of the Company's investments.

generate current income; and

The Company cannot assure stockholders that the Company will attain these objectives or that the value of the Company's assets will not decrease. Furthermore, within the investment objectives and policies, the Advisor will have substantial discretion with respect to the selection of specific investments and the purchase and sale of the Company's assets. The Company's board of directors will review investment policies at least annually to determine whether the investment policies continue to be in the best interests of stockholders.

The charter does not require the Company to consummate a transactionexplore strategic alternatives to provide liquidity to stockholders, on any certain date or at all; therefore,including sales of assets, potential liquidation of the Company, may continue indefinitely. We expect that our boarda sale of directors will evaluatethe Company or a portion thereof or a strategic business combination.

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In mid-2019, the Company engaged financial and legal advisors and began to explore a broad range of potential strategic alternatives to provide liquidity to stockholders.  The Company is currently exploring certain strategic alternatives, duringincluding potential sales of assets, a potential sale of the second quarter of 2017, subject to then prevailing market conditions. ThereCompany or a portion thereof, a potential strategic business combination or a potential liquidation.  However, there can be no assurance that the Board’s exploration of potential strategic alternatives will result in any change of strategy or transaction being entered into or consummated or, if a transaction is undertaken, as to its terms, structure or  timing. In addition, the value received in any potential strategic alternative would likely be less than the net asset value (“NAV”) most recently estimated by the Company’s board of directors. Our assets have been valued based upon appraisal standards and the values of our assets using these methods are not required to reflect market value under those standards and will not necessarily result in a reflection of fair value under generally accepted accounting principles. Further, different parties using different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could derive a different estimated NAV per share, which could be significantly different from the estimated NAV per share determined by our board of directors. The estimated NAV per share is not a representation or indication that, among other things a stockholder would ultimately realize distributions per share equal to the estimated NAV per share upon liquidation of assets and settlement of our liabilities or upon a sale of our company or a third party would offer the estimated NAV per share in an arms-length transaction to purchase all or substantially all of our shares of common stock. For example, we will cause a liquidity eventexpect to occur.incur additional costs in connection with ongoing litigation, the SEC investigation discussed in Note P - Legal in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K and legal and consulting fees associated with pursuing any potential strategic alternatives, which in the aggregate may be material, none of which was taken in consideration when the board of directors determined the prior estimated NAV per share. Please see our Current Reports on Form 8-K filed with the SEC on May 28, 2019 for additional information regarding the NAV calculation, as well as “Item 1A. Risk Factors—Risks Related to an Investment in the Company–Stockholders should not rely on the estimated NAV per share as being an accurate measure of the current value of our shares of common stock” in this Annual Report on Form 10-K.

Prior Investment Strategy

The Company'sCompany’s investment strategy will focushas historically focused primarily on parking lots, parking garagesacquiring, owning and other parking structures throughout the United States and Canada. To a lesser extent, the Company may also invest in properties other than parking facilities. No more than 10% of the proceeds of the Offering will be used for investment in Canadian properties.

Parking Facilities

The Company was formed to focus primarily on investments inmanaging parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada.  NoThe Company historically focused primarily on investing in income-producing parking lots and garages with air rights in central business districts. In building its current portfolio, the Company sought geographically targeted investments that present key demand drivers, that were expected to generate cash flows and provide greater predictability during periods of economic uncertainty. Such targeted investments include, but are not limited to, parking facilities near one or more than 10% of the proceeds of this offering will be used for investment in Canadian properties.  To a lesser extent, the Company may also invest in properties other than parking facilities.following demand drivers:

Downtown core
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Government buildings and courthouses
Sporting venues
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Hospitals
Hotels

The Company believes parking facilities possess attractive characteristics not foundHowever, as a result of the current COVID-19 pandemic, among other factors, such demand drivers have been and are expected to be significantly diminished for an indeterminate period of time. Many state and local governments are currently restricting public gatherings or requiring people to shelter in place, which has in some cases eliminated or severely reduced the demand for parking. For more information on the effect of COVID-19 on our business, see “Item 1A. Risk Factors—Risks Related to Our Business—Our business and those of our tenants may be adversely affected by epidemics, pandemics or other commercial real estate investments, including the following:
•generally can be leased to any number of parking operators, which gives the property owner flexibility and pricing power
•if a tenant that operates a facility terminates a lease, replacement operators can generally be found quickly, minimizing any dark period;
•generally, no leasing commissions;
•generally, no tenant improvement requirements;
•relatively low capital expenditures; and
•in light of the relatively low up-front costs, an enhanced opportunity for geographic diversification.
outbreaks.”

Moreover, the Company believes the REIT industry is evolving, with more REITs moving towards specializing in particular types of properties or property location rather than building a diversified portfolio of a variety of property types and locations. As a result, the Company believes that focusing the portfolio on parking facilities would enhance stockholder value through specialization that could distinguish the Company from other REITs in the marketplace. The Company also believes that a parking-focused investment strategy will enhance the value of the portfolio upon a sale, merger or listing of the Company's shares on a national securities exchange at the time that the Company's board of directors determines to pursue a transaction that would provide liquidity to stockholders, or a liquidity event.

Other Real Property Investments

The Company may also seek to invest in properties other than parking facilities. The Company may also enter into various leases for these properties. The terms and conditions of any lease the Company enters into with the Company's tenants may vary substantially. However, the Company expects that leases will be the type customarily used between landlords and tenants in the geographic area where the property is located.

Prior Investment Criteria

The Company will focushistorically focused on acquiring properties that meetmet the following criteria:

·properties that generate current cash flow;
properties that were expected to generate current cash flow;
·properties that are located in populated metropolitan areas; and
properties that were expected to be located in populated metropolitan areas; and
·while the Company may acquire properties that require renovation, the Company will only do so if the Company anticipates the properties will produce income within 12 months of the Company's acquisition.
properties were expected to produce income within 12 months of the Company’s acquisition.

TheAs noted above, the Company does not currently expect to make any additional acquisitions unless and until it is able to sell some of its existing assets, and then only after ensuring that it has sufficient liquidity resources.  In the unlikely event of a future acquisition, the Company would expect the foregoing criteria areto serve as guidelines, however, Management and the Advisor andCompany’s board of directors may vary from these guidelines to acquire properties which they believe represent value opportunities.
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The Advisor will have substantial discretion with respect to

Management Internalization

On March 29, 2019, the selection of specific properties. The Company's board of directors has delegated to the Advisor the authority to make certain decisions regarding investments consistent with the investment guidelines and borrowing policies approved by the Company's board of directors and subject to the limitations in the charter, advisory agreement,Company and the direction and oversightformer Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 (the “Internalization”). Since their formation, under the supervision ofthe Company's board of directors. There is no limitation on the number, size or type of properties that the Company may acquire or on the percentage of net offering proceeds that may be invested in any particular property type or single property. The number and mix of properties will depend upon real estate market conditions and other circumstances existing at the time of acquisition and the amount of proceeds raised in the Offering. Moreover, depending upon real estate market conditions, economic changes and other developments, the board of directors may change(the “Board of Directors”), the targeted investment focusformer Advisor has been responsible for managing the operations of the Company and MVP REIT, Inc., a Maryland corporation (“MVP I”), which merged with a wholly owned indirect subsidiary of the Company in December 2017. As part of the Internalization, among other things, the Company agreed with the former Advisor to (i) terminate the Second Amended and Restated Advisory Agreement, dated as of May 26, 2017 and, for the avoidance of doubt, the Third Amended and Restated Advisory Agreement, dated as of September 21, 2018, which by its terms would have become effective only upon a listing of the Company’s common stock on a national securities exchange (collectively, the “Management Agreements”), each entered into among the Company, the former Advisor and MVP REIT II Operating Partnership, LP (the “Operating Partnership”); (ii) extend employment to the executives and other employees of the former Advisor; (iii) arrange for the former Advisor to continue to provide certain services with respect to outstanding indebtedness of the Company and its subsidiaries; and (iv) lease the employees of the former Advisor for a limited period of time prior to the time that such employees become employed by the Company.

Contribution Agreement

On March 29, 2019, the Company entered into a Contribution Agreement (the “Contribution Agreement”) with the former Advisor, Vestin Realty Mortgage I, Inc. (“VRTA”) (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc. (“VRTB”) (solely for purposes of Section 1.01(c) thereof) and Shustek (solely for purposes of Section 4.03 thereof). In exchange for the Contribution, the Company agreed to issue to the former Advisor 1,600,000 shares of Common Stock as consideration (the “Internalization Consideration”), issuable in four equal installments. The first and second installments of 400,000 shares of Common Stock per installment were issued on April 1, 2019 and December 31, 2019, respectively. See Note S — Deferred Management Internalization in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information. The remaining installments will be issued on December 31, 2020 and December 31, 2021 (or if December 31st is not a business day, the day that is the last business day of such year). If requested by the Company in connection with any contemplated capital raise by the Company, the former Advisor has agreed not to sell, pledge or supplementotherwise transfer or dispose of any of the Internalization Consideration for a period not to exceed the lock-up period that focusotherwise would apply to include other targeted investments from time to time without stockholder consent.
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stockholders of the Company in connection with such capital raise. See the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 3, 2019 for more information regarding the Management Internalization.

Concentration

The Company had sixfifteen parking tenants as of December 31, 2016.2019 and 2018. One tenant, Standard Parking + ("SP Plus Corporation (Nasdaq: SP) (“SP+"”), represented a concentration60.8% of the Company’s base parking rental revenue for the year ended December 31, 2016,2019.

SP+ is one of the largest providers of parking management in regards to parking base rental revenue.  During the year endedUnited States. As of December 31, 2016,2019, SP+ accounted for 42%, of the parking base rental revenue.  managed approximately 3,100 locations in North America.

Below is a table that summarizes base parking rent by tenant:tenant for the years ended December 31, 2019 and 2018:

  For the Years Ended December 31, 
Parking Tenant 2019  2018 
SP +  
60.8
%
  
57.3
%
Premier Parking  
14.8
%
  
17.1
%
ISOM Mgmt  
3.9
%
  
4.3
%
ABM  
3.9
%
  
4.6
%
Interstate Parking  
2.9
%
  
2.8
%
342 N. Rampart  
2.9
%
  
2.6
%
Denison  
2.7
%
  
2.5
%
Lanier  
2.4
%
  
2.4
%
St. Louis Parking  
2.0
%
  
2.2
%
Premium Parking  
1.2
%
  
--
 
TNSH, LLC  
1.1
%
  
0.6
%
Riverside Parking  
0.9
%
  
1.0
%
BEST PARK  
0.2
%
  
1.5
%
Denver School  
0.2
%
  
0.2
%
Secure  
0.1
%
  
0.1
%
PCAM, LLC  
--
   
0.8
%
* During June 2018 Premier Parking acquired iPark Services. Subsequent to the acquisition Premier and iPark continue to operate under their original company names.
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Parking Tenant% of Total
SP +42.44%
ABM27.96%
Interstate Parking12.82%
Premier Parking10.92%
Riverside Parking4.49%
iPark Services1.37%
Grand Total100.00%


In addition, the Company had concentrations in various cities based on parking rental revenue for the years ended December 2019 and 2018, as well as concentrations in various cities based on the real estate the Company owned as of December 31, 2019 and 2018. The below tables summarize this information by city.

City Concentration for Parking Rental Revenue 
  For the Years Ended December 31, 
  2019  2018 
Detroit  
22.6
%
  
18.2
%
Houston  
11.7
%
  
13.3
%
Cincinnati  
9.3
%
  
9.2
%
Fort Worth  
7.0
%
  
8.1
%
Indianapolis  
6.1
%
  
6.5
%
Cleveland  
5.8
%
  
5.3
%
St. Louis  
5.0
%
  
5.4
%
Honolulu  
4.3
%
  
2.6
%
Lubbock  
3.9
%
  
4.2
%
Milwaukee  
3.7
%
  
3.7
%
Minneapolis  
3.6
%
  
4.3
%
Nashville  
3.1
%
  
3.5
%
St Paul  
2.9
%
  
2.7
%
New Orleans  
2.9
%
  
2.7
%
San Jose  
2.0
%
  
2.4
%
Bridgeport  
1.9
%
  
2.3
%
Memphis  
1.4
%
  
1.6
%
Louisville  
0.9
%
  
1.0
%
Denver  
0.7
%
  
0.8
%
Ft. Lauderdale  
0.4
%
  
0.6
%
Wildwood  
0.3
%
  
0.4
%
Clarksburg  
0.3
%
  
0.3
%
Canton  
0.2
%
  
0.3
%
Kansas City  
--
   
0.6
%
Real Estate Investment Concentration by City 
  As of December 31, 
   2019   2018 
Detroit  
17.7
%
  
17.6
%
Houston  
12.1
%
  
11.9
%
Fort Worth  
8.8
%
  
8.8
%
Cincinnati  
8.8
%
  
8.7
%
Honolulu  
6.8
%
  
6.7
%
Cleveland  
6.3
%
  
6.2
%
Indianapolis  
5.8
%
  
5.8
%
St Louis  
4.4
%
  
4.4
%
Minneapolis  
4.3
%
  
4.4
%
Lubbock  
4.3
%
  
3.5
%
Milwaukee  
3.9
%
  
3.8
%
Nashville  
3.7
%
  
3.7
%
St Paul  
2.7
%
  
2.7
%
Bridgeport  
2.6
%
  
2.6
%
New Orleans  
2.6
%
  
2.6
%
Memphis  
1.3
%
  
1.5
%
San Jose  
1.1
%
  
1.2
%
Denver  
1.0
%
  
1.0
%
Louisville  
1.0
%
  
1.0
%
Wildwood  
0.4
%
  
0.4
%
Clarksburg  
0.2
%
  
0.2
%
Canton  
0.2
%
  
0.2
%
Fort Lauderdale  
--
   
1.1
%

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Economic Dependency

UnderPrior to the Internalization, under various agreements, the Company has engaged or will engage the former Advisor and its affiliates to provide certain services that arewere essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions,services, the sale of shares of the Company's common stockCompany’s securities available for issue,issuance, as well as other administrative responsibilities for the Company, including accounting services and investor relations. The Company also depend upon VRM I and VRM II,In addition, the ownersSponsor paid selling commissions in connection with the sale of the Company’s shares in the Common Stock Offering and the former Advisor to continue to supportpaid the Company’s organization and fund the Company's costs and expensesoffering expenses.

As a result of these relationships, prior to the Internalization, the Company iswas wholly dependent upon the former Advisor and its affiliates, including VRM I and VRM II. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.affiliates.

Competition

Outside of affiliates, theThe Company is unaware of any REITs in the United States or Canada that invest predominantly in parking facilities; nevertheless, the Company has significant competition with respect to the acquisition of real property. Competitors include other REITs, owners and managers of parking facilities, private investment funds, hedge funds and other investors, many of which have significantly greater resources. The Company may not be able to compete successfully for investments.investments, particularly in light of the Company’s lack of liquidity available for investments which would preclude the Company from making any additional investments unless it sells some of its existing assets and enhances existing liquidity resources. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If the Company pays higher prices for investments the returns will be lower, and the value of assets may not increase or may decrease significantly below the amount paid for such assets.

AnyThe Company’s parking facilities acquired or invested in will face intense competition, which may adversely affect rental and fee income. The Company believes that competition in parking facility operations is intense. The relatively low cost of entry has led to a strongly competitive, fragmented market consisting of competitors ranging from single facility operators to large regional and national multi-facility operators, including several public companies. In addition, any parkingthe Company’s facilities acquired may compete with building owners that provide on-site paid parking. Many of the competitors have more experience in owning and operating parking facilities. Moreover, some of the competitors will have greater capital resources, greater cash reserves, less demanding rules governing distributions to stockholders and a greater ability to borrow funds. Competition for investments may reduce the number of suitable investment opportunities available, may increase acquisition costs and may reduce demand for parking facilities, all of which may adversely affect operating results.

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In addition, the Company may compete against VRM I and VRM II, both of which are managed by affiliates of the Company’s Sponsor and the former Advisor, for the acquisition of investments to the extent that the Company is able to pursue acquisition in the future. The Company believes this potential conflict is mitigated, in part, by the Company's focus on parking facilities as its core investments, while the investment strategy of VRM I and VRM II focuses on acquiring office buildings and other commercial real estate and loans secured by commercial real estate.

Income Taxes

TheCommencing with the taxable year ended December 31, 2017, the Company believes it has been organized and conductshas conducted its operations to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the "Code"),.  The Company expects to qualify as a REIT commencing with the taxable year ending December 31, 2016. Code. A REIT is generally not subject to federal income tax on that portion of its REIT taxable income ("Taxable Income"), which is distributed to its stockholders provided that at least 90% of Taxable Incomesuch taxable income is distributed and provided that certain other requirements are met. The Company's Taxable IncomeCompany’s REIT taxable income may substantially exceed or be less than the Company'sincome calculated according to GAAP. In addition, the Company will be subject to corporate income tax to the extent that less than 100% of the net taxable income as determined based on GAAP, because, differences in GAAP and taxableis distributed, including any net income consist primarily of allowances for loan losses or doubtful account, write-downs on real estate held for sale, amortization of deferred financing cost, capital gains and losses, and deferred income.gain.

A tax benefit from anThe Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position may be recognized whenfor recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of any related appeals or litigation process, based onprocesses, if any. The second step is to measure the technical merits. Based ontax benefit as the Company's evaluation,largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has concluded that there are no significantnot recorded any uncertain tax positions requiring recognitionas of December 31, 2019.

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A full valuation allowance for deferred tax assets was provided since the Company believes that it is more likely than not that it will not realize the benefits of its deferred tax assets. A change in circumstances may cause the Company to change its judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized. The Company would generally report any change in the valuation allowance through its income statement in the period in which such changes in circumstances occur. Because the Company is a REIT, it will generally not be subject to corporate level federal income taxes on earnings distributed to the financial statements.Company’s stockholders and therefore may not realize any benefit from deferred tax assets arising during 2019 or any prior period in which a valid REIT election was in effect. The netCompany intends to distribute at least 100% of its taxable income tax provisionannually and intends to do so for the tax year ended December 31, 2016 was approximately zero.2019 and in all future periods. The Company has placed a full valuation allowance on all of its deferred tax assets, and thus no asset is recorded on the Company’s balance sheet.

Regulations

The Company'sCompany’s investments are subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. The Company intends to obtain all permits and approvals necessary under current law to operate the Company'sCompany’s investments.

EnvironmentalReview of the Company’s Policies

As an ownerThe Company’s board of directors, including the independent directors, has reviewed the policies described in this Annual Report and determined that they are in the best interest of the Company’s stockholders because: (1) they increase the likelihood that the Company will be able implement and execute the Company’s business strategies; (2) the Company’s executive officers and directors have expertise with the type of real estate investments the Company is subject seeks; and (3) borrowings should enable the Company to various environmental lawspurchase assets and earn rental income more quickly, thereby increasing the likelihood of federal, state and local governments. In particular, under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liablegenerating income for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the Company's ownership of parking facilities, the Company may be potentially liable for any such costs.

The Company does not believe that compliance with existing laws will have a material adverse effect on the Company's financial condition or results of operations. However, the Company cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which the Company holds an interest, or on properties that may be acquired directly or indirectly in the future.Company’s stockholders and preserving stockholder capital.

Employees

The Company does not currently have any had approximately 16 employees nor does as of December 31, 2019. Prior to July 1, 2019 the Company currently intend to hire any employees who will be compensated directly by us. The Company relies on employees of the Advisor and its affiliates, subject to the supervision of the Company's board of directors, to manage the Company's day-to-day activities, implement the Company's investment strategy and provide management, acquisition, advisory and administrative services. had no employees.

Available Information

The Company is subject to the reporting and information requirements of the Securities Exchange Act of 1934, or the Exchange Act,as amended (the “Exchange Act”), and, as a result, file files the Company'sCompany’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information with the SEC.SEC from time to time. The SEC maintains a website (http://www.sec.gov) that contains the Company'sCompany’s annual, quarterly and current reports, proxy and information statements and other information the Company files electronically with the SEC.SEC from time to time. Access to these filings is free of charge and can be accessed on the Company'sCompany’s website, www.mvpreitii.com.
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www.theparkingreit.com. The information on, or accessible through, the Company’s website is not incorporated into and does not constitute a part of this Annual Report or any other report or document the Company files with or furnishes to the SEC from time to time.

ITEM 1A. RISK FACTORS

The following are some of the risks and uncertainties that could cause the Company's actual results to differ materially from those presented in the forward-looking statements. The risks and uncertainties described below are not the only ones the Company faces but do represent those risks and uncertainties that the Company believes are material. Additional risks and uncertainties not presently known or that are currently deemed immaterial may also harm the business.

Risks Related to an Investment in the Company

There are a number of pending legal matters involving us and our affiliates, which could distract our officers from attending to the Company's business and could have a material adverse effect on the Company.

The pending investigations and legal proceedings involving us, and our affiliates could harm the reputation of the Company and may distract our management from attending to the Company's business. The adverse publicity arising out of the pendency of such investigations or proceedings could impair our ability to raise additional capital or pursue liquidity transactions as it could make the Company less attractive to potential counterparties. We maintain insurance in such amounts and with such coverage and deductibles as management believes is reasonable. However, there can be no assurance that our insurance will be sufficient to fully cover all potential liabilities from any such proceedings. Accordingly, our failure to successfully defend or settle such legal proceedings could result in liability that, to the extent not covered by insurance, could have an adverse effect on our business, financial condition, results of operations and cash flow. The loss of key personnel or circumstances causing such personnel to otherwise become unavailable to manage our business, would result in the loss of experience, skill, resources, relationships and contacts of individuals that we believe are important to our investment and operating strategies.

-7-

On March 12, 2019, stockholder SIPDA Revocable Trust (“SIPDA”) filed a purported class action complaint in the United States District Court for the District of Nevada, against the Company and certain of its current and former officers and directors. SIPDA filed an Amended Complaint on October 11, 2019. The Amended Complaint purports to assert class action claims on behalf of all public shareholders of the Company and MVP I between August 11, 2017 and April 1, 2019 in connection with the (i) August 2017 proxy statements filed with the SEC to obtain shareholder approval for the merger of the Company and MVP I (the “proxy statements”), and (ii) August 2018 proxy statement filed with the SEC to solicit proxies for the election of certain directors (the “2018 proxy statement”). The Amended Complaint alleges, among other things, that the 2017 proxy statements failed to disclose that two major reasons for the merger and certain charter amendments implemented in connection therewith were (i) to facilitate the execution of an amended advisory agreement that allegedly was designed to benefit Mr. Shustek financially in the event of an internalization and (ii) to give Mr. Shustek the ability to cause the Company to internalize based on terms set forth in the amended advisory agreement. The Amended Complaint further alleges, among other things, that the 2018 proxy statement failed to disclose the Company’s purported plan to internalize its management function.

The Amended Complaint alleges, among other things, (i) that all defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, by disseminating proxy statements that allegedly contain false and misleading statements or omit to state material facts; (ii) that the director defendants violated Section 20(a) of the Exchange Act; and (iii) that the director defendants breached their fiduciary duties to the members of the class and to the Company.

The Amended Complaint seeks, among other things, unspecified damages; declaratory relief; and the payment of reasonable attorneys' fees, accountants' and experts' fees, costs and expenses.

On June 13, 2019, the court granted SIPDA’s motion for Appointment as Lead Plaintiff. The litigation is still at a preliminary stage. On January 9, 2020, the Company and the Board of Directors moved to dismiss the Amended Complaint.  The Company and the Board of Directors have reviewed the allegations in the Amended Complaint and believe the claims asserted against them in the Amended Complaint are without merit and intend to vigorously defend this action.

On May 31, 2019, and June 27, 2019, alleged stockholders filed class action lawsuits alleging direct and derivative claims against the Company, certain of our officers and directors, MVP Realty Advisors, Vestin Realty Mortgage I, and Vestin Realty Mortgage II in the Circuit Court for Baltimore City, captioned Arthur Magowski v. The Parking REIT, Inc., et. al, No. 24-C-19003125 (filed on May 31, 2019) (the “Magowski Complaint”) and Michelle Barene v. The Parking REIT, Inc., et. al, No. 24-C-19003527 (filed on June 27, 2019) (the “Barene Complaint”).

The Magowski Complaint asserts purportedly direct claims on behalf of all stockholders (other than the defendants and persons or entities related to or affiliated with any defendant) for breach of fiduciary duty and unjust enrichment arising from the Company’s decision to internalize its advisory function. In this Complaint, Plaintiff Magowski asserts that the stockholders have allegedly been directly injured by the internalization and related transactions. The Barene Complaint asserts both direct and derivative claims for breach of fiduciary duty arising from substantially similar allegations as those contained in the Magowski Complaint. The purportedly direct claims are asserted on behalf of the same class of stockholder as the purportedly direct claims in the Magowski Complaint, and the derivative claims in the Barene Complaint are asserted on behalf of the Company.

On September 12 and 16, 2019, the defendants filed motions to dismiss the Magowski and Barene complaints, respectively. The Magowski and Barene Complaints seek, among other things, damages; declaratory relief; equitable relief to reverse and enjoin the internalization transaction; and the payment of reasonable attorneys' fees, accountants' and experts' fees, costs and expenses. The actions are at a preliminary stage. The Company and the board of directors intend to vigorously defend against these lawsuits.

The Magowski Complaint also previewed that a stockholder demand would be made on the Board to take action with respect to claims belonging to the Company for the alleged injury to the Company. On June 19, 2019, Magowski submitted a formal demand letter to the Board asserting the same alleged wrongdoing as alleged in the Magowski Complaint and demanding that the Board investigate the alleged wrongdoing and take action to remedy the alleged injury to the Company. The demand includes that claims be initiated against the same defendants as are named in the Magowski Complaint. In response to this stockholder demand letter, on July 16, 2019, the Board established a demand review committee of one independent director to investigate the allegations of wrongdoing made in the letter and to make a recommendation to the Board for a response to the letter.  On September 27, 2019, the Board replaced the demand review committee with a special litigation committee. The special litigation committee is responsible for investigating the allegations of wrongdoing made in the letter and making a final determination regarding the allegations. The work of the special litigation committee is on-going.

The SEC is conducting an investigation relating to the Parking REIT. In June 2019, the SEC issued subpoenas to the Company and its chairman and chief executive officer Michael V. Shustek. In connection with each subpoena, the SEC stated that: “this investigation is a non-public, fact-finding inquiry. We are trying to determine whether there have been any violations of the federal securities laws. The investigation and the subpoena do not mean that we have concluded that the recipient of the subpoena or anyone else has violated the law. Also, the investigation does not mean that we have a negative opinion of any person, entity or security.” The Company has received additional requests for information and expects to receive more in the future. The Company and Mr. Shustek intend to cooperate fully with the SEC in this matter. However, the Company cannot predict the outcome or the duration of the SEC investigation or any other legal proceedings or any enforcement actions or other remedies, if any, that may be imposed on Mr. Shustek, the Company or any other entity arising out of the SEC investigation.
-8-

Our business and those of our tenants may be adversely affected by epidemics, pandemics or other outbreaks.
Epidemics, pandemics or other outbreaks of an illness, disease or virus (including COVID-19) that affect areas in which our tenants operate or in which our properties are located, and actions taken to contain or prevent their further spread, may have a material and adverse impact on general commercial activity, the financial condition, results of operations and liquidity of us and our tenants.  In particular, many of our properties are located near government buildings and sports centers, which depend in large part on customer traffic, and conditions that lead to a decline in customer traffic will have a material and adverse impact on those businesses.  Several such conditions already exist and may intensify.  Many state and local governments are currently restricting public gatherings or requiring people to shelter in place, which has in some cases eliminated or severely reduced the demand for parking.  Such events are adversely impacting and may continue to adversely impact our tenants’ sales and/or cause the temporary closure of our tenants’ businesses, which could significantly disrupt or cause a closure of their operations and, in turn, significantly impact or eliminate the rental revenue we generate from our leases with them. In particular, a majority of the Company’s property leases call for additional percentage rent, which will be adversely impacted by a decline in the demand for parking. We are in preliminary discussions with some of our tenants and currently expect to grant relief to some our tenants to defer rent payments as a result of their estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance we will reach an agreement with any tenant or if an agreement is reached, that any such tenant will be able to repay any such deferred rent in the future. Epidemics, pandemics or other outbreaks of an illness, disease or virus could also cause our employees and those of our tenants, vendors or other business on which we rely to avoid reporting for work at their respective places of employment, which could adversely affect our ability and their respective abilities to adequately manage our and their respective businesses. In addition, risks related to epidemics, pandemics or other outbreaks of an illness, disease or virus have begun (and may continue) to adversely affect the economies in impacted countries, including the United States, and the global financial markets, including the global debt and equity capital markets, which have begun (and may continue) to experience significant volatility, potentially leading to an economic downturn that could adversely affect our and our tenants’ respective businesses, financial condition, liquidity, results of operations and prospects.  The ultimate extent of the impact of any epidemic, pandemic or other outbreak of an illness, disease or virus on our business, financial condition, liquidity, results of operations and prospects will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemics, pandemics or other outbreaks of an illness, disease or virus and actions taken to contain or prevent their further spread, among others. These and other potential impacts of epidemics, pandemics or other outbreaks of an illness, disease or virus could therefore materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.
The Company will need to improve cash flow from operations or through a sale of assets to avoid a future liquidity shortfall.
The Company has significantly limited liquidity.  Absent operational improvements or additional funds from an asset sale, the Company could face a liquidity shortfall in 2020. While the Company is actively focused on operational and other initiatives to increase cash flow, no assurances can be given that these initiatives will be successful.  The Company’s ability to generate sufficient cash flow from operations will depend on a range of economic, competitive and business factors, many of which are outside its control, including the impact of COVID-19.  As a result of current economic conditions, the Company’s cash flow from operations might be impacted. The Company is in preliminary discussions with its lenders, including Bank of America, to obtain waivers from certain liquidity requirements and defer payments due under its loans in light of the current economic conditions and the fact that the Company expects to allow tenants to defer rents under its leases with its tenants as a result of the current COVID-19 pandemic; however, there can be no assurance that the Company will reach any such agreement with its lenders. In particular, some of the Company’s loan agreements require that the Company maintain certain liquidity and net worth levels. For example, the loan with Bank of America for MVP Detroit garage requires the Company to maintain $2.3 million of unencumbered cash and cash equivalents at all times. As of the time of this filing, the Company was in compliance with this lender requirement; however, unless the Company sells some of its existing assets, it does not expect that it will be able to maintain such required minimum balances beyond the third quarter of 2020, if the Company does not receive a waiver for this requirement.  The Company may be unable to sell assets and may be unable to negotiate a waiver or amendment of the liquidity and net worth requirements, in which case, the Company could experience an event of technical default under its loan agreements, which, if uncured, could result in an acceleration of such indebtedness.
-9-

We have engaged financial and legal advisors and begun to explore a broad range of potential strategic alternatives to provide liquidity to stockholders; however, there can be no assurance that our exploration of potential strategic alternatives will result in any transaction being completed, and speculation and uncertainty regarding the outcome of our exploration of strategic alternatives may adversely affect our business.

In mid-2019, we engaged financial and legal advisors and began to explore a broad range of potential strategic alternatives to provide liquidity to stockholders. We are currently exploring certain strategic alternatives, including potential sales of assets, a potential sale of the Company or a portion thereof, a potential strategic business combination or a potential liquidation. The process of exploring and executing potential strategic alternatives may be time consuming and disruptive to our business operations, and if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. Any potential transaction and the related valuation would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable terms. There can be no assurance that the Board’s exploration of potential strategic alternatives will result in any change of strategy or transaction being entered into or consummated or, if a transaction is undertaken, as to its terms, structure or timing.

Shares of our common stock are illiquid. No public market currently exists for our shares, and our charter does not require us to liquidate our assets or list our shares on an exchange by any specified date, or at all. It will be difficult for stockholders to sell shares, and if stockholders are able to sell shares, it will likely be at a substantial discount.

There is no current public market for our shares, and our charter does not require us to liquidate our assets or list our shares on an exchange by any specified date, or at all. Our charter limits stockholdersstockholders' ability to transfer or sell shares unless the prospective stockholder meets the applicable suitability and minimum purchase standards. Our charter also prohibits the ownership of more than 9.8% in value of the aggregate of our outstanding capital stock or more than 9.8% in value or number, whichever is more restrictive, of the aggregate of our outstanding common stock unless exempted prospectively or retroactively by our board of directors. These restrictions may inhibit large investors from desiring to purchase stockholdersstockholders' shares. Moreover, our share repurchase program includes numerous restrictions that limit stockholders abilitywas suspended in May 2018, other than with respect to sell shares to us, and ourhardship repurchases in connection with a shareholders’ death, which were suspended by the board of directors may amend, suspend or terminate our share repurchase program without stockholder approval upon 30 days' written prior notice.on March 24, 2020. It will be difficult for stockholders to sell shares promptly or at all. If stockholders are able to sell shares, stockholders will likely have to sell them at a substantial discount to their purchase price. It is also likely that stockholdersstockholders' shares would not be accepted as the primary collateral for a loan.

In addition, Nasdaq has informed us that (i) our common stock will not be approved for listing currently on the Nasdaq Global Market, and (ii) it is highly unlikely that our common stock would be approved for listing while the SEC investigation is ongoing. There can be no assurance that our common stock will ever be approved for listing on the Nasdaq Global Market or any other stock exchange, even if the SEC investigation referred to above is completed and no wrongdoing is found and no action is taken in connection therewith against us, Mr. Shustek or any other person. Accordingly, we are not pursuing a listing and do not anticipate the ability to list in the foreseeable future. Our board of directors does not anticipateis actively evaluating a transaction providingactions that could provide liquidity for our stockholders. However, our ability to achieve liquidity for our stockholders until the second quarter of 2017,is subject to then prevailing market conditions. Thereconditions, legal requirements and loan covenants, and there can be no assurance that we will affect a liquidity event. If we do not successfully implement a liquidity transaction, a stockholder may have to hold his or her investment for an indefinite period.

In the future, our board of directors may consider various forms of liquidity, each of which is referred to as a liquidity event, including, but not limited to: (1) the sale of all or substantially all of our assets; (2) the sale or a merger in a transaction that would provide our stockholders with cash and/or securities of a publicly traded company, which may be an affiliate; or (3) the listing of our common stock on a national securities exchange. We expect that our board of directors will evaluate liquidity alternatives no earlier than the second quarter of 2017, subject to then prevailing market conditions. There can be no assurance that we will cause a liquidity event to occur. If we do not pursue a liquidity transaction, our shares of common stock may continue to be illiquid and stockholders may, for an indefinite period of time, be unable to convert their investments to cash easily and could suffer losses on their investments.
Moreover, our charter contains other restrictions on the ownership and transfer of our securities as described under "Description of Capital Stock—Restrictions on Ownership and Transfer of Shares—Ownership Limit." These restrictions may also inhibit our stockholders' ability to sell their shares of our common stock promptly or at all.

We have a limited operating history which makes our future performance difficult to predict.

We are a recentlywere formed companyon May 4, 2015 and merged with MVP REIT, Inc., which was formed on April 3, 2012, on December 15, 2017. In addition, our management function was internalized effective April 1, 2019. Accordingly, we have a limited operating history.history, particularly as an internally managed company. Stockholders should not assume that our performance will be similar to the past performance of other real estate investment programs sponsored by our Sponsor oran affiliate of the parent of our Sponsor.former Advisor. Our lack of an operating history increases the risk and uncertainty that stockholders face in making or holding an investment in our shares.
-7-

We have experienced net losses in the past, and we may experience additional net losses in the future.

Historically, we have experienced net losses (calculated in accordance with accounting principles generally accepted in the United States of America)GAAP), and we may not be profitable or realize growth in the value of our investments. Many of our losses can be attributed to start-up costs, depreciation and amortization, as well as acquisition expenses incurred in connection with purchasing properties or making other investments. For a further discussion of our operational history and the factors affecting our net losses, see "Management's“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” appearing elsewhere in this Annual Report on Form 10-K and our accompanying consolidated financial statements and notes thereto.

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Our cash distributions are not guaranteed and may fluctuate.
Although we intend
The Company's board of directors unanimously authorized a suspension of our cash distributions and stock dividends to pay distributions on the sharesholders of our common stock, effective as of March 22, 2018. In addition, on a monthly basis, there is no guaranty that we will be able to payMarch 24, 2020, the full amountCompany’s board of directors unanimously authorized the distribution, or at all.  In determining whether to authorize a distribution or make such distribution and the amount, our directors will consider all relevant factors, including the amountsuspension of cash available for distribution, capital expenditure and reserve requirements and general operational requirements. We cannot assure you that we will consistently be able to generate sufficient available cash flow to fund distributions on our shares nor can we assure you that sufficient cash will be available to make distributions to you. With limited prior operations, we cannot predict the amount of distributions you may receive and we may be unable to pay, maintain or increase distributions over time. Our inability to acquire additional properties or make real estate-related investments or operate profitably may have a negative effect on our ability to generate sufficient cash flow from operations to pay distributions on our shares.

We have paid, and may continue to pay, our distributions from sources other than cash flow from operations, which has reduced the funds available for the acquisition of properties and may reduce our stockholders' overall return.

As of December 31, 2016, we have paid all of our cash distributions from proceeds from issuance of our common stock in the offering or under our distribution reinvestment plan. Our organization documents permit us to pay distributions from any source, including offering proceeds, borrowings, or sales of assets. We have not placed a cap on the use of offering or other proceeds to fund distributions. Our distribution policy is to fund the payment of regular distributions on the Series A Convertible Redeemable Preferred Stock and Series 1 Convertible Redeemable Preferred Stock, however such distributions will continue to our stockholders from cash flow from our operations.  However, we may not generateaccrue in accordance with the terms of the Series A Convertible Redeemable Preferred Stock and Series 1 Convertible Redeemable Preferred Stock.  Our board is focused on preserving capital in order to maintain sufficient cash flow from operations to fund distributions.  Therefore, we may needliquidity to continue to utilize proceeds fromoperate the sale of securities, borrow funds or request thatbusiness and maintain compliance with debt covenants, including minimum liquidity covenants and to seek to provide liquidity to stockholders through potential strategic transactions. Our board will continue to evaluate our advisor,performance and expects to assess our distribution policy quarterly, although we do not currently expect to resume paying cash distributions in its discretion, defer its receipt of fees and reimbursement of expenses in order to make cash distributions. Wethe near future. There can givebe no assurance that we will be ableresume payment of distributions to pay distributions solely from our funds from operationscommon or preferred stockholders at any time in the future. If we continuefuture, or that any liquidity event will occur or when such event may occur. As the Company does not expect to pay distributions from sources other than our cash flow from operations, wehave any REIT taxable income, the Company does not believe this policy will have fewer funds available for investments and stockholder overall return may be reduced.

Because we have paid, and may continueaffect the Company’s ability to pay, our cash distributions from sources other than cash flow from operations, such distributions may not reflect the current performance of our real property investments or our current operating cash flows, and may constitute a return of capital or taxable gain from the sale or exchange of property.
Our long-term strategy is to fund the payment of monthly distributions to our stockholders entirely from our funds from operations. However, during the early stages of our operations, we have utilized offering proceeds to make cash distributions. Because the amount we pay out in distributions may exceed our cash flow from operations, the amount of distributions paid at any given time may not reflect the current performance our real property investments or our current cash flow from operations. To the extent distributions exceed cash flow from operations, distributions may be treatedmaintain its status as a return of capital (rather than a return on capital) and could reduce a stockholder's basis in our stock. A reduction in a stockholder's basis in our stock could result in the stockholder recognizing more gain upon the disposition of his or her shares, which in turn could result in greater taxable income to such stockholder.
We may be unable to build a large, diversified portfolio of properties and the poor performance of a single investment could materially adversely affect our overall investment performance if we are unable to raise sufficient capital.
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As of December 31, 2016, we raised approximately $56.4 million from the issuance and sale of shares of our common stock in our initial public offering, which ended as of December 31, 2016. We continue to seek to raise additional capital, including through the offer and sale of our preferred stock and warrants to acquire our common stock, in private placements solely to persons who meet the definition of an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended. Although we continue to seek to expand our portfolio of investments, the number of investments we may make may be limited by the amount raised in our stock offerings. If we are unable to raise significant additional proceeds, we will be thinly capitalized and may not be able to diversify our portfolio in terms of the numbers of investments we own and the areas in which our investments or the properties underlying our investments are located. Failure to build a diversified portfolio increases the likelihood that any single investment's poor performance would materially affect our overall investment performance. Our inability to raise substantial funds would also increase our fixed operating expenses as a percentage of gross income. Each of these factors could have an adverse effect on our financial condition and ability to make distributions to our stockholders.
We depend upon the Advisor to find suitable investments. If it is unable to do so, we may not be able to achieve our investment objectives or pay distributions.

Our ability to achieve our investment objectives and to pay distributions depends upon the performance of the Advisor in the acquisition of our investments, including the determination of any financing arrangements. The Advisor's personnel have only limited experience in making direct investments in real estate. Stockholders will have no opportunity to evaluate the economic merits or the terms of our investments before and must rely entirely on the management abilities of the Advisor and the oversight of our board of directors. We cannot assure stockholders that the Advisor will be successful in obtaining suitable investments on financially attractive terms or that, if the Advisor makes investments on our behalf, our objectives will be achieved.

Our Sponsor and its other affiliated entities, including MVP REIT, Inc., also rely on the Advisor's real estate, finance and securities professionals, including Mr. Shustek, to identify investment opportunities. To the extent that the Advisor's real estate, finance and securities professionals face competing demands upon their time in instances when we have capital ready for investment, we may face delays in execution of our investment strategy. Delays we encounter in the selection and acquisition of income-producing assets would likely limit our ability to pay distributions to our stockholders and lower their overall returns.REIT.

We may changedepend on our targeted investments and investment guidelines without stockholder consent.

Our boardmanagement team. The loss of directors may change our targeted investments and investment guidelines at any time without the consent of our stockholders, whichkey personnel could result in our making investments that are different from, and possibly riskier than, the investments described in our prospectus. Pursuant to SEC rules, we may be required to file post-effective amendments to this registration statement to disclose anyhave a material change to investors, such as changes to our targeted investments and investment guidelines. Changes to our investment guidelines must be approved by our board of directors, including a majority of our independent directors. A change in our targeted investments or investment guidelines may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of shares of our common stock andadverse effect upon our ability to make distributions to stockholders.conduct and manage our business.

The value of a share of our common stock may be diluted if we pay a stock dividend.

Our board of directors has authorized and declared and, may continue to authorize and declare special stock dividends. While our objective is to acquire assets that appreciate in value, there can be no assurance that assets we acquire will appreciate in value. Furthermore, we currently do not expect to change the initial value per share public offering price during the Offering until the Valuation Date. With the declaration of stock dividends, investors who purchase shares early in the offering will receive more shares for the same cash investment than investors who purchase later in the offering as a result of the stock dividend. Because they own more shares, upon a sale or liquidation of the Company, these early investors will receive more sales proceeds or liquidating distributions relative to their invested capital compared to later investors. Furthermore, unless our assets appreciate in an amount sufficient to offset the dilutive effect of the prior stock dividends, the value per share for later investors purchasing our stock will be below the value per share of earlier investors.
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Any adverse changes in the Advisor's financial health or our relationship with the Advisor or its affiliates could hinder our operating performance and the return on investment.

We have engaged the Advisor to manage our operations and our portfolio of real property investments. Our ability to achieve our investment objectives and to pay distributions is dependent upon the performance of the Advisor and its affiliates as well as the Advisor's real estate, finance and securities professionalsour management team in the identification and acquisition of investments, the determination of any financing arrangements, the management of our assets and operation of our day-to-day activities. We also depend upon Vestin Realty Mortgage I, Inc. and Vestin Realty Mortgage II, Inc., the owners of our advisor, to continue to support and fund our costs and expenses. Any adverse changes in the Advisor's financial condition or our relationship with the Advisor, its owners or its other affiliates could hinder the Advisor's ability to successfully manage our operations and our portfolio of investments.

The loss of key real estate, finance and securities professionals at our Sponsor could delayservices of one or hinder implementationmore members of our key personnel or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment strategies,opportunities and weaken our relationships with lenders, business partners, parking facility operators and managers and other industry personnel, which could limitmaterially and adversely affect our business, financial condition, results of operations and ability to make distributions and decreaseto stockholders in the value of a stockholder's investment.

Our success depends to a significant degree upon the contributions of Michael V. Shustek, who could be difficult to replace. We do not intend to maintain key person life insurance on any person. We believe that our future success depends, in large part, upon our Sponsor and its affiliates' ability to retain highly skilled managerial, operational and marketing professionals. Competition for such professionals is intense, and our Sponsor and its affiliates may be unsuccessful in attracting and retaining such skilled individuals. If our Sponsor loses or is unable to obtain the services of highly skilled professionals, our ability to implement our investment strategies could be delayed or hindered, and the value of a stockholder's investmentour common stock. .  Furthermore, the loss of one or more of our key personnel may decline.constitute an event of default under certain of our limited non-recourse property-level indebtedness, which could result in such indebtedness being accelerated.

We areStockholders should not required to disclose an estimated net asset value, or NAV, per share of our common stock until May 2018 andrely on the purchase price paid for our shares of common stock may be higher than such estimated NAV. The estimated NAV per share may not beas being an accurate reflectionmeasure of the faircurrent value of our assets and liabilities and likely will not represent the amount of net proceeds that would result if we were liquidated or dissolved.

To assist members of FINRA and their associated persons that participate in our primary offering, pursuant to FINRA Conduct Rules, we intend to have the Advisor prepare an annual report of the per share estimated value of our shares of common stock, the method by which it was developed and the date of the data used to develop the estimated values. For this purpose, we intend to use the price paid to acquire a common share in our primary offering as our estimated per share value until 150 days following the second anniversary of the date we satisfy the minimum offering requirement in the primary offering. This approach to valuing our shares may bear little relationship and will likely exceed what a stockholder might receive for his or her shares if they tried to sell them or if we liquidated our portfolio. We expect to disclose an estimated per share value of our shares no later than 150 days following the second anniversary of the date we satisfy the minimum offering requirement in the primary offering, or the Valuation Date, although we may determine to provide an estimated per share value based upon a valuation earlier than presently anticipated.

Although our initial price of $25.00 per share represents the price at which investors will purchase shares in our primary offering, this price and any subsequent estimated per share values are likely to differ from the price at which a stockholder could resell the shares because: (i) there is no public trading market for our shares at this time; (ii) the price does not reflect and will not reflect, the fair value of our assets as we acquire them, nor does it represent the amount of net proceeds that would result from an immediate liquidation of those assets, because the amount of proceeds available for investment from our offering is net of acquisition fees and costs; (iii) the estimated per share value does not take into account how market fluctuations affect the value of our investments, including how the current conditions in the financial and real estate markets may affect the values of our investments; and (iv) the estimated per share value does not take into account how developments related to individual assets may increase or decrease the value of our portfolio.
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Currently there are no SEC, federal or state rules that establish requirements concerning the methodology to employ in determining an estimated per share value. When determining the estimated value per share on the Valuation Date and annually thereafter, the Advisor, or another firm we choose for that purpose, will estimate the value of our shares based upon the fair value of our assets less the fair value of our liabilities under market conditions existing at the time of the valuation. We will obtain independent third party appraisals for our properties and will value our other assets in a manner we deem most suitable under the circumstances, which will include an independent appraisal or valuation. Our independent directors will be responsible for the oversight of the valuation process, including approval of the engagement of any third parties to assist in the valuation of assets, liabilities and unconsolidated investments. We anticipate that any property appraiser we engage will be a member of the Appraisal Institute with the MAI designation or such other professional valuation designation appropriate for the type and geographic locations of the assets being valued and will provide a written opinion, which will include a description of the reviews undertaken and the basis for such opinion. Any such appraisal will be provided to a participating dealer upon request. The valuations are estimates and consequently should not be viewed as an accurate reflection of the fair value of our investments nor will they represent the amount of net proceeds that would result from an immediate sale of our assets.

Commencing on the Valuation Date, we will base the repurchase prices for shares of our common stock at a price equal to our NAV per share. Our NAV will be based upon subjective judgments, assumptions and opinions about future events, and may not be accurate. As a result, our NAV per share may not reflect the amount that a stockholder might receive for his or her shares in a market transaction.

Commencing on the Valuation Date, we will base the repurchase prices for shares of our common stock on our NAV per share. The Advisor will be responsible for calculating our NAV no less frequently than annually. Our NAV will be calculated by estimating the market value of our assets and liabilities, many of which may be illiquid. Our board of directors will review the Advisor's NAV calculation. In connection with our NAV calculation, we expect that an independent valuation expert will appraise our portfolio and that the Advisor will review each appraisal. The Advisor will also determine the valuation of our portfolio and will compare each appraisal to its own determinations. If in the Advisor's opinion the appraisals are materially higher or lower than the Advisor's determinations of value, the Advisor will discuss the appraisals with the independent valuation expert. If the Advisor determines that the appraisals are still materially higher or lower than its valuations, a valuation committee, comprised of our independent directors, will review the appraisals and valuations, and make a final determination of value. Although the valuations of our portfolio will be approved by our board of directors, the valuations may not be precise because the valuation methodologies used to value a portfolio involve subjective judgments, assumptions and opinions about future events. Any resulting disparity may benefit existing stockholders or new purchasers of our shares of common stock.

A stockholder's ability to have his or herOur board of directors, including all of our independent directors, approves and establishes at least annually an estimated per share NAV of our common shares repurchasedstock, which is limited under our share repurchase program, and if a stockholder is unable to have his or her common shares repurchased, it may be at a price that is less than the price the stockholder paid for the common shares and the then-currentbased on an estimated market value of our assets less the common shares.

Our share repurchase program, or SRP, contains significant restrictions and limitations. For example, stockholders must generally hold their shares for a minimumestimated market value of two years before they can participate in our SRP. Further, we presently intend to limit the number of shares to be repurchased during any calendar quarter to not more than 5% of the weighted average ofliabilities, divided by the number of shares of our common stock outstanding on December 31stoutstanding. The objective of the prior calendar year. Repurchases will be funded solely from the net proceeds from the sale of shares under the DRIP in the prior calendar. Our board of directors may also limit the amounts available for repurchase at any time in its sole discretion. In addition, our board of directors in determining the estimated NAV per share was to arrive at a value, based on the most recent data available, that it believed was reasonable based on methodologies that it deemed appropriate.  As with any valuation method, the methods used to determine the estimated NAV per share were based upon a number of assumptions, estimates, forecasts and judgments that over time may prove to be incorrect, incomplete, or may change materially. For example, current market disruptions relating to COVID-19 have significantly and adversely impacted the market for a wide variety of real estate assets, commercial businesses that are adjacent to parking structures and the supply of debt financing for real estate assets. Our business could be significantly and adversely affected by the COVID-19 pandemic and we expect to continue to experience adverse effects resulting therefrom, all of which is likely to cause the actual NAV and any amount that may be available to stockholders upon a liquidation to be significantly less than the NAV estimated in its sole discretion, amend, suspend,May 2019.

In the most recent estimation of NAV, our assets were valued based upon appraisal standards and the values of our assets using these methods are not required to reflect market value under those standards and will not necessarily result in a reflection of fair value under generally accepted accounting principles. Further, different parties using different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could derive a different estimated NAV per share, which could be significantly different from the estimated NAV per share determined by our board of directors. The estimated NAV per share is not a representation or terminate the SRP at any time upon 30 days prior notice. Therefore,indication that, among other things: a stockholder may not havewould be able to realize the opportunityestimated NAV per share if he or she attempts to makesell shares; a repurchase request priorstockholder would ultimately realize distributions per share equal to the estimated NAV per share; a third party would offer the estimated NAV per share in an arms-length transaction to purchase all or substantially all of our shares of common stock or the Employee Retirement Income Security Act of 1974, as amended, or ERISA, or other regulatory authorities (including state regulators), with respect to their respective requirements. For example, we expect to incur additional  costs in connection with ongoing litigation, the SEC investigation discussed in Note P - Legal in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K and legal and consulting fees associated with pursuing any potential terminationstrategic alternatives, which in the aggregate may be material, none of which was taken into consideration when the board of directors determined the prior estimated NAV per share. Further, the estimated NAV per share was calculated as of a specific time based on the shares then outstanding and the amount and value of our SRP.

Asshares will fluctuate over time as a result of, these limitations,among other things, future acquisitions or dispositions of assets, developments related to individual assets and changes in the repurchase price areal estate and capital markets and issuances and redemptions of shares of our common stock after that date that the estimated NAV per share was established. Since the date that the last estimated NAV per share was established, the Company has redeemed 30,858 shares under the Company’s Share Repurchase Program (related solely to hardship repurchases in connection with stockholder may receive upon any such repurchase may not be indicativedeaths) and on December 31, 2019, issued to the former Advisor the second tranche of 400,000 shares payable in respect of the price our stockholders would receive if ourInternalization. As discussed under Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management Internalization and Note S – Deferred Management Internalization in Part II, Item 8 Notes to the Consolidated Financial Statements, the Company will issue the remaining 800,000 shares of common shares were actively traded or if we were liquidated, and a stockholder should not assume that he or she will be able to sell all or any portion of his or her common shares back to us pursuant to our SRP or to third parties at a price that reflects the then current market valuestock payable in respect of the common shares or at all.Internalization in two 400,000 share tranches on December 31, 2020 and December 31, 2021, which will have a further dilutive impact on NAV per share.

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Future interest rate increases in response to inflation may inhibit our ability to conduct our business and acquire or dispose of real property at attractive prices and a stockholder's overall return may be reduced.

We will be exposed to inflation risk with respect to income from any leases on real property as these may constitute a source of our cash flows from operations. High inflation may in the future tighten credit and increase prices. Further, if interest rates rise, such as during an inflationary period, the cost of acquisition capital to purchasers may also rise, which could adversely impact our ability to dispose of our assets at attractive sales prices. Should we be required to acquire, hold or dispose of our assets during a period of inflation, our overall return may be reduced.

Disruptions in the financial markets and difficult economic conditions could adversely impact the real estate market, which could hinder our ability to implement our business strategy and generate returns to stockholders.

We intend to acquire a portfolio of real property investments. We may also acquire other companies with assets consisting of real property investments. Economic conditions greatly increase the risks of these investments. Revenues on the properties and other assets in which we have invested could decrease, making it more difficult for us to collect rents which would likely have a negative impact on the value of our investment.

Government intervention may limit our ability to continue to implement certain strategies or manage certain risks.

The pervasive and fundamental disruptions that the global financial markets have and may continue to undergo have led to extensive and unprecedented governmental intervention. Such intervention has in certain cases been implemented on an "emergency" basis, suddenly and substantially eliminating market participants' ability to continue to implement certain strategies or manage the risk of their outstanding positions. It is impossible to predict what, if any, additional interim or permanent governmental restrictions may be imposed on the markets and the effect of such restrictions on us and our results of operations.

We disclose funds from operations or FFO,(“FFO”), a non-GAAP financial measure, in communications with investors, including documents filed with the SEC; however, FFO is not equivalent to our net income or loss as determined under GAAP, and our computation of FFO may not be comparable to other REITs.

One of our objectives is to provide cash distributions to our stockholders from cash generated by our operations determined under U.S. GAAP. Cash generated from operations is not equivalent to our net income from continuing operations as determined under U.S. GAAP. One non-U.S. GAAPnon-GAAP supplemental performance measure that we consider due to the certain unique operating characteristics of real estate companies is known as funds from operations, or "FFO."FFO. The National Association of Real Estate Investment Trusts, or "NAREIT,"NAREIT, an industry trade group, promulgated this measure, which it believes more accurately reflects the operating performance of a REIT. As defined by NAREIT, FFO means net income computed in accordance with U.S. GAAP, excluding gains or losses from sales of property, plus depreciation and amortization on real property and after adjustments for unconsolidated partnerships and joint ventures in which we hold an interest. In addition, NAREIT has recently clarified its computation of FFO, which includes adding back real estate impairment charges for all periods presented,presented; however, under U.S. GAAP, impairment charges reduce net income. While impairment charges are added back in the calculation of FFO, we caution that due to the fact that impairments to the value of any property are typically based on estimated future undiscounted cash flows compared to current carrying value, declines in the undiscounted cash flows which led to the impairment charges reflect declines in property operating performance which may be permanent.

The calculation of FFO may vary from entity to entity since capitalization and expense policies tend to vary from entity to entity. Items that are capitalized do not impact FFO, whereas items that are expensed reduce FFO. Consequently, our presentation of FFO may not be comparable to other similarly titled measures presented by other REITs. FFO does not represent cash flows from operations as defined by U.S. GAAP, it is not indicative of cash available to fund all cash flow needs nor is it indicative of liquidity, including our ability to pay distributions, and should not be considered as an alternative to net income, as determined in accordance with U.S. GAAP, for purposes of evaluating our operating performance. Management uses the calculation of FFO for severalmultiple reasons. We use FFO to compare our operating performance to that of other REITs. Additionally, we compute FFO as part of our acquisition process to determine whether a proposed investment will satisfy our investment objectives.

The historical cost accounting rules used for real estate assets require, among other things, straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical cost accounting for depreciation may be less informative than FFO. We believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our operating performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs.

However, FFO should not be construed to be equivalent to or a substitute for the current U.S. GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the performance of real estate under U.S. GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-U.S.non- GAAP FFO measures and the adjustments to U.S. GAAP in calculating FFO. Furthermore, FFO is not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of our performance, as an alternative to cash flows from operations calculated in accordance with U.S. GAAP, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders.

FFO should be reviewed in conjunction with other U.S. GAAP measurements as an indication of our performance. The exclusion of impairments limits the usefulness of FFO as a historical operating performance measure since an impairment indicates that the property'sproperty’s operating performance may have been permanently affected. FFO is not a useful measure in evaluating net asset valueNAV because impairments are taken into accountconsidered in determining net asset valueNAV but not in determining FFO.

We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems.

We will face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our information technology, or IT, networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations, and, in some cases, may be critical to the operations of certain of our tenants. There can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving our IT networks and related systems could adversely impact our financial condition, results of operations, cash flows,flow and our ability to satisfy our debt service obligations and to pay distributions to our stockholders.


Risks Related to Our Investments

We may acquire properties in parts of the United States and Canada where we do not have extensive experience.

We intend to explore acquisitions of properties throughout the United States and Canada. No more than 10% of the proceeds of this offering will be used for investment in Canadian properties. We may not possess familiarity with the dynamics and prevailing conditions of any geographic market we enter, which could adversely affect our ability to successfully expand into or operate within those markets. For example, markets may have different insurance practices, reimbursement rates and local real estate, zoning and development regulations than those with which we are familiar. We may find ourselves more dependent on third parties in new markets because our distance could hinder our ability to directly and efficiently identify suitable investments or manage properties in distant markets. We may not be successful in identifying suitable properties or other assets which meet our acquisition or development criteria

or in consummating acquisitions or investments on satisfactory terms or at all for a number of reasons, including, among other things, unsatisfactory results of our due diligence investigations, failure to obtain financing on acceptable terms for the acquisition or development and our misjudgment of the value of the opportunities. We may also be unable to successfully integrate the operations of acquired properties, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisitions within the anticipated timeframe or at all. If we are unsuccessful in expanding into new markets, it could adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.

Our revenues will beare significantly influenced by demand for parking facilities generally, and a decrease in such demand would likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio.

We have decided that theThe focus for our portfolio of investments and acquisitions will beis on parking facilities. Based on our current investment strategy to focus on parking facilities, including parking lots, parking garages and other parking structures, aA decrease in the demand for parking facilities, or other developments adversely affecting such sectors of the property market would likely have a more pronounced effect on our financial performance than if we owned a more diversified real estate portfolio. Adverse changes in global, national and local economic conditions could have a negative impact on our business. If adverse economic conditions reduce discretionary spending, business travel or other economic activity, such as sporting events and entertainment, that fuels demand for parking services, our revenues could be reduced. In addition, our parking facilities tend to be concentrated in urban areas. The recent COVID-19 pandemic has resulted in reduced discretionary spending, reduced travel and other activity.  Users of our parking facilities include workers who commute by car to their places of employment in these urban centers. The return on our investments couldmay be materially adversely affected by restrictions requiring people to shelter in place in reaction to the COVID-19 outbreak and may continue to be materially adversely affected to the extent that weak economic conditions or demographic factors have resultedresult in the elimination of jobs and high unemployment in these urban areas. In addition, increased unemployment levels,or the movementmigration of white-collar jobs from the urban centers where our parking facilities are situated to suburbsother locations. We are in preliminary discussions with some of our tenants and currently expect to grant relief to some our tenants to defer rent payments as a result of their estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance we will reach an agreement with any tenant or out of North America entirely, increasedif an agreement is reached, that any such tenant will be able to repay any such deferred rent in the future. Increased office vacancies in urban areas, movement toward home office alternatives or lower consumer spending could reduce consumer demand for parking, which could adversely impact our revenues and financial condition. Moreover, changing lifestyles and technology innovations also may decrease the need for parking spaces, thereby decreasing the demand for parking facilities. The need for parking spaces, for example, may decrease as the public increases its use of livery service companies and ride sharing companies or elects to take public transit for their transportation needs. Future technology innovations, such as driverless vehicles, also may decrease the need for parking spaces. TheseIt is also possible that cities could enact new or additional measures such as higher tolls, increased taxes and other developments affectingvehicle occupancy requirements in certain circumstances, to encourage car-pooling and the use of mass transit, all of which could adversely impact the demand for parking. Weather conditions, such as hurricanes, snow, flooding or severe weather storms, and other natural disasters and acts of terrorism could also disrupt our parking could have a material, adverse effect onoperations and further reduce the value of our properties as well as our revenues and our distributions to stockholders.demand for parking.

AnyOur parking facilities we acquire or invest in will face intense competition, which may adversely affect rental and fee income.

We believe that competition in parking facility operations is intense. The relatively low cost of entry has led to a strongly competitive, highly fragmented market consisting of competitors ranging from single facility operators to large regional and national multi-facility operators, including several public companies. In addition, any parking facilities we acquire may compete with building owners that provide on-site paid parking. Many of the competitors have more experience than we do in owning and operating parking facilities. Moreover, some of our competitors will have greater capital resources, greater cash reserves, less demanding rules governing distributions to stockholders and a greater ability to borrow funds. Competition for investments may reduce the number of suitable investment opportunities available to us, may increase acquisition costs and may reduce demand for parking facilities, all of which may adversely affect our operating results. Additionally, an economic slowdown in a particular market could have a negative effect on our parking fee revenues.

If competitors build new facilities that compete with our facilities or offer space at rates below the rates we charge, our lessees may lose potential or existing customers and may be pressured to discount their rates to retain business, andthereby causing them to reduce rents paid to us. As a result, our ability to make distributions to stockholders may be impaired. In addition, increased competition for customers may require us to make capital improvements to facilities that we would not otherwise make, which could reduce cash available for distribution to our stockholders.
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Our leases expose us to certain risks.

We net lease our parking facilities to lessees that will either offer parking services to the public or provide parking to their employees. We rely upon the lessee to manage and conduct the daily operations of the facilities. In addition, under a net lease arrangement, the lessee is generally responsible for taxes and fees at a leased location. The loss or renewal on less favorable terms of a substantial number of leases, or a breach, default or other failure to perform by a lessee under a lease, could have a material adverse effect on our business, financial condition and results of operations. A material reduction in the rental income associated with the leases (or an increase in anticipated expenses to the extent we are responsible for such expenses) also could have a material adverse effect on our business, financial condition and results of operations.

Changes in national, regional or local economic, demographic or real estate market conditions may adversely affect our results
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Table of operations and returns to our investors.Contents

We will be subject to risks incident to the ownership of real estate related assets including: changes in national, regional or local economic, demographic or real estate market conditions; changes in supply of, or demand for, similar properties in an area; and changes in government rules, regulations and fiscal policies, including changes in tax, real estate, environmental and zoning laws. Additionally, we are unable to predict future changes in national, regional or local economic, demographic or real estate market conditions. For example, a recession or rise in interest rates could make it more difficult for us to lease real properties or dispose of them. These conditions, or others we cannot predict, may adversely affect our results of operations, cash flow and returns to our investors.

The value of each property is affected significantly by its ability to generate cash flow and net income, which in turn depends on the amount of rental or other income that can be generated net of expenses required to be incurred with respect to the property. Many expenditures associated with properties (such as operating expenses and capital expenditures) cannot be reduced when there is a reduction in income from the properties. These factors may have a material adverse effect the value that we can realize from assets we own or acquire.

Our investments in real estate will be subject to the risks typically associated with real estate.

We invest directly in real estate. We will not know whether the values of properties that we own directly will remain at the levels existing on the dates of acquisition. If the values of properties we own drop,decrease, our risk will increase because of the lower value of the real estate. In this manner, real estate values could impact the value of our real estate investments. Therefore, our investments will be subject to the risks typically associated with real estate.

The value of real estate may be adversely affected by a number of risks, including:
natural disasters such as hurricanes, earthquakes and floods;

acts of war or terrorism, including the consequences of terrorist attacks;

adverse changes in national and local economic and real estate conditions;

an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;

costs of remediation and liabilities associated with environmental conditions affecting properties; and

the potential for uninsured or underinsured property losses.

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epidemics, pandemics or other outbreaks of an illness, disease or virus (including COVID-19);

natural disasters such as hurricanes, earthquakes and floods;
We have no established investment criteria limiting
acts of war or terrorism, including the geographic concentrationconsequences of our investmentsterrorist attacks;
adverse changes in real estate. If our investments are concentrated in an area that experiences adversenational and local economic conditions, our investments may lose value and we may experience losses.

Our real estate investmentsconditions;
an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;
changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;
costs associated with real property taxes and changes in tax rates;
costs of remediation and liabilities associated with environmental conditions affecting properties;
costs associated with complying with the Americans with Disabilities Act, which may be concentrated in one or few geographic locations. As a result,reduce the amount of cash available for distribution to our stockholders;
our properties may be overly concentrated in certain geographic areas, and we may experience losses as a result. A worsening of economic or real estate conditions in the geographic area in which our investments may be concentrated could have an adverse effect on our business.business; and
the potential for uninsured or underinsured property losses.

Competition with third parties in acquiringA small number of our parking tenants account for a significant percentage of our total rental revenues, and operatingthe failure of any of these tenants to meet their obligations to us could materially and adversely affect our business, financial condition and results of operations.

The successful performance of our investments may reduceis materially dependent on the financial stability of our profitabilityparking tenants. We had 15 parking tenants as of December 31, 2019. Approximately 72.5% of our parking rental revenues for the year ended December 31, 2019 were generated by only two of those tenants, SP+ (60.8%) and iPark Services (11.7%). The inability of any of our significant lessees or parking managers to pay rent or fees, as applicable, or a decision by a significant lessee or parking manager to terminate a lease or management agreement prior to, or at the return on stockholder's investment.

conclusion of, their term or any other loss of a significant lessee or parking manager (including due to a bankruptcy or insolvency) could materially and adversely affect our business, financial condition and results of operations if a suitable replacement lessee or manager is not secured in a timely manner. We have significant competitionare in preliminary discussions with respectsome of our tenants and currently expect to grant relief to some our acquisitiontenants to defer rent payments as a result of assetstheir estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance we will reach an agreement with many other companies, including other REITs, owners and managers of parking facilities, private investment funds, hedge funds, and other investors, many of which have greater resources than us. We may notany tenant or if an agreement is reached, that any such tenant will be able to compete successfully for investments.repay any such deferred rent in the future. In addition, the numberevent of entities and the amount of funds competing for suitable investments may increase. If we pay higher prices for investments our returns will be lower and the valuea payment default by one or more of our assets may not increase or may decrease significantly below the amountsignificant parking tenants, including SP+ and iPark Services, we paid for such assets. If such events occur, a stockholder may experience a lower return on his or her investment.

We will compete with numerous other persons to attract tenants to real propertydelays in enforcing our rights and may incur substantial costs in protecting our investments and re-leasing our parking facilities. Further, we acquire. These persons or entities may have greater experience and financial strength than us. There is no assurancecannot assure stockholders that we will be able to attract tenants on favorable terms, ifre-lease the parking facilities for the rent previously received, or at all. For example, our competitors may be willing to offer space at rental rates below our rates, causingall, or that lease terminations will not cause us to lose existing or potential tenantssell the facilities at a loss. The result of any of the foregoing risks could materially and pressuring us to reduce our rental rates to retain existing tenants or convince new tenants to lease space at our properties. Each of these factors could adversely affect our business, financial condition, results of operations, financial condition, value of our investments and ability to pay distributions.

Changes in supply of or demand for similar real properties in a particular area may increase the price of real properties we seek to purchase and decrease the price of real properties when we seek to sell them.

The real estate industry is subject to market forces. We are unable to predict certain market changes including changes in supply of, or demand for, similar real properties in a particular area. Any potential purchase of an overpriced asset could decrease our rate of return on these investments and result in lower operating results and overall returns to our stockholders.

Our operating expenses may increase in the future and, to the extent such increases cannot be passed on to tenants, our cash flow and our operating results would decrease.

Operating expenses, such as expenses for fuel, utilities, labor and insurance, are not fixed and may increase in the future. There is no guarantee that we will be able to pass such increases on to tenants of real property we own. To the extent such increases cannot be passed on to tenants, any such increase would cause our cash flow and our operating results to decrease.

Real property that incurs a vacancy could be difficult to sell or re-lease.

Real property may incur a vacancy either by the continued default of a tenant under its lease or the expiration of a lease. Additionally, the recent economic downturn in the United States may lead to increased defaults by tenants. Certain of the real properties we may acquire may have some level of vacancy at the time of closing. If the vacancy continues for a long period of time, we may suffer reduced revenues resulting in lower cash distributions to stockholders. In addition, the resale value of the real property could be diminished because the market value may depend principally upon the value of the leases of such real property.

Real property will be subject to property taxes that may increase in the future, which could adversely affect our cash flow.

Real property is subject to real and personal property taxes that may increase as tax rates change and as real property is assessed or reassessed by taxing authorities. We anticipate that certain of our leases will generally provide that the property taxes, or increases in property taxes, are charged to the lessees as an expense related to the real property that they occupy, while other leases will generally provide that we are responsible for such taxes. In any case, we are ultimately responsible for payment of the taxes to the applicable government authorities. If real property taxes increase, tenants may be unable to make the required tax payments, ultimately requiring us to pay the taxes even if otherwise stated under the terms of the lease. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale. In addition, we will generally be responsible for real property taxes related to any vacant space.

Our parking facilities also may be subject to sales and parking taxes and, to the extent we are unable to require compliance by our lessee or manager of such regulations, or to the extent a lessee or manager fails to comply with such regulations, we may be obligated to withhold and remit such taxes or a direct assessment may be imposed upon us for failure to remit sales/parking taxes or failure to file the appropriate tax return.operations.

Uninsured losses or premiums for insurance coverage relating to real property may adversely affect stockholder returns.

Our real properties may incur casualty losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Risks associated with potential acts of terrorism acts could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders sometimes require property owners to purchase specific coverage against terrorism as a condition for providing mortgage loans. These policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance real property we may hold. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. Changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our real property incurs a casualty loss which is not fully covered by insurance, the value of our assets will be reduced by any such uninsured loss. In addition, we cannot assure stockholders that funding will be available to us for repair or reconstruction of damaged real property in the future.

Actions of joint venture partners could negatively impact our performance.

We may enter into joint ventures with third parties, including with entities that are affiliated with the Advisor. We may also purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements with the sellers of the properties, affiliates of the sellers, developers or other persons. Such investments may involve risks not otherwise present with a direct investment in real estate, including, for example:

the possibility that our venture partner or co-tenant in an investment might become bankrupt or fail to fund their required capital contributions;

that the venture partner or co-tenant may at any time have economic or business interests or goals which are, or which become, inconsistent with our business interests or goals;

that such venture partner or co-tenant may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives;

the possibility that we may incur liabilities as a result of an action taken by such venture partner;

that disputes between us and a venture partner may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business;


the possibility that if we have a right of first refusal or buy/sell right to buy out a co-venturer, co-owner or partner, we may be unable to finance such a buy-out if it becomes exercisable or we may be required to purchase such interest at a time when it would not otherwise be in our best interest to do so; or

the possibility that we may not be able to sell our interest in the joint venture if we desire to exit the joint venture.

Under certain joint venture arrangements, neither party has the power to control the joint venture, potentially resulting in an impasse in decision-making, which might have a negative influence on the joint venture and decrease potential returns to stockholders. In addition, to the extent that our venture partner or co-tenant is an affiliate of the Advisor, certain conflicts of interest will exist.

Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.

From time to time, we may seek to acquire multiple properties in a single transaction. Portfolio acquisitions are more complex and expensive than single property acquisitions, and the risk that a multiple-property acquisition does not close may be greater than in a single-property acquisition. Portfolio acquisitions may also result in us owning investments in geographically dispersed markets, placing additional demands on our ability to manage the properties in the portfolio. In addition, a seller may require that a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another person or entity to acquire the unwanted properties, we may be required to operate or attempt to dispose of these properties. To acquire multiple properties in a single transaction we may be required to accumulate a large amount of cash. We would expect the returns that we earn on such cash to be less than the ultimate returns on real property, therefore accumulating such cash could reduce our funds available for distributions. Any of the foregoing events may have an adverse effect on our operations.

CostsOur costs of complying with governmental laws and regulations related to environmental protection and human health and safety may be high.

All real property investments and the operations conducted in connection with such investments are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. Some of these laws and regulations may impose joint and several liabilities on customers, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal.

Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such real property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such real property as collateral for future borrowings. For example, the presence of significant mold or other airborne contaminants at any of our real property investments could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to increase ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs.

Environmental laws also may impose restrictions on the manner in which real property may be used or businesses may be operated. Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Additionally, operations of our parking facilities and other tenant operations, the existing condition of land when we buy it, operations in the vicinity of our real property, such as the presence of underground storage tanks, oil leaks and other vehicle discharge, or activities of unrelated third parties may affect our real property. There are also various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance. In connection with the acquisition and ownership of real property, we may be exposed to such costs in connection with such regulations. The cost of defending against environmental claims, of any damages

or fines we must pay, of compliance with environmental regulatory requirements or of remediating any contaminated real property could materially and adversely affect our business, lower the value of our assets or results of operationsand,operations and, consequently, lower the amounts available for distribution to stockholders.

Real property investments may contain or develop harmful mold or suffer from other indoor air quality issues, which could lead to liability for adverse health effects or property damage or cost for remediation.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our real property investments could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to increase ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs.

The costs associated with complying with the Americans with Disabilities Act may reduce the amount of cash available for distribution to our stockholders.

Investment in real property may be subject to the Americans with Disabilities Act of 1990, as amended, or ADA. Under the ADA, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The ADA has separate compliance requirements for "public accommodations" and "commercial facilities" that generally require that buildings and services be made accessible and available to people with disabilities. With respect to the properties we acquire, the ADA's requirements could require us to remove access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any monies we use to comply with the ADA will reduce the amount of cash available for distribution to our stockholders.

Real property is an illiquid investment, and we may be unable to adjust our portfolio in response to changes in economic or other conditions or sell a property if or when we decide to do so.

Real property is an illiquid investment. We may be unable to adjust our portfolio in response to changes in economic or other conditions. In addition, the real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any real property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a real property. Also, we may acquire real properties that are subject to contractual "lock-out"“lock-out” provisions that could restrict our ability to dispose of the real property for a period of time.time, and a number of our assets are subject to loans that impose prepayment penalties or debt breakage costs that could significantly impair our ability to sell that asset or the net value realized from any such sale.

We may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure stockholders that we will have funds available to correct such defects or to make such improvements.improvements.

In acquiring a real property, we may agree to restrictions that prohibit the sale of that real property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that real property. Our real properties may also be subject to resale restrictions. All these provisions would restrict our ability to sell a property, which could reduce the amount of cash available for distribution to our stockholders.

The bankruptcy, insolvency or other loss of a significant lessee or parking facility manager may adversely impact our operations and our ability to pay distributions to our stockholders.

A single lessee accounted for a significant portion of our parking base rental revenue as of December 31, 2016.  See "Item 1. Business –Investment Strategy– Concentration" for more information.  The inability of any of our significant

lessee or parking managers to pay rent or fees, as applicable, or a decision by a significant lessee or parking manager to terminate a lease or management agreement prior to, or at the conclusion of, their term or any other loss of a significant lessee or parking manager could have a significant negative impact on our results of operations or financial condition if a suitable replacement lessee or manager is not secured in a timely manner. The bankruptcy, insolvency or other loss of a significant lessee or parking facility manager may have an adverse impact on our income and our ability to pay distributions to our stockholders. Generally, under bankruptcy law, a debtor tenant has 120 days to exercise the option of assuming or rejecting the obligations under any unexpired lease for nonresidential real property, which period may be extended once by the bankruptcy court. If the tenant assumes its lease, the tenant must cure all defaults under the lease and may be required to provide adequate assurance of its future performance under the lease. If the tenant rejects the lease, we will have a claim against the tenant's bankruptcy estate. Although rent owing for the period between filing for bankruptcy and rejection of the lease may be afforded administrative expense priority and paid in full, pre-bankruptcy arrears and amounts owing under the remaining term of the lease will be afforded general unsecured claim status (absent collateral securing the claim). Moreover, amounts owing under the remaining term of the lease will be capped. Other than equity and subordinated claims, general unsecured claims are the last claims paid in a bankruptcy and therefore funds may not be available to pay such claims in full.

Declines in the market values of our investments may adversely affect periodic reported results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our stockholders.

Some of our assets will be classified for accounting purposes as "available-for-sale."“available-for-sale.” These investments are carried at estimated fair value, and temporary changes in the market values of those assets will be directly charged or credited to stockholders'stockholders’ equity without impacting net income on the income statement. Moreover, if we determine that a decline in the estimated fair value of an available-for-sale security falls below its amortized value and is not temporary, we will recognize a loss on that security on the income statement, which will reduce our earnings in the period recognized.


A decline in the market value of our assets may adversely affect us particularly in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we were unable to post the additional collateral, we may have to sell assets at a time when we might not otherwise choose to do so. A reduction in credit available may reduce our earnings and, in turn, cash available for distribution to stockholders.

Further, credit facility providers may require us to maintain a certain amount of cash reserves or to set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on equity. In the event that we are unable to meet these contractual obligations, our financial condition could deteriorate rapidly.

Market values of our investments may decline for a number of reasons, such as changes in prevailing market rates, increases in defaults, increases in voluntary prepayments for those investments that we have that are subject to prepayment risk, widening of credit spreads and downgrades of ratings of the securities by ratings agencies.

We are subject to additional risks from our international investments.

We expect to purchase real estate investments located outside the United States. These investments may be affected by factors peculiar to the laws and business practices of the jurisdictions in which the properties are located. These laws and business practices may expose us to risks that are different from and in addition to those commonly found in the United States. Foreign investments could be subject to the following additional risks:

the burden of complying with a wide variety of foreign laws;

changing governmental rules and policies, including changes in land use and zoning laws, more stringent environmental laws or changes in such laws;



existing or new laws relating to the foreign ownership of real property and laws restricting the ability of foreign persons or companies to remove profits earned from activities within the country to the person's or company's country of origin;

the potential for expropriation;

possible currency transfer restrictions;

imposition of adverse or confiscatory taxes;

changes in real estate and other tax rates and changes in other operating expenses in particular countries;

possible challenges to the anticipated tax treatment of the structures that allow us to acquire and hold investments;

adverse market conditions caused by terrorism, civil unrest and changes in national or local governmental or economic conditions;

the willingness of domestic or foreign lenders to make loans in certain countries and changes in the availability, cost and terms of loan funds resulting from varying national economic policies;

general political and economic instability in certain regions;

the potential difficulty of enforcing obligations in other countries; and

our limited experience and expertise in foreign countries relative to its experience and expertise in the United States.

Investments in properties outside the United States subject us to foreign currency risks, which may adversely affect distributions and our REIT status.

Revenues generated from any properties or other real estate investments we acquire or ventures we enter into relating to transactions involving assets located in markets outside the United States likely will be denominated in the local currency. Therefore any investments we make outside the United States may subject us to foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar. As a result, changes in exchange rates of any such foreign currency to U.S. dollars may affect our revenues, operating margins and distributions and may also affect the book value of our assets and the amount of stockholders' equity.

Changes in foreign currency exchange rates used to value a REIT's foreign assets may be considered changes in the value of the REIT's assets. These changes may adversely affect our status as a REIT. Further, bank accounts in foreign currency that are not considered cash or cash equivalents may adversely affect our status as a REIT.

Inflation in foreign countries, along with government measures to curb inflation, may have an adverse effect on our investments.

Certain countries have in the past experienced extremely high rates of inflation. Inflation, along with governmental measures to curb inflation, coupled with public speculation about possible future governmental measures to be adopted, has had significant negative effects on the certain international economies in the past and this could occur again in the future. The introduction of governmental policies to curb inflation can have an adverse effect on our business. High inflation in the countries in which we purchase real estate or make other investments could increase our expenses and we may not be able to pass these increased costs onto our tenants.

Lack of compliance with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including potential competitors, are not subject to these prohibitions. Fraudulent practices, including corruption, extortion, bribery, pay-offs, theft and others, occur from time-to-time in countries in which we may do business. If people acting on our behalf or at our request are found to have engaged in such practices, severe penalties and other consequences could be imposed on us that may have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay distributions to our stockholders and the value of a stockholder's investment.

Risks Related to Our Financing Strategy

We may not be able to access financing sources on attractive terms or at all, which could adversely affect our ability to execute our business plan.

WeOur operating income has been, and we expect may continue to be, insufficient to cover our operating expenses and other liquidity needs.  In addition, we have and intend to continue to finance our assets with outside capital.  As a result of Nasdaq’s decision not to approve the listing of the Company’s common stock, our ability to raise equity capital will be limited in the future.  In addition, we currently have limited or no access to additional debt financing and, as a result, expect that we will be dependent on the sale of assets for liquidity. In the past we have used short-term financing to complete planned development projects, perform renovations to our properties, or to meet other liquidity needs, however we do not believe such financing is currently available to us.

We do not know whether anyexpect that we will be able to obtain additional financing on acceptable terms or at all.  Future access to sources of capitalfinancing will depend upon a number of factors, over which we may have little or no control, including:

general market conditions;
a financing source’s view of the quality of our assets;
a financing source’s perception of our financial condition and growth potential; and
our current and potential future earnings and cash distributions.

In addition, our ability to sell assets may also be availablelimited due to us inseveral factors, including general market conditions and limitations under our existing loan agreements, and as a result, we may receive less than the futurevalue at which those assets are carried on terms that are acceptableour consolidated financial statements or we may be unable to us, ifsell certain assets at all.

If we cannot obtain sufficient capital on acceptable terms, our businesses and our ability to operate could be severelymaterially adversely impacted.

We have broad authorityIn addition to incurcustomary representations, warranties, covenants, and indemnities, our existing loan agreements require us and/or our subsidiaries to comply with covenants involving, among other matters, limitations on incurrence of indebtedness, debt cancellation, property cash flow allocation, liens on properties and high debt levelsrequirements to maintain minimum unrestricted cash balances. As noted above, unless we are able to sell assets, we may be unable to meet the minimum unrestricted cash balances in our loan agreements, which could hinderresult in events of default.  Our existing loan agreements contain covenants that may limit our ability to make distributionssell assets, including covenants that limit debt cancellation and decreaseassignment of debt in connection with the valuesale of a stockholder's investment.an asset. In addition, certain of our assets are collateral under multiple loan agreements, which may limit our ability to sell such assets. We may enter into additional loan agreements that also may contain covenants, including those requiring us to comply with various financial covenants.

If we breach covenants under our loan agreements, we could be held in default under such loans, which could accelerate our repayment date and materially adversely affect our financial condition, results of operations and cash flows.

Our charter does not limit us from incurring debt until our borrowings would exceed 300%failure to comply with covenants in any of our net assets. Further, we can increase our borrowings in excessloan agreements will likely constitute an event of 300%default and, if not cured or waived, may result in:
acceleration of all of our net assets, ifdebt under such loan agreement (and any other debt containing a majoritycross-default or cross-acceleration provision, including certain of our independent directors approveloan agreements) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all;
our inability to borrow any unused amounts under such increase and loan agreement, even if we are current in payments on borrowings under such loan agreement; and/or
the justification for such excess borrowing is disclosedloss of some or all of our assets to foreclosure or sale.


Further, our stockholders in our next quarterly report. Our board of directors is required to review our debt levels at least quarterly. High debt levels would cause us to incur higher interest charges and higher debt service payments and could also be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute andloan agreements may contain cross default provisions, which could result in a decline in the value of a stockholder's investment.default on our other outstanding debt.

We expect to use credit facilities to finance our investments, which may require us to provide additional collateral and significantly impact our liquidity position.

On October 5, 2016, we and MVP REIT, Inc. ("MVP REIT"), as borrowers, through our respective operating partnerships, entered into an unsecured credit agreement with KeyBank, National Association as the administrative agent and KeyBanc Capital Markets as the lead arranger.  Pursuant to the unsecured credit agreement, the borrowers were provided with a $30 million unsecured credit facility, which may be increased up to $100 million, in minimum incrementsAny such event of $10 million, for a maximumdefault, termination of $70 million increase. The unsecured credit facility has an initial termcommitments, acceleration of two years, maturing on October 5, 2018, and may be extended for a one-year period if certain conditions are met and upon payment of an extension fee.

We expect to use this credit facility and potential other credit facilities to finance somepayments, or foreclosure of our investments. In a weakening economic environment, we would generally expect credit quality to decline, resulting in a higher likelihood that the lenders would require partial repayment from us, which could be substantial. Posting additional collateral to support our credit facilities could significantly reduce our liquidity and limit our ability to leverage our assets. In the event we do not have sufficient liquidity to meet such requirements, lending institutions can accelerate our indebtedness, whichassets could have a material adverse effect on our businessfinancial condition, results of operations and operations.cash flows and ability to continue to operate or make distributions to our stockholders in the future. A default also could limit significantly our financing alternatives, which could cause us to curtail our investment activities and/or dispose of assets. A default could also make it difficult for us to satisfy the qualification requirements necessary to maintain our status as a REIT for U.S. federal income tax purposes. It is also possible that we could become involved in litigation related to matters concerning the loan, and such litigation could result in significant costs to us.

Instability in the debt markets and other factors may make it more difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire and the amount of cash distributions we can make to our stockholders.

If mortgage debt is unavailable on reasonable terms as a result of increased interest rates or other factors, we may not be able to finance the initial purchase of properties. In addition, if we place mortgage debt on properties, we run the risk of being unable to refinance such debt when the loans come due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to sell properties on terms that are not advantageous to us or could result in the foreclosure of such properties. For example, some of our loans are packed into commercial mortgage-backed securities, which place restrictions on our ability to restructure such loans without the consent of holders of the commercial mortgage-backed securities. Obtaining such consents may be time-consuming or may not be possible at all and could delay or prevent us from restructuring one or more loans. If any of these events occur, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to stockholders and may hinder our ability to raise more capital by issuing securities or by borrowing more money.

Increases in interestInterest rates may increase, which could increase the amount of our debt payments and negatively impact our operating results.

Interest we pay on our debt obligations will reduce cash available for distributions. If we incur variable rate debt, increasesIncreases in interest rates would increase our interest costs on our variable rate debt and increase the cost of refinancing existing debt and issuing new debt, which wouldcould limit our growth prospects, reduce our cash flows and our ability to make distributions to stockholders. If we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times which may not permit realization of the maximum return on such investments. The effect of prolonged interest rate increases could materially adversely impact our ability to make acquisitions and develop properties.

LendersFailure to hedge effectively against interest rate changes may require us to enter into restrictive covenants relating tomaterially adversely affect our business, financial condition, results of operations which could limit ourand ability to make distributions to our stockholders.

When providing financing, a lenderWe currently have, and may impose restrictions on usincur in the future, debt that bears interest at variable rates. An increase in interest rates would increase our interest costs to the extent we have not effectively hedged against such increase, which could adversely affect our distributioncash flows and operating policiesresults of operations. Subject to our qualification and maintaining our qualification as a REIT for U.S. federal income tax purposes and our exemption from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), we may manage and mitigate our exposure to interest rate risk attributable to variable-rate debt by using interest rate swap arrangements, interest rate cap agreements and other derivatives. The goal of any interest rate management strategy that we may adopt is to minimize or eliminate the effects of interest rate changes on the value of our assets, to improve risk-adjusted returns and, where possible, to lock in, on a long-term basis, a favorable spread between the yield on our assets and the cost of financing such assets. However, these derivatives themselves expose us to various risks, including the risk that: (i) counterparties may fail to honor their obligations under these arrangements; (ii) the credit quality of the counterparties owing money under these arrangements may be downgraded to such an extent that it impairs our ability to incursell or assign our side of the hedging transactions; (iii) the duration of the hedging transactions may not match the duration of the related liability; (iv) these arrangements may not be effective in reducing our exposure to interest rate changes; and (v) these arrangements may actually result in higher interest rates than we would otherwise have. Moreover, no hedging activity can completely insulate us from the risks associated with changes in interest rates. Failure to hedge effectively against interest rate changes may materially adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.


Certain loans are and may be secured by mortgages on our properties and if we default under our loans, we may lose properties through foreclosure.

We have obtained, and intend to continue to obtain, loans that are secured by mortgages on our properties, and we may obtain additional debt. Loan documentsloans evidenced by promissory notes secured by mortgages on our properties. As a general policy, we enter intowill seek to obtain mortgages securing indebtedness which encumber only the particular property to which the indebtedness relates, but recourse on these loans may include all of our assets. If recourse on any loan incurred by us to acquire or refinance any particular property includes all of our assets, the equity in other properties could be reduced or eliminated through foreclosure on that loan. If a loan is secured by a mortgage on a single property, we could lose that property through foreclosure if we default on that loan. We may also give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. Some of our loans contain covenantscross collateralization or cross default provisions, and therefore, a default on a single property could affect multiple properties. In addition, for tax purposes, a foreclosure on any of our properties that limitis subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to further mortgagemeet the REIT distribution requirements imposed by the Code. Further, if we default under a property, discontinue insurance coverage, or replace the Advisor. In addition, loan, documents may limit our ability to replace a property's property manager or terminate certain operating or lease agreementsit is possible that we could become involved in litigation related to a property. Thesematters concerning the loan, and such litigation could result in significant costs to us which could affect distributions to stockholders or other limitations may adversely affectlower our flexibility andworking capital reserves or our ability to achieve our investment objectives.overall value.

Risks Related to Conflicts of Interest

The fees we and the Sponsor pay to affiliates in connection with our offering of common stock and in connection with the acquisition and management of our investments were not determined on an arm's length basis; therefore, we do not have the benefit of arm's length negotiations of the type normally conducted between unrelated parties.

The fees being paid to the Advisor, our affiliated selling agent and other affiliates for services they provide for us were not determined on an arm's length basis. As a result, the fees have been determined without the benefit of arm's length negotiations of the type normally conducted between unrelated parties and may be in excess of amounts that we would otherwise pay to third parties for such services.

Our UPREIT structure may result in potential conflicts of interest with limited partners in our operating partnership whose interests may not be aligned with those of our stockholders.

Limited partners of our operating partnership may receive the right to vote on certain amendments to the operating partnership agreement, as well as on certain other matters. Persons holding such voting rights may exercise them in a manner that conflicts with the interests of our stockholders. As general partner of our operating partnership, we are obligated to act in a manner that is in the best interest of all partners of our operating partnership. Circumstances may arise in the future when the interests of limited partners in our operating partnership may conflict with the interests of our stockholders. These conflicts may be resolved in a manner stockholders do not believe are in their best interest.

Our executive officers and the Advisor's key real estate, finance and securities professionals will face conflicts of interest caused by our compensation arrangements with the Advisor and its affiliates, which could result in actions that are not in the long-term best interests of our company.

Our executive officers and the Advisor's key real estate, finance and securities professionals are also officers, directors, managers and/or key professionals of our Sponsor, our affiliated selling agent and other affiliated entities. The Advisor, our affiliated selling agent and other affiliated entities will receive substantial fees from us. These fees could influence the advice given to us by the key personnel of the Advisor and its affiliates. Among other matters, these compensation arrangements could affect their judgment with respect to:

the continuation, renewal or enforcement of our agreements with the Advisor, our affiliated selling agent and other affiliated entities, including the advisory agreement and the selling agreements with our selling agents;

public offerings of equity by us, which would enable our affiliated selling agent to earn additional selling commissions and the Advisor to earn additional acquisition and asset management fees;

acquisitions of investments for us by affiliates, which entitle the Advisor to acquisition and asset management fees and, in the case of acquisitions of real property from other affiliated entities, might entitle affiliates of the Advisor to disposition fees in connection with services for the seller;

real property sales, since the asset management fees payable to the Advisor will decrease;

sales of real property, which entitle the Advisor to disposition fees; and

borrowings to acquire investments, which borrowings will increase the asset management fees payable to the Advisor.

The fees the Advisor receives in connection with transactions involving the acquisition of an asset are based on the cost of the investment, and not based on the quality of the investment or the quality of the services rendered to us. Additionally, the payment of certain fees may influence the Advisor to recommend transactions with respect to the sale of a property or properties that may not be in our best interest at the time. Investments with higher net operating income growth potential are generally riskier or more speculative. In evaluating investments and other management strategies, the opportunity to earn fees may lead the Advisor to place undue emphasis on criteria relating to its compensation at the expense of other criteria, such as the preservation of capital, to achieve higher short-term compensation. Considerations relating to our affiliates' compensation from us and other affiliates could result in decisions that are not in the best interests of our stockholders, which could hurt our ability to pay distributions to stockholders or result in a decline in the value of their investment.

Our affiliated selling agent, MVP American Securities, will face conflicts of interest in connection with its due diligence review and investigation of us and otherwise relating to the services provided on our behalf.

MVP American Securities is an affiliate of the Advisor and received fees for acting as our affiliated selling agent in the primary offering. Because MVP American Securities is an affiliate, its due diligence review and investigation of us and our public offering documents cannot be considered to be an independent review and, therefore, may not be as meaningful as a review conducted by an unaffiliated broker-dealer. In addition, MVP American Securities may act as a selling agent in future programs, if any, that may be sponsored by affiliates of the Advisor. We may compete for investors with any such future programs and any overlap of such offerings with our offering could adversely affect our ability to raise all the capital we seek in our initial public offering, the timing of sales of our shares and the amount of proceeds we have to spend on real estate investments.

Our Sponsor will face conflicts of interest relating to performing services on our behalf and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could limit our ability to make distributions and reduce stockholders overall investment return.

Our Sponsor and other affiliated entities rely on many of the same real estate, finance and securities professionals as the Advisor. Our investment strategy is very similar to that of our Sponsor and its affiliated entities, including MVP REIT, Inc. When these real estate, finance and securities professionals direct an investment opportunity to any affiliated entity, they, in their sole discretion, will offer the opportunity to the entity for which the investment

opportunity is most suitable based on the investment objectives, portfolio and criteria of each entity. The allocation of investment opportunities could result in us investing in assets that provide less attractive returns, reducing the level of distributions we may be able to pay to stockholders.

Further, our directors and officers, our Sponsor, the Advisor, Michael V. Shustek and any of their respective affiliates, employees and agents are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the acquisition or sale of real estate investments or that otherwise compete with us.

The Advisor's real estate, finance and securities professionals acting on behalf of the Advisor will face competing demands relating to their time and this may cause our operations and a stockholder's investment to suffer.

Our Sponsor and other affiliated entities rely on many of the same real estate, finance and securities professionals as the Advisor, including Mr. Shustek, for the day-to-day operation of our business. Mr. Shustek is also an executive officer of other affiliated entities, including serving as the Chief Executive Officer of MVP REIT, Inc. As a result of his interests in other affiliated entities and the fact that he engages in and will continue to engage in other business activities on behalf of himself and others, Mr. Shustek will face conflicts of interest in allocating his time among us, our Sponsor and other affiliated entities and other business activities in which he is involved. These conflicts of interest could result in declines in the returns on our investments and the value of a stockholder's investment.

The Advisor may have conflicting fiduciary obligations if we enter into joint ventures or engage in other transactions with its affiliates. As a result, in any such transaction we may not have the benefit of arm's-length negotiations of the type normally conducted between unrelated parties.

We have made and may continue to make co-investments in real estate with affiliates of the Advisor, including MVP REIT, through a joint venture. In these circumstances, the Advisor will have a conflict of interest when fulfilling its fiduciary obligation to us. In any such transaction, we would not have the benefit of arm's-length negotiations of the type normally conducted between unrelated parties.

Our executive officers and the Advisor's key real estate, finance and securities professionals face conflicts of interest related to their positions and interests in our affiliates, which could hinder our ability to implement our business strategy and to generate returns to stockholders.

Our executive officers and the Advisor's key real estate, finance and securities professionals are also executive officers, directors, managers and key professionals of MVP American Securities and/or other affiliated entities. As a result, they owe duties to each of these entities, their members and limited partners and these investors, which duties may from time to time conflict with the fiduciary duties that they owe to us. Their loyalties to these other entities and investors could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our investment and leasing opportunities. Conflicts with our business and interests are most likely to arise from involvement in activities related to (a) allocation of new investments and management time and services between us and the other entities, (b) the timing and terms of the investment in or sale of an asset, (c) development of our stockholders. In addition, our Sponsor may grant equity interests in the Advisor to certain management personnel performing services for the Advisor.properties by such affiliates, and (d) investments with such affiliates. The loyalties of these individuals to other entities and investors could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our investment and leasing opportunities. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to make distributions to stockholders and to maintain or increase the value of our assets.

We may purchase real propertyFurther, our directors and officers and any of their respective affiliates are not prohibited from third parties who have existingengaging, directly or previous business relationships with affiliates of the Advisor, and, as a result,indirectly, in any such transaction, we may not havebusiness or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the benefitacquisition or sale of arm's-length negotiations of the type normally conducted between unrelated parties.real estate investments or that otherwise compete with us.

We may purchase real estate from third parties that have existing or previous business relationships with affiliatesThe issuance of common stock as consideration in the Advisor. The officers, directors or employees of the AdvisorInternalization has and its affiliates maywill have a conflict in representing our interests in these transactions on the one hand and the interests of such affiliates in preserving or furthering their respective relationships on the other hand. In any such transaction, we will not have the benefit of arm's-length negotiations of the type normally conducted between unrelated parties, and the purchase price or fees paid by us may be in excess of amounts that we would otherwise pay to third parties.

A stockholder's interest in us could be diluteddilutive effect and we could incur other significant costs associated with being self-managed if we internalize our management functions.the Internalization.

Our boardThe issuances of directors may decideshares of Common Stock as the consideration in connection with the future to internalize our management functions. If we do so, we may elect to negotiate to acquire the Advisor's assetsInternalization had and the personnel that the Advisor utilizes to perform services on its behalf for us. The payment of such consideration could result in dilution ofwill have a stockholder's interestdilutive effect and couldwill reduce the income per share attributable to a stockholder's investment. Additionally, although we would no longer bear the costsvoting power and relative ownership percentage interests of the various fees and expenses we expect to payholders of Common Stock prior to the Advisor underInternalization.

In addition, following the advisory agreement,Internalization, our direct expenses wouldcontinue to include increased general and administrative costs, including legal, accounting and other expenses related to corporate governance, SEC reporting and compliance.costs. We would also employ personnel and would beare subject to potential liabilities commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances as well as incur the compensation and benefits costs of our officers and other employees and consultants. We have issued and may issue additional equity awards to officers, employees and consultants, which awards would decrease our net income and funds from operationsFFO and may further dilute a stockholder'sstockholder's investment. We cannot reasonably estimate

Our independent board members reviewed and analyzed the amountestimated costs of advisory fees we would save orInternalization and the anticipated and perceived benefits and savings associated therewith and compared them against the estimated costs we would incur if we become self-managed.of continuing to be externally managed. The costs of Internalization and cost savings estimates, however, were based upon certain assumptions, including regarding future growth, and may prove to be incorrect. If the expenses we assume as a result of an internalization are higher than the expenses we avoid paying to the Advisor,so, our income per share wouldcould be lower as a result of the internalizationInternalization than it otherwise would have been, potentially decreasing the amount of cash available to distribute to our stockholders and the value of our shares.


The Internalization transactions involving the acquisition of advisors affiliated with entity sponsors have also, in some cases, been the subject of litigation. Even if these claims are without merit, we could be forced to spend significant amounts of money defending claims which would reduce the amount of cash available for us to originate or acquire assets, and to pay distributions. If we internalize our management functions, wewas only recently completed. We could have difficulty integrating these functions as a stand-alone entity. Currently, the Advisor and its affiliates perform asset management and general and administrative functions, including accounting and financial reporting, for multiple entities. These personnel have substantial know-how and experienceentity, which provides us with economies of scale. We may fail to properly identify the appropriate mix of personnel and capital needs to operate as a stand-alone entity. Certain key employees may not become employees of the Advisor but may instead remain employees of the Sponsor or its affiliates. In addition, the advisory agreement provides that we will not solicit or hire the employees of the Advisor or any of its affiliates during the term of the respective agreement and for a one-year period thereafter. As a result, our board of directors, including a majority of our independent directors, may determine that it is appropriate for us to pay the Advisor consideration in order to cause it to relinquish these restrictive covenants and allow us to hire certain personnel who were performing services for us prior to the internalization.  However, no transaction with our Advisor may be undertaken unless our board of directors (including a majority of the independent directors) approve the transaction as fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from unaffiliated third parties.

An inability to manage an internalization transaction effectively could thus result in our incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. Such deficiencies could cause us to incur additional costs, and our management'smanagement's attention could be diverted from most effectively managing our investments.

As noted above, the Internalization is already the subject of litigation. Although we believe that the related claims are without merit, we have been and may continue to be forced to spend significant amounts of money defending such claims or other claims, which would reduce the amount of cash available for us to acquire assets and to pay distributions.

Risks Related to Our Corporate Structure

Certain provisions of Maryland law could inhibit changes in control.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of deterring a third party from making a proposal to acquire us or of inhibiting a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock. Under the MGCL, certain “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder (as defined in the statute) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (2) two-thirds of the votes entitled to be cast by holders of shares of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted any business combination between us and any other person.

The MGCL provides that holders of “control shares” of our company (defined as shares of voting stock that, if aggregated with all other shares of capital stock owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of issued and outstanding “control shares”) have no voting rights except to the extent approved at a special meeting of stockholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares. Our bylaws currently contain a provision exempting any and all acquisitions by any person of shares of our stock from this statute.

The “unsolicited takeover” provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses if we have a class of equity securities registered under the Exchange Act and at least three independent directors (which we will have upon the completion of this offering). These provisions may have the effect of inhibiting a third party from acquiring us or of delaying, deferring or preventing a change in control of our company under the circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-current market price. Our charter contains a provision whereby we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. See “Certain Provisions of Maryland Law and of our Charter and Bylaws—Business Combinations” and “Certain Provisions of Maryland Law and of our Charter and Bylaws—Control Share Acquisitions.”

Our charter contains provisions that make removal of our directors difficult, which makes it more difficult for our stockholders to effect changes to our management and may prevent a change in control of our company that is in the best interests of our stockholders.

Our charter provides that a director may be removed only for cause and only by the affirmative vote of at least two-thirds of all the votes of stockholders entitled to be cast generally in the election of directors. Vacancies on our board of directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any individual elected to fill such a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until his or her successor is duly elected and qualifies. These requirements make it more difficult for our stockholders to effect changes to our management by removing and replacing directors and may prevent a change in control of our company that is otherwise in the best interests of our stockholders.


Our rights and the rights of our stockholders to recover claimstake action against directors, including our independent directors and our officers are limited, which could reduce a stockholder's and our recovery against them if they negligently cause us to incur losses.limited.

As permitted by Maryland law, provides that a director has noour charter limits the liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believesof our directors and officers to be inus and our best interestsstockholders for money damages to the maximum extent permitted by Maryland law. Therefore, our directors and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter generally provides that,officers will be subject to monetary liability resulting only from:

actual receipt of an improper benefit or profit in money, property or services; or
active and deliberate dishonesty by the limitations under Maryland law, no director or officer will be liablethat was established by a final judgment as being material to us or our stockholders for monetary damages and that we must generally indemnify directors and officers for losses unless, in the casecause of independent directors, they are grossly negligent or engage in willful misconduct or, in the case of non-independent directors or officers,
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action adjudicated.

they are negligent or engage in misconduct. As a result, a stockholderwe and we mayour stockholders have more limited rights against our directors and officers that are more limited than might otherwise exist under common law, which could reduce a stockholder'sexist. Accordingly, in the event that actions taken by any of our directors or officers impede the performance of our company, stockholders and our recoveryability to recover damages from these personssuch director or officer will be limited. In addition, our charter and our bylaws require us to indemnify our directors and officers for actions taken by them in those and certain other capacities to the maximum extent permitted by Maryland law.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the exclusive forum for certain actions and proceedings that may be initiated by our stockholders against us or any of our directors, officers or other employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if they actthat court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, (b) any derivative action or proceeding brought on our behalf, (c) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders, (d) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws or (e) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our stock will be deemed to have notice of and consented to the provisions of our charter and bylaws, including the exclusive forum provisions in our bylaws. This choice of forum provisions may limit a stockholder’s ability to bring a claim in a negligent manner. In addition, wejudicial forum that the stockholder believes is favorable for such disputes and may be obligated to fund the defense costs incurred bydiscourage lawsuits against us and any of our directors, (as well as by our officers employeesor other employees. We believe that requiring these claims to be filed in a single court in Maryland is advisable because (i) litigating these claims in a single court avoids unnecessarily redundant, inconvenient, costly and agents)time-consuming litigation in some cases, which would decrease the cash otherwise available for distribution to stockholders.multiple forums and (ii) Maryland courts are authoritative on matters of Maryland law and Maryland judges have more experience in dealing with issues of Maryland corporate law than judges in any other state.

Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary or appropriate to preserve our qualification as a REIT. To help us comply with the REIT ownership requirements of the Code, among other purposes, our charter generally prohibits a person from beneficially or constructively owning more than 9.8% in value of the aggregate of our outstanding shares of capital stock or more than 9.8% in value or number of shares, whichever is more restrictive, of the aggregate of our outstanding common stock, unless exempted, prospectively or retroactively, by our board of directors. This limit can generally be waived and adjusted by our board of directors prospectively or retroactively. The ownership limit may have the effect of precluding a change in control of us by a third party, even if such change in control would be in the interest of the our stockholders (and even if such change in control would not reasonably jeopardize our REIT status). This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock. In addition, these provisions may also decrease a stockholder'sstockholder’s ability to sell their shares of our common stock.

Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may classify or reclassify any unissued shares of common stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of repurchase of any such classes or series of stock. Thus, our board of directors could authorize the issuance of shares of a class or series of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of our stockholders. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to our stockholders. However, the issuance of preferred stock must be approved by a majority of our independent directors not otherwise interested in the transaction, who will have access, at our expense, to our legal counsel or to independent legal counsel.

We are not and do not plan to be registered as an investment company under the Investment Company Act, and therefore we will not be subject to the requirements imposed and stockholder protections provided by the Investment Company Act; maintaining an exemption from registration may limit or otherwise affect our investment choices.

Neither we,None of us, our operating partnership, norOperating Partnership, or any of our subsidiaries areis registered or intendintends to register as an investment company under the Investment Company Act. Our operating partnership'sOperating Partnership’s and subsidiaries'subsidiaries’ investments in real estate will represent the substantial majority of our total asset mix. In order for us not to be subject to regulation under the Investment Company Act, we engage, through our operating partnershipOperating Partnership and our wholly and majority-owned subsidiaries, primarily in the business of buying real estate. These investments must be made within a year after our public offering ends.

If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:


limitations on capital structure;

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restrictions on specified investments;

prohibitions on transactions with affiliates; and
restrictions on specified investments;
compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

prohibitions on transactions with affiliates; and

compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. We are organized as a holding company that conducts its businesses primarily through our operating partnershipOperating Partnership and its subsidiaries. We believe neither we nornone of us, our operating partnership nor theOperating Partnership or our subsidiaries will be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because neither we nornone of us, our operating partnership nor theOperating Partnership or our subsidiaries will engage primarily or hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, through our operating partnership'sOperating Partnership’s wholly owned or majority-owned subsidiaries, we and our operating partnershipOperating Partnership will be primarily engaged in the non-investment company businesses of these subsidiaries, namely the business of purchasing or otherwise acquiring real property.

Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer'sissuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to herein as the 40% test. Excluded from the term "investment“investment securities,"” among other things, are (i) U.S. government securities and (ii) securities issued by majority-owned subsidiaries that are (a) not themselves investment companies and (b) not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act relating to private investment companies. We believe that we, our operating partnershipOperating Partnership and the subsidiaries of our operating partnershipOperating Partnership will each comply with the 40% test as we have invested in real property, rather than in securities, through our wholly and majority-owned subsidiaries. As our subsidiaries will be investing either solely or primarily in real property, they would be outside of the definition of "investment company"“investment company” under Section 3(a)(1)(C) of the Investment Company Act. As weWe are organized as a holding company that conducts its businesses primarily through our operating partnership,Operating Partnership, which in turn is a holding company conducting its business of investing in real property through wholly-ownedwholly owned or majority-owned subsidiaries. We have monitored and will continue to monitor our holdings to ensure continuing and ongoing compliance with the 40% test.

Even if the value of investment securities held by one of our subsidiaries were to exceed 40% of the value of its total assets, we expect that subsidiary to be able to rely on the exception from the definition of an investment company under Section 3(c)(5)(C) of the Investment Company Act, which is available for entities "primarily“primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate."” Section 3(c)(5)(C), as interpreted by the SEC staff, of the SEC, requires each of our subsidiaries relying on this exception to invest at least 55% of its portfolio in "mortgage“mortgage and other liens on and interests in real estate,"” which we refer to herein as "qualifying real estate assets," and maintain at least 80% of its assets in qualifying real estate assets or other real estate-related assets. The remaining 20% of the portfolio can consist of miscellaneous assets.

For purposes of the exclusions provided by Sections 3(c)(5)(C), we will classify our investments based in large measure on no-action letters issued by the SEC staff and other SEC interpretive guidance and, in the absence of SEC Guidance,guidance, on our view of what constitutes a qualifying real estate asset and a real estate related asset. Although we intend to monitor our portfolio periodically and prior to each investment acquisition and disposition, there can be no assurance that we will be able to maintain this exclusion for each of these subsidiaries. It is not certain whether or to what extent the SEC or its staff in the future may modify its interpretive guidance to narrow the ability of issuers to rely on the exemption from registration provided by Section 3(c)(5)(C). Any such future guidance may affect our ability to rely on this exception.


Although we intend to monitor our portfolio periodically and prior to each investment acquisition and disposition, there can be no assurance that we, our operating partnershipOperating Partnership or our subsidiaries will be able to maintain this exemption from registration for the Companyus and each of itsour subsidiaries. If the SEC or its staff does not agree with our determinations, we may be required to adjust our activities or those of our subsidiaries.

In the event that we, or our operating partnership,Operating Partnership, were to acquire assets that could make either entity fall within the definition of investment company under Section 3(a)(1)(C) of the Investment Company Act, we believe that we would still qualify for the exception from the definition of "investment company"“investment company” provided by Section 3(c)(6). Although the SEC or its staff has issued little interpretive guidance with respect to Section 3(c)(6), we believe that we and our operating partnershipOperating Partnership may rely on Section 3(c)(6) if 55% of the assets of our operating partnershipOperating Partnership consist of, and at least 55% of the income of our operating partnershipOperating Partnership is derived from, qualifying real estate assets owned by wholly owned or majority-owned subsidiaries of our operating partnership.Operating Partnership.

Qualification for this exemption will limit our ability to make certain investments. To the extent that the SEC staff provides more specific guidance regarding any of the matters bearing upon such tests and/or exceptions, we may be required to adjust our strategy accordingly. Any additional guidance from the SEC staff could provide additional flexibility to us, or it could further inhibit our ability to pursue the strategies we have chosen.

Further, if we, our operating partnershipOperating Partnership or our subsidiaries are required to register as investment companies under the Investment Company Act, our investment options may be limited by various limitations, such as those mentioned above, and we or our subsidiaries would be subjected to a complex regulatory scheme, the costs of compliance with which can be high.

We are an "emerging“emerging growth company"company” under the federal securities laws and will be subjectare to reduced public company reporting requirements.

In April 2012, President Obama signed into law the Jumpstart Our Business Startups Act, or the JOBS Act. We are an "emerging“emerging growth company,"” as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging“emerging growth companies."”

We could remain an "emerging“emerging growth company"company” for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues equals or exceeds $1 billion, (2) December 31 of the fiscal year that we become a "large“large accelerated filer"filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Under the JOBS Act, emerging growth companies are not required to (1) provide an auditor'sauditor’s attestation report on management'smanagement’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor'sauditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (3) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise, (4) provide certain disclosure regarding executive compensation required of larger public companies or (5) hold stockholder advisory votes on executive compensation. Certain of these exemptions are inapplicable to us because of our structure as an externally managed REIT, and we have not made a decision as to whether to take advantage of any or all of the JOBS Act exemptions that applicable to us.

In addition, the JOBS Act provides that an "emerging“emerging growth company"company” can take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. In other words, an "emerging“emerging growth company"company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of such extended transition period. Since we will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If we were to subsequently elect to instead comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

Stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks a stockholder faces.may face.

Our board of directors determines our major policies, including our policies regarding investment strategies and approach, growth, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under the Maryland General Corporation Law or MGCL,(the “MGCL”) and our charter, our stockholders have a right to vote only on limited matters. Our board's of directors’ broad discretion in setting policies and our stockholders'stockholders’ inability to exert control over those policies increase the uncertainty and risks a stockholder faces.may face.
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Stockholder's

Stockholders' interest in us willcould be diluted if we issue additional shares.shares, which could reduce the overall value of their investment.

Stockholders do not have preemptive rights to any shares issued by us in the future.future and generally have no appraisal rights. Our charter currently has authorized 100,000,000 shares of capital stock. Of the total number of shares of capital stock of whichauthorized, 98,999,000 shares are classified as common stock, par value $0.0001 per share,share; and 1,000,000 shares are classified as preferred stock, par value $0.0001 per share, within which (i) 97,000 shares are classified and designated as Series 1 Convertible Redeemable Preferred Stock, and (ii) 50,000 shares are classified and designated as Series A Convertible Redeemable Preferred Stock, and 1,000 shares are classified as convertible stock, par value $0.0001 per share. We have designated 50,000 shares of our preferred stock as the Series A Redeemable Convertible Preferred Stock, or the Series A preferred stock. Subject to any limitations set forth under Maryland law, a majority of our board of directors may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of stock of any class or series, or classify or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval.

Our All of such shares may be issued in the discretion of our board of directors is authorized, without stockholder approval, to causedirectors. A stockholder's interest in us to issuemay be diluted in the event that we (1) sell additional shares in the future, (2) sell securities that are convertible into shares of our common stock, or to raise capital through the issuance of additional preferred stock (including equity or debt securities convertible into preferred stock), options, warrants and other rights, on such terms and for such consideration as our board of directors in its sole discretion may determine.  We may(3) issue additional shares of our common stock convertible debt or preferred stock pursuant to a subsequent public offering orin a private placement,offering of securities to institutional investors, (4) issue shares of our common stock to the former Advisor, its successors or assigns, in payment of an outstanding fee obligation as set forth under our Amended and Restated Advisory Agreement or (5) issue shares of our common stock to sellers of properties we directly or indirectly acquire insteadacquired by us in connection with an exchange of or in addition to, cash consideration. Any such issuance could result in dilutionlimited partnership interests of our stockholders' equity inoperating partnership. In connection with the Company.

In particular, stockholders, including those who acquiredInternalization, we issued the former Advisor 400,000 shares of common stock in our initial public offering, have no rightsCommon Stock on April 1, 2019, and 400,000 shares of Common Stock on December 31, 2019 and are obligated to buy anyissue the former Advisor 400,000 additional shares of stock orCommon Stock on each of December 31, 2020 and 2021. We have the option to repurchase up to 1,100,000 of such shares at a price equal to $17.50 but there can be no assurance that we will do so. Because of these and other securities if we issue new shares of stock or other securities. Stockholders who doreasons described in this “Risk Factors” section, stockholders should not participate in any future stock issuances will experience dilution in theexpect to be able to own a significant percentage of the issued and outstanding stock they own.our shares. In addition, depending on the terms and pricing of any additional offerings and the value of our investments, stockholders also may experience dilution in the book value and fair mark value of, and the amount of distributions paid on, their shares.

Our Chartercharter also authorizes our board of directors, without stockholder approval, to designate and issue any classes or series of preferred stock (including equity or debt securities convertible into preferred stock) and to set or change the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions and qualifications or terms or conditions of redemption of each class or series of shares so issued. Because our board of directors has the power to establish the preferences and rights of each class or series of preferred stock, it may afford the holders of any series or class of preferred stock preferences, powers, and rights senior to the rights of holders of common stock or preferred stock.

Under this power, our board of directors has created the Series A preferred stock and the Series 1 preferred stock, each of which ranks senior to our common stock with respect to the payment of dividends and rights upon liquidation, dissolution or winding up. Specifically, payment of any distribution preferences on the Series A preferred stock, Series 1 preferred stock, or any future series of preferred stock would reduce the amount of funds available for the payment of distributions on our common stock. Further, holders of our preferred stock are entitled to receive a preference payment if we liquidate, dissolve, or wind up before any payment is made to the common stockholders, likely reducing the amount common stockholders would otherwise receive upon such an occurrence. Holders of our preferred stock will have the right to require us to convert their shares into shares of our common stock. The conversion of our preferred stock into common stock may further dilute the ownership interest of our common stockholders. Following a "Listing Event"Listing Event (as defined below), we also have the right, but not the obligation, to redeem the Series A preferred stock and Series 1 Preferred Stock. We may make suchpreferred stock and pay the redemption payments in the form of shares of our common stock, which may further dilute the ownership interest of our common stockholders.

Although the dollar amounts of such payments are unknown, the number of shares to be issued in connection with such payments may fluctuate based on the price of our common stock. If we elect to redeem any of our preferred stock with cash, the exercise of such rights may reduce the availability of our funds for investment purposes or to pay for distributions on our common stock. A "Listing Event"Listing Event is defined in the Articles Supplementary for the Series A preferred stock and Series 1 preferred stock as ana liquidity event involving the listing of our shares of common stock on national securities exchange or a merger or other transaction in which our stockholders will receive shares listed on a national securities exchange as consideration in exchange for their shares in the Company.us.

Any sales or perceived sales in the public market of shares of our common stock issuable upon the conversion or redemption of our preferred stock could adversely affect prevailing market prices of shares of our common stock. The issuance of common stock upon any conversion or redemption of our preferred stock also may have the effect of reducing our net income per share (or increasing our net loss per share). In addition, if a Listing Event occurs, the existence of our preferred stock may encourage short selling by market participants because the existence of redemption payments could depress the value or market price of shares of our common stock.

Payment of fees to the Advisor and its affiliates will reduce cash available for investment and distribution and increases the risk that stockholders will not be able to recover the amount of their investment in our shares.

The Advisor and its affiliates perform services for us in connection with the selection, acquisition, and management of our investments. We pay them substantial fees for these services, which will result in immediate dilution to the value of a stockholder's investment and will reduce the amount of cash available for investment or distribution to stockholders. We may increase the compensation we pay to the Advisor subject to approval by our board of directors, including the independent directors, and other limitations in our charter, which would further dilute a stockholder's investment and the amount of cash available for investment or distribution to stockholders. We estimate that 100% of the gross proceeds from the primary offering will be available for investments. We intend to use a portion of this amount to pay fees and expenses to the Advisor in connection with the selection and acquisition of our real estate investments, which amounts cannot be determined at the present time. We may also maintain a working capital reserve. As a result, stockholders will only receive a full return of their invested capital if we either (1) sell our assets or our company for a sufficient amount in excess of the original purchase price of our assets or (2) the market value of our company after we list our shares of common stock on a national securities exchange is substantially in excess of the original purchase price of our assets. Moreover, these fees increase the risk that the amount available for distribution to common stockholders upon a liquidation of our portfolio would be less than the purchase price of the shares of our common stock. These substantial fees and other payments also increase the risk that stockholders will not be able to resell their shares at a profit, even if our shares of common stock are listed on a national securities exchange.

Our board of directors could opt into certain provisions of the MGCL relating to deterring or defending hostile takeovers in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, "business combinations" between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder and thereafter may only be consummated if approved by two supermajority votes of our stockholders. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Pursuant to the Maryland Business Combination Act, our board of directors has exempted any business combinations between us and any person. Consequently, the five-year prohibition and the super-majority vote requirements do not apply to business combinations between us and any person.  As a result, such parties may be able to enter into business combinations with us that may not be in the best interest of our stockholders, without compliance with the supermajority vote
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requirements and the other provisions in the statute.  Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of shares of our stock. There can be no assurance that these resolutions or exemptions will not be amended or eliminated at any time in the future.

Our charter includes a provision that may discourage a person from launching a mini-tender offer for our shares.

Our charter provides that any tender offer made by a person, including any "mini-tender" offer, must comply with most provisions of Regulation 14D of the Securities Exchange Act of 1934, as amended, or the Exchange Act. A "mini-tender offer" is a public, open offer to all stockholders to buy their stock during a specified period of time that will result in the bidder owning less than 5% of the class of securities upon completion of the mini-tender offer process. Absent such a provision in our charter, mini-tender offers for shares of our common stock would not be subject to Regulation 14D of the Exchange Act. Tender offers, by contrast, result in the bidder owning more than 5% of the class of securities and are automatically subject to Regulation 14D of the Exchange Act. Pursuant to our charter, the offeror must provide our company notice of such tender offer at least 10 business days before initiating the tender offer. If the offeror does not comply with these requirements, no stockholder may transfer shares of our common stock to such offeror unless such stockholder shall have first offered such shares to us for purchase at the tender offer price. In addition, the non-complying offeror shall be responsible for all of our expenses in connection with that offeror's noncompliance. This provision of our charter may discourage a person from initiating a mini-tender offer for our shares and prevent stockholders from receiving a premium price for their shares in such a transaction.

Federal Income Tax Risks

Failure to maintain our status as a REIT could adversely affect our operations and our ability to make distributions.

We intend to qualify as a real estate investment trust, or a REIT, for federal income tax purposes. Although we have received an opinion of counsel with respect tomaintain our qualification as a REIT investors shouldwould have significant adverse consequences to us and the value of our common stock.

We elected to be aware, among other things,taxed as a REIT commencing with our taxable year ended December 31, 2017. We believe that such opinion doeswe have been organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and that our manner of operation enables us to meet the requirements for qualification and taxation as a REIT.  We have not bindrequested and do not plan to request a ruling from the Internal Revenue Service, or IRS, that we qualify as a REIT and was based on certain representationscannot assure you that we so qualify.  If we fail to qualify as a REIT or lose our REIT qualification, we will face serious tax consequences that would substantially reduce the funds available for distribution to factual mattersour stockholders for each of the years involved because:

we would not be allowed a deduction for distributions to our stockholders in computing our taxable income and covenants made by us. Bothwould be subject to regular U.S. federal corporate income tax;

we also could be subject to increased state and local taxes; and

unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the validity ofyear during which we were disqualified.

Any such opinioncorporate tax liability could be substantial and would reduce our cash available for, among other things, our operations and distributions to our stockholders. In addition, if we fail to qualify or maintain our qualification as a REIT, we will depend onnot be required to make distributions to our satisfactionstockholders. As a result of numerous requirements (some on an annualall these factors, our failure to qualify or maintain our qualification as a REIT also could impair our ability to expand our business and quarterly basis) established underraise capital and could materially and adversely affect the value of our common stock.

Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial orand administrative interpretations, and involves theinterpretations.

The determination of various factual matters and circumstances not entirely within our control. Importantly,control may affect our ability to maintain our qualification as of the date hereof we have a limited operating history and both the opinion and any other assessment regardingREIT. In order to maintain our qualification as a REIT, depends whollywe must satisfy a number of requirements, including requirements regarding the ownership of our stock, requirements regarding the composition of our assets and a requirement that at least 75% and 95% of our gross income in any year must be derived from qualifying sources. Also, we must make distributions to our stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. In addition, legislation, new regulations, administrative interpretations or court decisions may materially adversely affect our investors, our ability to maintain our qualification as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.

Even if we maintain our qualification as a REIT for federal income tax purposes, we may be subject to some federal, state and local income, property and excise taxes on projectionsour income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer. In addition, any taxable REIT subsidiaries (each, a “TRS”) that we own will be subject to tax as regular corporations in the jurisdictions they operate.

Complying with REIT requirements may force us to liquidate, restructure or forego otherwise attractive investments.

To qualify as a REIT, we must ensure that we meet the REIT gross income tests annually and that, at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities, stock in REITs and other qualifying real estate assets, including certain mortgage loans and certain kinds of mortgage-backed securities and debt instruments of publicly offered REITs. The remainder of our investments in securities (other than government securities and REIT qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and securities that are qualifying real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total securities can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive investments, and may be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the income or asset requirements for qualifying as a REIT. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.


Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.

To continue to qualify as a REIT, we must comply with requirements regarding our future activitiesassets and our ability, withinsources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on arm's length terms.
From time to time we may own interests in one year after our receipt thereof,or more TRSs.  A TRS is a corporation, other than a REIT, in which a REIT directly or indirectly holds stock and that has made a joint election with such REIT to apply the proceedsbe treated as a TRS. If a TRS owns more than 35% of the Offeringtotal voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including activities that generate fee income that would be nonqualifying income for purposes of the REIT gross income tests or the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to federal income tax as a regular C corporation. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 20% of the value of a REIT’s total assets may be represented by securities of TRSs, and not more than 25% of the value of a REIT’s total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test. We anticipate that the aggregate value of the stock and securities of any TRSs that we own will be less than 20% of the value of our total assets, and together with any other nonqualifying assets that we own will be less than 25% of the value of our total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations. We expect to hold our interests in servicer advances in a TRS; therefore, in order to comply with the 20% TRS limit, investments in servicer advances may be limited. In addition, we intend to structure our transactions with any TRSs that we own to ensure that they are entered into on arm’s-length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above.

To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could adversely affect our financial condition, results of operations, cash flow and value of our common stock.  

To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year (determined without regard to the dividends paid deduction and excluding net capital gains), and we will be subject to regular corporate income taxes to the extent that we distribute less than 100% of our REIT taxable income (determined without regard to the dividends paid deduction and including net capital gains) each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our net capital gains, and 100% of our undistributed income from prior years. To maintain our REIT qualification and avoid the payment of federal income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements, even if the then-prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from differences in timing between the actual receipt of income and inclusion of income for federal income tax purposes. For example, we may be required to accrue interest and discount income on mortgage loans, mortgage-based securities and other types of debt securities or interests in debt securities before we receive any payments of interest or principal on such assets. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial condition, results of operations, cash flow and the value of our common stock. Alternatively, we may make taxable in-kind distributions of our own stock, which may cause our stockholders to be required to pay income taxes with respect to such distributions in excess of any cash they receive, or we may be required to withhold taxes with respect to such distributions in excess of any cash our stockholders receive.


Dividends payable by REITs, including us, generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our common stock.

“Qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. Under the recently enacted Tax Cuts and Jobs Act, however, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. Although this deduction reduces the effective U.S. federal income tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the stockholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the stock of REITs, including the per share trading price of our common stock.

Complying with REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Internal Revenue Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate exposure or currency fluctuations will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if (A) the instrument hedges either (i) interest rate risk on liabilities used to carry or acquire real estate assets or (ii) currency fluctuations with respect to items of income that qualify for purposes of the REIT 75% or 95% gross income tests or assets that generate such income or (B) the transaction is entered into to hedge the income or loss from prior hedging transactions, where the property or indebtedness which was the subject of the prior hedging transaction was extinguished or disposed of, and, in any such case, such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous.

The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, that would be treated as sales for U.S. federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, but including mortgage loans, held as inventory or primarily for sale to customers in the ordinary course of business. We could be subject to this tax if we were to sell or securitize loans in a manner that was treated as a sale of the loans as inventory or primarily for sale to customers in the ordinary course of business for U.S. federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans, other than through a TRS, and we may be required to limit the structures we use for securitization transactions, even though such sales or structures might otherwise be beneficial for us.

In connection with our acquisition of certain assets, we may rely on legal opinions or advice rendered or given or statements by the issuers of such assets, and the inaccuracy of any conclusions of such opinions, advice or statements may adversely affect our REIT qualification and result in significant corporate-level tax.

When purchasing securities, we may rely on opinions or advice of counsel for the issuer of such securities, or statements made in related offering documents, for purposes of determining whether such securities represent debt or equity securities for U.S. federal income tax purposes, and also to what extent those securities constitute qualifying real estate assets for purposes of the REIT requirements.

Ifasset tests and produce income which qualifies under the 75% and 95% REIT gross income tests. In addition, when purchasing the equity tranche of a securitization, we were to fail to maintain our status as a REITmay rely on opinions or advice of counsel regarding the qualification of the securitization for exemption from U.S. corporate income tax. The inaccuracy of any taxable year,such opinions, advice or if our board of directors determined to revokestatements may adversely affect our REIT election, we would be subject to U.S. federal income tax on our taxable income at corporate rates. In addition, we would be disqualified from treatment as a REIT for the four taxable years following the yearqualification and result in which we lose our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, absent IRS relief, distributions to stockholders would no longer be deductible in computing our taxable income, and we would no longer be required to make distributions. To the extent that distributions had been made in anticipation of our qualifying as a REIT, we might be required to borrow funds or liquidate some investments in order to pay the applicable corporate incomesignificant corporate-level tax.
Lastly, it is possible that future economic, market, legal, tax or other considerations may cause our board of directors to determine that it is no longer in our best interest to continue to be qualified as a REIT and recommend that we revoke our REIT election.


Our leases must be respected as such for U.S. federal income tax purposes in order for us to qualify as a REIT.

In order for us to qualify as a REIT, at least 75% of our gross income each year must consist of real estate-related income, including rents from real property. Income from operation of our parking facilities will not be treated as rents from real property. Accordingly, we will lease our parking facilities to lessees that will operate the facilities. If such leases were recharacterized as management contracts for U.S. federal income tax purposes or otherwise as an arrangement other than a lease, we could fail to qualify as a REIT.

To qualify as a REIT, we must meet annual distribution requirements, which may result in us distributing amounts that may otherwise be used for our operations or having to borrow funds.
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To obtain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute dividends to our stockholders equal to at least 90% of our real estate investment trust taxable income, determined without regard to the dividends-paid deduction and by excluding net capital gains. We will be subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on acquisitions of properties, and it is possible that we might be required to borrow funds or sell assets to fund these distributions. We may not always be able to make distributions sufficient to meet the annual distribution requirements and to avoid corporate income and excise taxes.

From time to time, we may generate taxable income greater than our income for financial reporting purposes, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur, e.g., from (i) the effect of non-deductible capital expenditures, (ii) the creation of reserves, (iii) the recognition of original issue discount or (iv) required debt amortization payments. If we do not have other funds available in these situations, it might be necessary to arrange for short-term, or possibly long-term, borrowings, or to pay dividends in the form of our shares or other taxable in-kind distributions of property. We may need to borrow funds at times when the market conditions are unfavorable. Such borrowings could increase our costs and reduce the value of a stockholder's investment. In the event in-kind distributions are made, a stockholder's tax liabilities associated with an investment in our common stock for a given year may exceed the amount of cash we distribute to a stockholder during such year. Distributions in kind shall not be permitted, except for distributions of readily marketable securities, distributions of beneficial interests in a liquidating trust established for the dissolution of the corporation and the liquidation of its assets in accordance with the terms of the charter or distributions in which (a) the board advises each stockholder of the risks associated with direct ownership of the property, (b) the board offers each stockholder the election of receiving such in-kind distributions and (c) in-kind distributions are made only to those stockholders that accept such offer.

StockholdersYou may have current tax liability on distributions if theyyou elect to reinvest in our shares.

Our stockholders who elect to participate in the distribution reinvestment plan,Company's DRIP, if it is ever reactivated, and who are subject to U.S. federal income taxation laws, will incur a tax liability on an amount equal to the fair market value on the relevant distribution date of the shares of our common stock purchased with reinvested distributions, even though such stockholders have elected not to receive the cash distributions used to purchase those shares of common stock. As a result, if a stockholder isyou are not a tax-exempt entity, such stockholderyou may have to use funds from other sources to pay itsyour tax liability on the value of the common stock received.

Dividends payable by REITs generally do notIf our operating partnership failed to qualify as a partnership for the reduced tax rates that apply to other corporate dividends.

The maximum U.S. federal income tax rate for dividends payable by corporations to domestic stockholders that are individuals, trusts or estates is generally 20%. Dividends from REITs, however, generally continue to be taxed at the normal ordinary income rate applicable to the individual recipient, rather than the 20% preferential rate. The more

favorable rates applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations, which could adversely affect the value of the stock of REITs, including our common stock.

In certain circumstances,purposes, we may be subject to federal, state and local taxes as a REIT, which would reduce our cash available for distribution to stockholders.

Even if we qualify and maintain our status as a REIT, we may be subject to U.S. federal income taxes or state taxes. For example, net income from a "prohibited transaction," generally sales of property held primarily for sale to customers in the ordinary course of business, will be subject to a 100% tax. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We may also decide to retain capital gains we earn from the sale or other disposition of our property and pay income tax directly on such gains. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns to claim refunds. We may also be subject to state and local taxes on our income or property, either directly or at the level of the companies through which we indirectly own our assets. Any U.S. federal or state taxes we pay will reduce our cash available for distribution to stockholders.

Distributions to tax-exempt investors may be classified as unrelated business taxable income.

Neither ordinary nor capital gain distributions with respect to our common stock nor gain from the sale of common stock should generally constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In particular:

Part of the income and gain recognized by certain qualified employee pension trusts with respect to our common stock may be treated as unrelated business taxable income if shares of our common stock are

predominately held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT share ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income;

Part of the income and gain recognized by a tax-exempt investor with respect to our common stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the common stock;

Part or all of the income or gain recognized with respect to our common stock by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans which are exempt from federal income taxation under Sections 501(c)(7), (9), (17), or (20) of the Code may be treated as unrelated business taxable income.

Investments in other REITs and real estate partnerships could subject us to the tax risks associated with the tax status of such entities.

We may invest in the securities of other REITs and real estate partnerships. Such investments are subject to the risk that any such REIT or partnership may fail to satisfy the requirementscease to qualify as a REIT orand suffer other adverse consequences.

We believe that our operating partnership will be treated as a partnership as the casefor federal income tax purposes. As a partnership, our operating partnership will not be subject to federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our operating partnership or any other subsidiary partnership in which we own an interest as a partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our operating partnership or any givensuch other subsidiary partnership as an entity taxable year. In the case of a REIT, such failure would subject such entity to taxation as a corporation may require such REITfor federal income tax purposes, we would fail to incur indebtednessmeet the gross income tests and certain of the asset tests applicable to pay its tax liabilities, may reduce its ability to make distributions to us,REITs and, may render it ineligible to elect REIT status prior to the fifth taxable year following the year in which it fails to so qualify. In the case of a partnership, such failure could subject such partnership to an entity level tax and reduce the entity's ability to make distributions to us. In addition, such failures could, depending on the circumstances, jeopardize our abilityaccordingly, we would likely cease to qualify as a REIT.


Complying with Also, the REIT requirements may impact our ability to maximize profits.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sourcesfailure of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of shares of our common stock. We may be required to forego attractive investmentsoperating partnership or liquidate otherwise attractive investments to comply with such tests. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with the REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate-related assets. The remainder of our investments (other than government securities and qualified real estate-related assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, no more than 5% of the value of our assets (other than government securities and qualified real estate-related assets) can consist of the securities of any one issuer, no more than 25% (20% after 2017) of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries and no more than 25% of the value of our total assets can be represented by "nonqualified publicly offered REIT debt instruments." If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments to maintain REIT status. Such action may subject the REIT to the tax on prohibited transactions, discussed below.

Liquidation of assets may jeopardize our REIT status.

To continuesubsidiary partnerships to qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelledpartnership could cause it to liquidate our investments to satisfy our obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our status as a REIT, or we may bebecome subject to a 100% tax on any resulting gain if we sell assets that are treated as dealer property or inventory.

Certain of our business activities are potentially subject to the prohibited transactionfederal and state corporate income tax, which couldwould reduce significantly the return on a Stockholder's investment.

Our abilityamount of cash available for debt service and for distribution to dispose of property during the first few years following acquisition is restricted to a substantial extent as a result of our REIT status. Under applicable provisions of the Code regarding prohibited transactions by REITs, we will be subject to a 100% tax on any gain realized on the sale or other disposition of any property (other than foreclosure property) we own, directly or through any subsidiary entity,its partners, including our operating partnership, but excluding our taxable REIT subsidiaries, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of trade or business. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. We intend to avoid the 100% prohibited transaction tax by (1) conducting activities that may otherwise be considered prohibited transactions through a taxable REIT subsidiary, (2) conducting our operations in such a manner so that no sale or other disposition of an asset we own, directly or through any subsidiary other than a taxable REIT subsidiary, will be treated as a prohibited transaction or (3) structuring certain dispositions of our properties to comply with certain safe harbors available under the Internal Revenue Code for properties held at least two years. However, no assurance can be given that any particular property we own, directly or through any subsidiary entity, including our operating partnership, other than our taxable REIT subsidiaries, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.


Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.

We may purchase real property and lease it back to the sellers of such property. We cannot assure stockholdersyou that the Internal Revenue ServiceIRS will not challenge any characterization of such a lease as a "true“true lease,"” which would allow us to be treated as the owner of the property for federal income tax purposes. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. If a sale-leaseback transaction were so recharacterized, we mightmay fail to satisfy the REIT qualification "asset tests" or the "gross income tests" and, consequently, lose our REIT status. Alternatively, the amount of our REIT taxable income could be recalculated, which mightmay also cause us to fail to meet the distribution requirement for a taxable year.
Legislative or other actions affecting REITs could have a negative effect on our stockholders or us.
The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.

The 2017 Tax Legislation has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. We are continuing to assess the potential impact of the 2017 Tax Legislation on us as related regulations are proposed and finalized. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and IRS, any of which could lessen or increase the impact of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. While some of the changes made by the 2017 Tax Legislation may adversely affect us in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. We continue to work with our tax advisors to determine the full impact that the 2017 Tax Legislation, as a whole, will have on us.

We and the operating partnership may inherit tax liabilities from the Merger or future acquisitions.

Pursuant to the Merger, we acquired all of the assets and liabilities, including any tax liabilities, of MVP I. If MVP I failed to qualify as a REIT for any of its taxable years, MVP I would be liable for (and we, as the surviving corporation in the Merger, would be obligated to pay) regular U.S. federal corporate income tax on its taxable income for such taxable years.  In addition, to qualify as a REIT, we would have been required to distribute any earnings and profits acquired from MVP I prior to the close of the taxable year in which the Merger occurred. No rulings from the IRS were requested and no opinion of counsel was rendered regarding the federal income tax treatment of the Merger. Accordingly, no assurance can be given that MVP I qualified as a REIT for federal income tax purposes, or that MVP I does not have any other tax liabilities.


In addition, if we acquire any asset from a subchapter C corporation (i.e., a corporation generally subject to full corporate-level tax) in a merger or other transaction in which we acquire a basis in the asset determined by reference either to the subchapter C corporation's basis in the asset or to another asset, we will pay tax, at the highest U.S. federal corporate income tax rate, on any built-in gain recognized on a taxable disposition of the asset during the 5-year period after its acquisition.

The stock ownership limit imposed by the Code for REITs and our charter may restrict our business combination opportunities.

To qualify as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of any taxable year after our first year in which we qualify as a REIT. Our charter, with certain exceptions, authorizes our board of directors to take the actions that are necessary or appropriate to preserve our qualification as a REIT. Unless an exemption is granted prospectively or retroactively by our board of directors, no person (as defined to include certain entities) may own more than 9.8% in value of the aggregate of our outstanding shares of capital stock or more than 9.8%, in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of common stock following the completion of the Offering.stock. Generally, this limit can be waived and adjusted by the board of directors. In addition, our charter will generally prohibit beneficial or constructive ownership of shares of our capital stock by any person that owns, actually or constructively, an interest in any of our tenants that would cause us to own, actually or constructively, 10% or more of any of our tenants. Our board of directors may grant an exemption from the 9.8% ownership limit prospectively or retroactively in its sole discretion, subject to such conditions, representations and undertakings as required by our charter or as it may determine. These and other ownership limitations in our charter are common in REIT charters and are intended, among other purposes, to assist us in complying with the tax law requirements and to minimize administrative burdens. However, these ownership limits and the other restrictions on ownership and transfer in our charter might also delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.

Legislative or regulatory action could adversely affect us or our investors.

In recent years, numerous legislative and administrative changes have been made or proposed to the U.S. federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future and may take effect retroactively, and there can be no assurance that any such changes will not adversely affect how we are taxed or the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our shares. We urge stockholders to consult with their own tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.

Non-U.S. investors may be subject to FIRPTA on the sale of common stock if we are unable to qualify as a domestically controlled REIT.

A non-U.S. person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests, is generally subject to a tax under the Foreign Investment in Real Property Tax Act of 1980, or "FIRPTA,"“FIRPTA,” on the gain recognized on the disposition. FIRPTA does not apply, however, to the disposition of stock in a REIT if the REIT is a "domestically“domestically controlled REIT."” A domestically controlled REIT is a REIT in which, at all times during a specified testing period, less than 50% in value of its shares is held directly or indirectly by non-U.S. holders. There can be no assurance that we will qualify as a domestically controlled REIT.

If we were to fail to so qualify, gain realized by a foreign investor on a sale of our common stock would be subject to FIRPTA unless our common stock was traded on an established securities market and the non-U.S. investor did not at any time during a specified testing period directly or indirectly own more than 5%10% of the value of our outstanding common stock. We are not currently traded on an established securities market, nor docan we anticipate beingprovide any assurance as to whether or when we will be traded on an established securities market in the foreseeable future.market.

Qualifying as a REIT involves highly technical and complex provisions of the Code.

Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stock ownership and other requirements on a continuing basis. In addition, our ability to satisfy the requirements to qualify as a REIT may depend in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

Retirement Plan Risks

If a stockholder fails to meet the fiduciary and other standards under ERISA or the Internal Revenue Code as a result of an investment in our stock, a stockholder could be subject to criminal and civil penalties.

There are special considerations that apply to employee benefit plans subject to the Employee Retirement Income Security Act of 1974, or ERISA, (such as pension, profit-sharing or 401(k) plans) and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code (such as an IRA or Keogh plan) whose assets are being invested in our common stock. If stockholders are investing the assets of such a plan (including assets of an insurance company general account or entity whose assets are considered plan assets under ERISA) or account in our common stock, stockholders should satisfy their self that:

stockholder investment is consistent with their fiduciary obligations under ERISA and the Internal Revenue Code;


stockholder investment is made in accordance with the documents and instruments governing your plan or IRA, including your plan or account's investment policy;

stockholder investment satisfies the prudence and diversification requirements of Section 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and/or the Internal Revenue Code;

stockholder investment will not impair the liquidity of the plan or IRA;

stockholder investment will not produce unrelated business taxable income, referred to as UBTI for the plan or IRA;

stockholders you will be able to value the assets of the plan annually in accordance with ERISA requirements and applicable provisions of the plan or IRA; and

stockholder investments will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

With respect to the annual valuation requirements described above, we expect to provide an estimated value for our shares annually by publishing such value in reports filed with the SEC.
This estimated value may not reflect the proceeds a stockholder would receive upon our liquidation or upon the sale of his or her shares. Accordingly, we can make no claim whether such estimated value will or will not satisfy the

applicable annual valuation requirements under ERISA and the Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our shares. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Internal Revenue Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to equitable remedies. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested.


ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Prior to March 2017, our corporate headquarters were located at 12730 High Bluff Drive, Suite 110, San Diego, CA  92130.  During March 2017,January 2020, the Company moved ourits headquarters to our Southern Nevada office, located atfrom 8880 West Sunset Road, Suite 240, Las Vegas, Nevada 89148 to 9130 West Post Road, Suite 200, Las Vegas, Nevada 89148.  The office in San Diego will be closed on March 31, 2017.

As of December 31, 2016,2019, the Company had acquired, along with affiliated entities, 17 propertiesheld 40 properties.


The following map and table setsset forth the property name, percentage owned, location and other information with respect to the parking lots/lots and/or facilities that the Company had acquired as of December 31, 2016:2019:


The location marks are based on dollar amounts MVP REIT II paid forthe Company has invested in each property in relation to the total property investment held at the time of purchase in relation to total purchases held at December 31, 2016.filing.

Property NameLocationAcquisition DateProperty Type # Spaces  Property Size (Acres)  Retail Sq. Ft  Investment Amount  % Owned 
MVP Cleveland West 9th (1)Cleveland, OH5/11/2016Lot  260   2.00   N/A  $5,845,000   100%
33740 Crown Colony (1)Cleveland, OH5/17/2016Lot  82   0.54   N/A  $3,049,000   100%
MVP San Jose 88 GarageSan Jose, CA6/15/2016Garage  328   1.33   N/A  $3,500,000   100%
MCI 1372 StreetCanton, OH7/8/2016Lot  66   0.44   N/A  $700,000   100%
MVP Cincinnati Race Street GarageCincinnati, OH7/8/2016Garage  350   0.63   N/A  $6,331,000   100%
MVP St. Louis WashingtonSt Louis, MO7/18/2016Lot  63   0.39   N/A  $2,957,000   100%
MVP St. Paul Holiday GarageSt Paul, MN8/12/2016Garage  285   0.85   N/A  $8,396,000   100%
MVP Louisville Station BroadwayLouisville, KY8/23/2016Lot  165   1.25   N/A  $3,107,000   100%
White Front Garage PartnersNashville, TN9/30/2016Garage  155   0.26   N/A  $11,673,000   100%
Cleveland Lincoln Garage OwnersCleveland, OH10/19/2016Garage  536   1.14   45,272  $10,649,000   100%
MVP Houston Preston LotHouston, TX11/22/2016Lot  46   0.23   N/A  $2,820,000   100%
MVP Houston San Jacinto LotHouston, TX11/22/2016Lot  85   0.65   240  $3,250,000   100%
MVP Detroit Center GarageDetroit, MI1/10/2017Garage  1,275   1.28   N/A  $55,476,000   100%
St. Louis BroadwaySt Louis, MO2/1/2017Lot  161   0.96   N/A  $2,400,000   100%
St. Louis Seventh & CerreSt Louis, MO2/1/2017Lot  174   1.06   N/A  $3,300,000   100%
MVP Preferred Parking (3)Houston, TX6/29/2017Garage/Lot  528   0.98   784  $21,210,000   100%
MVP Raider Park GarageLubbock, TX11/21/2017Garage  1,495   2.15   20,536  $13,517,000   100%
MVP PF Memphis PoplarMemphis, TN12/15/2017Lot  127   0.87   N/A  $3,747,000   100%
MVP PF St. Louis 2013St Louis, MO12/15/2017Lot  183   1.22   N/A  $5,145,000   100%
Mabley Place GarageCincinnati, OH12/15/2017Garage  775   0.9   8,400  $21,185,000   83%
MVP Denver ShermanDenver, CO12/15/2017Lot  28   0.14   N/A  $705,000   100%
MVP Fort Worth TaylorFort Worth, TX12/15/2017Garage  1,013   1.18   11,828  $27,663,000   100%
MVP Milwaukee Old WorldMilwaukee, WI12/15/2017Lot  54   0.26   N/A  $2,044,000   100%
MVP Houston Saks GarageHouston, TX12/15/2017Garage  265   0.36   5,000  $10,423,000   100%


MVP Milwaukee WellsMilwaukee, WI12/15/2017Lot  148   1.07   N/A  $5,083,000   100%
MVP Wildwood NJ Lot 1 (2)Wildwood, NJ12/15/2017Lot  29   0.26   N/A  $545,000   100%
MVP Wildwood NJ Lot 2 (2)Wildwood, NJ12/15/2017Lot  45   0.31   N/A  $686,000   100%
MVP Indianapolis City ParkIndianapolis, IN12/15/2017Garage  370   0.47   N/A  $10,934,000   100%
MVP Indianapolis WA StreetIndianapolis, IN12/15/2017Lot  141   1.07   N/A  $5,749,000   100%
MVP Minneapolis VentureMinneapolis, MN12/15/2017Lot  195   1.65   N/A  $4,013,000   100%
MVP Indianapolis MeridianIndianapolis, IN12/15/2017Lot  36   0.24   N/A  $1,601,000   100%
MVP Milwaukee ClybournMilwaukee, WI12/15/2017Lot  15   0.06   N/A  $262,000   100%
MVP Milwaukee Arena LotMilwaukee, WI12/15/2017Lot  75   1.11   N/A  $4,631,000   100%
MVP Clarksburg LotClarksburg, WV12/15/2017Lot  94   0.81   N/A  $715,000   100%
MVP Denver Sherman 1935Denver, CO12/15/2017Lot  72   0.43   N/A  $2,533,000   100%
MVP Bridgeport FairfieldBridgeport, CT12/15/2017Garage  878   1.01   4,349  $8,256,000   100%
Minneapolis City ParkingMinneapolis, MN12/15/2017Lot  268   1.98   N/A  $9,338,000   100%
MVP New Orleans RampartNew Orleans, LA2/1/2018Lot  78   0.44   N/A  $8,105,000   100%
MVP Hawaii Marks GarageHonolulu, HI6/21/2018Garage  311   0.77   16,205  $21,127,000   100%

(1) These properties are held by West 9th St. Properties II, LLC.
Property NameLocation
Purchase
Date
Property
Type
# SpacesProperty Size (Acres)
Retail
Sq Ft
 Initial Aggregate Purchase Price
%
Owned
Minneapolis City Parking, LLCMinneapolis, MN1/6/2016Lot2704.36N/A$9,395,00013.0%
MVP Denver Sherman 1935, LLCDenver, CO2/12/2016Lot720.43N/A$2,437,50024.0%
MVP Cleveland West 9th, LLC (1)Cleveland, OH5/11/2016Lot2542.16N/A$5,675,00051.0%
33740 Crown Colony, LLC (1)Cleveland, OH5/17/2016Lot820.54N/A$3,030,00051.0%
MCI 1372 Street, LLCCanton, OH7/8/2016Lot680.44N/A$700,000100.0%
MVP St. Louis Washington, LLCSt Louis, MO7/18/2016Lot630.39N/A$3,000,000100.0%
MVP Louisville Station Broadway, LLCLouisville, KY8/23/2016Lot1651.25N/A$3,050,000100.0%
MVP Houston Jefferson Lot, LLC (2)Houston, TX11/22/2016For Sale760.52N/A$700,000100.0%
MVP Houston Preston Lot, LLCHouston, TX11/22/2016Lot460.23N/A$2,800,00020.0%
MVP Houston San Jacinto Lot, LLCHouston, TX11/22/2016Lot850.65240$3,200,000100.0%
MVP Bridgeport Fairfield Garage, LLCBridgeport, CT3/30/2016Garage8781.014,349$7,800,00010.0%
MVP San Jose 88 Garage, LLCSan Jose, CA6/15/2016Garage3281.33N/A$3,575,500100.0%
MVP Cincinnati Race Street Garage, LLCCincinnati, OH7/8/2016Garage3500.63N/A$4,500,000100.0%
MVP St. Paul Holiday Garage, LLCSt Paul, MN8/12/2016Garage2850.85N/A$8,200,000100.0%
White Front Garage Partners, LLCNashville, TN9/30/2016Garage1550.26N/A$11,496,00080.0%
Cleveland Lincoln Garage Owners, LLCCleveland, OH10/19/2016Garage5361.2045,272$7,316,950100.0%
MVP Minneapolis Venture, LLCMinneapolis, MN1/6/2016For Sale1854.36N/A$6,100,00013.0%
(2) These properties are held by MVP Wildwood NJ Lot, LLC.
(3) MVP Preferred Parking holds two properties.

(1)
In November 2016, these properties were merged into one holding company called West 9th Street Properties II, LLC, for the purposes of debt financing.
(2)During March 2017, the Company signed an unsolicited Purchase Sales Agreement.

AllAs of date of filing, all of the Company'sCompany’s parking facilities were fully leased to a parking operator as of December 31, 2016, except for our MVP San Jose 88 Garage, LLC, which is under a one year parking management agreement.operators.

ITEM 3. LEGAL PROCEEDINGS

From timeSee Note P — Legal in Part II, Item 8 Notes to timethe Consolidated Financial Statements of this Annual Report for a description of a purported class action lawsuit that was filed on March 12, 2019.

The nature of the Company’s business exposes its properties, the Company, its Operating Partnership and its other subsidiaries to the risk of claims and litigation in the normal course of business. Other than as noted above or routine litigation arising out of the ordinary course of business, the Company or its subsidiaries may becomeis not presently subject to legal proceedings, claims or disputes.  As of March 24, 2017, neither the Company nor any of its subsidiaries was a party to any material pending legal proceedings.litigation nor, to its knowledge, is any material litigation threatened against the Company.

ITEM 4. MINE SAFETY DISCLOSURES

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stockholder Information

As of March 30, 2020, there were 3,808 holders of record of the Company’s common shares and 52 and 626 holders of record of the Company’s Series A and Series 1 preferred shares, respectively. The number of stockholders is based on the records of the Company’s transfer agent.

Market Information

The Company'sCompany’s shares of common stock are not currently listed on a national securities exchange or any over-the-counter market. The Company doesmarket and are not expect sharesexpected to becomebe listed in the near future, and they may not become listed at all. The board of directors does not anticipate evaluating a transaction providing liquidity for stockholders until after the date the Offering closes.future. The charter does not require the board of directors to pursue a liquidity event. Due to the uncertainties of market conditionsevent, however, as noted above, in the future,mid-2019, the Company believes setting finite dates for possible, but uncertain, liquidity events may result in actions not necessarily in the best interests or within the expectationsengaged financial and legal advisors and began to explore a broad range of the Company's stockholders. The Company expects that the Company's boardpotential strategic alternatives, including potential sales of directors, in the exercise of its fiduciary duty to stockholders, will determine to pursueassets, a liquidity event when it believes that then-current market conditions are favorable for a liquidity event, and that such a transaction is in the best interests of stockholders. A liquidity event

could include (1) thepotential sale of allthe Company or substantially all assets either on a portfolio basisportion thereof, a potential strategic business combination or individually followed by a liquidation, in which the net proceeds are distributed to stockholders, (2) a merger or another transaction approved by the board of directors in which stockholders will receive cash and/or shares of a publicly traded company or (3) a listing of shares on a national securities exchange.potential liquidation. There can be no assurance asthat the Company will cause a liquidity event to when a suitable transaction will be availableoccur in the near future or at all.


In order for members of the Financial Industry Regulatory Authority, Inc., or FINRA and their associated persons to have participated in the offering and sale of the Company'sCompany’s common shares or to participate in any future offering of common shares, the Company is required pursuant to FINRA Rule 5110 to disclose in each Annual Report distributed to stockholders a per share estimated value of the Company'sCompany’s common shares, the method by which it was developed and the date of the data used to develop the estimated value. In addition, the AdvisorCompany must prepare annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in the Company'sCompany’s common shares. For these purposes,On May 28, 2019 the Company announced an estimated per common share net asset value (“NAV”) of approximately $174.1 million or $25.10 per common share as of May 28, 2019. The estimated per common share NAV was based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the approximate number of shares shall be deemed to be $25.00outstanding, calculated as of May 29, 2019. However, the estimated NAV per share as of December 31, 2015. The basisMay 28, 2019, did not take into consideration the dilutive effect of the 1.2 million shares of common stock that, at that date, had yet to be issued to the former Advisor in connection with the Internalization. In addition, as set forth above, there is no public trading market for the shares at this valuation istime and stockholders would likely receive substantially less than $25.10 per share if a market did exist. Please see our Current Reports on Form 8-K filed with the net investment amount of SEC on May 28, 2019 for additional information regarding the Company's shares, which is basedNAV calculation, as well as “Item 1A. Risk Factors—Risks Related to an Investment in the Company–Stockholders should not rely on the "amount available for investment" percentage shown in the estimated use of proceeds table in the prospectus for the Offering.

Stockholder Information

As of March 21, 2017, there were 1,684 holders of recordNAV per share as being an accurate measure of the Company'scurrent value of our shares of common shares and 37 holders of record of the Company's preferred shares. The number of stockholders is basedstock” in this Annual Report on the records of the Company's transfer agent.Form 10-K.

Distribution PolicyReinvestment Plan

In order
On March 22, 2018 the Company suspended the payment of distributions on its common stock. There can be no assurance that cash distributions to the Company’s common stockholders will be resumed in the future. The actual amount and timing of distributions, if any, will be determined by the Company’s board of directors in its discretion and typically will depend on the amount of funds available for distribution, which is impacted by current and projected cash requirements, tax considerations and other factors. As a result, the Company’s distribution rate and payment frequency may vary from time to time. However, to qualify as a REIT for federal income tax purposes, the Company is requiredmust make distributions equal to distributeat least 90% of annualits REIT taxable income to stockholderseach year (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). The board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on the Company's financial condition and such other factors as the Company's board of directors deems relevant.

It is the Company's intention that cash distributions will be paid from modified funds from operations; however, the Company may also pay distributions from sources other than cash flow from operations, including the sale of assets, borrowings or offering proceeds. The Company has no limits on the amounts the Company may pay from such sources. The Company may also pay dividends in shares of the Company's common stock. If the Company continues to pay distributions from sources other than the Company's cash flow from operations, the funds available for investments would be reduced and the stockholders share value may be diluted. The Company may be forced to cease paying distributions if cash flows and other resources are insufficient to sustain such payments. The Company expects that the board of directors will authorize andIn addition, the Company will declare distributions based on a record date onbe subject to corporate income tax to the 24th of each month, andextent the Company expects to pay distributions on the 10th daydistributes less than 100% of the following month (or the next business day if the 10thnet taxable income including any net capital gain.

The Company is not a business day), monthlycurrently and may not in arrears.

If the Company does not havefuture generate sufficient cash flow from operations to make requiredfully fund distributions. All or a portion of the distributions the Company may need to borrow funds, request that the Advisor, in its discretion, defer its receiptbe paid from other sources, such as cash flows from equity offerings, financing activities, borrowings, or by way of waiver or deferral of fees, and reimbursements of expenses or, to the extent necessary, utilize offering proceeds in orderthat such other sources are then available. The Company has not established any limit on the extent to make cash distributions. Atwhich distributions could be funded from these other sources. Accordingly, the endamount of each calendar quarter, the Company will provide notice to the stockholders identifying the source or sources of the distribution payments made in the quarter then ended. If the Company pays distributions from sources other thanpaid may not reflect current cash flow from operations the Company will have less funds available for investments and the stockholder's overalldistributions may include a return will be reduced. If the aggregate amount of cash distributions in any given year exceeds the amount of the Company's current and accumulated earnings and profits, a stockholder's share of such excess amount (i) first will becapital, (rather than a return on capital, reducing such stockholder's tax basis in its stock, but not below zero, and (ii) thereafter, will result in gain from the sale or exchange of such stock to the extent such share of such excess amount exceeds such basis.

From inception through December 31, 2016, the Company has paid approximately $0.7 million in distributions including approximately $0.5 million in DRIP distributions to the Company's stockholders, all of which have been paid from offering proceeds and constituted a return of capital.  The Company may pay distributions from sources other than cash flow from operations, including proceeds from the Offering, the sale of assets, or borrowings.  The Company has no limits on the amounts it may pay from such sources.capital). If the Company continues to paypays distributions from sources other than cash flow from operations, the funds available to the Company for investments would be reduced and the share value may be diluted.

Please see "Management's Discussion The level of distributions will be determined by the board of directors and Analysisdepend on several factors including current and projected liquidity requirements, anticipated operating cash flows and tax considerations, and other relevant items deemed applicable by the board of Financial Condition and Results of Operations – Distributions" for more information on distributions.

Distribution Reinvestment Plandirectors.

The Company currently has issued a distribution reinvestment plan pursuant to which the Stockholder may have the distributions received automatically reinvested in additionaltotal of 83,437 shares of the Company's common stock. The Stockholder may purchase common stock under the Company's distribution reinvestment plan for $25.00 per share. However, the Company may amend the plan to offer shares at such prices as the Company determines necessary or appropriate to ensure the Company's dividends are not "preferential" for incomes tax purposes. No sales commissions will be paid in connection with shares purchased pursuant to the Company's distribution reinvestment plan.

Investors participating in the Company's distribution reinvestment plan may purchase fractional shares. If sufficient shares of the Company's common stock are not available for issuance under the Company's distribution reinvestment plan, the Company will remit excess distributions in cash to the participants. If the Stockholder elects to participate in the distribution reinvestment plan, the Stockholder must agree that, if at any time the Stockholder fails to meet the applicable investor suitability standards or cannot make the other investor representations or warranties set forth in the then current prospectus, the subscription agreement or the Company's articles relating to such investment, the Stockholder will promptly notify us in writing of that fact.

Stockholders purchasing common stock pursuant to the distribution reinvestment plan will have the same rights and will be treated in the same manner as if such common stock were purchased pursuant to this offering.

At least quarterly, the Company will provide each participant a confirmation showing the amount of the distributions reinvested in the Company's shares during the covered period, the number of shares of the Company's common stock owned at the beginning of the covered period, and the total number of shares of common stock owned at the end of the covered period. The Company have the discretion not to provide a distribution reinvestment plan, and a majority of the Company's board of directors may amend, suspend or terminate the Company's distribution reinvestment plan for any reason (except that the Company may not amend the distribution reinvestment plan to eliminate a participant's ability to withdraw from the plan) at any time upon 10 days' prior notice to the participants. The Stockholder's participation in the plan will also be terminated to the extent that a reinvestment of the Stockholder's distributions in the Company's common stock would cause the percentage ownership limitation contained in the Company's charter to be exceeded. Otherwise, unless the Stockholder terminate the Stockholder's  participation in the Company's distribution reinvestment plan in writing, the Stockholder's  participation will continue even if the shares to be issued under the plan are registered in a future registration. The Stockholder may terminate the Stockholder's participation in the distribution reinvestment plan at any time by providing us with 10 days' written notice. A withdrawal from participation in the distribution reinvestment plan will be effective only with respect to distributions paid more than 30 days after receipt of written notice. Generally, a transfer of common stock will terminate the stockholder's participation in the distribution reinvestment planDRIP as of the first day of the month in which the transfer is effective.

If the Stockholder participates in the Company's distribution reinvestment plan and are subject to federal income taxation, the Stockholder will incur a tax liability for distributions allocated to the Stockholder even though the Stockholder has elected not to receive the distributions in cash, but rather to have the distributions withheld and reinvested in the Company's common stock. Specifically, the Stockholder will be treated as if the Stockholder have

received the distribution from us in cash and then applied such distribution to the purchase of additional shares of the Company's common stock. The Stockholder will be taxed on the amount of such distribution as ordinary income to the extent such distribution is from current or accumulated earnings and profits, unless the Company has designated all or a portion of the distribution as a capital gain distribution. In addition, the difference between the public offering price of the Company's shares and the amount paid for shares purchased pursuant to the Company's distribution reinvestment plan may be deemed to be taxable as income to participants in the plan. Please see "Risk Factors — Federal Income Tax Risks — The Stockholder may have current tax liability on distributions if the Stockholder elect to reinvest in shares of the Company's common stock."

Notwithstanding any of the foregoing, an investor's participation in the Company's distribution reinvestment plan will terminate automatically if the Company dishonors, or partially dishonors, any requests by such investor to redeem the Company's shares of common stock in accordance with the Company's share repurchase program. The Company will notify investors of any such automatic termination from the Company's distribution reinvestment plan.December 31, 2019.

Share Repurchase Program

The Company will have aOn May 29, 2018, the Company’s Board of Directors suspended the Share Repurchase Program, ("SRP") that enables stockholders to sell their shares to the Company. Under the SRP, stockholders may request that the Company redeem all or any portion, subject to certain minimum conditions described below, if such repurchase does not impair the Company's capital or operations.

Prior to the time that the Company's shares are listed on a national securities exchange, the repurchase price per share will depend on the length of time investors have held such shares as follows: noother than for hardship repurchases for the first two years unless shares are being repurchased in connection with a stockholder's death or disability (as defined in the Code).shareholder’s death. Repurchase requests made in connection with the death or disability of a stockholder will bewere repurchased at a price per share equal to 100% of the amount the stockholder paid for each share, or once the Company hashad established an estimated NAV per share, 100% of such amount as determined by the Company'sCompany’s board of directors, subject to any special distributions previously made to the Company'sCompany’s stockholders. With respect to all other repurchases, prior to the date that the Company establishes an estimated value per share of common stock, the purchase price will be 95.0% of the purchase price paid for the shares, if redeemed at any time between the second and third anniversaries of the purchase date, and 97.0% of the purchase price paid if redeemed after the third anniversary.  After the Company establishes an estimated NAV per share of common stock, the purchase price will be 95.0% of the NAV per share for the shares, if redeemed at any time between the second and third anniversaries of the purchase date, 97.0% of the NAV per share if redeemed at any time between the third and fifth anniversaries, and 100.0% of the NAV per share if redeemed after the fifth anniversary. In the event that the Company does not have sufficient funds available to repurchase all of the shares for which repurchase requests have been submitted in any quarter, the Company will repurchase the shares on a pro rata basis on the repurchase date. The SRP will be terminated if the Company's shares become listed for trading on a national securities exchange or if the Company's board of directors determines that it is in the Company's best interest to terminate the SRP.

The Company is not obligated to repurchaserepurchased 9,896 shares of common stock pursuant to the hardship exception under the share repurchase program. The number of shares to be repurchasedthis program during the calendar quarter is limited to the lesser of: (i) 5% of the weighted average number of shares outstanding during the prior calendar year and (ii) those repurchases that could be funded from the net proceeds of the sale of shares under the DRIP in the prior calendar year plus such additional funds as may be reserved for that purpose by the Company's board of directors; provided, however, that the above volume limitations shall not apply to repurchases requested in connection with the death or qualifying disability of a stockholder..  Because of these limitations,ended December 31, 2019.

On May 28, 2019, the Company cannot guarantee that the Company will be ableestablished an estimated NAV equal to accommodate all repurchase requests.

The Company will repurchase shares as of March 31, June 30, September 30, and December 31 of each year.  Each stockholder whose repurchase request is approved will receive the repurchase payment approximately 30 days following the end of the applicable quarter, effective as of the last day of such quarter.  The Company refers to the last day of such quarter as the repurchase date.  If funds available for the Company's share repurchase program are not sufficient to accommodate all requests, shares will be repurchased as follows: (i) first, repurchases due to the death

of a stockholder, on the basis of the date of the request for repurchase; (ii) next, in the discretion of the Company's board of directors, repurchases because of other involuntary exigent circumstances, such as bankruptcy; (iii) next, repurchases of shares held by stockholders subject to a mandatory distribution requirement under the stockholder's IRA; and (iv) finally, all other repurchase requests based upon the postmark of receipt. If the Stockholder's repurchase request is not honored during a repurchase period, the Stockholder will be required to resubmit the request to have it considered in a subsequent repurchase period.

The board of directors may, in its sole discretion, terminate, suspend or amend the share repurchase program upon 30 days' written notice without stockholder approval if it determines that the funds available to fund the share repurchase program are needed for other business or operational purposes or that amendment, suspension or termination of the share repurchase program is in the best interest of the stockholders.  Among other things, the Company may amend the plan to repurchase shares at prices different from those described above for the purpose of ensuring the Company's dividends are not "preferential" for incomes tax purposes.  Any notice of a termination, suspension or amendment of the share repurchase program will be made via a report on Form 8-K filed with the SEC at least 30 days prior to the effective date of such termination, suspension or amendment.  The board of directors may also limit the amounts available for repurchase at any time in its sole discretion.  Notwithstanding the foregoing, the share repurchase program will terminate if the shares of$25.10 per common stock are listed on a national securities exchange.  At December 31, 2016, no shares had been redeemed.share.

As of the date of this filing, no45,944 shares have been redeemed.redeemed of which 30,858 shares were hardship repurchases.

Since inception, there have been 30,858 hardship repurchases in connection with a shareholder’s death through March 30, 2020. On March 24, 2020, the Board of Directors suspended all repurchases, even in the case of a shareholder’s death.

Recent Sales of Unregistered Securities

The Company did not sell any securities that were not registered under the Securities Act for the year ended December 31, 2019, other than any sales that have been previously reported by the Company in a quarterly report on 10-Q or current report on Form 8-K.

Use of Offering Proceeds

Common Shares

On October 22, 2015, the Company's registration statement on Form S-11 registering a public offering (No. 333-205893) of up to $550,000,000 in shares of the Company's common stock was declared effective under the Securities Act of 1933, as amended, or the Securities Act, and the Company commenced the initial public offering. The Company offered up to 20,000,000 shares of its common stock to the public in the primary offering at $25.00 per share and continues to offer up to 2,000,000 shares of its common stock pursuant to the distribution reinvestment plan at $25.00 per share. The Company entered into selling agreements with MVP American Securities, LLC ("MVP AS") and other non-affiliated selling agents to distribute shares of the Company's common stock to its clients. . As of December 31, 2016, the Company ceased all selling efforts for the initial public offering but may accept additional subscriptions through March 31, 2017.

As of December 31, 2016,30, 2020, the Company had 2,301,8287,330,071 shares of common stock issued and outstanding, 2,862 shares of preferred Series A stock outstanding and 39,811 shares of preferred Series 1 stock outstanding for a total gross proceeds of approximately $56.1 Million,$197.2 million, less offering costs.

The following is a table of summary of offering proceeds from inception through December 31, 2016:2019:

Type Number of Shares - Common  Value  Number of Shares Preferred  Number of Shares Common  Value 
Issuance of common stock  2,254,253   56,356,000  
--
  
3,251,238
  
$
75,281,000
 
Redeemed shares 
--
  
(43,203
)
 
(1,057,000
)
DRIP shares  18,311   --  
--
  
83,437
  
2,086,000
 
Issuance of Series A preferred stock 
2,862
  
--
  
2,544,000
 
Issuance of Series 1 preferred stock 
39,811
  
--
  
35,981,000
 
Dividend shares  29,264   --  
--
  
153,826
  
3,845,000
 
Distributions  --   (274,000) 
--
  
--
  
(10,305,000
)
Deferred offering costs  --   (1,086,000) 
--
  
--
  
(1,086,000
)
Contribution from Advisor      1,147,000 
        
Contribution from advisor 
--
  
--
  
1,147,000
 
Shares added for merger  
--
   
3,887,513
   
85,701,000
 
Total  2,301,828  $56,143,000   
42,673
   
7,332,811
  
$
194,137,000
 

From October 22, 2015 through December 31, 2016,2019, the Company incurred organization and offering costs in connection with the issuance and distribution of the registered securities of approximately $1.1 million, which were paid to unrelated parties by the Sponsor. From October 22, 2015 through December 31, 2016,2019, the net proceeds to the

Company from its offering,offerings, after deducting the total expenses and deferred offering costs incurred and paid by the Company as described above, were $56.1approximately $194.1 million. A majority of these proceeds were used, along with other sources of debt financing, to make investments in parking facilities, and ourof which the Company’s portion of the total purchase price for these parking facilities was approximately $51.8 million.$320.0 million, which includes its $2.8 million investment in the DST. In addition, a portion of these proceeds were used to make cash distributions of approximately $274,000$1.8 million to the Company's stockholders. The ratio of the costs of raising capital to the capital raised is approximately 2.0%0.6%.

Recent Sales of Unregistered Securities

On May 26, 2015, the Company issued 8,000 shares of common stock at $25.00 per share to MVP Capital Partners II, LLC, the Sponsor, in exchange for $200,000 in cash.  The Company relied on Section 4(a)(2) of the Securities Act for the exemption from the registration requirements of the Securities Act of 1933, as amended.

The Series A preferred stock and warrants have not been registered under the Securities Act of 1933, as amended (the "Act") and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506(c) of Regulation D promulgated thereunder by the Securities and Exchange Commission (the "SEC"). The Company has filed file a Form D with the SEC in accordance with the requirements of Regulation D.  This Offering was closed on March 23, 2017.

Long-Term Incentive Plan

The Company's board of directors has adopted a long-term incentive plan which the Company will use to attract and retain qualified directors, officers, employees, and consultants. The Company's long-term incentive plan will offer these individuals an opportunity to participate in the Company's growth through awards in the form of, or based on, the Company's common stock. The Company currently anticipates that the Company will not issue awards under the Company's long-term incentive plan, although the Company may do so in the future, including to the Company's independent directors as a form of compensation.

The long-term incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or deferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, officers, employees and consultants of the Company and the Company's affiliates' selected by the board of directors for participation in the Company's long-term incentive plan. Stock options granted under the long-term incentive plan will not exceed an amount equal to 10% of the outstanding shares of the Company's common stock on the date of grant of any such stock options. Stock options may not have an exercise price that is less than the fair market value of a share of the Company's common stock on the date of grant.

The Company's board of directors or a committee appointed by the Company's board of directors will administer the long-term incentive plan, with sole authority to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the long-term incentive plan if the grant or vesting of the awards would jeopardize the Company's status as a REIT under the Code or otherwise violate the ownership and transfer restrictions imposed under the Company's charter. Unless otherwise determined by the Company's board of directors, no award granted under the long-term incentive plan will be transferable except through the laws of descent and distribution.

The Company has authorized and reserved an aggregate maximum number of 500,000 shares for issuance under the long-term incentive plan. In the event of a transaction between the Company's company and the Company's stockholders that causes the per-share value of the Company's common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the long-term incentive plan will be adjusted proportionately and the board of directors will make such adjustments to the long-term incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the

authorization limits under the long-term incentive plan will automatically be adjusted proportionately and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.

The Company's board of directors may in its sole discretion at any time determine that all or a portion of a participant's awards will become fully vested. The board may discriminate among participants or among awards in exercising such discretion. The long-term incentive plan will automatically expire on the tenth anniversary of the date on which it is approved by the Company's board of directors and stockholders, unless extended or earlier terminated by the Company's board of directors. The Company's board of directors may terminate the long-term incentive plan at any time. The expiration or other termination of the long-term incentive plan will not, without the participant's consent, have an adverse impact on any award that is outstanding at the time the long-term incentive plan expires or is terminated. The Company's board of directors may amend the long-term incentive plan at any time, but no amendment will adversely affect any award without the participant's consent and no amendment to the long-term incentive plan will be effective without the approval of the Company's stockholders if such approval is required by any law, regulation or rule applicable to the long-term incentive plan. During the year ended December 31, 2016, no grants have been made under the long-term incentive plan.

ITEM 6. SELECTED FINANCIAL DATA

NotItem not required for a smaller reporting company.Smaller Reporting Company.


ITEM 7.MANAGEMENT'S        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K. Also see “Forward Looking Statements” preceding Part I.

Overview

MVP REIT II, Inc. (Commencing with its taxable year ended December 31, 2017, the "Company," "we," "us," or "our") isCompany has operated in a Maryland corporation formed on May 4, 2015 and intendsmanner to qualify as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2016. As of December 31, 2016, the Company ceased all selling efforts for the initial public offering (the "Offering") of its common stock, $0.0001 par value per share, at $25.00 per share, pursuant to a registration statement on Form S-11 filed with the SEC under the Securities Act.  As of December 31, 2016, the Company raised approximately $56.4 million in the Offering before payment of deferred offering costs of approximately $1.1 million, contribution from the Sponsor of approximately $1.1 million and cash distributions of approximately $274,000.

The Company has also registered $50 million in shares of common stock for issuance pursuant to a distribution reinvestment plan (the "DRIP") under which common stock holders may elect to have their distributions reinvested in additional shares of common stock at $25.00 per share.

REIT. The Company was formed to focus primarily on investments in parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada. No more than 10% of the proceeds of this offering will be used for investment in Canadian properties.  To a lesser extent, the Company may also invest in parking properties that contain other thansources of rental income, potentially including office, retail, storage, residential, billboard or cell towers. As of December 31, 2019, the Company held 40 properties in various cities, all of which are parking facilities. See note C – Commitments and Contingencies in Part II, Item 8 Financial Statements of this Annual Report for additional information.

The Company was incorporated in Maryland on May 4, 2015 and is the sole general partnermember of MVP REIT IIthe Operating Partnership, LP, a Delaware limited partnership (the "Operating Partnership").Partnership. The Company plans to ownowns substantially all of its assets and conduct its operations through the Operating Partnership.

Prior to the management Internalization effective on April 1, 2019, the Company was externally managed by MVP Realty Advisors, LLC, dba The Company's wholly owned subsidiary, MVPParking REIT II Holdings, LLC, is the soleAdvisors (the “former Advisor”), a Nevada limited partnerliability company. As a result of the Operating Partnership. The operating agreement provides that the Operating Partnership is operated in a manner that enablesmanagement Internalization, the Company will no longer incur an asset management fee equal to (1) satisfy1.1% of the requirementscost of all assets held by the Company, effective April 1, 2019. See Part I, Item 1 Business of this Annual Report for being classifiedadditional information.

The Company has elected to be taxed as a REIT for tax purposes, (2) avoid any federal income or excise tax liability, and (3) ensure that the Operating Partnership is not classified as a "publicly traded partnership" for purposes of Section 7704real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code which classification couldof 1986, as amended, commencing with our taxable year ended December 31, 2017.

Objectives

The Company’s primary objectives are to:

preserve capital;
generate current income; and
explore strategic alternatives to provide liquidity to stockholders.

In mid-2019, the Company engaged financial and legal advisors and began to explore a broad range of potential strategic alternatives to provide liquidity to stockholders. The Company is currently exploring certain strategic alternatives, including potential sales of assets, a potential sale of the Company or a portion thereof, a potential strategic business combination or a potential liquidation. However, there can be no assurance that the Board’s exploration of potential strategic alternatives will result in any change of strategy or transaction being entered into or consummated or, if a transaction is undertaken, as to its terms, structure or timing. In addition, the Operating Partnershipvalue received in any potential strategic alternative would likely be less than the NAV most recently estimated by the Company’s board of directors. Our assets have been valued based upon appraisal standards and the values of our assets using these methods are not required to reflect market value under those standards and will not necessarily result in a reflection of fair value under generally accepted accounting principles. Further, different parties using different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could derive a different estimated NAV per share, which could be significantly different from the estimated NAV per share determined by our board of directors. The estimated NAV per share is not a representation or indication that, among other things a stockholder would ultimately realize distributions per share equal to the estimated NAV per share upon liquidation of assets and settlement of our liabilities or upon a sale of our company or a third party would offer the estimated NAV per share in an arms-length transaction to purchase all or substantially all of our shares of common stock. For example, we expect to incur additional costs in connection with ongoing litigation, the SEC investigation discussed in Note P - Legal in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K and legal and consulting fees associated with pursuing any potential strategic alternatives, which in the aggregate may be material, none of which was taken in consideration when the board of directors determined the prior estimated NAV per share. Please see our Current Reports on Form 8-K filed with the SEC on May 28, 2019 for additional information regarding the NAV calculation, as well as “Item 1A. Risk Factors—Risks Related to an Investment in the Company–Stockholders should not rely on the estimated NAV per share as being taxed as a corporation.an accurate measure of the current value of our shares of common stock” in this Annual Report on Form 10-K.

Prior Investment Strategy

The Company’s investment strategy has historically focused primarily on acquiring, owning and managing parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada.  The Company historically focused primarily on investing in income-producing parking lots and garages with air rights in central business districts. In building its current portfolio, the Company sought geographically targeted investments that present key demand drivers, that were expected to generate cash flows and provide greater predictability during periods of economic uncertainty. Such targeted investments include, but are not limited to, parking facilities near one or more of the following demand drivers:

Downtown core
Government buildings and courthouses
Sporting venues
Hospitals
Hotels

However, as a result of the current COVID-19 pandemic, among other factors, such demand drivers have been and are expected to be significantly diminished for an indeterminate period of time. Many state and local governments are currently restricting public gatherings or requiring people to shelter in place, which has in some cases eliminated or severely reduced the demand for parking. For more information on the effect of COVID-19 on our business, see “Item 1A. Risk Factors—Risks Related to Our Business—Our business and those of our tenants may be adversely affected by epidemics, pandemics or other outbreaks.”

Prior Investment Criteria

The Company utilizes an Umbrella Partnership Real Estate Investment Trust ("UPREIT") structure historically focused on acquiring properties that met the following criteria:

properties that were expected to enable usgenerate current cash flow;
properties that were expected to be located in populated metropolitan areas; and
properties were expected to produce income within 12 months of the Company’s acquisition.

As noted above, the Company does not currently expect to make any additional acquisitions unless and until it is able to sell some of its existing assets, and then only after ensuring that it has sufficient liquidity resources.  In the event of a future acquisition, the Company would expect the foregoing criteria to serve as guidelines, however, Management and the Company’s board of directors may vary from these guidelines to acquire real property in exchange for limited partnership interests in the Company's Operating Partnership from owners who desire to defer taxable gain that would otherwise normally be recognized by them upon the disposition of their real property or transfer of their real property to us in exchange for shares of the Company's common stock or cash. properties which they believe represent value opportunities.

The following table is a summary of the dispositions for the year ended December 31, 2019:

PropertyLocationDate SoldProperty Type # Spaces  Size / Acreage  Retail Sq. Ft.  Property Sale Price 
MVP PF Ft Lauderdale 2013, LLC
Ft Lauderdale, FL9/23/2019Lot  
66
   
0.75
   
4,000
  
$
6,100,000
 
MVP PF Memphis Court, LLC
Memphis, TN10/29/2019Lot  
37
   
0.41
   
N/A
  
$
675,000
 

Management Internalization

On March 29, 2019, the Company and the former Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 (the “Internalization”). Under the supervision of the board of directors (the “Board of Directors”), the former Advisor had been responsible for managing the operations of the Company and MVP I, which merged with a wholly owned indirect subsidiary of the Company in December 2017, since their respective formations. As part of the Company's initial capitalization,Internalization, among other things, the Company sold 8,000 sharesagreed with the former Advisor to (i) terminate the Second Amended and Restated Advisory Agreement, dated as of May 26, 2017 and, for the avoidance of doubt, the Third Amended and Restated Advisory Agreement, dated as of September 21, 2018, which by its terms would have become effective only upon a listing of the Company’s common stock for $200,000on a national securities exchange (collectively, the “Management Agreements”), each entered into among the Company, the former Advisor and MVP REIT II Operating Partnership, LP (the “Operating Partnership”); (ii) extend employment to MVP Capital Partners II, LLC (the "Sponsor"), the sponsorexecutives and other employees of the former Advisor; (iii) arrange for the former Advisor to continue to provide certain services with respect to outstanding indebtedness of the Company and its subsidiaries; and (iv) lease the employees of the former Advisor for a limited period of time prior to the time that such employees become employed by the Company. The Sponsor is owned 60% by

Contribution Agreement

On March 29, 2019, the Company entered into a Contribution Agreement (the “Contribution Agreement”) with the former Advisor, Vestin Realty Mortgage I, Inc. (“VRTA”) (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc., a Maryland corporation (“VRTB”) (solely for purposes of Section 1.01(c) thereof) and NADSAQ-listed company that has provided noticeShustek (solely for purposes of its intentSection 4.03 thereof). In exchange for the Contribution, the Company agreed to delist from Nasdaq on or about March 30, 2017 ("VRM II"), and 40% by Vestin Realty Mortgage I, Inc., a Maryland corporation and NASDAQ-listed company ("VRM I"), both which are managed by Vestin Mortgage, LLC, a Nevada limited liability company in which Michael Shustek owns a significant majority.  The Company also sold 5,000issue to the former Advisor 1,600,000 shares of common stock directlyCommon Stock as consideration (the “Consideration”), issuable in four equal installments. The first and second installments of 400,000 shares of Common Stock per installment were issued on the April 1, 2019 and December 31, 2019, respectively. See Note S — Deferred Management Internalization in Part II, Item 8 Notes to VRM II.the Consolidated Financial Statements of this Annual Report for additional information. The remaining installments will be issued on December 31, 2020 and December 31, 2021 (or if December 31st is not a business day, the day that is the last business day of such year). If requested by the Company in connection with any contemplated capital raise by the Company, the former Advisor has agreed not to sell, pledge or otherwise transfer or dispose of any of the Internalization Consideration for a period not to exceed the lock-up period that otherwise would apply to other stockholders of the Company in connection with such capital raise. See the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2019 for more information regarding the Management Internalization.

Results of Operations for the year ended December 31, 2019 compared to the year ended December 31, 2018.

  For the Years Ended December 31 
  2019  2018 
Revenues      
Base rent income
 
$
20,151,000
  
$
19,534,000
 
Management agreement
  
--
   
--
 
Percentage rent income
  
2,643,000
   
2,566,000
 
Total revenues
 
$
22,794,000
  
$
22,100,000
 

Rental revenue

The Company's advisorincrease of approximately $0.7 million in rental revenues is mainly attributable to increases in percentage rent from certain properties and increases in base rent due to the acquisition of a property in June 2018 of which 2019 contained a full year of base rent from this property. Additionally, gross increases in rent revenue were partially offset due to properties sold in 2018 resulting in the net increase in rent revenue of approximately $0.7 million.

On December 5, 2018 the operating lease of MVP Realty Advisors,PF St. Louis 2013, LLC (the "Advisor"), a Nevada limited liability company, which is owned sixty percent (60%(“MVP St. Louis”) by VRM II and forty percent (40%SP+ expired. Upon the expiration of the operating lease, MVP St. Louis entered into a new modified triple net (“Mod NNN”) by VRM I.operating lease with SP+. The Advisorterm of the lease is 5 years with the option of one five-year extension. SP+ will pay annual rent of $450,000. In addition, the lease provides percentage rent with MVP St. Louis receiving 70% of gross receipts over $650,000 per lease year. The tenant is responsible for managingpaying property taxes up to $60,000.

On January 31, 2019 the Company's affairsoperating lease of MVP PF Ft. Lauderdale 2013, LLC (“MVP Ft. Lauderdale”) by SP+ expired. Upon the expiration of the operating lease, MVP Ft. Lauderdale entered into a new double net (“NN”) operating lease with Lanier Parking Solutions (“Lanier”). The term of the lease was 5 years. Lanier was paying annual rent of $70,000. In addition, the lease provided percentage rent with MVP Ft. Lauderdale receiving 70% of gross receipts over $140,000 per lease year. Subsequently, on September 23, 2019 the Company, through an entity wholly owned by the Company, sold the surface parking lot and office building in Ft. Lauderdale for cash consideration of $6.1 million to 625 SE 3rd Avenue, LLC, a day-to-day basisthird-party buyer.

On February 28, 2019 the operating lease of MVP PF Memphis Court 2013, LLC (“MVP Memphis Court”) by SP+ was cancelled. Upon the cancellation of the operating lease, MVP Memphis Court entered into a triple net (“NNN”) lease agreement with Premium Parking of Memphis, LLC (“Premium Parking”). The term of the lease was 5 years. Under the terms of the lease agreement, Premium Parking paid annual rent of $3,000. In addition, the lease provided percentage rent with MVP Memphis Court receiving 60% of gross receipts over $3,000 per lease year. The lease also provided that should monthly gross receipts exceed $4,500 for six consecutive months during the term, monthly base rent shall adjust for the remainder of the term to $2,500 (“Adjusted Minimum Monthly Rent”), plus percentage rent of 65% of gross receipts in excess of the Adjusted Minimum Monthly Rent.  This property was sold to an unrelated third-party buyer for cash consideration of $675,000 on October 29, 2019.

On February 28, 2019 the operating lease of MVP PF Memphis Poplar 2013, LLC (“MVP Memphis Poplar”) by Best Park, Inc. expired. Upon the expiration of the operating lease MVP Memphis Poplar entered into a Mod NNN lease agreement with Premium Parking of Memphis, LLC (“Premium Parking”). The term of the lease is 5 years. Premium Parking will pay annual rent of $320,000. In addition, the lease provides percentage rent with MVP Memphis Poplar receiving 65% of gross receipts over $390,000 per lease year. The tenant is responsible for paying property taxes up to $40,000.

For additional information see Note D – Investments in Real Estate, Note I – Acquisitions, Note K - Disposition of Investments in Real Estate in the notes to the consolidated financial statements included in Part II, Item 8 - Notes to the Consolidated Financial Statements of this Annual Report.

During the years ended December 31, 2019 and for identifying and making investments2018 the Company received percentage rent on the Company's behalf pursuant to an advisory agreement between the Company and the Advisor (the "Advisory Agreement").following properties:

  For the Years Ended December 31 
  2019  2018 
Percentage rent income      
MVP PF Ft. Lauderdale (a)
 
$
32,000
   
--
 
MVP St Louis 2013 (b)
  
57,000
  
$
166,000
 
Mabley Place Garage
  
316,000
   
309,000
 
MVP Ft Worth Taylor (c)
  
8,000
   
22,000
 
MVP St Louis Convention (d)
  
--
   
63,000
 
MVP St Louis Lucas (d)
  
--
   
65,000
 
MVP Indianapolis Washington
  
116,000
   
115,000
 
MVP Indianapolis Meridian Lot
  
9,000
   
9,000
 
MVP Milwaukee Arena (e)
  
173,000
   
130,000
 
MVP Denver 1935 Sherman
  
9,000
   
16,000
 
MVP Cleveland West 9th (f)
  
11,000
   
--
 
MVP San Jose 88 Garage (g)
  
--
   
24,000
 
MVP St Paul Holiday
  
82,000
   
76,000
 
MVP Louisville Station Broadway
  
--
   
6,000
 
White Front Garage
  
--
   
2,000
 
MVP Houston Preston
  
17,000
   
4,000
 
MVP Houston San Jacinto
  
57,000
   
47,000
 
MVP Detroit Center Garage (h)
  
1,574,000
   
1,489,000
 
MVP Raider Park Garage
  
62,000
   
14,000
 
St. Louis Broadway
  
31,000
   
--
 
MVP New Orleans Rampart
  
89,000
   
9,000
 
 Total revenues
 
$
2,643,000
  
$
2,566,000
 

a)New lease terms with addition of percentage rent.
b)New lease terms with increase to monthly base rent and higher break point for percentage rent.
c)Timing of tenant’s collections.
d)Property sold during June 2018.
e)The new Fiserv Forum Arena became fully operational in late August 2018, which had a positive impact on operations, a trend expected to continue.
f)Increased volume in area due to additional multi-tenant apartment complex and decrease in competing surface lots.
g)Due to construction on the property the new revenue control system experienced some technical difficulties which have been repaired and are not anticipated to impede percentage rent in the future.
h)Heavy snow in the first quarter had impact on transient parking offset by increase in collections by tenant on monthly parking contracts.

  For the Years Ended December 31 
  2019  2018 
Operating expenses      
Property taxes
 
$
3,023,000
  
$
2,918,000
 
Property operating expense
  
1,701,000
   
1,404,000
 
Asset management expense – related party
  
854,000
   
2,000,000
 
General and administrative
  
5,601,000
   
3,620,000
 
Professional fees
  
8,528,000
   
3,625,000
 
Management internalization
  
32,004,000
   
618,000
 
Acquisition expenses
  
251,000
   
412,000
 
Acquisition expenses – related party
  
--
   
--
 
Depreciation and amortization
  
5,172,000
   
4,938,000
 
Impairment on investment in real estate
  
1,452,000
   
600,000
 
Total operating expenses
  
58,586,000
   
20,135,000
 
Income (loss) from operations 
$
(35,792,000
)
 
$
1,965,000
 
-36- The Company has no paid employees.  The Advisor also advises MVP REIT, Inc. ("MVP REIT"), a real estate investment trust registered with the SEC with substantially the same investment strategy as the Company in that MVP REIT also invests primarily in parking facilities.


From inception through December 31, 2016,

To the Company had paid approximately $274,000 in cash, issued 18,311 shares of its common stock as DRIP and issued 29,264 shares of its common stock as dividend in distributions to the Company's stockholders.  All of the cash distributions have been paid from offering proceeds and constituted a return of capital.  The Company may pay distributions from sources other than cash flow from operations, including proceeds from the Offering, the sale of assets, or borrowings.  The Company has no limits on the amounts it may pay from such sources. Ifextent that the Company continues to pay distributionsacquire new properties, the Company expects to see operations and maintenance and depreciation expenses increase.

General economic conditions and our business may be significantly adversely affected by the COVID-19 pandemic and we expect to continue to experience possible adverse effects resulting therefrom. Many state and local governments are currently restricting public gatherings or requiring people to shelter in place, which has in some cases eliminated or severely reduced the demand for parking. Such events are adversely impacting and may continue to adversely impact our tenants’ sales and/or cause the temporary closure of our tenants’ businesses, which could significantly disrupt or cause a closure of their operations and, in turn, significantly impact or eliminate the rental revenue we generate from sourcesour leases with them. In particular, a majority of the Company’s property leases call for additional percentage rent, which will be adversely impacted by a decline in the demand for parking.  We are in preliminary discussions with some of our tenants and currently expect to grant relief to some our tenants to defer rent payments as a result of their estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance we will reach an agreement with any tenant or if an agreement is reached, that any such tenant will be able to repay any such deferred rent in the future. For more information on the effect of COVID-19 on our business, see “Item 1A. Risk Factors—Risks Related to Our Business—Our business and those of our tenants may be adversely affected by epidemics, pandemics or other than cash flow from operations, the funds availableoutbreaks” and Note U — Subsequent Events in Part II, Item 8 Financial Statements.

Property taxes

The increase in property taxes in 2019 compared to 2018 is attributable primarily to the Company for investments would be reducedincrease of assessed property values or increased tax rates which resulted in an increase in property tax expense in certain municipalities and the shareacquisition of a property in June 2018.

Property operating expense

The increase in property operating expense in 2019 compared to 2018 is attributable primarily to a full year of operations for properties acquired in the prior year, which accounted for higher operating expenses. Additionally, there was an increase in general liability insurance expense, HOA fees and legal expenses for the year ended December 31, 2019 compared to the same period in 2018.

Asset management expense – related party

The decrease in asset management expense is due to the Internalization, as a result of which the Company no longer incurred an asset management expense beginning April 1, 2019.

See Note E — Related Party Transactions and Arrangements in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

General and administrative

Approximately $2.0 million of the increase in general and administrative expenses was attributable to an increase in directors and officers liability insurance. Additionally, due to the Internalization, the Company is now responsible for additional expenses previously paid by the former Advisor, including payroll for certain employees, rent, office equipment, utilities and other expenses.

Asset management expense, general and administrative expenses and professional fees, in aggregate, were approximately $15.0 million and $9.9 million during the years ended December 31, 2019 and 2018, respectively.

Professional fees

The increase in professional fees was primarily due to legal expenses incurred relating to lawsuits filed in 2019 and the SEC investigation, which was initiated in June of 2019. Additionally, professional fees increased in 2019 as a result of legal and consulting fees incurred by the Company in connection with its exploration of potential strategic alternatives to provide liquidity to stockholders, beginning in mid-2019.  We expect to continue to incur legal fees related to the pending lawsuits and SEC investigation and additional legal and consulting fees in connection with our exploration of potential strategic alternatives to provide liquidity to stockholders.

See Note P – Legal in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

Management internalization

The Company was externally managed by the former Advisor prior to the management internalization that became effective on April 1, 2019. These expenses include (i) the Internalization Consideration to be paid in aggregate to the former Advisor and (ii) professional fees incurred to complete the Internalization of the Company’s management. See Note A — Organization and Business Operations and Note S – Deferred Management Internalization in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

Acquisition expenses

Acquisition expenses related to purchased properties are capitalized with the investment in real estate. Acquisition expenses incurred during the year ended December 31, 2019 relate solely to dead deals. The decrease in cost for the year ended December 31, 2019 compared to the year ended December 3, 2018 of approximately $0.2 million is a result of reduced acquisition activity.

Depreciation and amortization expenses

The increase in depreciation and amortization expenses was due to the properties acquired during 2018 and assets placed in service following the completion of construction projects or general improvements on properties already held.

Impairment

During the year ended December 31, 2019, the Company recorded asset impairment charges totaling approximately $1,452,000. These impairment charges consisted of $558,000 associated with the Memphis Court lot, $344,000 associated with the San Jose 88 garage, $50,000 associated with the St. Louis Washington lot and $500,000 associated with the Minneapolis City lot. These charges were recorded to write down the carrying value mayof these assets to their current appraised values net of estimated closing costs. The Company recorded impairment charges totaling approximately $600,000 for the year ended December 31, 2018. See Note B — Summary of Significant Accounting Policies in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

  For the Years Ended December 31 
  2019  2018 
Other income (expense)      
Interest expense
 
$
(9,513,000
)
  
(9,449,000
)
Gain from sale of investment in real estate
  
2,509,000
   
2,276,000
 
Other income
  
82,000
   
81,000
 
Income from DST
  
218,000
   
205,000
 
Total other expense
 
$
(6,704,000
)
 
$
(6,887,000
)

Interest expense

The increase in interest expense of approximately $0.1 million for the year ended December 31, 2019, as compared to the same period in 2018, is primarily attributable to the Company’s increased use of debt on properties throughout the year.

To maximize the use of cash, the Company will continue to look for opportunities to utilize debt financing in future acquisitions, including use of long-term debt. The interest expense will vary based on the amount of the Company’s borrowings and current interest rates at the time of financing. The Company will seek to secure appropriate leverage with the lowest interest rate available. The terms of the loans will vary depending on the quality of the applicable property, the credit worthiness of the tenant and the amount of income the property is able to generate through parking leases. There is no assurance, however, that the Company will be diluted.able to secure additional financing on favorable terms or at all.

Interest expense recorded for the year ended December 31, 2019 and 2018 includes amortization of loan issuance costs. Total amortization of loan issuance cost for the years ended December 31, 2019 and 2018 was approximately $0.9 million and $1.7 million, respectively.

For additional information see Note L – Notes Payable in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

Gain from sale of investment in real estate

During September 2019, the Company sold the surface parking lot and office building in Ft. Lauderdale, Florida for $6.1 million, which resulted in a gain from sale of investments in real estate of approximately $2.3 million.

On October 29, 2019, the Company sold a surface parking lot in Memphis, Tennessee for cash consideration of $675,000, which resulted in a gain on sale of investments in real estate of approximately $0.2 million.

During August 2018, the Company sold two surface lots in Kansas City for $4.0 million, which resulted in a gain from sale of investments in real estate of approximately $1.0 million.

During June 2018, the Company sold two surface lots in St. Louis for $8.5 million, which resulted in a gain from sale of investments in real estate of approximately $1.0 million.

In May 2018, the Company entered into agreements with the Redevelopment Agency for the City of Milwaukee ("RACM") and the Milwaukee Symphony ("Symphony"), regarding the MVP Milwaukee Wells surface parking lot (the "Lot"), wherein we acquired a parcel of land from RACM for $388,545 and sold a portion of the Lot to the Symphony for $200,000. These transactions resulted in an addition of approximately 5,000 square feet to the Lot and will allow us to add an additional 53 parking spaces.

On October 5, 2018, The Parking REIT, Inc., through an entity wholly owned by the Company, completed a partial sale of 36,155 square feet of land adjoining a surface parking lot in Minneapolis for cash consideration of $3.0 million to Camber Lodging, LLC and Amber Lodging, LLC, for a proposed hotel development. The Company originally purchased the approximately 108,000 square foot parcel in January 2016 for $6.1 million.  The partial sale resulted in a gain of approximately $0.3 million.

Other income

During January 2019, the Company received a rebate of approximately $31,000 from Hawaii Energy for the completion of a project to replace and improve the lighting of the property located in Hawaii

During August 2019, the Company received $50,000 from Inner Fire Fitness, LLC for the early termination of the retail lease at Mabley Place Garage.

During May 2018, the Company received a rebate of approximately $5,000 for the completion of a project to replace and improve the lighting of Cleveland Lincoln Garage. In addition, the Company also received $50,000 from PCAM, LLC for the early termination of the lease of MVP Milwaukee Wells.

During August 2018, the Company received a rebate of approximately $7,000 for the completion of a project to replace and improve the lighting of MVP Indianapolis City Park.

Income from DST

During the year ended December 31, 2016, MVP REIT acquired an ownership interest in2019, the following properties:Company recorded a one-time accrual of $18,000 for income from DST.

Property NameMVP REIT II  %MVP REIT %Total Purchase PricePurchase DateParking Lease is withTenant Portion of Property TaxTerm in YearsAnnual Base RentRevenue Sharing Starting Point $
Consolidated Properties listed as investments in real estate      
MVP San Jose 88 Garage100.00%0.00%$3,575,5006/15/2016ABMN/A1N/AManagement Agreement
MCI 1372 Street100.00%0.00%$700,0007/8/2016ABM$3,0345$50,00070% > $100,000
MVP Cincinnati Race Street Garage100.00%0.00%$4,500,0007/8/2016SP +$120,0005$330,00070%> 610,000
MVP St. Louis Washington100.00%0.00%$3,000,0007/18/2016SP +N/A5$162,50070%> $245,000
MVP St. Paul Holiday Garage100.00%0.00%$8,200,0008/12/2016Interstate Parking$150,00010$534,50075% > $900,000
MVP Louisville Station Broadway100.00%0.00%$3,050,0008/23/2016Riverside Parking$25,0005$200,00075% > $275,000
Cleveland Lincoln Garage Owners100.00%0.00%$7,316,95010/19/2016SP +$125,0005$500,00080% > $900,000
MVP Houston Jefferson Lot100.00%0.00%$700,00011/22/2016iPark ServicesN/A10$87,00065% > $154,000
MVP Houston San Jacinto Lot100.00%0.00%$3,200,00011/22/2016iPark ServicesN/A10$264,00065% > $325,000

White Front Garage Partners80.00%20.00%$11,496,0009/30/2016Premier ParkingALL10$700,00070% > $850,000
MVP Cleveland West 9th (1)
51.00%49.00%$5,675,0005/11/2016SP +$120,0005$330,00070% >650,000
33740 Crown Colony (1)51.00%49.00%$3,030,0005/17/2016SP +$40,0005$185,00070% >$325,000
Investment in equity method investee      
MVP Denver Sherman 193524.00%76.00%$2,437,5002/12/2016SP +N/A10$120,00070% > $160,000
MVP Houston Preston Lot20.00%80.00%$2,800,00011/22/2016iPark ServicesN/A10$228,00065% > $300,000
Investment in cost method investees      
Minneapolis City Parking13.00%87.00%$9,395,0001/6/2016SP +N/A5$800,0000% > $1,032,000
MVP Bridgeport Fairfield Garage10.00%90.00%$7,800,0003/30/2016SP +$100,00010$400,00065%> $775,000
Assets held for sale         
MVP Minneapolis Venture13.00%87.00%$6,100,0001/6/2016N/AN/AN/AN/AN/A
MVP Houston Jefferson Lot100.00%0.00%$700,00011/22/2016iPark ServicesN/A10$87,00065% > $154,000

(1)
In November 2016, these properties were merged into one holding company called West 9th Street Properties II, LLC, for the purposes of debt financing.

During January 2017, the CompanyRental Income and MVP REIT, through MVP Detroit Center Garage, LLC ("MVP Detroit Center"), an entity owned by the Company and MVP REIT, acquired a multi-level parking garage consisting of approximately 1,275 parking spaces, located in Detroit, Michigan, for a purchase price of $55.0 million, plus acquisition and financing-related transaction costs.  The Company owns an 80% equity interest in the MVP Detroit Center and MVP REIT II owns a 20% equity interest.  The parking garage will be operated by SP Plus Corporation ("SP+") under a long-term lease, where SP will be responsible for the first $572,000 in property taxes, pay annual base rent of $3.4 million, and 80% of all gross revenue above $5.0 million.  As part of the acquisition MVP Detroit Center entered into a $31.5 million loan agreement with Bank of America, N.A., with a term of 10 years, amortized over 25 years, with monthly principal and interest payments totaling approximately $194,000, bearing an annual interest rate of 5.52%, secured by the parking garage, and maturing in February 2027.  In connection with this purchase the Company paid a broker commission totaling 2% of the purchase price.

On February 1, 2017, the Company, through MVP St. Louis Broadway, LLC, a Delaware limited liability company ("Broadway"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 161 parking spaces, located in St. Louis, Missouri, for a purchase price of $2.4 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking Co, ("St. Louis Parking"), a regional parking operator, under a modified net lease agreement where Broadway is responsible for property taxes above a $19,600 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $180,000.  In addition, the lease provides revenue participation with Broadway receiving 75% of gross receipts over $270,000.

On February 1, 2017, the Company, through MVP St. Louis Seventh & Cerre, LLC, a Delaware limited liability company ("7th & Cerre"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 174 parking spaces, located in St. Louis, Missouri, for a purchase price of $3.3 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking, a regional parking operator, under a modified net lease agreement where 7th & Cerre is responsible for property taxes above a $14,885 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $225,000.  In addition, the lease provides revenue participation with 7th & Cerre receiving 75% of gross receipts over $345,000.
-47-
Property Gross Revenues

Since a majority of the Company'sCompany’s property leases call for additional percentage rent, the Company monitors the gross revenue generated by each property on a monthly basis. The higher the property'sproperty’s gross revenue the higher the Company'sCompany’s potential percentage rent. BelowThe graph is showingbelow shows the comparison of the Company's monthlyCompany’s quarterly rental income to the gross revenue generated by the properties.


As of December 31, 2016, the Company held a 51% or more interest in 12 properties (out of 17 total investments), with initial purchase prices totaling approximately $54.4 million, of which the Company's portion was $47.9 million. Of those 12 properties; 9 were owned 100% by us, and three properties had common ownership with MVP REIT.  The Company held a less than 50% ownership in five properties, where MVP REIT owned the majority share, of which the Company's share of the purchase price was approximately $3.9 million.  One of those properties owned by us and MVP REIT is currently listed for sale at $6.1 million. These properties were acquired with funds from the initial public offering, third party financing and the assumption of existing liabilities.

The Company operates as a REIT. The Company is not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor is the Company subject to any regulation thereunder. As a REIT, the Company is required to have a December 31 fiscal year end. As a REIT, the Company will not be subject to federal income tax on income that is distributed to stockholders.  Among other requirements, REITs are required to satisfy certain gross income and asset tests, which may affect the composition of assets the Company acquires with the proceeds of the offering. In addition, REITs are required to distribute to stockholders at least 90% of their annual REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain).

The Company's board of directors will at all times have ultimate oversight and policy-making authority over the Company, including responsibility for governance, financial controls, compliance and disclosure. Pursuant to the Company's advisory agreement, however, the Company's board has delegated to MVP Realty Advisors, LLC, the Company's advisor, authority to manage the Company's day-to-day business, in accordance with the Company's investment objectives, strategy, guidelines, policies and limitations. Vestin Realty Mortgage II, Inc., ("VRM II") owns 60% of the Advisor, and the remaining 40% is owned by Vestin Realty Mortgage I, Inc. ("VRM I"); both are managed by Vestin Mortgage, LLC. The Company's sponsor is MVP Capital Partners II, LLC (" the "Sponsor").  The Sponsor is owned 60% by Vestin Realty Mortgage II, Inc., a Maryland corporation and NASDAQ-listed company that has provided notice of its intent to delist from Nasdaq, to be effective on or about March 30, 2017 ("VRM II"), and 40% by Vestin Realty Mortgage I, Inc., a Maryland corporation and OTC Market-listed company ("VRM I"), both which are managed by Vestin Mortgage, LLC, a Nevada limited liability company in which Michael Shustek owns a significant majority.  The Company also sold 5,000 shares of common stock directly to VRM II.

VRM I, an OTC Pink Sheet-listed company, and VRM II, a NASDAQ-listed company that has provided notice of its intent to delist from Nasdaq on or about March 30, 2017, are engaged primarily in the business of investing in commercial real estate and loans secured by commercial real estate. As the owners of the Advisor, VRM I and VRM II may benefit from any fees and other compensation that the Company pays to the Advisor under the Advisor Agreement. In this regard, the Company notes that the Advisor has agreed to waive certain fees and expenses it otherwise would be entitled under the Advisory Agreement.  Please refer to Note E – Related Party Transactions and Arrangements – Fees and Expenses Paid in Connection With the Operations of the Company in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K for more information. As of December 31, 2016, the aggregate amount of fees and expense reimbursements waived by the Advisor was approximately $6.9 million.  If the owners of the Advisor determine that such waivers are no longer in the best interests of their stockholders or otherwise refuse to grant future waivers of fees or expenses if requested by the Company, then the Company's operating expenses could increase significantly, which could adversely affect the Company's results of operations and the amount of distributions to stockholders.

In addition, the Company may compete against MVP REIT, VRM I and VRM II, all of whom are managed by affiliates of the Company's sponsor, for the acquisition of investments. The Company believes this potential conflict with respect to VRM I and VRM II, is mitigated, in part, by the Company's focus on parking facilities as its core investments, while the investment strategy of VRM I and VRM II focuses on acquiring office buildings and other commercial real estate and loans secured by commercial real estate. MVP REIT has substantially the same investment strategy as the Company, in that MVP REIT is also focused primarily on investments in parking facilities. For additional discussion regarding potential conflicts of interests, please see "Risk Factors—Risks Related to Conflicts of Interest" and "Item 13 – Certain Relationships and Related Transactions, and Director Independence" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

Review of the Company's Policies

The Company's board of directors, including the independent directors, have reviewed the policies described in this Annual Report and determined that they are in the best interest of the Company's stockholders because: (1) they increase the likelihood that the Company will be able to acquire a diversified portfolio of income producing properties, thereby reducing risk in its portfolio; (2) the Company's executive officers, directors and affiliates of the advisor have expertise with the type of real estate investments the Company seeks; and (3) borrowings should enable the Company to purchase assets and earn rental income more quickly, thereby increasing the likelihood of generating income for the Company's stockholders and preserving stockholder capital.

Results of Operations

The Company has purchased the majority of the properties since May 2016 (the Company had no rental income during 2015) and the results of operations below reflect start-up costs as well as acquisition expenses incurred in connection with purchasing properties as the Company seeks to deploy the Company's offering proceeds.  The Company expects that income and expenses related to the Company's portfolio will increase in future yearsnoted above, as a result of owningcurrent economic conditions, the properties acquired for a full yearCompany expects that the amount of percentage rent to be earned in the current and as a result of anticipated future acquisitions of real estate and real estate-related assets.  The results of operations described below may notperiods will be indicative of future results of operations.significantly reduced.

Rental revenues (by property)  2016 
MVP Cleveland West 9th, LLC (b)  $211,000 
33740 Crown Colony, LLC (b)   115,000 
MVP San Jose 88 Garage, LLC(a)  423,000 
MCI 1372 Street, LLC   24,000 
MVP Cincinnati Race Street Garage, LLC   189,000 
MVP St. Louis Washington, LLC   72,000 
MVP St. Paul Holiday Garage, LLC   206,000 

MVP Louisville Station Broadway, LLC  72,000 
White Front Garage Partners, LLC  175,000 
Cleveland Lincoln Garage Owners, LLC  93,000 
MVP Houston San Jacinto Lot, LLC  22,000 
     
Total revenues $1,602,000 

a)As of December 31, 2016, the San Jose 88 Garage was under a Parking management agreement and the rental income represents the gross revenues generated by the property. Operating expenses for this property are included in Operations and Maintenance.  Starting on March 1, 2017, this property is expected to be leased to a national parking operator, with an annual base rent of $450,000 per year.
b)
In November 2016, these properties were merged into one holding company called West 9th Street Properties II, LLC, for the purposes of debt financing.

Results of Operations for the year ended December 31, 2016 compared to the period from May 4, 2015 (Date of Inception) to December 31, 2015.

  For the Year ended  For the Period from May 4, 2015 (Date of Inception) to 
  December 31, 2016  December 31, 2015 
Revenues      
Rental revenue $1,602,000  $-- 
Total revenues  1,602,000     
         
Operating expenses        
General and administrative  1,049,000   119,000 
Acquisition expenses  2,472,000   -- 
Acquisition expenses – related party  1,229,000   -- 
Operation and maintenance  460,000   -- 
Operation and maintenance – related party  197,000   -- 
Seminar  16,000   -- 
Organizational costs  --   6,000 
Depreciation  195,000     
Total operating expenses  5,618,000   125,000 
         
Loss from operations  (4,016,000)  (125,000)
         
Other income (expense)        
Interest expense  (154,000)  (1,000)
Distribution income – related party  34,000   -- 
Income from investment in equity method investee  3,000   -- 
Total other income  (117,000)  (1,000)
         
Loss from continuing operations $(4,133,000) $(126,000)
         

General and administrative expenses.  General and administrative expenses were approximately $1.0 million for the year ended December 31, 2016.  This mainly consisted of professional fees of approximately $635,000, director fees of approximately $197,000, insurance totaling $173,000 and other expenses.  The Company expects most of these expenses will continue in similar amounts in future years.  General and administrative expenses were $119,000 for the period from May 4, 2015 (date of inception) through December 31, 2015. A portion of these general and administrative expenses were paid through the Sponsor and recorded as a contribution from the Sponsor.


Acquisition expenses.  During the year ended December 31, 2016, acquisition expense totaled $3.7 million, of which $1.2 million were incurred by related parties.  See Note E - Related Party Transactions of the Notes to the ConsolidatedNon-GAAP Financial Statements included in Part 2, Item 8 Consolidated Financial Statements of this Annual Report on Form 10-K, for additional information.  As the Company did not acquire any properties during 2015, the Company had no acquisition expense for the period from May 4, 2015 (date of inception) through December 31, 2015.  As the Company continues to grow and acquire more properties the Company expects acquisition expenses to grow as well.

As of December 31, 2016, we had a 100% ownership interest in one property that was listed as held for sale, with a carrying value of approximately $700,000.  This property was acquired on November 22, 2016.  This property is accounted for at the fair value based on an appraisal.

See Note P – Assets Held for Sale of the Notes to the Consolidated Financial Statements included in Part II, Item 8 Consolidated Financial Statements of this Annual Report on Form 10-K.

Operations and maintenance.  During the year ended December 31, 2016, the Company's operation and maintenance expenses totaled approximately $657,000, and mainly consisted of asset management fees to MVP Realty Advisor, LLC (the "Advisor") for approximately $197,000, payroll on the San Jose Garage of approximately $139,000 and property taxes of approximately $30,000.   Remaining costs are associated with the operation of the properties such as property tax and repairs & maintenance.  As the Company did not acquire any properties during 2015, the Company had no operations and maintenance expense for the period from May 4, 2015 (date of inception) through December 31, 2015.

See Note E - Related Party Transactions of the Notes to the Consolidated Financial Statements included in Part 2, Item 8 Consolidated Financial Statements of this Annual Report on Form 10-K, for additional information on the asset management fee.

Interest expense.  For the year ended December 31, 2016, interest expense totaled approximately $154,000, related to the interest expense incurred by the Company's KeyBank line of credit for $56,000, amortized loan cost of approximately $37,000, interest expense on the two Cleveland lots (MVP Cleveland West 9th, LLC & 33740 Crown Colony, LLC) for approximately $46,000 and approximately $1,000 related to financing of the Company's Directors and Officers liability Insurance.  Interest expense was $1,000 for the period from May 4, 2015 (date of inception) through December 31, 2015, which was due to the financing of the Company's Directors and Officers Liability Insurance.  As of December 31, 2016, the Company's loan to cost ratio was approximately 24% (line of credit $8.0 million and notes payable of $5.3 million divided by total parking assets of $54.4 million).  The Company expects to continue to leverage the Company's parking assets and future parking assets to fund additional purchases.  This will result in higher interest expense in the future.  See Note N - Notes Payable and Note M – Line of Credit of the Notes to the Consolidated Financial Statements included in Part 2, Item 8 Consolidated Financial Statements of this Annual Report on Form 10-K, for additional information

Discontinued operations, net of income taxes 2016 
Loss from assets held for sale, net of income taxes $(19,000)
     
Total loss from discontinued operations $(19,000)
Measures

Funds from Operations and Modified Funds from Operations

The AdvisorCompany believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient. Additionally, publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, the Company believes that non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after the acquisition activity ceases.

In order to provide a more complete understanding of the operating performance of a REIT, the National Association of Real Estate Investment Trusts ("NAREIT")NAREIT promulgated a measure known as funds from operations ("FFO").FFO. FFO is defined as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property, adding back asset impairment write-downs, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures. Because FFO calculations exclude such items as depreciation and amortization of real estate assets and gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs. As a result, the Company believes that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of the Company'sCompany’s performance relative to the Company'sCompany’s competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. It should be noted, however, that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than the Company does, making comparisons less meaningful.

The Investment Program Association ("IPA"(“IPA”) issued Practice Guideline 2010-01 (the "IPA“IPA MFFO Guideline"Guideline”) on November 2, 2010, which extended financial measures to include modified funds from operations ("MFFO"(“MFFO”). In computing MFFO, FFO is adjusted for certain non-operating cash items such as acquisition fees and expenses and certain non-cash items such as straight-line rent, amortization of in-place lease valuations, amortization of discounts and premiums on debt investments, nonrecurring impairments of real estate-related investments, mark-to-market adjustments included in net income (loss), and nonrecurring gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Management is responsible for managing interest rate, hedge and foreign exchange risk. To achieve the Company'sCompany’s objectives, the Company may borrow at fixed rates or variable rates. In order to mitigate the Company'sCompany’s interest rate risk on certain financial instruments, if any, the Company may enter into interest rate cap agreements and in order to mitigate the Company'sCompany’s risk to foreign currency exposure, if any, the Company may enter into foreign currency hedges. The Company views fair value adjustments of derivatives, impairment charges and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Additionally, the Company believes it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations, assessments regarding general market conditions, and the specific performance of properties owned, which can change over time.

No less frequently than annually, the Company evaluates events and changes in circumstances that could indicate that the carrying amounts of real estate and related intangible assets may not be recoverable. When indicators of potential impairment are present, the Company assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) expected from the use of the assets and the eventual disposition. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of MFFO as described above, investors are cautioned that due to the fact thatbecause impairments are based on estimated future undiscounted cash flows and the relatively limited term of the Company'sCompany’s operations, it could be difficult to recover any impairment charges through operational net revenues or cash flows prior to any liquidity event. The Company adopted the IPA MFFO Guideline as management believes that MFFO is a helpful indicator of the Company'sCompany’s on-going portfolio performance. More specifically, MFFO isolates the financial results of the REIT'sREIT’s operations. MFFO, however, is not considered an appropriate measure of historical earnings as it excludes certain significant costs that are otherwise included in

reported earnings.earnings in accordance with GAAP. Further, since the measure is based on historical financial information, MFFO for the period presented may not be indicative of future results or the Company'sCompany’s future ability to pay the Company'sCompany’s dividends. By providing FFO and MFFO, the Company presents information that assists investors in aligning their analysis with management'smanagement’s analysis of long-term operating activities. MFFO also allows for a comparison of the performance of the Company'sCompany’s portfolio with other REITs that are not currently engaging in acquisitions, as well as a comparison of the Company'sCompany’s performance with that of other non-traded REITs, as MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and the Company believebelieves it is often used by analysts and investors for comparison purposes. As explained below, management'smanagement’s evaluation of the Company'sCompany’s operating performance excludes items considered in the calculation of MFFO based on the following economic considerations:

·
Straight-line rent. Most of the Company's leases provide for periodic minimum rent payment increases throughout the term of the lease. In accordance with GAAP, these periodic minimum rent payment increases during the term of a lease are recorded to rental revenue on a straight-line basis in order to reconcile the difference between accrual and cash basis accounting. As straight-line rent is a GAAP non-cash adjustment and is included in historical earnings, it is added back to FFO to arrive at MFFO as a means of determining operating results of the Company's
Straight-line rent. Most of the Company’s leases provide for periodic minimum rent payment increases throughout the term of the lease. In accordance with GAAP, these periodic minimum rent payment increases during the term of a lease are recorded to rental revenue on a straight-line basis in order to reconcile the difference between accrual and cash basis accounting. As straight-line rent is a GAAP non-cash adjustment and is included in historical earnings, it is added back to FFO to arrive at MFFO as a means of determining operating results of the Company’s portfolio.
·
Amortization of in-place lease valuation. As this item is a cash flow adjustment made to net income in calculating the cash flows provided by (used in) operating activities, it is added back to FFO to arrive at MFFO as a means of determining operating results of the Company's
Amortization of in-place lease valuation. As this item is a cash flow adjustment made to net income in calculating the cash flows provided by (used in) operating activities, it is added back to FFO to arrive at MFFO as a means of determining operating results of the Company’s portfolio.
·
Acquisition-related costs. The Company was organized primarily with the purpose of acquiring or investing in income-producing real property in order to generate operational income and cash flow that will allow us to provide regular cash distributions to the Company's stockholders. In the process, the Company incurs non-reimbursable affiliated and non-affiliated acquisition-related costs, which in accordance with GAAP, are expensed as incurred and are included in the determination of income (loss) from operations and net income (loss). These costs have been and will continue to be funded with cash proceeds from the Offering or included as a component of the amount borrowed to acquire such real estate. If the Company acquires a property after all offering proceeds from the Offering have been invested, there will not be any offering proceeds to pay the corresponding acquisition-related costs. Accordingly, unless the Advisor determines to waive the payment of any then-outstanding acquisition-related costs otherwise payable to the Advisor, such costs will be paid from additional debt, operational earnings or cash flow, net proceeds from the sale of properties, or ancillary cash flows. In evaluating the performance of the Company's portfolio over time, management employs business models and analyses that differentiate the costs to acquire investments from the investments' revenues and expenses. Acquisition-related costs may negatively affect the Company's operating results, cash flows from operating activities and cash available to fund distributions during periods in which properties are acquired, as the proceeds to fund these costs would otherwise be invested in other real estate related assets. By excluding acquisition-related costs, MFFO may not provide an accurate indicator of the Company's operating performance during periods in which acquisitions are made. However, it can provide an indication of the Company's on-going ability to generate cash flow from operations and continue as a going concern after the Company ceases to acquire properties on a frequent and regular basis, which can be compared to the MFFO of other non-listed REITs that have completed their acquisition activity and have similar operating characteristics to the Company. Management believes that excluding these costs from MFFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management.
Acquisition-related costs. The Company was organized primarily with the purpose of acquiring or investing in income-producing real property in order to generate operational income and cash flow that will allow us to provide regular cash distributions to the Company’s stockholders. In the process, the Company incurs non-reimbursable affiliated and non-affiliated acquisition-related costs, which, in accordance with GAAP, are expensed as incurred and are included in the determination of income (loss) from operations and net income (loss). These costs have historically been funded with cash proceeds from the sale of common or preferred stock or included as a component of the amount borrowed to acquire such real estate. If the Company acquires a property in the future, such costs will be paid from additional debt, operational earnings or cash flow, net proceeds from the sale of properties, or ancillary cash flows. In evaluating the performance of the Company’s portfolio over time, management employs business models and analyses that differentiate the costs to acquire investments from the investments’ revenues and expenses. Acquisition-related costs may negatively affect the Company’s operating results, cash flows from operating activities and cash available to fund distributions during periods in which properties are acquired, as the proceeds to fund these costs would otherwise be invested in other real estate related assets. By excluding acquisition-related costs, MFFO may not provide an accurate indicator of the Company’s operating performance during periods in which acquisitions are made. However, it can provide an indication of the Company’s on-going ability to generate cash flow from operations and continue as a going concern after the Company ceases to acquire properties on a frequent and regular basis, which can be compared to the MFFO of other non-listed REITs that have completed their acquisition activity and have similar operating characteristics to the Company. Management believes that excluding these costs from MFFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management.

For all of these reasons, the Company believes the non-GAAP measures of FFO and MFFO, in addition to income (loss) from operations, net income (loss) and cash flows from operating activities, as defined by GAAP, are helpful supplemental performance measures and useful to investors in evaluating the performance of the Company'sCompany’s real estate portfolio. However, a material limitation associated with FFO and MFFO is that they are not indicative of the Company'sCompany’s cash available to fund distributions since other uses of cash, such as capital expenditures at the Company'sCompany’s properties and principal payments of debt, are not deducted when calculating FFO and MFFO. Additionally, MFFO has limitations as a performance measure in an offering such as the Company'sCompany’s where the price of a share of common stock is a stated value. The use of MFFO as a measure of long-term operating performance on value is also limited if the Company does not continue to operate under the Company'sCompany’s current business plan as noted above. MFFO is useful

in assisting management and investors in assessing the Company's on-goingCompany’s ongoing ability to generate cash flow from operations and continue as a going concern in future operating periods, and, in particular, after the Offeringsale of the Company’s common stock and acquisition stages are complete and net asset value ("NAV")NAV is disclosed. However, MFFO is not a useful measure in evaluating NAV because impairments are taken into accountconsidered in determining NAV but not in determining MFFO. Therefore, FFO and MFFO should not be viewed as a more prominent a measure of performance than income (loss) from operations, net income (loss) or to cash flows from operating activities and each should be reviewed in connection with GAAP measurements.

NeitherNone of the SEC, NAREIT noror any other organization body has opined on the acceptability of the adjustments contemplated to adjust FFO in order to calculate MFFO and its use as a non-GAAP performance measure. In the future, the SEC or NAREIT may decide to standardize the allowable exclusions across the REIT industry, and the Company may have to adjust the calculation and characterization of this non-GAAP measure.

The Company'sCompany’s calculation of FFO and MFFO attributable to common shareholders is presented in the following table for the years ended December 31, 2016,2019 and for the period from May 4, 2015 (Inception) through December 31, 2015.2018:

  For the year ended December 31, 2016  For the period from May 4, 2015 (Inception) through December 31, 2015 
Net loss attributable to MVP REIT II, Inc. common shareholders $(4,268,000) $(126,000)
Add:        
Depreciation and amortization of real estate assets  195,000   -- 
Discontinued operations loss  19,000     
FFO $(4,054,000) $(126,000)
Add:        
Acquisition fees and expenses to non-affiliates  2,472,000   -- 
Acquisition fees and expenses to affiliates  1,229,000   -- 
         
MFFO attributable to MVP REIT II, Inc. common shareholders $(353,000) $(126,000)
  For the Years Ended December 31, 
  2019  2018 
Net loss attributable to The Parking REIT, Inc. common shareholders
 
$
(45,558,000
)
 
$
(7,773,000
)
Add (Subtract):
        
(Gain) on Sale of investment in real estate
  
(2,509,000
)
  
(2,276,000
)
Provision for impairment of investment in real estate
  
1,452,000
   
600,000
 
Depreciation and Amortization of real estate assets
  
5,172,000
   
4,938,000
 
FFO 
$
(41,443,000
)
 
$
(4,511,000
)
Add:        
Acquisition fees and expenses
  
251,000
   
412,000
 
Loan defeasance costs
  
--
   
643,000
 
Loan fee costs due to loan defeasance
  
--
   
210,000
 
Subtract:        
(Increase) in Deferred Rental Assets
  
(31,000
)
  
(70,000
)
MFFO attributable to The Parking REIT, Inc. shareholders 
$
(41,223,000
)
 
$
(3,316,000
)
Distributions paid to Common Shareholders 
$
--
  
$
807,000
 

CapitalLiquidity and LiquidityCapital Resources

The Company commenced operations on December 30, 2015.

The Company'sCompany’s principal demand for funds will be/and ishistorically was for the acquisition of real estate assets, funding of loans secured by real estate, the payment of operating expenses, capital expenditures, principal and interest on the Company'sCompany’s outstanding indebtedness and the payment of distributions to the Company'sCompany’s stockholders. Over time, the Company intends to generally fund its operating expenses from its cash flow from operations. The cash required for acquisitions and investments in real estate will behas, to date, been funded primarily from the sale of shares of the Company'sCompany’s common stock and preferred stock, including those shares offered for sale through the Company'sCompany’s distribution reinvestment plan, dispositions of properties in the Company'sCompany’s portfolio and through third party financing and the assumption of debt on acquired properties.

In addition,On December 31, 2016, the Company anticipates raising additional funds though private placementsceased all selling efforts for its initial public offering of shares of its preferredcommon stock as well asat $25.00 per share, pursuant to a registration statement on Form S-11 (No. 333-205893). The Company accepted additional subscriptions through additional debt financing.    As of March 22,31, 2017, the last day of the initial public offering, and raised approximately $61.3 million in the initial public offering before payment of deferred offering costs of approximately $1.1 million, contribution from an affiliate of the former Advisor of approximately $1.1 million and cash distributions of approximately $1.8 million.

The Company had raised $2,679,000approximately $2.5 million, net of offering costs, in funds from the private placements of Series A Convertible Redeemable Preferred Stock and Warrants.approximately $36.0 million, net of offering costs, in funds from the private placements of Series 1 Convertible Redeemable Preferred Stock.

As disclosed in Note P - Legal in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report, Nasdaq has informed the Company that (i) the Company’s common stock will not be approved for listing currently on the Nasdaq Global Market, and (ii) it is highly unlikely that the Company’s common stock would be approved for listing while the SEC investigation is ongoing. There can be no assurance that the Company’s common stock will ever be approved for listing on the Nasdaq Global Market or any other stock exchange, even if the SEC investigation referred to above is completed and no wrongdoing is found and no action is taken in connection therewith against the Company, Mr. Shustek or any other person. As a result of this Nasdaq decision, the Company has determined not to proceed with the registration and sale of the Company’s common stock as contemplated by the Registration Statement (File No. 333-205893) on Form S-11 filed with the U.S. Securities and Exchange Commission on October 5, 2018 and such Registration Statement was withdrawn on August 29, 2019.

As of December 31, 2019, the Company’s debt consisted of approximately $121.4 million in fixed rate debt and $39.5 million in variable rate debt, net of loan issuance costs and the Company’s cash and cash equivalents and restricted cash were approximately $11.6 million ($3.9 million of which was restricted cash).

The Company currently has little cash available for acquisitions and no ability to raise new debt or equity financing, and, accordingly, the Company’s only source of near-term liquidity is from operating activities or the sale of assets. In order to enhance liquidity, the Company’s board of directors is exploring certain strategic alternatives, including sales of assets, a sale of the Company or a portion thereof or a strategic business combination.  For addition information see Note B - Liquidity Matters.

Sources and Uses of Cash

The following table summarizes our cash flows for the years ended December 31, 2019 and 2018:

  For the Years Ended December 31, 
  2019  2018 
Net cash used in operating activities
 
$
(1,767,000
)
 
$
(1,671,000
)
Net cash provided by (used in) investing activities
  
2,811,000
   
(24,460,000
)
Net cash provided by financing activities
  
1,165,000
   
18,836,000
 

Comparison of the year ended December 31, 2019, to the year ended December 31, 2018

The Company’s cash and cash equivalents and restricted cash were approximately $11.6 million as of December 31, 2019, which was an increase of approximately $2.2 million from the balance at December 31, 2018.

Cash flows from operating activities

Net cash used in operating activities for the year ended December 31, 2016 totaled2019 was approximately $3.6 million.  Operating cash flows were used$1.8 million, compared to approximately $1.7 million for the payment of normal operating expenses.  Netsame period in 2018. The increase in cash used was primarily due to an increase in investing activities totaled approximately $59.4 million and consisted of investmentscash used to fund an increase in real estate of approximately $53.7 million, investment in equity method investee ofprepaid expenses including approximately $1.1 million investmentsof prepaid directors and officers insurance premiums, other assets and accounts receivable primarily offset by an increase in cost method investees of
-54-
accounts payable.

Cash flows from investing activities

Net cash provided by investing activities for the year ended December 31, 2019 was approximately $2.0$2.8 million, investment in cost method investees held for salecompared to approximately $24.5 million of approximately $0.8 million,  security deposits on future acquisitions of approximately $4.6 million, investment in assets held for sale of $0.7 million, and investment in MVP REIT, Inc. of $3.0 million, which offset by proceeds from non-controlling interest of $6.6 million. These deposits werenet cash used, to fundacquire investments, for the Detroit Center Parking Garagesame period in January 20172018. The reduction in cash used was due primarily to the fact that no investments were acquired during the year ended December 31, 2019, with the exception of a small tract of land adjacent to our Raider Park garage for $41,000, and two assets were sold in 2019.

For additional information see Note K – Disposition of Investments in Real Estate in Part II, Item 8 Notes to the two St. Louis lots in February 2017.  Consolidated Financial Statements of this Annual Report for additional information.

Cash flows from financing activities

Net cash provided by financing activities totaled approximately $65.7 million and mainly consisted of proceeds from issuance of common stock of approximately $54.0 million.  In addition, financing activity included proceeds from notes payable of approximately $6.5 million, proceeds from the Company's KeyBank line of credit of approximately $8.2 million and cash distributions of approximately $274,000. Net cash used in financing activities also included approximately $2.6 million distributed to non-controlling interest related to their portion of the loan proceeds.

Net cash used in operating activities for the period from May 4, 2015 (date of inception) throughyear ended December 31, 20152019 was $207,000.  Operating cash flows were used forapproximately $1.2 million compared to approximately $18.8 million during the payment of normal operating expenses.  Netsame period in 2018. The decrease in cash provided by financing activities totaled approximately $2.5 million and consisted of proceeds from issuance of commonwas primarily due to the fact that no preferred stock of approximately $2.4 million, and proceeds from a promissory note of approximately $0.1 million, which offset by payments on notes payable of approximately $45,000. Our Sponsor has paid approximately $1.1 million in our organizational and offering cost on our behalf, which have been accounted for as contributions. Duringor other equity was issued during the year ended December 31, 2015,2019 compared to approximately $9.1 million of preferred stock issued during the same period in 2018 and a decrease in net proceeds from long term debt and lines of credit of approximately $8.7 million during the year ended December 31, 2019 compared to the same period in 2018.


Company did not acquire any assets or earn any income from operations.Indebtedness

On October 5, 2016,February 8, 2019, subsidiaries of the Company, through its Operating Partnership,consisting of MVP PF St. Louis 2013, LLC (“MVP St. Louis”), and MVP REIT, through a wholly owned subsidiary (the "Borrowers"PF Memphis Poplar 2013 (“MVP Memphis Poplar”), LLC entered into a creditloan agreement, (the "Unsecureddated as of February 8, 2019, with LoanCore Capital Credit Agreement"REIT LLC (“LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan MVP St. Louis and MVP Memphis Poplar $5.5 million to repay and discharge the outstanding KeyBank loan agreement. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by MVP St. Louis and MVP Memphis Poplar.

The loan with KeyBank, National Association ('KeyBank")Bank of America for the MVP Detroit garage requires the Company to maintain $2.3 million in liquidity at all times, which is defined as unencumbered cash and cash equivalents. As of the administrative agentdate of this filing, the Company was in compliance with this lender requirement.  However, if the Company is unable to sell assets it may be unable to meet this requirement beyond the third quarter of 2020, which could result in an event of default and KeyBank Capital Markets ("KeyBank Capital Markets")acceleration of such loan if the lender is unwilling to waive the requirement. The Company is in preliminary discussions with its lenders, including Bank of America, to obtain waivers from certain liquidity requirements and defer payments due under its loans in light of the current economic conditions and the fact that the Company expects to allow tenants to defer rents under its leases with its tenants as a result of the lead arranger.  Pursuantcurrent COVID-19 pandemic; however, there can be no assurance that the Company will reach any such agreement with its lenders.

The Company’s secured mortgage debt of approximately $53.7 million and $58.6 million as of December 31, 2019 and 2018, respectively, require Mr. Shustek and the former Advisor to continue to provide guarantees. In connection with the Contribution Agreement and the Internalization, Mr. Shustek and the former Advisor will continue to provide such guarantees. For additional information regarding the Company’s indebtedness, please see Note L – Notes Payable in Part II, Item 8 Notes to the Unsecured Credit Agreement, the Borrowers were provided with a $30 million unsecured credit facility (the "Unsecured Credit Facility"), which may be increased up to $100 million, in minimum increments Consolidated Financial Statements of $10 million.  The Unsecured Credit Facility has an initial term of two years, maturing on October 5 2018, and may be extendedthis Annual Report for a one-year period if certain conditions are met and upon payment of an extension fee.  The Unsecured Credit Facility has an annual interest rate calculated based on LIBOR Rate plus 2.25% or Base Rate plus 1.25%, both as provided in the Unsecured Credit Agreement.  The Base Rate is calculated as the greater of (i) the KeyBank Prime rate or (ii) the Federal Funds rate plus ½ of 1%.  Payments under the Unsecured Credit Facility are interest only and are due on the first day of each quarter.  The obligations of the Borrowers of the Unsecured Credit Agreement are joint and several.    The REITs have entered into cross-indemnification provisions with respect to their joint and several obligations under the Unsecured Credit Agreement.additional information.

The Company will experience a relative decrease in liquidity as offering proceeds are used to acquire and operate assets and may experience a temporary, relative increase in liquidity if and when investments are sold, to the extent such sales generate proceeds that are available for additional investments. The Advisor may, but is not required to, establish working capital reserves from offering proceeds of cash flow generated by the Company's investments or out of proceeds from the sale of investments. The Company does not anticipate establishing a general working capital reserve during the initial stages of the Offering; however, the Company may establish capital reserves with respect to particular investments. The Company also may, but is not required to, establish reserves out of cash flow generated by investments or out of net sale proceeds in non-liquidating sale transactions. Working capital reserves are typically utilized to fund tenant improvements, leasing commissions and major capital expenditures. The Company'sCompany’s lenders also may require working capital reserves.

To the extent that the working capital reserve is insufficient to satisfy the Company'sCompany’s cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowing.borrowing, if such borrowing becomes available in the future. In addition, subject to thecertain exceptions and limitations, previously described in the Company's prospectus, the Company may incur indebtedness in connection with the acquisition of any real estate asset to the extent such indebtedness becomes available to the Company in the future, refinance the debt thereon, arrange for the leveraging of any previously unfinancedunencumbered property or reinvest the proceeds of financing or refinancing in additional properties.

The Company's management is not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting the Company's targeted portfolio, the U.S. parking facility industry, which may reasonably be expected to have a material impact on either capital resources or the revenues or incomes to be derived from the operation of the Company's assets.

In addition to making investments in accordance with the Company's investment objectives, the Company expects to use its capital resources to make certain payments to the Company's advisor and the selling agent(s). During the acquisition and development stage, the Company expects to make payments to the Company's advisor in connection with the selection or purchase of investments, the management of the Company's assets and costs incurred by the Company's advisor in providing services to us. For a discussion of the compensation to be paid to the Company's advisor, see "Fees and Expenses Paid in Connection with the Operations of the Company", included in Note E — Related Party Transactions and Arrangements in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K for more information. The advisory agreement has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of the Company's advisor and the Company's board of directors.

Management Compensation Summary

The following table summarizes all compensation and fees incurred by us and paid or payable to the Company'sformer Advisor and its affiliates in connection with the Company'sCompany’s organizationthe Company's initial public offering and the Company's operations for the yearyears ended December 31, 20162019 and for the period from May 4, 2015 (Date of Inception) through December 31, 2015.2018.

 For the year ended December 31, 2016  
For the Period from
May 4, 2015 (Date of Inception) through December 31, 2015
  For the Years Ended December 31, 
Acquisition Fees – related party $1,229,000  $-- 
 2019  2018 
Asset Management Fees  197,000   --   
854,000
   
2,000,000
 
Total $1,426,000  $--  
$
854,000
  
$
2,000,000
 

Distributions and Stock Dividends

The
On March 22, 2018 the Company intends to make regularsuspended the payment of distributions on its common stock. There can be no assurance that cash and stock distributions to itsthe Company’s common stockholders typically on a monthly basis.will be resumed in the future. The actual amount and timing of distributions, if any, will be determined by the Company'sCompany’s board of directors in its discretion and typically will depend on the amount of funds available for distribution, which is impacted by current and projected cash requirements, tax considerations and other factors. As a result, the Company'sCompany’s distribution rate and payment frequency may vary from time to time. However, to qualify as a REIT for federal income tax purposes, the Company must make distributions equal to at least 90% of its REIT taxable income each year.

On October 23, 2015,year (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). In addition, the Company announced that its board of directors has approved a plan for payment of initial monthly cash distributions of $0.0625 per share and monthly stock dividends of $0.0025 per share, based on a purchase price of $25.00 per common share, commencing afterwill be subject to corporate income tax to the extent the Company breaks escrow upon receiving subscriptions for the minimum offering amount of $2 million. The initial cash distribution and stock dividend were paid on February 10, 2016 to stockholders of record as of January 24, 2016. The initial cash distributions were paid from offering proceeds ratherdistributes less than funds from operations and therefore may represent a return of capital.  There can be no assurance that distributions and dividends will continue to be paid at this rate. The Company's board of directors may at any time change the distribution and dividend rate or suspend payment of distributions and dividends if it determines that such action is in the best interest100% of the Company and its stockholders.  The Company expects that its board of directors will continue to authorize, and it will declare, distributions based on a record date on the 24th of each month, and it expects to continue to pay distributions on the 10th day of the following month (or the next business day if the 10th is not a business day), monthly in arrears. The Company has not established a minimum distribution level, and its charter does not require that it make distributions to its stockholders; however, the Company anticipates the payment of monthly distributions. The Company may also make special stock dividends. net taxable income including any net capital gain.

From inception through December 31, 2016, the Company had paid approximately $274,000 in cash, issued 18,311 shares of its common stock as DRIP and issued 29,264 shares of its common stock as dividend in distributions to the Company's stockholders.  All of the cash distributions have been paid from offering proceeds and constituted a return of capital.  The Company's total distributions paid for the period presented, the sources of such distributions, the cash
-56--44-

flows provided by (used in) operations and the number of shares of common stock issued pursuant to the Company's distribution reinvestment plan, or DRIP, are detailed below.

To date, all distributions have been paid from offering proceeds and therefore may represent a return of capital.

  Distributions paid in Cash  Distributions paid through DRIP  
Total
Distributions Paid
  Cash Flows Used in Operations (GAAP basis) 
1st Quarter, 2016
 $10,000  $14,000  $24,000  $(134,000)
2nd Quarter, 2016
  47,000   67,000   114,000   (435,000)
3rd Quarter, 2016
  85,000   136,000   221,000   (1,181,000)
4th Quarter, 2016
  132,000   241,000   373,000   (1,894,000)
Total 2016 $274,000  $458,000  $732,000  $(3,644,000)

As of December 31, 2016, the Company issued 29,264 shares of its common stock as dividend distribution made to the Company's stockholders through the DRIP.

The Company is not currently and may not in the future generate sufficient cash flow from operations to fully fund distributions. AllThe Company does not currently anticipate that it will be able to resume the payment of distributions.  However, if distributions do resume, all or a portion of the distributions may be paid from other sources, such as cash flows from equity offerings, financing activities, borrowings, cash advances from the Advisor, or by way of waiver or deferral of fees. The Company has not established any limit on the extent to which distributions could be funded from these other sources. Accordingly, the amount of distributions paid may not reflect current cash flow from operations and distributions may include a return of capital, rather(rather than a return on capital.capital). If the Company continues to paypays distributions from sources other than cash flow from operations, the funds available to the Company for investments would be reduced and the share value may be diluted. The level of distributions will be determined by the board of directors and depend on a number ofseveral factors including current and projected liquidity requirements, anticipated operating cash flows and tax considerations, and other relevant items deemed applicable by the board of directors.

Related-Party TransactionsCommon Stock

From inception through December 31, 2019, the Company had paid approximately $1.8 million in cash, issued 83,437 shares of its common stock as DRIP and Arrangementsissued 153,826 shares of its common stock in distributions to the Company’s stockholders. All of the cash distributions were paid from offering proceeds and constituted a return of capital. On March 22, 2018 the Company suspended payment of distributions and as such there are currently no distributions to invest in the DRIP.

The Company’s total distributions paid for the period presented, the sources of such distributions, the cash flows provided by (used in) operations and the number of shares of common stock issued pursuant to the Company’s DRIP are detailed below.

To date, all distributions were paid from offering proceeds and therefore represent a return of capital.

  Distributions Paid in Cash  Distributions Paid through DRIP  
Total
Distributions Paid
  Cash Flows provided by (used in) Operations (GAAP basis) 
1st Quarter, 2019 
$
--
  
$
--
  
$
--
  
$
(1,272,000
)
2nd Quarter, 2019
  
--
   
--
   
--
   
(942,000
)
3rd Quarter, 2019
  
--
   
--
   
--
   
(989,000
)
4th Quarter, 2019
  
--
   
--
   
--
   
1,436,000
 
Total 2019 
$
--
  
$
--
  
$
--
  
$
(1,767,000
)

  Distributions Paid in Cash  Distributions Paid through DRIP  
Total
Distributions Paid
  Cash Flows Generated from (used in) Operations (GAAP basis) 
1st Quarter, 2018 
$
806,000
  
$
418,000
  
$
1,224,000
  
$
(1,015,000
)
2nd Quarter, 2018
  
--
   
--
   
--
   
(506,000
)
3rd Quarter, 2018
  
--
   
--
   
--
   
663,000
 
4th Quarter, 2018
  
--
   
--
   
--
   
(813,000
)
Total 2018 
$
806,000
  
$
418,000
  
$
1,224,000
  
$
(1,671,000
)

Preferred Series A Stock

The Company has entered into agreementsoffered up to $50 million in shares of the Company’s Series A Convertible Redeemable Preferred Stock (“Series A”), par value $0.0001 per share, together with affiliates of its Sponsor, wherebywarrants to acquire the Company’s common stock, in a Regulation D 506(c) private placement to accredited investors. In connection with the private placement, on October 27, 2016, the Company will pay certain fees
or reimbursementsfiled with the State Department of Assessments and Taxation of Maryland Articles Supplementary to the Advisor or its affiliatescharter of the Company classifying and designating 50,000 shares of Series A Convertible Redeemable Preferred Stock. The Company commenced the private placement of the Shares to accredited investors on November 1, 2016 and closed the offering on March 24, 2017. The Company raised approximately $2.5 million, net of offering costs, in connectionthe Series A private placements.

The offering price was $1,000 per share. In addition, each investor in the Series A received, for every $1,000 in shares subscribed by such investor, 30 detachable warrants to purchase shares of the Company’s common stock if the Company’s common stock is listed on a national securities exchange. The warrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with among other things, acquisitionthe terms of the warrant; however, in no event shall the exercise price be less than $25 per share. As of March 5, 2019, there were 84,510 detachable warrants that may be exercised after the 90th day following the occurrence of a listing event. These warrants will expire five years from the 90th day after the occurrence of a listing event.

For additional information see Note R — Preferred Stock and financing activities, asset management services and reimbursement of operating and offering related costs. See Note E — Related Party Transactions and Arrangements inWarrants in Part II, Item 8 Financial Statements of this Annual Report on Form 10-Kfor a discussion of the various related party transactions, agreements and fees.


From initial issuance through December 31, 2019, the Company had declared distributions of approximately $561,000 of which approximately $543,000 had been paid to Series A stockholders.

  
Total Series A
Distributions Paid
  Cash Flows provided by (used in) Operations (GAAP basis) 
1st Quarter, 2019 
$
54,000
  
$
(1,272,000
)
2nd Quarter, 2019
  
54,000
   
(942,000
)
3rd Quarter, 2019
  
54,000
   
(989,000
)
4th Quarter, 2019
  
54,000
   
1,436,000
 
Total 2019 
$
216,000
  
$
(1,767,000
)

  
Total Series A
Distributions Paid
  Cash Flows Generated from (used in) Operations (GAAP basis) 
1st Quarter, 2018 
$
41,000
  
$
(1,015,000
)
2nd Quarter, 2018
  
51,000
   
(506,000
)
3rd Quarter, 2018
  
54,000
   
663,000
 
4th Quarter, 2018
  
54,000
   
(813,000
)
Total 2018 
$
200,000
  
$
(1,671,000
)

On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series A, however, such distributions will continue to accrue in accordance with the terms of the Series A.

Preferred Series 1 Stock

On November 5, 2016,March 29, 2017, the Company purchased 338,409filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary to the charter of the Company classifying and designating 97,000 shares of MVP REIT'sits authorized capital stock as shares of Series 1 Convertible Redeemable Preferred Stock (“Series 1”), par value $0.0001 per share. On April 7, 2017, the Company commenced the Regulation D 506(b) private placement of shares of Series 1, together with warrants to acquire the Company’s common stock, from an unrelated third party for $3.0to accredited investors. On January 31, 2018, the Company closed this offering. As of March 5, 2019, the Company had raised approximately $36.0 million, or $8.865net of offering costs, in the Series 1 private placements and had 39,811 shares of Series 1 issued and outstanding.

The offering price is $1,000 per share. DuringIn addition, each investor in the year endedSeries 1 will receive, for every $1,000 in shares subscribed by such investor, 35 detachable warrants to purchase shares of the Company’s common stock if the Company’s common stock is listed on a national securities exchange. The warrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with the terms of the warrant; however, in no event shall the exercise price be less than $25 per share. As of March 5, 2019, there were 1,382,675 detachable warrants that may be exercised after the 90th day following the occurrence of a listing event. These warrants will expire five years from the 90th day after the occurrence of a listing event.

For additional information see Note R — Preferred Stock and Warrants in Part II, Item 8 Financial Statements of this Annual Report for a discussion of the various related party transactions, agreements and fees.

From issuance date through December 31, 2106,2019, the Company received,had declared distributions of approximately $34,000$5.9 million of which approximately $5.7 million had been paid to Series 1 stockholders.

  
Total Series 1
Distributions Paid
  Cash Flows provided by (used in) Operations (GAAP basis) 
1st Quarter, 2019 
$
697,000
  
$
(1,272,000
)
2nd Quarter, 2019
  
695,000
   
(942,000
)
3rd Quarter, 2019
  
696,000
   
(989,000
)
4th Quarter, 2019
  
696,000
   
1,436,000
 
Total 2019 
$
2,784,000
  
$
(1,767,000
)


  
Total Series 1
Distributions Paid
  Cash Flows Provided by (used in) Operations (GAAP basis) 
1st Quarter, 2018 
$
477,000
  
$
(1,015,000
)
2nd Quarter, 2018
  
639,000
   
(506,000
)
3rd Quarter, 2018
  
697,000
   
663,000
 
4th Quarter, 2018
  
697,000
   
(813,000
)
Total 2018 
$
2,510,000
  
$
(1,671,000
)

On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series 1, however, such distributions will continue to accrue in distributions, relatedaccordance with the terms of the Series 1.

Related-Party Transactions and Arrangements

The Company had entered into agreements with affiliates of its Sponsor, whereby the Company paid certain fees or reimbursements to the Company's ownershipformer Advisor or its affiliates prior to the Internalization. For additional information see Note E — Related Party Transactions and Arrangements in Part II, Item 8 Financial Statements of MVP REIT common stock.this Annual Report for a discussion of the various related party transactions, agreements and fees.

Inflation

The Company expects to include provisions in its tenant leases designed to protect the Company from the impact of inflation. These provisions will include reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements, or in some cases annual reimbursement of operating expenses above a certain allowance. Due to the generally long-term nature of these leases, annual rent increases may not be sufficient to cover inflation and rent may be below market.

Income Taxes

TheCommencing with the taxable year ended December 31, 2017, the Company believes it has been organized and conducts its operations to qualify as a REIT under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the "Code").  The Company expects to qualify as a REIT commencing with the taxable year ending December 31, 2016.Code. A REIT is generally not subject to federal income tax on that portion of its REIT taxable income, which is distributed to its stockholders, provided that at least 90% of its REITsuch taxable income is distributed and provided that certain other requirements are met. The Company'sCompany’s REIT taxable income

may substantially exceed or be less than the income calculated according to GAAP. In addition, the Company will be subject to corporate income tax to the extent that less than 100% of the net taxable income is distributed, including any net capital gain.

The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as determined basedthe largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has not recorded any uncertain tax positions as of December 31, 2019.

A full valuation allowance for deferred tax assets was provided since the Company believes that it is more likely than not that it will not realize the benefits of its deferred tax assets. A change in circumstances may cause the Company to change its judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized. The Company would generally report any change in the valuation allowance through its income statement in the period in which such changes in circumstances occur. Because the Company is a REIT, it will generally not be subject to corporate level federal income taxes on GAAP, because, differencesearnings distributed to the Company’s stockholders and therefore may not realize any benefit from deferred tax assets arising during 2019 or any prior period in GAAPwhich a valid REIT election was in effect. The Company intends to distribute at least 100% of its taxable income annually and taxable net income consist primarilyintends to do so for the tax year ended December 31, 2019 and in all future periods. The Company has placed a full valuation allowance on all of allowances for loan losses or doubtful account, write-downsits deferred tax assets, and thus no asset is recorded on real estate held for sale, amortization of deferred financing cost, capital gains and losses, and deferred income.the Company’s balance sheet.

REIT Compliance

The Company intendselected to be treated as a REIT for federal income tax purposes for the year ended December 31, 2017, and has continued to operate in a manner to qualify as a REIT for federal income tax purposes for the years ended December 31, 2018 and December 31, 2019 and therefore the Company generally will not be subject to federal income tax on income that the Company distributes to theits stockholders. If the Company fails to qualify as a REIT in any taxable year, including and after the taxable year in which the Company initially elects to be taxed as a REIT, the Company will be subject to federal income tax on the taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied. Failing to qualify as a REIT could materially and adversely affect the Company'sCompany’s net income.

To qualify as a REIT for tax purposes, the Company will beis required to distribute at least 90% of its REIT taxable income to the Company'sCompany’s stockholders. The Company must also meet certain asset and income tests, as well as other requirements. The Company will monitor the business and transactions that may potentially impact the Company'sCompany’s REIT status. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax (including any applicable alternative minimum tax) on the taxable income at regular corporate rates.


Off-Balance Sheet Arrangements

Series A Preferred Stock

Each investor in the Series A received, for every $1,000 in shares subscribed by such investor, detachable warrants to purchase 30 shares of the Company’s common stock if the Company’s common stock is listed on a national securities exchange. The Company hadwarrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with the terms of the warrant; however, in no off-balance sheet arrangements asevent shall the exercise price be less than $25 per share. As of December 31, 2016.2019, there were detachable warrants that may be exercised for 84,510 shares of the Company’s common stock after the 90th day following the occurrence of a listing event. These potential warrants will expire five years from the 90th day after the occurrence of a listing event. If all the potential warrants outstanding at December 31, 2019 became exercisable because of a listing event and were exercised at the minimum price of $25 per share, the Company would issue an additional 84,510 shares of common stock and would receive gross proceeds of approximately $2.1 million.

Real Estate Investments & Industry OutlookFor additional information see “— Liquidity and Capital Resources” and “—Preferred Series A Stock” above and Note R — Preferred Stock and Warrants in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

The Company is required to present the operations related to properties that have been sold or properties that are intended to be sold, as discontinued operationsSeries 1 Preferred Stock

Each investor in the statementSeries 1 received, for every $1,000 in shares subscribed by such investor, detachable warrants to purchase 35 shares of operationsthe Company’s common stock if the Company’s common stock is listed on a national securities exchange. The warrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with the terms of the warrant; however, in no event shall the exercise price be less than $25 per share. As of December 31, 2019, there were detachable warrants that may be exercised for approximately 1,382,675 shares of the Company’s common stock after the 90th day following the occurrence of a listing event. These potential warrants will expire five years from the 90th day after the occurrence of a listing event. If all periods presented. Properties that are intended to be sold are to be designated as "held for sale" on the balance sheet.potential warrants outstanding at December 31, 2019 became exercisable because of a listing event and were exercised at the minimum price of $25 per share, the Company would issue an additional 1,382,675 shares of common stock and would receive gross proceeds of approximately $34.6 million.

Favorable U.S. Treasury yieldsFor additional information see “— Liquidity and competitive lender spreads have created a generally favorable borrowing environment for real estate purchases Capital Resources” and “—Preferred Series A Stock” above and Note R — Preferred Stock and Warrants in 2015 and 2016.  Given the uncertainty around the world's financial markets, investors have been willing to accept lower yields on U.S. government backed securities, providing Freddie Mac and Fannie Mae with excellent access to investor capital.  During the 4thPart II, Item 8 quarter of 2016, U.S. Treasury rates increased, the Company expects the market to continue to increase US Treasury rates over the next year, which will make it harder to finance the Company's current unencumbered properties or to finance new acquisitions at favorable rates.  Management will continue to look for favorable financing opportunities that will maximize the Company's use of cash, but there can be no assurance that the Company will be able to find favorable rates.

Parking Industry Outlook

In December 2016, the National Parking Association, ("NPA"), released their annual Parking Demand Report, which highlighted long-term demand and potential trends in the parking industry.  AccordingNotes to the NPA's website http://weareparking.org some Consolidated Financial Statements of the key finds include:

·Parking revenue is projected to grow from just under $25 billion in 2015 to nearly $29 billion by 2018.
·The #1 reason for parking growth is population expansion projected to increase from 320M in 2015, to 400M by 2050.
·15 year trend continues, 86 percent of U.S. commuters' say driving and parking their vehicle is their dominant mode of transportation.
·Approximately 119.9M Americans drive to work (2013 U.S. Census).
·New York, Los Angeles, Chicago, Houston and Phoenix highlight urbanization and density and have the most parking growth potential.

·The top two states in terms of parking revenue are California ($1.4 billion), and New York ($1.2 billion).
·By region, population density leads to parking growth in the New York/Northeast corridor. The West Coast, anchored by California, continues to be a parking powerhouse. And Florida as 3rd most populous state, presents future revenue growth opportunities.

According to NPA, parking demand is a function of a number of factors, all working in tandem to affect demand and usage. When looking at macroeconomic, demographic, employment, and industry statistics, NPA see a picture of patterns that influence parking demand in North America:

·
Population: Fundamental population growth of 9.6% from the 2000 U.S. Census to the 2010 U.S. Census is expected to continue into the future.
·
Employment: In the U.S., 92% employment provides sustained parking demand, 6.2% unemployment as of August 2014.
·
Baby Boomers. The Baby Boomer population will be 65 or older in 2029 and stand at 61.3 million, representing 20% of the U.S. population.
·
Colleges/Universities: College/university enrollment increased 30% from 2000-2009, from 15.3 million to 20.4 million.
·
Municipalities: Public sector parking is beset by financial pressures; this pressure will accelerate automation and rate increases that will drive revenue.
·
Pricing: Demand will be affected by demand pricing, mobile rate promotions, pre-paid parking and price increases, both public/private, as well as price rates for peak parking periods.
this Annual Report for additional information.

Critical Accounting Policies

The Company'sCompany’s accounting policies have been established to conformin conformity with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management'smanagement’s judgment or interpretation of the facts and circumstances relating to various transactions is different, it is possible that different accounting policies will be applied, or different amounts of assets, liabilities, revenues and expenses will be recorded, resulting in a different presentation of the financial statements or different amounts reported in the financial statements.

Additionally, other companies may utilize different estimates that may impact comparability of the Company'sCompany’s results of operations to those of companies in similar businesses. Below is a discussion of the accounting policies that management considers to be most critical once the Company commences significant operations. These policies require complex judgment in their application or estimates about matters that are inherently uncertain.

Real Estate Investments

Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

The Company are is required to make subjective assessments as to the useful lives of the Company'sCompany’s properties for purposes of determining the amount of depreciation to record on an annual basis with respect to the Company'sCompany’s investments in real estate. These assessments have a direct impact on the Company'sCompany’s net income because if the Company were to shorten the expected useful lives of the Company'sCompany’s investments in real estate, the Company would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.


Purchase Price Allocation

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company'sCompany’s analysis of comparable properties in the Company'sCompany’s portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable.

The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into accountconsidering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company will include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Estimates of costs to execute similar leases including leasing commissions, legal and other related expenses are also utilized. Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management'smanagement’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease. The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined by taking into consideration the tenant'stenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company'sCompany’s evaluation of the specific characteristics of each tenant'stenant’s lease and the Company'sCompany’s overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of the Company'sCompany’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant'stenant’s credit quality and expectations of lease renewals, among other factors.

The value of in-place leases is amortized to expense over the initial term of the respective leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event, does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

In making estimates of fair values for purposes of allocating purchase price, the Company will utilize a number ofseveral sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company will also consider information obtained about each property as a result of the pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Deferred Costs

Deferred costs may consist of deferred financing costs, deferred offering costs and deferred leasing costs. Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest

method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.


Contractual Obligations

The following is a summary of the Company's gross contractual obligations asAs of December 31, 2016:2019, our contractual obligations consisted of the mortgage notes secured by our acquired properties:

Contractual Obligations Total  Less than 1 year  1-3 years  3-5 years  More than 5 years  Total  Less than 1 year  1-3 years  3-5 years  More than 5 years 
Long-term debt obligations $5,393,000  $231,000  $253,000  $277,000  $4,632,000  
$
160,948,000
  
$
50,183,000
  
$
4,310,000
  
$
17,781,000
  
$
88,674,000
 
Capital and Operating Lease Obligations  --   --   --   --   -- 
Line of credit:  --   --   --   --   -- 
Lines of credit: 
--
  
--
  
--
  
--
  
--
 
Interest  --   --   --   --   --  
--
  
--
  
--
  
--
  
--
 
Principle  8,190,000   8,190,000   --   --   -- 
Purchase Obligations  --   --   --   --   -- 
Principal  
--
   
--
   
--
   
--
   
--
 
Total $13,583,000  $8,421,000  $253,000  $277,000  $4,632,000  
$
160,948,000
  
$
50,183,000
  
$
4,310,000
  
$
17,781,000
  
$
88,674,000
 

The Contractual obligationobligations table amount does not reflect the unamortized loan issuance costs of approximately $0.1$1.8 million for notes payable and approximately $0.2 million for the line of credit as of December 31, 2016.2019.

On March 29, 2019, the Company entered into a Contribution Agreement (the “Contribution Agreement”) with the former Advisor, Vestin Realty Mortgage I, Inc. (“VRTA”) (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc. (“VRTB”) (solely for purposes of Section 1.01(c) thereof) and Shustek (solely for purposes of Section 4.03 thereof). In exchange for the Contribution, the Company agreed to issue to the former Advisor 1,600,000 shares of Common Stock as consideration (the “Consideration”), issuable in four equal installments. The first and second installments of 400,000 shares of Common Stock per installment were issued on the April 1, 2019 and December 31, 2019, respectively. As of December 31, 2019, The Company is obligated to issue 800,000 more shares of Common Stock, 400,000 each on December 31, 2020 and 2021, respectively. See Note S — Deferred Management Internalization in Part II, Item 8 Notes to the Consolidated Financial Statements of this Annual Report for additional information.

Subsequent Events

During January 2017, the Company and MVP REIT, through MVP Detroit Center Garage, LLC ("MVP Detroit Center"), an entity owned by the Company and MVP REIT, acquired a multi-level parking garage consistingSee Note U — Subsequent Events in Part II, Item 8 Financial Statements of approximately 1,275 parking spaces, located in Detroit, Michigan,this Annual Report for a purchase price of $55.0 million, plus acquisition and financing-related transaction costs.  The Company owns a 80% equity interest in the MVP Detroit Center and MVP REIT owns an 20% equity interest.  The parking garage will be operated by SP Plus Corporation ("SP+") under a long-term lease, where SP will be responsible for the first $572,000 in property taxes, pay annual base rent of $3.4 million, and 80% of all gross revenue above $5.0 million.  As partdiscussion of the acquisition MVP Detroit Center entered into a $31.5 million loan agreement with Bank of America, N.A., with a term of 10 years, amortized over 25 years, with monthly principal and interest payments totaling approximately $194,000, bearing an annual interest rate of 5.52%, secured by the parking garage, and maturing in February 2027.  In connection with this purchase the company paid a broker commission totaling 2% of the purchase price.various subsequent events.

On February 1, 2017, the Company, through MVP St. Louis Broadway, LLC, a Delaware limited liability company ("Broadway"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 161 parking spaces, located in St. Louis, Missouri, for a purchase price of $2.4 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking Co, ("St. Louis Parking"), a regional parking operator, under a modified net lease agreement where Broadway is responsible for property taxes above a $19,600 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $180,000.  In addition, the lease provides revenue participation with Broadway receiving 75% of gross receipts over $270,000.

On February 1, 2017, the Company, through MVP St. Louis Seventh & Cerre, LLC, a Delaware limited liability company ("7th & Cerre"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 174 parking spaces, located in St. Louis, Missouri, for a purchase price of $3.3 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking, a regional parking operator, under a modified net lease agreement where 7th & Cerre is responsible for property taxes above a $14,885 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $225,000.  In addition, the lease provides revenue participation with 7th & Cerre receiving 75% of gross receipts over $345,000.


ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for a smaller reporting company.Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing the Company’s business plan, the Company expects that the primary market risk to which the Company will be exposed is interest rate risk. Our primary interest rate exposure will be the one-month LIBOR.

As of December 31, 2019, the Company’s debt consisted of approximately $121.4 million in fixed rate debt and $39.5 million in variable rate debt, net of loan issuance costs. Our variable interest rate debt is related to the LoanCore loan, where the floating rate loan is set at one-month LIBOR plus 3.65%, LIBOR can’t go below 1.95% and the Company has purchased a rate cap that caps LIBOR at 3.50%. Changes in interest rates have different impacts on the fixed rate and variable rate debt. A change in interest rates on fixed rate debt impacts its fair value but has no impact on interest incurred or cash flows. A change in interest rates on variable rate debt could impact the interest incurred and cash flows and its fair value. Assuming no increase in the level of our variable debt, if interest rates increased by 1.0%, or 100 basis points, our cash flow would decrease by approximately $0.4 million per year. At December 31, 2019 LIBOR was approximately 2.52%. Assuming no increase in the level of variable rate debt, if LIBOR were reduced to 1.95%, our cash flow would increase by approximately $0.2 million per year.

The following tables summarizes gross annual debt maturities, average interest rates and estimated fair values on the Company’s outstanding debt as of December 31, 2019:

  For the Years Ending December 31          
  2020  2021  2022  2023  2024  Thereafter  Total  Fair Value 
Fixed rate debt
 
$
50,183,000
  
$
2,058,000
  
$
2,252,000
  
$
2,498,000
  
$
15,283,000
  
$
88,674,000
  
$
160,948,000
  
$
149,943,000
 
                                 
Average interest rate
  
5.87
%
  
4.87
%
  
4.88
%
  
4.89
%
  
4.77
%
  
5.00
%
        

ITEM 8. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and StockholdersShareholders of
MVPThe Parking REIT, II, Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MVPThe Parking REIT, II, Inc. and subsidiariesSubsidiaries (the "Company"“Company”) as of December 31, 20162019 and 2015, and2018, the related consolidated statements of operations, changes in equity, and cash flows for each of the yeartwo years in the period ended December 31, 20162019, and the related notes and schedules (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period from May 4, 2015 (date of inception) throughended December 31, 2015.  Our audits also included2019, in conformity with accounting principles generally accepted in the consolidatedUnited States of America.
Basis for Opinion
These financial statement schedule.  These consolidated financial statements and financial statement schedule are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these consolidatedthe Company’s financial statements and financial statement schedule based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. OurAs part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MVP REIT II, Inc. and subsidiaries as of December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows for the year ended December 31, 2016 and for the period from May 4, 2015 (date of inception) through December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.  Also in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ RBSM LLP

We have served as the Company’s auditor since 2015.
New York, New York
March 24, 201730, 2020


MVPTHE PARKING REIT, II, Inc.
(A Maryland Corporation)INC.
CONSOLIDATED BALANCE SHEETS

  As of December 31, 
  2019  2018 
ASSETS 
Investments in real estate
      
Land and improvements 
$
136,607,000
  
$
142,607,000
 
Buildings and improvements  
170,276,000
   
170,206,000
 
Construction in progress  
714,000
   
1,872,000
 
Intangible assets  
2,288,000
   
2,288,000
 
   
309,885,000
   
316,973,000
 
Accumulated depreciation  
(12,049,000
)
  
(7,110,000
)
Total investments in real estate, net
  
297,836,000
   
309,863,000
 
         
Fixed Assets, net of accumulated depreciation of $42,000 and $21,000 as of December 31, 2019 and 2018, respectively
  
21,000
   
42,000
 
Assets held for sale, net of accumulated depreciation of $212,000
  
3,288,000
   
--
 
Cash
  
7,707,000
   
5,106,000
 
Cash – restricted
  
3,937,000
   
4,329,000
 
Prepaid expenses
  
1,679,000
   
616,000
 
Accounts receivable
  
929,000
   
712,000
 
Investment in DST
  
2,836,000
   
2,821,000
 
Accounts receivable related parties
  
--
   
3,000
 
Other assets
  
111,000
   
79,000
 
Total assets
 
$
318,344,000
  
$
323,571,000
 
LIABILITIES AND EQUITY 
Liabilities
        
Notes payable, net of unamortized loan issuance costs of approximately $1.8 million and $2.4 million as of December 31, 2019 and 2018, respectively
 
$
159,120,000
  
$
155,961,000
 
Accounts payable and accrued liabilities
  
10,883,000
   
4,605,000
 
Accounts payable and accrued liabilities – related party
  
--
   
653,000
 
Deferred management internalization
  
17,800,000
   
--
 
Security deposits
  
138,000
   
139,000
 
Due to related parties
  
54,000
   
--
 
Deferred revenue
  
104,000
   
93,000
 
Total liabilities
  
188,099,000
   
161,451,000
 
Commitments and contingencies
  
--
   
--
 
Equity
        
The Parking REIT, Inc. Stockholders’ Equity
        
Preferred stock Series A, $0.0001 par value, 50,000 shares authorized, 2,862 shares issued and outstanding (stated liquidation value of $2,862,000 as of December 31, 2019 and 2018)  
--
   
--
 
Preferred stock Series 1, $0.0001 par value, 97,000 shares authorized, 39,811 shares issued and outstanding (stated liquidation value of $39,811,000 as of December 31, 2019 and 2018)  
--
   
--
 
Non-voting, non-participating convertible stock, $0.0001 par value, 1,000 shares authorized, no shares issued and outstanding  
--
   
--
 
Common stock, $0.0001 par value, 98,999,000 shares authorized, 7,332,811 and 6,542,797 shares issued and outstanding as of December 31, 2019 and 2018, respectively  
--
   
--
 
Additional paid-in capital  
194,137,000
   
183,382,000
 
Accumulated deficit  
(66,511,000
)
  
(23,953,000
)
Total The Parking REIT, Inc. Shareholders’ Equity  
127,626,000
   
159,429,000
 
Non-controlling interest
  
2,619,000
   
2,691,000
 
Total equity
  
130,245,000
   
162,120,000
 
Total liabilities and equity
 
$
318,344,000
  
$
323,571,000
 
  December 31, 2016  December 31, 2015 
ASSETS      
Cash $4,885,000  $2,268,000 
Cash - restricted  100,000   -- 
Prepaid expenses  283,000   180,000 
Accounts receivable  208,000   -- 
Investments in MVP REIT, Inc.  3,034,000     
Land and improvements  28,854,000   -- 
Buildings and improvements  24,889,000   -- 
Investments in real estate and fixed assets  53,743,000   -- 
Accumulated depreciation  (195,000)  -- 
Total investments in real estate and fixed assets, net  53,548,000   -- 
         
Other assets  4,575,000   -- 
Assets held for sale  700,000     
Investment in equity method investee  1,150,000   -- 
Investments in cost method investee – held for sale  836,000   -- 
Investments in cost method investee  936,000   -- 
Total assets $70,255,000  $2,448,000 
LIABILITIES AND EQUITY        
Liabilities        
Accounts payable and accrued liabilities $485,000  $6,000 
Security Deposit  2,000   -- 
Due to related parties  575,000   32,000 
Line of credit, net of unamortized loan issuance costs of approximately $0.2 million  7,957,000   -- 
Deferred revenue  45,000   -- 
Notes payable, net of unamortized loan issuance costs of approximately $0.1 million  5,318,000   106,000 
Total liabilities  14,382,000   144,000 
Commitments and contingencies  --   -- 
Equity        
MVP REIT II, Inc. Stockholders' Equity        
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, none outstanding  --   -- 
Preferred stock Series A, $0.0001 par value, 50,000 shares authorized, none outstanding        
Non-voting, non-participating convertible stock, $0.0001 par value, no shares issued and outstanding  --   -- 
Common stock, $0.0001 par value, 98,999,000 shares authorized, 2,301,828 and 94,749 shares issued and outstanding as of December 31, 2016 and 2015, respectively  --   -- 
Additional paid-in capital  56,143,000   2,430,000 
Accumulated deficit  (4,394,000)  (126,000)
Total MVP REIT II, Inc. Shareholders' Equity  51,749,000   2,304,000 
Non-controlling interest – related party  4,124,000   -- 
Total equity  55,873,000   2,304,000 
Total liabilities and equity $70,255,000  $2,448,000 
         
The accompanying notes are an integral part of these consolidated financial statements.

THE PARKING REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

  For the Years Ended December 31, 
  2019  2018 
Revenues      
Base rent income
 
$
20,151,000
  
$
19,534,000
 
Percentage rent income
  
2,643,000
   
2,566,000
 
Total revenues
  
22,794,000
   
22,100,000
 
         
Operating expenses        
Property taxes
  
3,023,000
   
2,918,000
 
Property operating expense
  
1,701,000
   
1,404,000
 
Asset management fee – related party
  
854,000
   
2,000,000
 
General and administrative
  
5,601,000
   
3,620,000
 
Professional fees
  
8,528,000
   
4,243,000
 
Management internalization
  
32,004,000
   
--
 
Acquisition expenses
  
251,000
   
412,000
 
Provision for impairment of investments in real estate
  
1,452,000
   
600,000
 
Depreciation and amortization
  
5,172,000
   
4,938,000
 
Total operating expenses
  
58,586,000
   
20,135,000
 
         
Income (loss) from operations  
(35,792,000
)
  
1,965,000
 
         
Other income (expense)        
Interest expense
  
(9,513,000
)
  
(9,449,000
)
Gain on sale of investments in real estate
  
2,509,000
   
2,276,000
 
Other Income
  
82,000
   
81,000
 
Income from DST
  
218,000
   
205,000
 
Total other expense
  
(6,704,000
)
  
(6,887,000
)
         
Net loss
  
(42,496,000
)
  
(4,922,000
)
Net income attributable to non-controlling interest
  
62,000
   
41,000
 
Net loss attributable to The Parking REIT, Inc.’s stockholders
 
$
(42,558,000
)
 
$
(4,963,000
)
         
Preferred stock distributions declared - Series A
  
(216,000
)
  
(205,000
)
Preferred stock distributions declared - Series 1
  
(2,784,000
)
  
(2,605,000
)
Net loss attributable to The Parking REIT, Inc.’s common stockholders  
(45,558,000
)
  
(7,773,000
)
         
Basic and diluted loss per weighted average common share:
        
Net loss per share attributable to The Parking REIT, Inc.’s common stockholders - basic and diluted 
$
(6.66
)
 
$
(1.19
)
Distributions declared per common share 
$
--
  
$
0.12
 
Weighted average common shares outstanding, basic and diluted
  
6,836,693
   
6,550,099
 

The accompanying notes are an integral part of these consolidated financial statements.


THE PARKING REIT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

  Preferred stock  Common stock             
  Number of Shares  Par Value  Number of Shares  Par Value  Additional Paid-in Capital  Accumulated Deficit  Non-controlling interest  Total 
Balance, December 31, 2017  
32,651
   
--
   
6,532,000
   
--
   
177,598,000
   
(18,173,000
)
  
2,751,000
   
162,176,000
 
Distributions to non-controlling interest
  
--
   
--
   
--
   
--
   
--
   
--
   
(101,000
)
  
(101,000
)
Issuance of common stock – DRIP
  
--
   
--
   
11,326
   
--
   
307,000
   
--
   
--
   
307,000
 
Issuance of preferred Series 1
  
10,022
   
--
   
--
   
--
   
9,089,000
   
--
   
--
   
9,089,000
 
Redeemed Shares
  
--
   
--
   
(33,217
)
  
--
   
(812,000
)
  
--
   
--
   
(812,000
)
Distributions - Common
  
--
   
--
   
--
   
--
   
(807,000
)
  
--
   
--
   
(807,000
)
Distributions – Series A
  
--
   
--
   
--
   
--
   
(205,000
)
  
--
   
--
   
(205,000
)
Distributions – Series 1
  
--
   
--
   
--
   
--
   
(2,605,000
)
  
--
   
--
   
(2,605,000
)
Stock dividend
  
--
   
--
   
32,679
   
--
   
817,000
   
(817,000
)
  
--
   
--
 
Net income (loss)
  
--
   
--
   
--
   
--
   
--
   
(4,963,000
)
  
41,000
   
(4,922,000
)
Balance, December 31, 2018  
42,673
  
$
--
   
6,542,797
  
$
--
  
$
183,382,000
  
$
(23,953,000
)
 
$
2,691,000
  
$
162,120,000
 
                                 
Distributions to non-controlling interest
  
--
   
--
   
--
   
--
   
--
   
--
   
(134,000
)
  
(134,000
)
Issuance of common stock
  
--
   
--
   
800,000
   
--
   
14,000,000
   
--
   
--
   
14,000,000
 
Redeemed Shares
  
--
   
--
   
(9,986
)
  
--
   
(245,000
)
  
--
   
--
   
(245,000
)
Distributions – Series A
  
--
   
--
   
--
   
--
   
(216,000
)
  
--
   
--
   
(216,000
)
Distributions – Series 1
  
--
   
--
   
--
   
--
   
(2,784,000
)
  
--
   
--
   
(2,784,000
)
Net income (loss)
  
--
   
--
   
--
   
--
   
--
   
(42,558,000
)
  
62,000
   
(42,496,000
)
Balance, December 31, 2019  
42,673
  
$
--
   
7,332,811
  
$
--
  
$
194,137,000
  
$
(66,511,000
)
 
$
2,619,000
  
$
130,245,000
 

The accompanying notes are an integral part of these consolidated financial statements.
THE PARKING REIT, II, Inc.
(A Maryland Corporation)INC.
CONSOLIDATED STATEMENTSTATEMENTS OF OPERATIONSCASH FLOWS
  For the Years Ended December 31 
  2019  2018 
Cash flows from operating activities:      
Net Loss $(42,496,000) $(4,922,000)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization expense  5,172,000   4,938,000 
Gain from acquisition of real estate  (2,509,000)  (2,276,000)
Management internalization  31,800,000   -- 
Income from DST  (218,000)  (205,000)
Impairment on real estate  1,452,000   600,000 
Amortization of loan costs  902,000   1,658,000 
Changes in operating assets and liabilities        
Due to/from related parties  57,000   (388,000)
Accounts payable  6,286,000   1,343,000 
Accounts payable – related party  (653,000)  -- 
Loan Fees  (287,000)  (1,750,000)
Deferred revenue  40,000   198,000 
Other assets  (32,000)  (69,000)
Security deposits  (1,000)  (63,000)
Accounts receivable  (217,000)  (303,000)
Prepaid expenses  (1,063,000)  (432,000)
Net cash used in operating activities  (1,767,000)  (1,671,000)
Cash flows from investing activities:      -- 
Purchase of investment in real estate  --   (28,939,000)
Building and land improvements  (1,696,000)  (6,405,000)
Fixed Asset Purchase  (41,000)  (63,000)
Distributions from Investments  203,000   205,000 
Proceeds from sale of investments in real estate  4,345,000   10,067,000 
Payment of deposit for purchase of investment in real estate or debt  (97,000)  (4,003,000)
Return of deposit for purchase of investment in real estate or debt  --   1,788,000 
Deposits applied to purchase of investment in real estate or debt  97,000   2,890,000 
Net cash provided by (used in) investing activities  2,811,000   (24,460,000)
Cash flows from financing activities        
Proceeds from notes payable  11,181,000   45,843,000 
Payments on notes payable  (6,637,000)  (2,013,000)
Proceeds from line of credit  --   29,500,000 
Payments on line of credit  --   (59,360,000)
Distribution to non-controlling interest  (118,000)  (101,000)
Proceeds from issuance of preferred stock  --   9,089,000 
Redeemed shares  (245,000)  (812,000)
Dividends paid to stockholders  (3,016,000)  (3,310,000)
Net cash provided by financing activities  1,165,000   18,836,000 
Net change in cash, cash equivalents and restricted cash  2,209,000   (7,295,000)
Cash, cash equivalents and restricted cash, beginning of period  9,435,000   16,730,000 
Cash, cash equivalents and restricted cash, end of period $11,644,000  $9,435,000 

  For the Year Ended December 31, 2016  For the period from May 4, 2015 (Date of Inception) through December 31, 2015 
Revenues      
Rental revenue $1,602,000  $-- 
Total revenues  1,602,000   -- 
         
Operating expenses        
General and administrative  1,049,000   119,000 
Acquisition expenses  2,472,000   -- 
Acquisition expenses – related party  1,229,000   -- 
Operation and maintenance  460,000   -- 
Operation and maintenance – related party  197,000   -- 
Seminar  16,000   -- 
Organizational costs  --   6,000 
Depreciation and amortization  195,000   -- 
Total operating expenses  5,618,000   125,000 
         
Loss from operations  (4,016,000)  (125,000)
         
Other income (expense)        
Interest expense  (154,000)  (1,000)
Distribution income – related party  34,000   -- 
Income from investment in equity method investee  3,000   -- 
Total other expense  (117,000)  (1,000)
         
Loss from continuing operations  (4,133,000)  (126,000)
         
Discontinued operations, net of income taxes        
Loss from assets held for sale, net of income taxes  (19,000)  -- 
Total loss from discontinued operations  (19,000)  -- 
         
Provision for income taxes  --   -- 
         
Net loss  (4,152,000)  (126,000)
Net income attributable to non-controlling interest – related party  116,000   -- 
Net loss attributable to MVP REIT II, Inc.'s common stockholders $(4,268,000) $(126,000)
Basic and diluted loss per weighted average common share:        
Loss from continuing operations attributable to MVP REIT II, Inc.'s common stockholders – basic and diluted $(3.85) $(15.01)
Loss from discontinued operations – basic and diluted $(0.02) $-- 
Net loss attributable to MVP REIT II, Inc.'s common stockholders - basic and diluted $(3.87) $(15.01)
Distributions declared per common share $0.66  $-- 
Weighted average common shares outstanding, basic and diluted  1,102,459   8,396 
The accompanying notes are an integral part of these consolidated financial statements.

-66--56-
MVP REIT II, Inc.
(A Maryland Corporation)
THE PARKING REIT, Inc.
CONSOLIDATED STATEMENTS OF EQUITYCASH FLOWS
For the Period from May 4, 2015 (Date of Inception) Through December 31, 2016 (Continued)

  Common stock             
  Number of Shares  Par Value  Additional Paid-in Capital  Accumulated Deficit  Non-controlling interest  Total 
Balance, May 4, 2015  --  $--  $--  $--  $--  $-- 
                         
Issuance of common stock – purchase  94,749       2,369,000           2,369,000 
Deferred offering costs          (1,086,000)          (1,086,000)
Contributions from the Sponsor (unreimbursed expenditures)          1,147,000           1,147,000 
Net loss              (126,000)      (126,000)
                         
Balance, December 31, 2015  94,749   --   2,430,000   (126,000)  --   2,304,000 
                         
Issuance of common stock – Purchase  2,159,504   --   53,987,000   --   --   53,987,000 
Issuance of common stock – DRIP  18,311   --   458,000   --   --   458,000 
Issuance of common stock – Dividend  29,264   --   --   --   --   -- 
Investment from non-controlling interest  --   --   --   --   6,584,000   6,584,000 
Distributions to non-controlling interest  --   --   --   --   (2,576,000)  (2,576,000)
Distributions to stockholders  --   --   (732,000)  --   --   (732,000)
Net (loss) income  --   --   --   (4,268,000)  116,000   (4,152,000)
Balance, December 31, 2016  2,301,828  $--  $56,143,000  $(4,394,000) $4,124,000  $55,873,000 
  For the Years Ended December 31, 
  2019  2018 
Reconciliation of Cash, Cash Equivalents and Restricted Cash:      
Cash, cash equivalents at beginning of period 
$
5,106,000
  
$
8,501,000
 
Restricted cash at beginning of period  
4,329,000
   
8,229,000
 
Cash, cash equivalents and restricted at beginning of period 
$
9,435,000
  
$
16,730,000
 
         
Cash and cash equivalents at end of period 
$
7,707,000
   
5,106,000
 
Restricted cash at end of period  
3,937,000
   
4,329,000
 
Cash, cash equivalents and restricted at end of period 
$
11,644,000
   
9,435,000
 
         
Supplemental disclosures of cash flow information:        
Interest Paid
 
$
8,611,000
  
$
7.791,000
 
Non-cash investing and financing activities:        
Distributions - DRIP 
$
--
  
$
307,000
 
Dividend shares 
$
--
  
$
817,000
 
Dividends declared not yet paid 
$
250,000
  
$
250,000
 
Payment of deposit for purchase of investment in real estate or debt 
$
(97,000
)
 
$
(4,003,000
)
Return of deposit for purchase of investment in real estate or debt 
$
--
  
$
1,788,000
 
Deposits applied to purchase of investment in real estate or debt 
$
97,000
  
$
2,890,000
 
Issuance of common stock – internalization 
$
14,000,000
  
$
--
 
Deferred management internalization 
$
24,800,000
  
$
--
 
Payments on note payable through sale of investment in real estate 
$
(2,000,000
)
 
$
(11,092,000
)
Proceeds from line of credit through sale of investment in real estate 
$
--
  
$
7,103,000
 

The accompanying notes are an integral part of these consolidated financial statements.
-67--57-

MVP REIT II, Inc.
(A Maryland Corporation)

CONSOLIDATED STATEMENT OF CASH FLOWS

  For the Year Ended December 31, 2016  For the period from May 4, 2015 (Inception) through December 31, 2015 
Cash flows from operating activities:      
Net Loss $(4,152,000) $(126,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Income from investment in equity method investee
  (3,000)  -- 
Distribution from MVP REIT  (34,000)  -- 
Amortization  40,000   -- 
Depreciation expense  195,000   -- 
Contribution from Sponsor for unreimbursed organizational expenses  --   61,000 
Changes in operating assets and liabilities        
Cash - Restricted  (100,000)  -- 
Due to related parties  543,000   32,000 
Accounts payable  479,000   6,000 
Loan fees  (348,000)  -- 
Security deposits  2,000   -- 
Deferred revenue  45,000   -- 
Accounts receivable  (208,000)  -- 
Prepaid expenses  (103,000)  (180,000)
Net cash used in operating activities  (3,644,000)  (207,000)
         
Cash flows from investing activities:        
Purchase of investment in real estate  (53,743,000)  -- 
Investment in assets held for sale  (700,000)  -- 
Investment in cost method investee – held for sale  (836,000)  -- 
Investment in cost method investee  (1,994,000)  -- 
Investment in equity method investee  (1,160,000)  -- 
Investment in MVP REIT, Inc.  (3,000,000)  -- 
Proceeds from non-controlling interest  6,584,000   -- 
Payment of deposits on future acquisitions  (4,575,000)  -- 
Net cash used in investing activities  (59,424,000)  -- 
         
Cash flows from financing activities        
Proceeds from note payable – investment in equity method investee  6,498,000   151,000 
Payments on note payable  (153,000)  (45,000)
Proceeds from of line of credit  8,190,000   -- 
Distribution to non-controlling interest  (2,576,000)  -- 
Distribution received from investment in equity method investee  13,000   -- 
Proceeds from issuance of common stock - Sponsor  --   200,000 
Proceeds from issuance of common stock  53,987,000   2,169,000 
Distribution made to common stockholders  (274,000)  -- 
         
Net cash provided by financing activities  65,685,000   2,475,000 
         
Net change in cash  2,617,000   2,268,000 
Cash, beginning of period  2,268,000   -- 
Cash, end of period $4,885,000  $2,268,000 
         
Supplemental disclosures of cash flow information:      -- 
Interest Paid $154,000  $-- 
Non-cash investing and financing activities:        
Distributions - DRIP $(458,000) $-- 
Contribution from Sponsor for unreimbursed deferred offering expenses $--  $1,147,000 
The accompanying notes are an integral part of these consolidated financial statements.


MVPTHE PARKING REIT, II, Inc.

INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DecemberDECEMBER 31, 20162019

Note A — Organization and Proposed Business Operations

The Parking REIT, Inc., formerly known as MVP REIT II, Inc. (the "Company," "we," "us,"(the “Company,” “we,” “us” or "our"“our”), is a Maryland corporation formed on May 4, 2015 and intendshas elected to be taxed, and has operated in a manner that will allow the Company to qualify as a real estate investment trust ("REIT"(“REIT”) for U.S. federal income tax purposes beginning with the taxable year endingended December 31, 2016. As of2017. The Company intends to continue operating as a REIT for the taxable year ended December 31, 2016, the Company ceased all selling efforts for the initial public offering (the "Offering") of its common stock, $0.0001 par value per share, at $25.00 per share, pursuant to a registration statement on Form S-11 filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended.  As of December 31, 2016, the Company raised approximately $56.4 million in the Offering before payment of deferred offering costs of approximately $1.1 million, contribution from the Sponsor of approximately $1.1 million and cash distributions of approximately $274,000. The Company has also registered $50 million in shares of common stock for issuance pursuant to a distribution reinvestment plan (the "DRIP") under which common stock holders may elect to have their distributions reinvested in additional shares of common stock at $25.00 per share.2019.

The Company was formed to focus primarily on investments in parking facilities, including parking lots, parking garages and other parking structures throughout the United States and Canada. No more than 10% of the proceeds of this offering will be used for investment in Canadian properties.  To a lesser extent, the Company may also invest in parking properties that contain other than parking facilities.sources of rental income, potentially including office, retail, storage, residential, billboard or cell towers.

The Company is the sole general partner of MVP REIT II Operating Partnership, LP, a Delaware limited partnership (the "Operating Partnership"“Operating Partnership”). The Company plans to ownowns substantially all of its assets and conductconducts substantially all of its operations through the Operating Partnership. The Company'sCompany’s wholly owned subsidiary, MVP REIT II Holdings, LLC, is the sole limited partner of the Operating Partnership. The operating agreement provides that the Operating Partnership is operated in a manner that enables the Company to (1) satisfy the requirements for being classifiedto qualify and maintain qualification as a REIT for federal income tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership is not classified as a "publicly“publicly traded partnership"partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Code”), which classification could result in the Operating Partnership being taxed as a corporation.

We utilizeThe Company utilizes an Umbrella Partnership Real Estate Investment Trust ("UPREIT"(“UPREIT”) structure to enable usthe Company to acquire real property in exchange for limited partnership interests in the Company'sOperating Partnership from owners who desire to defer taxable gain that would otherwise normally be recognized by them upon the disposition of their real property or transfer of their real property to usthe Company in exchange for shares of the Company'sCompany’s common stock or cash.

As part of the Company's initial capitalization, we sold 8,000 shares of common stock for $200,000 to MVP Capital Partners II, LLC (the "Sponsor"), the sponsor of the Company. The Sponsor is owned 60% by Vestin Realty Mortgage II, Inc., a Maryland corporation and Nasdaq-listed company that has provided notice of its intent to delist from Nasdaq, to be effective on or about March 30, 2017 ("VRM II"), and 40% by Vestin Realty Mortgage I, Inc., a Maryland corporation and OTC pink sheet company ("VRM I"), both which are managed by Vestin Mortgage, LLC, a Nevada limited liability company in which Michael Shustek owns a significant majority.  The Company also sold 5,000 shares of common stock to VRM II in the Offering.

The Company'sCompany’s former advisor is MVP Realty Advisors, LLC, dba The Parking REIT Advisors (the "Advisor"“former Advisor”), a Nevada limited liability company, which is owned 60% by Vestin Realty Mortgage II, Inc. (“VRM IIII”) and 40% by Vestin Realty Mortgage I, Inc. (“VRM I.  TheI”). Prior to the Internalization (as defined below), the former Advisor iswas responsible for managing the Company'sCompany’s affairs on a day-to-day basis and for identifying and making investments on the Company'sCompany’s behalf pursuant to ana second amended and restated advisory agreement betweenamong the Company, the Operating Partnership and the former Advisor (the "Advisory Agreement"“Amended and Restated Advisory Agreement”), which became effective upon consummation of the Merger (as such term is defined below). The Company has no paid employees. VRM II and VRM I are Maryland corporations that trade on the OTC pink sheets and were managed by Vestin Mortgage, LLC, an affiliate of the former Advisor, prior to being internalized in January 2018.

From inception through December 31, 2016,As part of the Company’s initial capitalization, 8,000 shares of common stock were sold for $200,000 to an affiliate of the former Advisor (as defined below).

Merger of MVP REIT with Merger Sub, LLC

On May 26, 2017, the Company, has paid approximately $732,000MVP REIT, Inc., a Maryland corporation (“MVP I”), MVP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), and the former Advisor entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which MVP I would merge with and into Merger Sub (the “Merger”). On December 15, 2017, the Merger was consummated. Following the Merger, the Company contributed 100% of its equity interests in distributions, including issuing 18,311Merger Sub to the Operating Partnership.

At the effective time of the Merger, each share of MVP I common stock, par value $0.001 per share, that was issued and outstanding immediately prior to the Merger (the “MVP I Common Stock”), was converted into the right to receive 0.365 shares of itsCompany common stock. A total of approximately 3.9 million shares of Company common stock as DRIPwere issued to former MVP I stockholders, and issuing 29,264 sharesformer MVP I stockholders, immediately following the Merger, owned approximately 59.7% of its common stock as dividend in distributions to the Company's stockholders, all of which have been paid from offering proceeds and constituted a return of capital.  common stock. The Company may pay distributions from sources other than cash flow from operations, including proceeds from the Offering and other stock sales, the salewas subsequently renamed “The Parking REIT, Inc.”

Capitalization

As of December 31, 2016,2019, the Company had 2,301,8287,332,811 shares of common stock issued and outstanding. During the year endedOn December 31, 2016, the Company had received consideration of approximately $54 millionceased all selling efforts for the issuanceinitial public offering of its common stock in connection with(the “Common Stock Offering”). The Company accepted additional subscriptions through March 31, 2017, the last day of the Common Stock Offering. In connection with its formation, the Company sold 8,000 shares of common stock to the SponsorMVP Capital Partners II, LLC (the “Sponsor”) for $200,000.


On October 27, 2016, the Company filed a Form 8-K, summarizing the terms of its new Series A Convertible Redeemable Preferred Stock, par value $0.0001 per share (the "Series A Convertible Redeemable Preferred Stock"), The Company also disclosed its intentions to offer  up to $50 million in shares  of the Series A Convertible Redeemable Preferred Stock, together with warrants (the "Warrants") to acquire the Company's common stock, in a Regulation D 506(c) private placement to accredited investors (the "private placement"). In connection with the private placement, on October 27, 2016, the Company filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary (the "Articles Supplementary") to the charter of the Company classifying and designating 50,000 shares of Series A Convertible Redeemable Preferred Stock.Stock, par value $0.0001 per share (the “Series A”). The Company commenced thea private placement of the shares of Series A, Convertible Redeemable Preferred Stock andtogether with warrants to acquire the WarrantsCompany’s common stock, to accredited investors on November 1, 2016 and terminatedclosed the offering as ofon March 23,24, 2017. The Company raised an aggregate of $2,434,000 in proceeds,approximately $2.5 million, net of offering expenses,costs, in the Series A private placement.

Stockholders may elect to reinvest distributions received from the Company in commonplacement and had 2,862 Series A shares by participating in the Company's DRIP. The stockholder may enroll in the DRIP by checking the appropriate box on the subscription agreement. The stockholder may also withdraw at any time, without penalty, by delivering written notice to the Company.  Participants will acquire DRIP shares at a fixed price of $25.00 per share until (i) all such shares registered in the Offering are issued (ii) the Offering terminates and the Company elects to deregister any unsold shares under the DRIP, or (iii) the Company's board decides to change the purchase price for DRIP shares or terminate the DRIP for any reason. Commencing no later than May 29, 2018 (the "Valuation Date"), which is 150 days following the second anniversary of the date to satisfy the minimum offering requirement in the Offering, if the DRIP is ongoing, the Company will adjust the price of shares offered in the DRIP to equal the net asset value ("NAV") per share. The Company will update the NAV per share at least annually following the Valuation Date and further adjust the per share price in the Company's DRIP accordingly. The Company has registered $50,000,000 in shares for issuance under the DRIP.

The Company may amend, suspend or terminate the DRIP for any reason, except that the Company may not amend the DRIP to eliminate a participant's ability to withdraw from the DRIP, without first providing 10 days prior written notice to participants.

In addition, the Company has a Share Repurchase Program ("SRP") that may provide stockholders who generally have held their shares for at least two years an opportunity to sell their shares to the Company, subject to certain restrictions and limitations.  Prior to the date that the Company establishes an estimated value per share of common stock, the purchase price will be 95.0% of the purchase price paid for the shares if redeemed at any time between the second and third anniversaries of the purchase date, and 97.0% of the purchase price paid if redeemed after the third anniversary.  After the Company establishes an estimated NAV per share of common stock, the purchase price will be 95.0% of the NAV per share for the shares if redeemed at any time between the second and third anniversaries of the purchase date, 97.0% of the NAV per share if redeemed at any time between the third and fifth anniversaries, and 100.0% of the NAV per share if redeemed after the fifth anniversary.

The number of shares to be repurchased during a calendar quarter is limited to the lesser of: (i) 5.0% of the weighted average number of shares of common stock outstanding during the prior calendar year, and (ii) those repurchases that can be funded from the net proceeds of the sale of shares under the DRIP in the prior calendar year plus such additional funds as may be reserved for that purpose by the Company's board of directors; provided however, that the above volume limitations shall not apply to repurchases requested in connection with the death or qualifying disability of a stockholder.  The board of directors may also limit the amounts available for repurchase at any time at its sole discretion. The SRP will terminate if the shares of common stock are listed on a national securities exchange.  Redemption requests other than those made in connection with the death or disability (as defined in the Internal Revenue Code of 1986, as amended (the "Code") of a stockholder will continue to be repurchased as of March 31st, June 30th, September 30th and December 31st of each year in accordance with the terms of the SRP.  As of December 31, 2016, no shares had been redeemed.2019.

On October 27, 2016,March 29, 2017, the Company filed a Form 8-K announcing, among other things, an amendmentwith the State Department of Assessments and Taxation of Maryland, Articles Supplementary to the SRP providing for participation in the SRP by any holdercharter of the Company'sCompany classifying and designating 97,000 shares of its authorized capital stock as shares of Series A1 Convertible Redeemable Preferred Stock or any future board-authorized series or classpar value $0.0001 per share (the “Series 1”). On April 7, 2017, the Company commenced a private placement of preferred stock that is convertible intoshares of Series 1, together with warrants to acquire the Company’s common stock to accredited investors and closed the offering on January 31, 2018. The Company raised approximately $36.0 million, net of the Company.  Under the amendment, which becomes effective on November 26, 2016, a preferred stock holder may participateoffering costs, in the SRP by converting its preferred stock into common stock of the Company,Series 1 private placements and submitting such commonhad 39,811 Series 1 shares for repurchase. The time period, for purposes of determining how long such stockholder has held the common shares submitted for repurchase, beginsissued and outstanding as of the date such preferred stockholder acquired the underlying preferred shares that were converted into common shares and submitted for repurchase.December 31, 2019.

Note B — Summary of Significant Accounting Policies

Basis of Accounting

The consolidated financial statements of the Company are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”). for financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented have been included.

Liquidity Matters

The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. For the year ended December 31, 2019, the Company had a net loss of $42.6 million which included $31.8 million of non-cash consideration by issuance of its common shares to the former Advisor in connection with the Internalization. See Note S – Deferred Management Internalization of this Annual Report for additional information. At December 31, 2019, the Company had $11.6 million in cash, cash equivalents and restricted cash. In connection with preparing the consolidated financial statements for the year ended December 31, 2019, management evaluated the extent of the COVID-19 pandemic impact on the Company’s business and its future liquidity for the next twelve months through March 31, 2021.

Management has implemented the following plan to address the Company’s liquidity over the next twelve months plus a day from the filing of this Annual Report:

The Company has received unsolicited offers, from third parties, to purchase properties and executed a PSA for the sale of the San Jose garage on February 25, 2020 from a third-party buyer. The buyer’s earnest money deposit became nonrefundable on March 27, 2020. See Note J – Assets Held for Sale of this Annual Report for additional information. In addition, the Company received an unsolicited, executed letter of intent from a third party to purchase two properties in March 2020.
On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Preferred Stock Series A, however, such distributions will continue to accrue in accordance with the terms of the Preferred Stock Series A to preserve funds for operations.

On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Preferred Stock Series 1, however, such distributions will continue to accrue in accordance with the terms of the Preferred Stock Series 1 to preserve funds for operations.
The Company is in preliminary discussions with its lenders, including Bank of America, to obtain waivers from certain liquidity requirements and defer payments due under its loans in light of the current economic conditions. However, there can be no assurance that the Company will reach any such agreement with its lenders.
The Company expects to allow its tenants to defer their base rent payments due to the Company under its leases with its tenants, in order to assist tenants with the impact of the current COVID-19 pandemic.
The Company intends to apply for available SBA loans, for companies with 500 or less employees, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Trump on March 27, 2020.

Based on the Company’s current business plan, the Company believes its existing cash, projected cash collections and cash inflows will be sufficient to meet its anticipated cash requirements for at least twelve months after the December 31, 2019 financial statements are issued.

Consolidation

The Company'sCompany’s consolidated financial statements include its accounts, the accounts of the Company’s assets that were sold during 2019 and 2018 (as applicable), the accounts of its subsidiaries, Operating Partnership and all of the following subsidiaries. All intercompany profits and losses, balances and transactions are eliminated in consolidation. The following list includes the subsidiaries that are included in the Company’s consolidated financial statements, not the number of properties owned by the Company at December 31, 2019 and 2018.

West 9th Street Properties II,
MVP PF Ft. Lauderdale 2013, LLC (1)
MVP San Jose 88 Garage, LLC
MCI 1372 Street, LLC
Cincinnati Race Street, LLC
St. Louis Washington, LLC
St. Paul Holiday Garage, LLC
Louisville Station Broadway, LLC
White Front Garage Partners, LLC
Cleveland Lincoln Garage Owners, LLC
MVP Houston Jefferson Lot, LLC
MVP Houston San Jacinto Lot, LLC

(1)In November 2016, Cleveland West 9th and 33740 Crown  properties were merged into one holding company called West 9th Street Properties II, LLC, for the purposes of debt financing.
Minneapolis City Parking, LLC
MVP St. Paul Holiday Garage, LLC
MVP PF Memphis Poplar 2013, LLC
MVP Minneapolis Venture, LLC
MVP Louisville Station Broadway, LLC
MVP PF Memphis Court 2013, LLC
MVP Indianapolis Meridian Lot, LLC
White Front Garage Partners, LLC
MVP PF St. Louis 2013, LLC
MVP Milwaukee Clybourn, LLC
Cleveland Lincoln Garage, LLC
Mabley Place Garage, LLC
MVP Milwaukee Arena Lot, LLC
MVP Houston Preston, LLC
MVP Denver Sherman, LLC
MVP Clarksburg Lot, LLC
MVP Houston San Jacinto Lot, LLC
MVP Fort Worth Taylor, LLC
MVP Denver Sherman 1935, LLC
MVP Detroit Center Garage, LLC
MVP Milwaukee Old World, LLC
MVP Bridgeport Fairfield Garage, LLC
St. Louis Broadway, LLC
MVP Houston Saks Garage, LLC
West 9th Street Properties II, LLC
St. Louis Seventh & Cerre, LLC
MVP Milwaukee Wells, LLC
MVP San Jose 88 Garage, LLC
MVP Preferred Parking, LLC
MVP Wildwood NJ Lot, LLC
MCI 1372 Street, LLC
MVP Raider Park Garage, LLC
MVP Indianapolis City Park, LLC
MVP Cincinnati Race Street, LLC
MVP New Orleans Rampart, LLC
MVP Indianapolis WA Street Lot, LLC
MVP St. Louis Washington, LLC
MVP Hawaii Marks Garage, LLC

Under GAAP, the Company'sCompany’s consolidated financial statements will also include the accounts of its consolidated subsidiaries and joint ventures in which the Company is the primary beneficiary, or in which the Company has a controlling interest. In determining whether the Company has a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, the Company'sCompany’s management considers factors such as an entity'sentity’s purpose and design and the Company'sCompany’s ability to direct the activities of the entity that most significantly impacts the entity'sentity’s economic performance, ownership interest, board representation, management representation, authority to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which it will absorb the majority of the entity'sentity’s expected losses, if they occur, or receive the majority of the expected residual returns, if they occur, or both.

Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method. The Company's share of its equity method investees' earnings or losses is included in other income in the accompanying condensed consolidated statements of operations. Investments in which the Company is not able to exercise significant influence over the investee are accounted for under the cost method.


Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and derivative financial instruments and hedging activities, as applicable.

Concentration

The Company had sixfifteen parking tenants as of December 31, 2016.2019 and 2018. One tenant, Standard Parking + ("SP Plus Corporation (Nasdaq: SP) (“SP+"”), represented a concentration60.8% of the Company’s base parking rental revenue for the year ended December 31, 2016,2019.

SP+ is one of the largest providers of parking management in regards to parking base rental revenue.  During the year endedUnited States. As of December 31, 2016,2019, SP+ accounted for 43%, of the parking base rental revenue.  managed approximately 3,100 locations in North America.

Below is a table that summarizes base parking rent by tenant:

  For the Years Ended December 31, 
Parking Tenant 2019  2018 
SP +  
60.8
%
  
57.3
%
Premier Parking  
14.8
%
  
17.1
%
ISOM Mgmt  
3.9
%
  
4.3
%
ABM  
3.9
%
  
4.6
%
Interstate Parking  
2.9
%
  
2.8
%
342 N. Rampart  
2.9
%
  
2.6
%
Denison  
2.7
%
  
2.5
%
Lanier  
2.4
%
  
2.4
%
St. Louis Parking  
2.0
%
  
2.2
%
Premium Parking  
1.2
%
  
--
 
TNSH, LLC  
1.1
%
  
0.6
%
Riverside Parking  
0.9
%
  
1.0
%
BEST PARK  
0.2
%
  
1.5
%
Denver School  
0.2
%
  
0.2
%
Secure  
0.1
%
  
0.1
%
PCAM, LLC  
--
   
0.8
%
Parking Tenant% of Total
SP +42.44%
ABM27.96%
Interstate Parking12.82%
Premier Parking10.92%
Riverside Parking4.49%
iPark Services1.37%
Grand Total100.00%
* During June 2018 Premier Parking acquired iPark Services. Subsequent to the acquisition Premier and iPark continue to operate under their original company names.

-71--61-

In addition, the Company had concentrations in various cities based on parking rental revenue for the years ended December 31, 2019 and 2018, as well as concentrations in various cities based on the real estate the Company owned as of December 31, 2019 and 2018. The below tables summarize this information by city.

City Concentration for Parking Rental Revenue 
  For the Years Ended December 31, 
  2019  2018 
Detroit  
22.6
%
  
18.2
%
Houston  
11.7
%
  
13.3
%
Cincinnati  
9.3
%
  
9.2
%
Fort Worth  
7.0
%
  
8.1
%
Indianapolis  
6.1
%
  
6.5
%
Cleveland  
5.8
%
  
5.3
%
St. Louis  
5.0
%
  
5.4
%
Honolulu  
4.3
%
  
2.6
%
Lubbock  
3.9
%
  
4.2
%
Milwaukee  
3.7
%
  
3.7
%
Minneapolis  
3.6
%
  
4.3
%
Nashville  
3.1
%
  
3.5
%
St Paul  
2.9
%
  
2.7
%
New Orleans  
2.9
%
  
2.7
%
San Jose  
2.0
%
  
2.4
%
Bridgeport  
1.9
%
  
2.3
%
Memphis  
1.4
%
  
1.6
%
Louisville  
0.9
%
  
1.0
%
Denver  
0.7
%
  
0.8
%
Ft. Lauderdale  
0.4
%
  
0.6
%
Wildwood  
0.3
%
  
0.4
%
Clarksburg  
0.3
%
  
0.3
%
Canton  
0.2
%
  
0.3
%
Kansas City  
--
   
0.6
%

Real Estate Investment Concentration by City 
  As of December 31, 
  2019  2018 
Detroit  
17.7
%
  
17.6
%
Houston  
12.1
%
  
11.9
%
Fort Worth  
8.8
%
  
8.8
%
Cincinnati  
8.8
%
  
8.7
%
Honolulu  
6.8
%
  
6.7
%
Cleveland  
6.3
%
  
6.2
%
Indianapolis  
5.8
%
  
5.8
%
St Louis  
4.4
%
  
4.4
%
Minneapolis  
4.3
%
  
4.4
%
Lubbock  
4.3
%
  
3.5
%
Milwaukee  
3.9
%
  
3.8
%
Nashville  
3.7
%
  
3.7
%
St Paul  
2.7
%
  
2.7
%
Bridgeport  
2.6
%
  
2.6
%
New Orleans  
2.6
%
  
2.6
%
Memphis  
1.3
%
  
1.5
%
San Jose  
1.1
%
  
1.2
%
Denver  
1.0
%
  
1.0
%
Louisville  
1.0
%
  
1.0
%
Wildwood  
0.4
%
  
0.4
%
Clarksburg  
0.2
%
  
0.2
%
Canton  
0.2
%
  
0.2
%
Fort Lauderdale  
--
   
1.1
%


Acquisitions

The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on a number ofseveral factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.

The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings and improvements, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.

The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) management's estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. The Company's below-market operating leases generally do not include fixed rate or below-market renewal options.

The fair value of acquired in-place leases is derived based on management's assessment of lost revenue and costs incurred for the period required to lease the "assumed vacant" property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered by the Company in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand at market rates.

In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The amount recorded for acquired in-place leases is included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If a lease were to be terminated or if termination were determined to be likely prior to its contractual expiration (for example resulting from bankruptcy), amortization of the related unamortized in-place lease intangible would be accelerated.

The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.

The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of the Company's acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, the Company's judgments for these intangibles could have a significant impact on the Company's reported rental revenues and results of operations.

Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred. Duringincurred within operating expenses in the year ended December 31, 2016, the Company expensed approximately $1.2 million related party acquisition costs and $2.5 millionconsolidated statement of non-related party acquisition costs, for the purchase of an interest in 17 properties.  During the period from May 4, 2015 (Inception) through December 31, 2015, the Company did not acquire any properties.  The Company's acquisition expenses are directly related to the Company's acquisition activity and if the Company's acquisition activity was to increase or decrease, so would the Company's acquisition costs.operations.
Impairment of Long LivedLong-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property'sproperty’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, the property is written down to fair value and an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.

The Company recorded impairment charges of approximately $1.5 million for the year ended December 31, 2019. These impairment charges consisted of $558,000 associated with the Memphis Court lot, $344,000 associated with the San Jose 88 garage, $50,000 associated with the St. Louis Washington lot and $500,000 associated with the Minneapolis City lot. These charges were recorded to write down the carrying value of these assets to their current appraised values net of estimated closing costs. The appraisals were performed by independent third-party appraisers primarily using the income approach based on the contracted rent to be received from the operator (i.e. leased fee for St. Louis and San Jose) and the fee simple method for Memphis Court. The Company recorded impairment charges of $600,000 for the year ended December 31, 2018.  The impairment charges consisted of $400,000 associated with the Wildwood NJ Lot and $200,000 associated with the Memphis Court lot. The estimated fair values, as they relate to property carrying values were primarily based upon estimated sales prices from third-party offers or indicative bids.

Cash

Cash includes cash in bank accounts. The Company maintains a significant portion of its cash deposits cash with high quality financial institutions. These depositsat KeyBank, which are guaranteedheld by the Company’s subsidiaries allowing the Company to maximize FDIC insurance coverage. The balances are insured by the Federal Deposit Insurance Company up to an insurance limit upCorporation (“FDIC”) under the same ownership category of $250,000. As of December 31, 20162019, and 2018, the Company had approximately $3.4$2.7 million and $0.5 million, respectively, in excess of the federally-insured limits.  federally insured limits. As of December 31, 20152019, the Company was federally-insured for the full balance.has not experienced any losses on cash deposits.

Restricted Cash

Restricted cash primarily consists of escrowed tenant improvement funds, real estate taxes, capital improvement funds, insurance premiums and other amounts required to be escrowed pursuant to loan agreements.


Revenue Recognition

The Company's revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since many of the Company's leases will provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. Percentage rents will be recorded when earned and certain thresholds have been met.

The Company will continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant'stenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event thatIf the collectability of a receivable is in doubt, the Company will record an increase in the Company's allowance for uncollectible accounts or record a direct write-off of the receivable after exhaustive efforts at collection.

Advertising Costs

Advertising costs incurred in the normal course of operations and are expensed as incurred. During the yearyears ended December 31, 20162019 and for the period from May 4, 2015 (date of inception) through December 31, 2015,2018, the Company had no advertising costs.

Investments in Real Estate and Fixed Assets

Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Purchase Price Allocation

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other

methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company's analysis of comparable properties in the Company's portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable. The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into accountconsidering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company will include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Estimates of costs to execute similar leases including leasing commissions, legal and other related expenses are also utilized.

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management'smanagement’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease.

The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined by taking into consideration the tenant'stenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company's evaluation of the specific characteristics of each tenant'stenant’s lease and the Company's overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant'stenant’s credit quality and expectations of lease renewals, among other factors.

The value of in-place leases is amortized to expense over the initial term of the respective leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

In making estimates of fair values for purposes of allocating purchase price, the Company will utilize a number ofseveral sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company will also consider information obtained about each property as a result of the Company's pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Organization, Offering and Related Costs

Certain organization and offering costs will be incurred by the former Advisor. Pursuant to the terms of the Amended and Restated Advisory Agreement, the Company will not reimburse the Advisor for these out of pocket costs and future organization and offering costs it may incur. Such costs shall include legal, accounting, printing and other offering expenses, including marketing, and direct expenses of the Advisor'sformer Advisor’s employees and employees of the Advisor'sformer Advisor’s affiliates and others.

All direct offering costs incurred and or paid by usthe Company that are directly attributable to a proposed or actual offering, including sales commissions, if any, were charged against the gross proceeds of the Common Stock Offering and recorded as an offset to additional paid-in-capital. All indirect costs will be expensed as incurred.

Offering costs were reclassified from deferred costs to stockholders' equity when the Company commenced its Offering, and included all expenses incurred by the Company in connection with its Offering as of such date.

Stock-Based Compensation

The Company has a stock-based incentive award plan, which is accounted for under the guidance for share based payments. The expense for such awards will be included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met (See(See Note G — Stock-Based Compensation)Compensation).

Income Taxes

TheCommencing with its taxable year ended December 31, 2017, the Company has elected, and operatesoperated in a manner that will allow the Company, to qualify to be taxed as a REIT under Sections 856 throughto 860 of the Internal Revenue CodeCode. A REIT is generally not subject to federal income tax on that portion of 1986, as amended, commencing withits REIT taxable income, which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed and provided that certain other requirements are met. The Company’s REIT taxable income may substantially exceed or be less than the taxable year ended December 31, 2016. Ifincome calculated according to GAAP. In addition, the Company qualifies for taxation as a REIT, it generally will not be subjectsubjected to federal corporate income tax to the extent that less than 100% of the net taxable income is distributed, including any net capital gain.


The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it distributes allis more likely than not that the position will be sustained on audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon ultimate settlement. The Company believes that its income tax filing positions and deductions would be sustained upon examination; thus, the Company has not recorded any uncertain tax positions as of December 31, 2019.

A full valuation allowance for deferred tax assets was provided since the Company believes that it is more likely than not that it will not realize the benefits of its deferred tax assets. A change in circumstances may cause the Company to change its judgment about whether deferred tax assets should be recorded, and further whether any such assets would more likely than not be realized. The Company would generally report any change in the valuation allowance through its income statement in the period in which such changes in circumstances occur. Because the Company is a REIT, taxableit will generally not be subject to corporate level federal income taxes on earnings distributed to its stockholders and so long as it distributestherefore may not realize any benefit from deferred tax assets arising during 2019 or any prior period in which a valid REIT election was in effect. The Company intends to distribute at least 90%100% of its REIT taxable income. REITs are subjectincome annually and intends to do so for the tax year ended December 31, 2019 and in all future periods. The Company has placed a numberfull valuation allowance on all of other organizationalits deferred tax assets, and operational requirements. Even ifthus no asset is recorded on the Company qualifies to be taxed as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.Company’s balance sheet.

Per Share Data

The Company calculates basic income (loss) per share by dividing net income (loss) for the period by weighted-average shares of its common stock outstanding for the respective period. Diluted income per share takes into accountconsiders the effect of dilutive instruments, such as stock options and convertible stock, but uses the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. The Company had no outstanding common share equivalents during the yearyears ended December 31, 20162019 and 2018.

There is a potential for dilution from the Company’s Series A Convertible Redeemable Preferred Stock which may be converted into the Company’s common stock at any time. As of December 31, 2019, there were 2,862 shares of the Series A Convertible Redeemable Preferred Stock issued and outstanding. As of filing date, the Company has not received any requests to convert.

There is a potential for dilution from the Company’s Series 1 Convertible Redeemable Preferred Stock which may be converted upon a holder’s election into the Company’s common stock at any time. As of December 31, 2019, there were 39,811 shares of the Series 1 Convertible Redeemable Preferred Stock issued and outstanding. As of filing date, the Company has not received any requests to convert.

Each share of Series A preferred stock and Series 1 preferred stock will convert into the number of shares of the Company’s common stock determined by dividing (i) the stated value per Series A share or Series 1 share of $1,000 (as may be adjusted pursuant to the applicable articles supplementary) plus any accrued but unpaid dividends to, but not including, the conversion date by (ii) the conversion price. The conversion price is equal to the net asset value per share of the Company’s common stock; provided that if a “Listing Event” (as defined in the applicable articles supplementary) occurs, the conversion price will be 100% of the volume weighted average price per share of the Company’s common stock for the period from May 4, 2015 (date20 trading days prior to the delivery date of inception) through December 31, 2015.the conversion notice. The Company will have the right (but not the obligation) to redeem any Series A or Series 1 shares that are subject to a conversion notice on the terms set forth in the applicable articles supplementary.

Reportable SegmentsReclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

We currently -66-operate one reportable segment.

Accounting and Auditing Standards Applicable to "Emerging“Emerging Growth Companies"Companies”

The Company is an "emerging“emerging growth company"company” under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"“JOBS Act”). For as long as the Company remains an "emerging“emerging growth company,"” which may be up to five fiscal years, the Company is not required to (1) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (2) provide an auditor'sauditor’s attestation report on management'smanagement’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board or the PCAOB,(the “PCAOB”), requiring mandatory audit firm rotation or a supplement to the auditor'sauditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. The Company intends to take advantage of such extended transition period. Since the Company will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, the Company'sCompany’s financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If the Company were to subsequently elect to instead comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

Deferred Costs

Deferred costs may consist of deferred financing costs, deferred offering costs and deferred leasing costs. Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

Deferred offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with registering to sell shares of the Company's common stock. As of December 31, 2016, the Company fulfilled its minimum offering of $2.0 million in subscriptions and all deferred offering costs paid by the Sponsor were charged against the gross proceeds of the Offering and reclassified to stockholders' equity.

Share Repurchase Program

The Company has a Share Repurchase Program ("SRP") that enables stockholders to sell their shares to the Company. Under the SRP, stockholders may request that the Company redeem all or any portion, subject to certain minimum conditions described below, if such repurchase does not impair the Company's capital or operations.

Prior to the time that the Company's shares are listed on a national securities exchange, the repurchase price per share will depend on the length of time investors have held such shares as follows: no repurchases for the first two years unless shares are being repurchased in connection with a stockholder's death or disability (as defined in the Code).  Repurchase requests made in connection with the death or disability of a stockholder will be repurchased at a price per share equal to 100% of the amount the stockholder paid for each share, or once we have established an estimated NAV per share, 100% of such amount as determined by the Company's board of directors,

subject to any special distributions previously made to the Company's stockholders. With respect to all other repurchases, prior to the date that we establish an estimated value per share of common stock, the purchase price will be 95.0% of the purchase price paid for the shares, if redeemed at any time between the second and third anniversaries of the purchase date, and 97.0% of the purchase price paid if redeemed after the third anniversary.  After we establish an estimated NAV per share of common stock, the purchase price will be 95.0% of the NAV per share for the shares, if redeemed at any time between the second and third anniversaries of the purchase date, 97.0% of the NAV per share if redeemed at any time between the third and fifth anniversaries, and 100.0% of the NAV per share if redeemed after the fifth anniversary. In the event that the Company does not have sufficient funds available to repurchase all of the shares for which repurchase requests have been submitted in any quarter, we will repurchase the shares on a pro rata basis on the repurchase date. The SRP will be terminated if the Company's shares become listed for trading on a national securities exchange or if the Company's board of directors determines that it is in the Company's best interest to terminate the SRP.

The Company is not obligated to repurchase shares of common stock under the share repurchase program. The number of shares to be repurchased during the calendar quarter is limited to the lesser of: (i) 5% of the weighted average number of shares outstanding during the prior calendar year, and (ii) those repurchases that could be funded from the net proceeds of the sale of shares under the DRIP in the prior calendar year plus such additional funds as may be reserved for that purpose by the Company's board of directors; provided, however, that the above volume limitations shall not apply to repurchases requested in connection with the death or qualifying disability of a stockholder.. Because of these limitations, the Company cannot guarantee that the Company will be able to accommodate all repurchase requests.

The Company will repurchase shares as of March 31st, June 30th, September 30th, and December 31st of each year.  Each stockholder whose repurchase request is approved will receive the repurchase payment approximately 30 days following the end of the applicable quarter, effective as of the last day of such quarter.  The Company refers to the last day of such quarter as the repurchase date.  If funds available for the Company's share repurchase program are not sufficient to accommodate all requests, shares will be repurchased as follows: (i) first, repurchases due to the death of a stockholder, on the basis of the date of the request for repurchase; (ii) next, in the discretion of the Company's board of directors, repurchases because of other involuntary exigent circumstances, such as bankruptcy; (iii) next, repurchases of shares held by stockholders subject to a mandatory distribution requirement under the stockholder's IRA; and (iv) finally, all other repurchase requests based upon the postmark of receipt. If the Stockholder's repurchase request is not honored during a repurchase period, the Stockholder will be required to resubmit the request to have it considered in a subsequent repurchase period.

On October 27, 2016, the Company filed a Form 8-K announcing, among other things, an amendment to the SRP providing for participation in the SRP by any holder of the Company's Series A Convertible Redeemable Preferred Stock, or any future board-authorized series or class of preferred stock that is convertible into common stock of the Company.  Under the amendment, which becomes effective on November 26, 2016, a preferred stock holder may participate in the SRP by converting its preferred stock into common stock of the Company, and submitting such common shares for repurchase. The time period, for purposes of determining how long such stockholder has held the common shares submitted for repurchase, begins as of the date such preferred stockholder acquired the underlying preferred shares that were converted into common shares and submitted for repurchase.

The board of directors may, in its sole discretion, terminate, suspend or further amend the share repurchase program upon 30 days' written notice without stockholder approval if it determines that the funds available to fund the share repurchase program are needed for other business or operational purposes or that amendment, suspension or termination of the share repurchase program is in the best interest of the stockholders.  Among other things, we may amend the plan to repurchase shares at prices different from those described above for the purpose of ensuring the Company's dividends are not "preferential" for incomes tax purposes.  Any notice of a termination, suspension or amendment of the share repurchase program will be made via a report on Form 8-K filed with the SEC at least 30 days prior to the effective date of such termination, suspension or amendment.  The board of directors may also limit the amounts available for repurchase at any time in its sole discretion.  Notwithstanding the foregoing, the share repurchase program will terminate if the shares of common stock are listed on a national securities exchange.  As of December 31, 2016, no shares are eligible for redemption (other than in connection with a death or disability of a stockholder).

Distribution Reinvestment Plan

Pursuant to the DRIP stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the Offering. The board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days' notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying balance sheets in the period distributions are declared. We have issued a total of 18,311 shares of common stock under the DRIP as of December 31, 2016.

Non-controlling Interests

The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest.

Note C — Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company.

Environmental Matters

Investments in real property create the potential for environmental liability on the part of the owner or operator of such real property. If hazardous substances are discovered on or emanating from a property, the owner or operator of the property may be held strictly liable for all costs and liabilities relating to such hazardous substances. The Company has obtained a Phase I environmental study (which involves inspection without soil sampling or ground water analysis) conducted by independent environmental consultants on each of the properties and, in certain instances, has conducted additional investigation, including a Phase II environmental assessment. Furthermore, the Company has adopted a policy of conducting a Phase I environmental study on each property acquired and any additional investigation as warranted.

During the Company’s predecessor’s due diligence of a property purchased on December 15, 2017 (originally purchased by predecessor on March 31, 2015) and located in Milwaukee, it was discovered that the soil and ground water at the subject property had been impacted by the site’s historical use as a printing press as well as neighboring property uses. As an ownera result, the Company retained a local environmental engineer to seek a closure letter or similar certificate of real estate, we are subjectno further action from the State of Wisconsin due to variousthe Company’s use of the property as a parking lot. As of December 31, 2019, management has not received the closure letter, however the Company does not anticipate a material adverse effect related to this environmental laws ofmatter.

The Company believes that it complies, in all material respects, with all federal, state and local governments. We doordinances and regulations regarding hazardous or toxic substances. Furthermore, as of December 31, 2019, the Company has not believebeen notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that compliance with existing lawsit believes will have a material adverse effect on the Company's financial condition or results of operations. However, weThe Company, however, cannot predict the impact of any unforeseen environmental contingencies or new or changed laws or regulations on properties in which we holdthe Company holds an interest, or on properties that may be acquired directly or indirectly in the future.


Note D – Investments in Real Estate

2019

As of December 31, 2016,2019, the Company had the following Investments in Real Estate:Estate that were consolidated on the Company’s balance sheet:

PropertyLocationDate AcquiredProperty TypeInvestment AmountSize / Acreage# SpacesRetail /Office Square Ft.Ownership %
MVP San Jose 88 Garage, LLCSan Jose, CA6/15/2016Garage$3,575,5001.33328N/A100.0%
MCI 1372 Street, LLCCanton, OH7/8/2016Lot$700,0000.4468N/A100.0%
MVP Cincinnati Race Street Garage, LLCCincinnati, OH7/8/2016Garage$4,500,0000.63350N/A100.0%
MVP St. Louis Washington, LLCSt Louis, MO7/18/2016Lot$3,000,0000.3963N/A100.0%
MVP St. Paul Holiday Garage, LLCSt Paul, MN8/12/2016Garage$8,200,0000.85285N/A100.0%
MVP Louisville Station Broadway, LLCLouisville, KY8/23/2016Lot$3,050,0001.25165N/A100.0%
Cleveland Lincoln Garage Owners, LLCCleveland, OH10/19/2016Garage$7,316,9501.2053645,272100.0%
MVP Houston Jefferson Lot, LLCHouston, TX11/22/2016Lot$700,0000.5276N/A100.0%
MVP Houston San Jacinto Lot, LLCHouston, TX11/22/2016Lot$3,200,0000.6585240100.0%
White Front Garage Partners, LLCNashville, TN9/30/2016Garage$9,196,8000.26155N/A80.0%
MVP Cleveland West 9th, LLCCleveland, OH5/11/2016Lot$2,894,2502.16254N/A51.0%
33740 Crown Colony, LLCCleveland, OH5/17/2016Lot$1,545,3000.5482N/A51.0%
Property NameLocationDate AcquiredProperty Type # Spaces  Property Size (Acres)  Retail Sq. Ft  Investment Amount Parking Tenant
MVP Cleveland West 9th (1)Cleveland, OH5/11/2016Lot  260   2   N/A  $5,845,000 SP +
33740 Crown Colony (1)Cleveland, OH5/17/2016Lot  82   0.54   N/A  $3,050,000 SP +
MCI 1372 StreetCanton, OH7/8/2016Lot  66   0.44   N/A  $700,000 ABM
MVP Cincinnati Race Street GarageCincinnati, OH7/8/2016Garage  350   0.63   N/A  $6,331,000 SP +
MVP St. Louis WashingtonSt Louis, MO7/18/2016Lot  63   0.39   N/A  $2,957,000 SP +
MVP St. Paul Holiday GarageSt Paul, MN8/12/2016Garage  285   0.85   N/A  $8,396,000 Interstate Parking
MVP Louisville Station BroadwayLouisville, KY8/23/2016Lot  165   1.25   N/A  $3,107,000 Riverside Parking
White Front Garage PartnersNashville, TN9/30/2016Garage  155   0.26   N/A  $11,673,000 Premier / iPark
Cleveland Lincoln Garage OwnersCleveland, OH10/19/2016Garage  536   1.14   45,272  $10,649,000 SP +
MVP Houston Preston LotHouston, TX11/22/2016Lot  46   0.23   N/A  $2,820,000 Premier / iPark
MVP Houston San Jacinto LotHouston, TX11/22/2016Lot  85   0.65   240  $3,250,000 Premier / iPark
MVP Detroit Center GarageDetroit, MI2/1/2017Garage  1,275   1.28   N/A  $55,476,000 SP +
St. Louis BroadwaySt Louis, MO5/6/2017Lot  161   0.96   N/A  $2,400,000 St. Louis Parking
St. Louis Seventh & CerreSt Louis, MO5/6/2017Lot  174   1.06   N/A  $3,300,000 St. Louis Parking
MVP Preferred Parking (4)Houston, TX8/1/2017Garage/Lot  528   0.98   784  $21,210,000 Premier / iPark
MVP Raider Park GarageLubbock, TX11/21/2017Garage  1,495   2.15   20,536  $13,517,000 ISOM Management
MVP PF Memphis PoplarMemphis, TN12/15/2017Lot  127   0.87   N/A  $3,747,000 Best Park
MVP PF St. LouisSt Louis, MO12/15/2017Lot  183   1.22   N/A  $5,145,000 SP +
Mabley Place Garage (2)Cincinnati, OH12/15/2017Garage  775   0.9   8,400  $21,185,000 SP +
MVP Denver ShermanDenver, CO12/15/2017Lot  28   0.14   N/A  $705,000 Denver School
MVP Fort Worth TaylorFort Worth, TX12/15/2017Garage  1,013   1.18   11,828  $27,663,000 SP +
MVP Milwaukee Old WorldMilwaukee, WI12/15/2017Lot  54   0.26   N/A  $2,044,000 SP +
MVP Houston Saks GarageHouston, TX12/15/2017Garage  265   0.36   5,000  $10,423,000 Premier / iPark
MVP Milwaukee WellsMilwaukee, WI12/15/2017Lot  148   1.07   N/A  $5,083,000 Symphony
MVP Wildwood NJ Lot 1 (3)Wildwood, NJ12/15/2017Lot  29   0.26   N/A  $545,000 SP +
MVP Wildwood NJ Lot 2 (3)Wildwood, NJ12/15/2017Lot  45   0.31   N/A  $686,000 SP+
MVP Indianapolis City ParkIndianapolis, IN12/15/2017Garage  370   0.47   N/A  $10,934,000 ABM
MVP Indianapolis WA StreetIndianapolis, IN12/15/2017Lot  141   1.07   N/A  $5,749,000 Denison
MVP Minneapolis VentureMinneapolis, MN12/15/2017Lot  195   1.65   N/A  $4,013,000 N/A
Minneapolis City ParkingMinneapolis, MN12/15/2017Lot  268   1.98   N/A  $9,338,000 SP +
MVP Indianapolis MeridianIndianapolis, IN12/15/2017Lot  36   0.24   N/A  $1,601,000 Denison
MVP Milwaukee ClybournMilwaukee, WI12/15/2017Lot  15   0.06   N/A  $262,000 Secure
MVP Milwaukee Arena LotMilwaukee, WI12/15/2017Lot  75   1.11   N/A  $4,631,000 SP +
MVP Clarksburg LotClarksburg, WV12/15/2017Lot  94   0.81   N/A  $715,000 ABM

MVP Denver Sherman 1935Denver, CO12/15/2017Lot  72   0.43   N/A  $2,533,000 SP +
MVP Bridgeport FairfieldBridgeport, CT12/15/2017Garage  878   1.01   4,349  $8,256,000 SP +
MVP New Orleans RampartNew Orleans, LA2/1/2018Lot  78   0.44   N/A  $8,105,000 342 N. Rampart
MVP Hawaii Marks GarageHonolulu, HI6/21/2018Garage  311   0.77   16,205   21,127,000 SP +
Construction in progress               $714,000  
Total Investment in real estate and fixed assets              $309,885,000  
Investment
(1)
These properties are held by West 9th St. Properties II, LLC.
(2)
The Company holds an 83.3% undivided interest in the Mabley Place Garage pursuant to a tenancy-in-common agreement and is the Managing Co-Owner of the property.
(3)
These properties are held by MVP Wildwood NJ Lot, LLC.
(4)
MVP Preferred Parking, LLC holds a Garage and a Parking Lot.

2018

As of December 31, 2018, the Company had the following Investments in Real Estate continued:that were consolidated on the Company’s balance sheet:

Property NameLocationDate AcquiredProperty Type # Spaces  Property Size (Acres)  Retail Sq. Ft  Investment Amount Parking Tenant
MVP Cleveland West 9th (1)Cleveland, OH5/11/2016Lot  260   2   N/A  $5,845,000 SP +
33740 Crown Colony (1)Cleveland, OH5/17/2016Lot  82   0.54   N/A  $3,050,000 SP +
MVP San Jose 88 GarageSan Jose, CA6/15/2016Garage  328   1.33   N/A  $3,844,000 Lanier
MCI 1372 StreetCanton, OH7/8/2016Lot  66   0.44   N/A  $700,000 ABM
MVP Cincinnati Race Street GarageCincinnati, OH7/8/2016Garage  350   0.63   N/A  $6,300,000 SP +
MVP St. Louis WashingtonSt Louis, MO7/18/2016Lot  63   0.39   N/A  $3,007,000 SP +
MVP St. Paul Holiday GarageSt Paul, MN8/12/2016Garage  285   0.85   N/A  $8,396,000 Interstate Parking
MVP Louisville Station BroadwayLouisville, KY8/23/2016Lot  165   1.25   N/A  $3,107,000 Riverside Parking
White Front Garage PartnersNashville, TN9/30/2016Garage  155   0.26   N/A  $11,672,000 Premier Parking
Cleveland Lincoln Garage OwnersCleveland, OH10/19/2016Garage  536   1.14   45,272  $10,541,000 SP +
MVP Houston Preston LotHouston, TX11/22/2016Lot  46   0.23   N/A  $2,820,000 iPark Services
MVP Houston San Jacinto LotHouston, TX11/22/2016Lot  85   0.65   240  $3,250,000 iPark Services
MVP Detroit Center GarageDetroit, MI2/1/2017Garage  1,275   1.28   N/A  $55,476,000 SP +
St. Louis BroadwaySt Louis, MO5/6/2017Lot  161   0.96   N/A  $2,400,000 St. Louis Parking
St. Louis Seventh & CerreSt Louis, MO5/6/2017Lot  174   1.06   N/A  $3,300,000 St. Louis Parking
MVP Preferred Parking (4)Houston, TX8/1/2017Garage/Lot  528   0.98   784  $21,115,000 iPark Services
MVP Raider Park GarageLubbock, TX11/21/2017Garage  1,495   2.15   20,536  $11,029,000 ISOM Management
MVP PF Ft. LauderdaleFt. Lauderdale, FL12/15/2017Lot  66   0.75   4,017  $3,423,000 SP +
MVP PF Memphis CourtMemphis, TN12/15/2017Lot  37   0.41   N/A  $1,008,000 SP +
MVP PF Memphis PoplarMemphis, TN12/15/2017Lot  127   0.87   N/A  $3,735,000 Best Park
MVP PF St. LouisSt Louis, MO12/15/2017Lot  183   1.22   N/A  $5,145,000 SP +
Mabley Place Garage (2)Cincinnati, OH12/15/2017Garage  775   0.9   8,400  $21,185,000 SP +
MVP Denver ShermanDenver, CO12/15/2017Lot  28   0.14   N/A  $705,000 Denver School

MVP Fort Worth TaylorFort Worth, TX12/15/2017Garage  1,013   1.18   11,828  $27,663,000  SP + 
MVP Milwaukee Old WorldMilwaukee, WI12/15/2017Lot  54   0.26   N/A  $2,044,000  SP + 
MVP Houston Saks GarageHouston, TX12/15/2017Garage  265   0.36   5,000  $10,391,000  iPark Services 
MVP Milwaukee WellsMilwaukee, WI12/15/2017Lot  148   1.07   N/A  $5,083,000  Symphony 
MVP Wildwood NJ Lot 1 (3)Wildwood, NJ12/15/2017Lot  29   0.26   N/A  $545,000  SP + 
MVP Wildwood NJ Lot 2 (3)Wildwood, NJ12/15/2017Lot  45   0.31   N/A  $686,000  SP+ 
MVP Indianapolis City ParkIndianapolis, IN12/15/2017Garage  370   0.47   N/A  $10,934,000  ABM 
MVP Indianapolis WA StreetIndianapolis, IN12/15/2017Lot  141   1.07   N/A  $5,749,000  Denison 
MVP Minneapolis VentureMinneapolis, MN12/15/2017Lot  195   1.65   N/A  $4,012,000   N/A 
Minneapolis City ParkingMinneapolis, MN12/15/2017Lot  268   1.98   N/A  $9,838,000  SP + 
MVP Indianapolis MeridianIndianapolis, IN12/15/2017Lot  36   0.24   N/A  $1,601,000  Denison 
MVP Milwaukee ClybournMilwaukee, WI12/15/2017Lot  15   0.06   N/A  $262,000  Secure 
MVP Milwaukee Arena LotMilwaukee, WI12/15/2017Lot  75   1.11   N/A  $4,631,000  SP + 
MVP Clarksburg LotClarksburg, WV12/15/2017Lot  94   0.81   N/A  $715,000  ABM 
MVP Denver Sherman 1935Denver, CO12/15/2017Lot  72   0.43   N/A  $2,533,000  SP + 
MVP Bridgeport FairfieldBridgeport, CT12/15/2017Garage  878   1.01   4,349  $8,256,000  SP + 
MVP New Orleans RampartNew Orleans, LA2/1/2018Lot  78   0.44   N/A  $8,105,000  342 N. Rampart 
MVP Hawaii Marks GarageHonolulu, HI6/21/2018Garage  311   0.77   16,205   21,000,000  SP + 
Construction in progress               $1,872,000     
Total Investment in real estate and fixed assets              $316,973,000     

Property(1)LocationZoningHeight RestrictionParking TenantLease Commencement DateLease Term
MVP San Jose 88 Garage, LLCSan Jose, CADCUnlimitedABM6/15/20161 year management agreement
MCI 1372 Street, LLCCanton, OHB-5375 FTABM7/8/20165 years
MVP Cincinnati Race Street Garage, LLCCincinnati, OHDD-A500 FT.SP +9/1/20165 years
MVP St. Louis Washington, LLCSt Louis, MOCBD I100 FT.SP +7/21/20165 years
MVP St. Paul Holiday Garage, LLCSt Paul, MNB-5UnlimitedInterstate Parking8/12/201610 years
MVP Louisville Station Broadway, LLCLouisville, KYCBD IUnlimitedRiverside Parking8/23/20165 years
Cleveland Lincoln Garage Owners, LLCCleveland, OHSI-E5 / GR-E5250 FT.SP +10/25/20165 years
MVP Houston Jefferson Lot, LLCHouston, TXNONEUnlimitediPark Services12/1/201610 years
MVP Houston San Jacinto Lot, LLCHouston, TXNONEUnlimitediPark Services12/1/201610 years
White Front Garage Partners, LLCNashville, TNCBD IUnlimitedPremier Parking10/1/201610 years
MVP Cleveland
These properties are held by West 9th LLC
Cleveland, OHCBD LLR-B4175 FT.SP +5/11/20165 years
33740 Crown Colony, LLCCleveland, OHLLR-D5250 FT.SP +5/17/20165 yearsSt. Properties II, LLC.
(2)
The Company owns an 83.3% undivided interest in the Mabley Place Garage pursuant to a tenancy-in-common agreement and is the Managing Co-Owner of the property.
(3)
These properties are owned by MVP Wildwood NJ Lot, LLC.
(4)
MVP Preferred Parking, LLC owns a Garage and a Parking Lot.

Note E — Related Party Transactions and Arrangements

2019

The transactions described in this Note were approved by a majority of the Company'sCompany’s board of directors (including a majority of the independent directors) not otherwise interested in such transactiontransactions as fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from unaffiliated third parties.

Prior to the Internalization, the former Advisor had the option to request reimbursement of certain payroll expenses for salaries and benefits paid to non-executive officers. As of December 31, 2019, all reimbursable expenses had been paid.

Ownership of Company Stock

As of December 31, 2016,2019, the Company's Sponsor owned 8,0009,107 shares, VRM II owned 844,960 shares and VRM III owned 5,000456,834 shares of the Company'sCompany’s outstanding common stock.

Ownership of MVP REIT

On November 5, 2016, the Company purchased 338,409 shares of MVP REIT common stock from an unrelated third party for $3.0 million or $8.865 per share. During the year ended December 31, 2016, MVP REIT paid us,2018, VRM II and VRM I received approximately $34,000$33,000 and $19,000 in distributions related toin accordance with the Company's ownership of their common stock.

Acquisition Expense

DuringCompany’s distribution reinvestment program (“DRIP”). No DRIP distributions were received by either entity during the year ended December 31, 2016, JNL Parking, a brokerage and consulting company specializing in2019 due to the parking industry and co-founded bysuspension of the Advisor's former Chief Investment Officer and former Chief Technology Officer (their employment ended during August 2016), earned fees of approximately $78,000, equal to a 1% commission on purchases.  JNL Parking may continue to receive broker fee from the Company, for deals in which John Roy and Lance Miller acted as brokers, after their employment ended with the Company.DRIP program.

Ownership of the Former Advisor

VRM I and VRM II own 40% and 60%, respectively, of the former Advisor. Neither VRM I nor VRM II paid any up-front consideration for these ownership interests, but each willagreed to be responsible for its proportionate share of future expenses of the Advisor. The operating agreement of the Advisor provides that once VRM I and VRM II have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisor's behalf, or capital investment, and once they have received an annualized return on their capital investment of 7.5%, then Michael Shustek will receive 40% of the net profits of theformer Advisor.

Fees Paid in Connection with the Offering – Common Stock

Various affiliates of the Company are involved in this offering and the Company's operations including MVP American Securities, LLC, or ("MVP American Securities"), which is a broker-dealer and member of the Financial Industry Regulatory Authority, Inc., or FINRA.  MVP American Securities is owned by MS MVP Holdings, LLC which is owned and managed by Mr. Shustek. Additionally, the Company's board of directors, including a majority of the Company's independent directors, may engage an affiliate of the Advisor to perform certain property management services for us.
-78--70-

The Company's Sponsor or its affiliates will pay selling commissions of up to 6.5% of gross offering proceeds from the sale of shares in the primary offering without any right to seek reimbursement from the Company.

The Company's sponsor or its affiliates also may pay non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses, subject to the total underwriting compensation limitation set forth below. We expect such due diligence expenses to average up to 1% of total offering proceeds at the maximum offering amount. Such commissions and fees will be paid by the Company's sponsor or its affiliates (other than the Company) without any right to seek reimbursement from the Company's company.

Fees Paid in Connection with the Offering – Preferred Stock

In connection with the private placement of the Series A preferred stock, the Company will pay selling commissions of up to 6.0% of gross offering proceeds from the sale of shares in the private placement, including sales by affiliated and non-affiliated selling agents. 
The Company may pay non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses of up to 2.0% of gross offering proceeds. The Company may also pay a dealer manager fee to MVP American Securities of up to 2.0% of gross offering proceeds from the sale of the shares in the private placement as compensation for acting as dealer manager.

Fees Paid in Connection with the Operations of the Company

ThePrior to the Internalization (as defined below), the former Advisor or its affiliates will receivereceived an acquisition fee of 2.25% of the purchase price of any real estate provided, however, the Company will not pay any fees when acquiring loans from affiliates.  During the year ended December 31, 2016, approximately $1.2 million in acquisition fees have been earned by the Advisor.

The Advisor or its affiliates will be reimbursed for actual expenses paid or incurred in the investment.  During the year ended December 31, 2016, no acquisition expenses have been reimbursed to the Advisor.

The Advisor or its affiliates will receive a monthly asset management fee at an annuala rate equal to 1.0%1.1% of the cost of all assets then held by the Company, or the Company'sCompany’s proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement. The Company will determinePursuant to the Company's NAV, on a date not later than the Valuation Date.  Following the Valuation Date,Amended and Restated Advisory Agreement, the asset management fee willcould not exceed $2 million per annum until the earlier of such time, if ever, that (i) the Company holds assets with an appraised value equal to or in excess of $500,000,000 or (ii) the Company reports AFFO equal to or greater than $0.3125 per share of common stock (an amount intended to reflect a 5% or greater annualized return on $25.00 per share of common stock) for two consecutive quarters, on a fully diluted basis. All amounts of the asset management fee in excess of $2 million per annum, plus interest thereon at a rate of 3.5% per annum, would be due and payable by the Company no later than ninety (90) days after the condition for payment is satisfied. For the years ended December 31, 2019 and 2018, asset management fees of approximately $0.9 and $2.0 million, respectively, had been earned by the former Advisor. From and after May 29, 2018 (or the Valuation Date), the asset management fee was to be calculated based on the lower of the value of the Company'sCompany’s assets rather thanand their historical cost. AssetThe Company ceased payment of asset management fees foreffective April 1, 2019, as a result of the year ended December 31, 2016 were approximately $197,000.Internalization (as defined below).

The Company willwas to reimburse the former Advisor or its affiliates for costs of providing administrative services, subject to the limitation that weit will not reimburse the former Advisor for any amount by which the Company'sCompany’s operating expenses, at the end of the four preceding fiscal quarters (commencing after the quarter in which we make the Company'sCompany made its first investment), exceed the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income in connection with the selection or acquisition of an investment, whether or not the Company ultimately acquires, unless the excess amount is approved by a majority of the Company'sCompany’s independent directors. We willThe Company was not to reimburse the former Advisor for personnel costs in connection with services for which the former Advisor receivesreceived a separate fee, such as an acquisition fee, disposition fee or debt financing fee, or for the salaries and benefits paid to the Company'sCompany’s executive officers. In addition, we willthe Company was not to reimburse the former Advisor for rent or depreciation, utilities, capital equipment or other costs of its own administrative items. During the year ended December 31, 2016, no2019, approximately $1.4 million, in operating expenses have beenwere incurred by the former Advisor, on behalf of the Company, reimbursable to the former Advisor of which has been reimbursed.

On March 29, 2019, the Company and the former Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 (the “Internalization”). Since their formation, under the supervision of the board of directors (the “Board of Directors”), the former Advisor has been responsible for managing the operations of the Company and MVP I, which merged with a wholly owned indirect subsidiary of the Company in December 2017. As part of the Internalization, among other things, the Company agreed with the former Advisor to (i) terminate the Second Amended and Restated Advisory Agreement, dated as of May 26, 2017 and, for the avoidance of doubt, the Third Amended and Restated Advisory Agreement, dated as of September 21, 2018, which by its terms would have become effective only upon a listing of the Company’s common stock on a national securities exchange (collectively, the “Management Agreements”), each entered into among the Company, the former Advisor and MVP REIT II Operating Partnership, LP (the “Operating Partnership”); (ii) extend employment to the executives and other employees of the former Advisor; (iii) arrange for the former Advisor to continue to provide certain services with respect to outstanding indebtedness of the Company and its subsidiaries; and (iv) lease the employees of the former Advisor for a limited period of time prior to the time that such employees become employed by the Company. As part of those same agreements, the Company agreed to issue to the former Advisor over a period of more than two and a half years, 1,600,000 shares of the Company’s common stock as consideration under the terms of the Contribution Agreement, issuable in four equal installments. The first installment of 400,000 shares of Common Stock was issued on April 1, 2019 and the second on December 31, 2019. The remaining installments will be issued on December 31, 2020 and December 31, 2021 (or if December 31st is not a business day, the day that is the last business day of such year). See Note S — Deferred Management Internalization below in for additional information.

2018

The transactions described in this Note were approved by a majority of the Company’s board of directors (including a majority of the independent directors) not otherwise interested in such transactions as fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from unaffiliated third parties.

The former Advisor had the option to request reimbursement of certain payroll expenses for salaries and benefits paid to non-executive officers. As of December 31, 2018, the former Advisor was due approximately $0.2 million in reimbursable expenses, of which has been paid as of the date of this filing.

Ownership of Company Stock

As of December 31, 2018, the Sponsor owned 9,107 shares, VRM II owned 364,960 shares and VRM I owned 136,834 shares of the Company’s outstanding common stock. During the years ended December 31, 2018 and 2017, VRM II received approximately $50,550 and $19,750, respectively, in distributions in accordance with the Company’s DRIP program. During the year ended December 31, 2018, VRM I received approximately $18,700 in both cash and DRIP distributions. VRM I did not own shares of the Company’s stock in 2017.

Ownership of the former Advisor

VRM I and VRM II own 40% and 60%, respectively, of the former Advisor. Neither VRM I nor VRM II paid any up-front consideration for these ownership interests, but each agreed to be responsible for its proportionate share of future expenses of the former Advisor.

Fees Paid in Connection with the Liquidation or ListingOffering – Common Stock

Various affiliates of the Company's Real Estate AssetsCompany were involved in the Common Stock offering and the Company’s operations including MVP American Securities, LLC (“AMS”), which was a broker-dealer and member of the Financial Industry Regulatory Authority, Inc. AMS is owned by MS MVP Holdings, LLC, which is owned and managed by Mr. Shustek.

For substantial assistanceThe Company’s Sponsor or its affiliates paid selling commissions of up to 6.5% of gross offering proceeds from the sale of shares in the Common Stock Offering without any right to seek reimbursement from the Company.

The Company’s sponsor or its affiliates also paid non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses, subject to the total underwriting compensation limitation set forth below. Such due diligence expenses were approximately 1.25% to 2.00% of total offering proceeds. Such commissions and fees were paid by the Company’s sponsor or its affiliates (other than the Company) without any right to seek reimbursement from the Company.

Fees Paid in Connection with the Offering – Preferred Stock

In connection with the private placement of the Series A and Series 1 preferred stock, the Company paid selling commissions of up to 6.0% of gross offering proceeds from the sale of shares in the private placements, including sales by affiliated and non-affiliated selling agents. During the years ended December 31, 2018 and 2017, the Company paid approximately $0.8 and $2.4 million, respectively, in selling commissions, of which $0.2 and $0.6 million, respectively, were paid to affiliated selling agents.

The Company paid non-affiliated selling agents a one-time fee separately negotiated with each selling agent for due diligence expenses of up to 2.0% of gross offering proceeds. The Company also paid a dealer manager fee to AMS of up to 2.0% of gross offering proceeds from the sale of the shares in the private placements as compensation for acting as dealer manager. During the years ended December 31, 2018 and 2017, the Company paid approximately $0.2 and $0.6 million, respectively, to AMS as compensation.

Fees Paid in Connection with the Operations of the Company

The former Advisor or its affiliates receives an asset management fee at a rate equal to 1.1% of the cost of all assets held by the Company, or the Company’s proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement. Pursuant to the Amended and Restated Advisory Agreement, the asset management fee may not exceed $2 million per annum until the earlier of such time, if ever, that (i) the Company holds assets with an appraised value equal to or in excess of $500,000,000 or (ii) the Company reports AFFO equal to or greater than $0.3125 per share of common stock (an amount intended to reflect a 5% or greater annualized return on $25.00 per share of common stock) for two consecutive quarters, on a fully diluted basis. All amounts of the asset management fee in excess of $2 million per annum, plus interest thereon at a rate of 3.5% per annum, will be due and payable by the Company no later than ninety (90) days after the condition for payment is satisfied.  As of December 31, 2018, approximately $1.6 million was paid and $0.4 was due to the former Advisor and subsequently paid prior to the filing. From and after May 29, 2018 (or the Valuation Date), the asset management fee shall be calculated based on the lower of the value of the Company’s assets and their historical cost. As of December 31, 2018, the Company has subordinated approximately $1.4 million in asset management fees which will be accrued and paid once the above criteria are met.

Prior to the Merger, the Company was to determine the Company’s NAV on a date not later than the Valuation Date. Following the Valuation Date, the asset management fee was based on the value of the Company’s assets rather than their historical cost. Asset management fees for the year ended December 31, 2017 were approximately $1.3 million.

The Company was to reimburse the former Advisor or its affiliates for costs of providing administrative services, subject to the limitation that it will not reimburse the former Advisor for any amount by which the Company’s operating expenses, at the end of the four preceding fiscal quarters (commencing after the quarter in which the Company made its first investment), exceed the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income in connection with the saleselection or acquisition of investments, as determinedan investment, whether or not the Company ultimately acquires, unless the excess amount is approved by the independent directors, we will pay the Advisor or its affiliate the lesser of (i) 3.0%a majority of the contract sale price of each real estate-related secured loanCompany’s independent directors. The Company was not to reimburse the former Advisor for personnel costs in connection with services for which the former Advisor received a separate fee, such as an acquisition fee, disposition fee or debt financing fee, or for the salaries and benefits paid to the Company’s executive officers. In addition, the Company was not to reimburse the former Advisor for rent or depreciation, utilities, capital equipment or other real estate investment or (ii) 50%costs of the customary commission which would be paid to a third-party broker for the sale of a comparable property. The amount paid, when added to the sums paid to unaffiliated parties, may not exceed either the customary commission or an amount equal to 6.0% of the contract sales price. The disposition fee will be paid concurrently with the closing of any such disposition of all or any portion of any asset.its own administrative items. During the year ended December 31, 2016, no disposition fees have been earned2018, approximately $2.7 million in operating expenses were incurred by the Advisor.

AfterCompany reimbursable to the Company's stockholders have received a return of their net capital invested and a 6.0% annual cumulative, non-compounded return, then the Company's Advisor will be entitled to receive 15.0% of the remaining proceeds. We will pay this subordinated performance fee only upon one of the following events: (i) if the Company's shares are listed on a national securities exchange; (ii) if the Company's assets are sold or liquidated; (iii) upon a merger, share exchange, reorganization or other transaction pursuant to which the Company's investors receive cash or publicly-traded securities in exchange for their shares; or (iv) upon termination of the Company's advisory agreement.former Advisor. During the year ended December 31, 2016, no subordinated performance fees have2018, approximately $2.5 million had been earned byreimbursed to the Company'sformer Advisor. For the year ended December 31, 2017, the former Advisor was due approximately $0.2 million in reimbursable expenses. These reimbursable expenses were paid as of June 21, 2018, the date of the Company’s 2017 annual filing.

-79-On September 21, 2018, we entered into a Third Amended and Restated Advisory Agreement with the former Advisor. The Third Amended Advisory Agreement will become effective and replace the existing advisory agreement upon the listing of the shares of our common stock on any national exchange, unless an internalization transaction is completed before listing.

TABLE OF CONTENTS
For more information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”. The Third Amended and Restated Advisory Agreement is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 26, 2018.

Note F — Economic Dependency

Under various agreements, the Company has engaged or will engage the former Advisor and its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition services, the sale of shares of the Company's common stockCompany’s securities available for issue,issuance, as well as other administrative responsibilities for the Company, including accounting services and investor relations. In addition, the Sponsor payspaid selling commissions in connection with the sale of the Company'sCompany’s shares in the Common Stock Offering and the former Advisor payspaid the Company'sCompany’s organization and offering expenses.

As a result of these relationships, the Company is dependent upon the former Advisor and its affiliates. In the event thatIf these companies are unable to provide the Company with the respective services, the Company willmay be required to find alternative providers of these services.

Note G — Stock-Based Compensation

Long-Term Incentive Plan

The Company'sCompany’s board of directors has adopted a long-term incentive plan which we willthe Company may use to attract and retain qualified directors, officers, employees and consultants. The Company'sCompany’s long-term incentive plan will offer these individuals an opportunity to participate in the Company'sCompany’s growth through awards in the form of, or based on, the Company'sCompany’s common stock. WeThe Company currently anticipateanticipates that weit will not issue awards under the Company'sCompany’s long-term incentive plan, although weit may do so in the future, including possible equity grants to the Company'sCompany’s independent directors as a form of compensation.

The long-term incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or deferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, officers, employees and consultants of the Company and the Company's affiliates'Company’s affiliates selected by the board of directors for participation in ourthe Company’s long-term incentive plan. Stock options granted under the long-term incentive plan will not exceed an amount equal to 10% of the outstanding shares of ourthe Company’s common stock on the date of grant of any such stock options. Stock options may not have an exercise price that is less than the fair market value of a share of ourthe Company’s common stock on the date of grant.

The Company’s board of directors or a committee appointed by ourits board of directors will administer the long-term incentive plan, with sole authority to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the long-term incentive plan if the grant or vesting of the awards would jeopardize ourthe Company’s status as a REIT under the Code or otherwise violate the ownership and transfer restrictions imposed under ourits charter. Unless otherwise determined by ourthe Company’s board of directors, no award granted under the long-term incentive plan will be transferable except through the laws of descent and distribution.

We haveThe Company has authorized and reserved an aggregate maximum number of 500,000 common shares for issuance under the long-term incentive plan. In the event of a transaction between our companythe Company and ourits stockholders that causes the per-share value of ourthe Company’s common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the long-term incentive plan will be adjusted proportionately and the board of directors will make such adjustments to the long-term incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the long-term incentive plan will automatically be adjusted proportionately and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.

OurThe Company’s board of directors may in its sole discretion at any time determine that all or a portion of a participant'sparticipant’s awards will become fully vested. The board may discriminate among participants or among awards in exercising such discretion. The long-term incentive plan will automatically expire on the tenth anniversary of the date on which it is approved by ourthe board of directors and stockholders, unless extended or earlier terminated by ourthe board of directors. OurThe Company’s board of directors may terminate the long-term incentive plan at any time. The expiration or other termination of the long-term incentive plan will not, without the participant'sparticipant’s consent, have an adverse impact on any award that is outstanding at the time the long-term incentive plan expires or is terminated. OurThe board of directors may amend the long-term incentive plan at any time, but no amendment will adversely affect any award without the participant'sparticipant’s consent and no amendment to the long-term incentive plan will be effective without the approval of ourthe Company’s stockholders if such approval is required by any law, regulation or rule applicable to the long-term incentive plan. During the yearyears ended December 31, 2016,2019 and 2018, no grants have beenwere made under the long-term incentive plan.

Note H – Recent Accounting Pronouncements

In AprilMay 2014, Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), an updated standard on revenue recognition. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The standard requires expanded disclosure surrounding revenue recognition. Early application is not permitted. The standard was initially to be effective for fiscal periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB issued ASU 2015-03, Imputation2015-14, Revenue from Contracts with Customers, Deferral of Interest: SimplifyingEffective Date, which delays the Presentationeffective date of Debt Issuance Costs, ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related2014-09 by one year to borrowings be presented in the balance sheet as a direct deduction from the carrying amount of the borrowing, consistent with debt discounts. The ASU does not affect the amount or timing of expenses for debt issuance costs. The Company adopted ASU 2015-03 effective January 1, 2016 on a retrospective basis, by recasting all priorfiscal periods shown to reflect the effect of adoption, the effect of which is not material.

beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and Joint Ventures (Topic 323): Simplifyingunderstandability of the Transitionimplementation guidance on principal versus agent considerations and the effective date is the same as requirements in ASU 2015-14. The Company adopted ASU 2014-09 using the modified retrospective transition method in the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements. The adoption of this standard did not require any adjustments to the Equity Methodopening balance of Accounting ("ASU 2016-07"). ASU 2016-07 eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. ASU 2016-07 is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. We do not currently have significant investments that are accounted for by a method other than the equity method and do not expect ASU 2016-07 to have a significant impact on our consolidated financial condition and results of operations.January 1, 2018.

In MarchJanuary 2016, the FASB issued ASU No. 2016-09, Compensation2016-01, Financial Instruments - Stock Compensation (Topic 718)Overall (Subtopic 825-10): ImprovementsRecognition and Measurement of Financial Assets and Financial Liabilities. The ASU requires entities to Employee Share-Based Payment Accounting ("measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with changes in fair value recognized in net income. The ASU 2016-09"). ASU 2016-09 simplifies several aspectsalso requires an entity to present separately in other comprehensive income the portion of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classificationtotal change in the statementfair value of cash flows.a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The requirement to disclose the method(s) and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet has been eliminated by this ASU. This ASU 2016-07 is effective for annual and interim periodsfiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted ASU 2016-01 in the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases – (Topic 842). This update will require lessees to recognize all leases with terms greater than 12 months on their balance sheet as lease liabilities with a corresponding right-of-use asset. This update maintains the dual model for lease accounting, requiring leases to be classified as either operating or finance, with lease classification determined in a manner similar to existing lease guidance. The basic principle is that leases of all types convey the right to direct the use and obtain substantially all the economic benefits of an identified asset, meaning they create an asset and liability for lessees. Lessees will classify leases as either finance leases (comparable to current capital leases) or operating leases (comparable to current operating leases). Costs for a finance lease will be split between amortization and interest expense, with a single lease expense reported for operating leases. This update also will require both qualitative and quantitative disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; however, early adoption is permitted. We are currently assessingThe Company has determined that the potential impactprovisions of ASU 2016-092016-02 may result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities for leases in the future however the Company was not a lessee on ourany lease agreements at December 31, 2018. During the first quarter 2019, the Company adopted ASU 2016-02 and such adoption did not have a material impact on the Company’s consolidated financial condition and results of operations.statements.

In AugustJune 2016, the FASB issued ASU No. 2016-15, 2016-13, ClassificationFinancial Instruments-Credit Losses (Topic 326), Measurement of CertainCredit Losses on Financial Instruments. The amendments in this ASU replace the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. During the first quarter 2020, the Company adopted ASU 2016-13 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash ReceiptsFlows (Topic 230) Restricted Cash. The new guidance requires that the reconciliation of the beginning-of-period and Cash Payments.end-of-period amounts shown in the statements of cash flows include restricted cash and restricted cash equivalents. If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet. Companies will also need to disclose information about the nature of the restrictions. The standard permits the use of either the retrospective or cumulative effect transition method. This update provides guidance on how to record eight specific cash flow issues. This update iswill become effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2016-18 in the first quarter of 2018 and such adoption had no material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. This update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. This update will become effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted ASU 2016-18 beginning in the first quarter of 2018. The effect of ASU 2017-01 on the Company’s consolidated financial statements is dependent upon the value and quantity of acquisitions during the year.

In May 2017, the FASB issued Accounting Standards Update ASU 2017-09, Compensation-Stock Compensation: Scope of Stock Compensation Modification Accounting. The ASU was issued to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The update is effective for annual periods beginning after December 15, 2017, and interim periods thereafter. Early adoption is permitted, and a retrospective transition method should be applied.including adoption in any interim period. The Company is currently evaluatingadopted ASU 2017-09 in the effectfirst quarter of this update2018 and such adoption did not have a material impact on itsthe Company’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The objective of ASU 2017-12 is to expand hedge accounting for both financial (interest rate) and commodity risks and create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. ASU 2017-12 will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods in the year of adoption. Early adoption is permitted for any interim or annual period. During the first quarter 2019, the Company adopted ASU 2017-12 and such adoption did not have a material impact on the Company's consolidated financial statements.

Note I -– Acquisitions
PropertyLocationDate AcquiredProperty Type# SpacesSize / AcreageRetail /Office Square Ft.Investment AmountOwnership %
MVP Cleveland West 9th, LLCCleveland, OH5/11/2016Lot2542.16N/A$2,894,25051.00%
33740 Crown Colony, LLCCleveland, OH5/17/2016Lot820.54N/A$1,545,30051.00%
MVP San Jose 88 Garage, LLCSan Jose, CA6/15/2016Garage3281.33N/A$3,575,500100.00%
MCI 1372 Street, LLCCanton, OH7/8/2016Lot680.44N/A$700,000100.00%
MVP Cincinnati Race Street Garage, LLCCincinnati, OH7/8/2016Garage3500.63N/A$4,500,000100.00%
MVP St. Louis Washington, LLCSt Louis, MO7/18/2016Lot630.39N/A$3,000,000100.00%
MVP St. Paul Holiday Garage, LLCSt Paul, MN8/12/2016Garage2850.85N/A$8,200,000100.00%
MVP Louisville Station Broadway, LLCLouisville, KY8/23/2016Lot1651.25N/A$3,050,000100.00%
White Front Garage Partners, LLCNashville, TN9/30/2016Garage1550.26N/A$9,196,80080.00%
Cleveland Lincoln Garage Owners, LLCCleveland, OH10/19/2016Garage5361.245,272$7,316,950100.00%
MVP Houston Jefferson Lot, LLCHouston, TX11/22/2016Lot760.52N/A$700,000100.00%
MVP Houston San Jacinto Lot, LLCHouston, TX11/22/2016Lot850.65240$3,200,000100.00%

2019

There were no acquisitions for the year ended December 31, 2019.

2018

The following table is a summary of the acquisitions for the year ended December 31, 2016.2018.

PropertyLocationDate AcquiredProperty Type # Spaces  Size / Acreage  Retail Sq. Ft.  Property Purchase Price 
MVP New Orleans Rampart, LLC
New Orleans, LA2/1/2018Lot  
78
   
0.44
   
N/A
  
$
8,105,000
 
MVP Hawaii Marks Garage, LLC
Honolulu, HI6/21/2018Garage  
311
   
0.77
   
16,205
  
$
20,834,000
 

  Assets  Liabilities    
  Land and Improvements  Building and improvements  Total assets acquired  Notes Payable Assumed  Net assets and liabilities acquired 
                
West 9th Properties II
 $5,675,000   --  $5,675,000  $--  $5,675,000 
33740 Crown Colony  3,030,000   --   3,030,000   --   3,030,000 
San Jose 88 Garage  1,073,000   2,503,000   3,576,000   --   3,576,000 
MCI 1372 Street  700,000   --   700,000   --   700,000 
Cincinnati Race Street  2,142,000   2,358,000   4,500,000   --   4,500,000 
St. Louis Washington  3,000,000   --   3,000,000   --   3,000,000 
St. Paul Holiday Garage  1,673,000   6,527,000   8,200,000   --   8,200,000 
Louisville Station Broadway  3,050,000   --   3,050,000   --   3,050,000 
White Front Garage  3,116,000   8,379,000   11,495,000   --   11,495,000 
Cleveland Lincoln Garage  2,195,000   5,122,000   7,317,000       7,317,000 
Houston Jefferson *  700,000   --   700,000   --   700,000 
Houston San Jacinto  3,200,000   --   3,200,000   --   3,200,000 
                     
  $29,554,000  $24,889,000  $54,443,000  $--  $54,443,000 
* On January 11, 2017,The following table is a summary of the allocated acquisition value of all properties acquired by the Company received an unsolicited offer to purchasefor the Houston Jefferson lot for approximately $2.0 million, with a 90-day due diligence period.  year ended December 31, 2018.

  Assets 
  Land and Improvements  Building and improvements  Total assets acquired 
MVP New Orleans
 
$
8,105,000
  
$
--
  
$
8,105,000
*
MVP Hawaii Marks Garage
 
$
9,118,000
  
$
11,716,000
  
$
20,834,000
*
  
$
17,223,000
  
$
11,716,000
  
$
28,939,000
 

*Includes acquisition and closing costs

The property was purchased for a long-term hold; however, our advisor and boardfollowing table presents the results of directors believe that the offer received justified the saleoperations of the property.acquired properties for the year ended December 31, 2018:

  For the Year Ended December 31, 2018 
  Total Revenues  Net Income 
2018 acquisitions
 
$
1,241,000
  
$
745,000
 

Pro forma results of the Company

The following table of pro forma consolidated results of operations of the Company for the year ended December 31, 20162018 and for the period from May 4, 2015 (Date of Inception) through December 31, 2015, and assumes that the acquisitions were completed as of May 4, 2015 (Date of Inception)January 1, 2018.

    
  For the year ended December 31, 2018 
Revenues from continuing operations
 
$
22,593,000
 
Net income (loss) from continuing operations
 
$
(4,508,000
)
Net income (loss) from continuing operations per share – basic
 
$
(0.69
)
Net income (loss) from continuing operations per share – diluted
 
$
(0.69
)
  December 31, 2016  December 31, 2015 
Revenues from continuing operations $4,081,000  $1,695,000 
Net loss available to common stockholders $(2,081,000) $(1,273,000)
Net loss available to common stockholders per share – basic $(1.89) $152.11 
Net loss available to common stockholders per share – diluted $(1.89) $152.11 


Note J – Investment in Equity Method Investee— Assets held for sale

MVP Denver 1935 Sherman, LLC2019

On February 12, 2016,Effective April 17, 2019, the Company alongentered into a purchase sales agreement (“PSA”) with an unrelated third party to sell MVP REIT, through MVP Denver 1935 Sherman,San Jose 88 Garage, LLC, ("MVP Denver"), a Nevada limited liability companywhich is wholly owned 24.49% by the Company and 75.51%is listed as held for sale. This multi-level parking garage located in San Jose, California was originally acquired by MVP REIT, closedthe Company on June 15, 2016. On May 14, 2019 the purchase ofunrelated third party cancelled the PSA. The Company executed a parking lotnew PSA for approximately $2.4 million in cash, of which the Company's share was approximately $0.6 million.  The parking lot is located at 1935 Sherman Avenue, Denver, Colorado (the "Denver parking lot").  The Denver parking lot consists of approximately 18,765 square feet andthis property with another unrelated third party on February 25, 2020.  Such third party has approximately 72 parking spaces.  The Denver parking lot is leased by SP Plus Corporation,made a national parking operator, under a net lease agreement where MVP Denver is responsible for property taxes and SP Plus Corporation pays for all insurance and maintenance costs.  SP Plus Corporation pays annual rent of $120,000.  In addition, the lease provides revenue participation with MVP Denver receiving 70% of gross receipts over $160,000. The term of the lease is for 10 years.
-82-
deposit that became nonrefundable on March 27, 2020.

Houston Preston Lot

On November 22, 2016, the Company and MVP REIT, through MVP Houston Preston Lot,The following is summary of San Jose 88 Garage, LLC a Delaware limited liability company ("MVP Preston"), an entity wholly owned by the Company, closed on the purchasenet assets held for sale as of a parking lot consisting of approximately 46 parking spaces, located in Houston, Texas, for a purchase price of $2.8 million in cash plus closing costs, of which our portion was $560,000.  We hold a 20% ownership interest in Houston Preston, while MVP REIT holds an 80% ownership interest in Houston Preston.  The parking lot is under a 10 year lease with iPark Services LLC ("iPark"), a regional parking operator, under a modified net lease agreement where MVP Preston is responsible for property taxes above a $38,238 threshold, and iPark pays for insurance and maintenance costs.  iPark pays annual rent of $228,000.  In addition, the lease provides revenue participation with MVP Preston receiving 65% of gross receipts over $300,000. The term of the lease is for 10 years.December 31, 2019:
  December 31, 2019  December 31, 2018 
Assets:
      
Prepaid expenses
 
$
42,000
  
$
8,000
 
Property and equipment, net of accumulated depreciation
  
3,288,000
   
3,844,000
 
       Total assets
 
$
3,330,000
  
$
3,852,000
 
Liabilities:
        
Notes payable
 
$
2,500,000
  
$
2,500,000
 
Accounts payable and accrued liabilities
  
47,000
   
195,000
 
     Total liabilities
  
2,547,000
   
2,695,000
 
Net assets held for sale
 
$
783,000
  
$
1,157,000
 

The following is a summary of the Company's portionresults of operations related to MVP San Jose 88 Garage for the purchase per the agreement:years ended December 31, 2019 and 2018:

    
  2019  2018 
Revenue
 
$
450,000
  
$
474,000
 
Expenses *
  
842,000
   
419,000
 
Income/(loss) from assets held for sale, net of income taxes
 
$
(392,000
)
 
$
55,000
 
      Ownership 
Property NamePurchase Date Purchase Price  MVP REIT II  MVP REIT 
           
MVP Denver 1935 Sherman02/12/2016 $600,000   24.49%  75.51%
              
MVP Houston Preston11/22/2016  560,000   20.00%  80.00%
              
Total  $1,160,000         
*Includes $343,000 impairment for the year ended December 31, 2019.

Note K – Investment in Cost Method Investee

Minneapolis Venture, LLC and Minneapolis City Parking, LLC

On January 6, 2016, the Company along with MVP REIT closed on the purchase of two parking lots located in Minneapolis for a purchase price of approximately $15.5 million in cash plus closing costs.  The purchase was accomplished through Minneapolis Venture, LLC, a limited liability company (the "Minneapolis Venture") owned jointly by the Company and MVP REIT, of which the Company owns 12.91%. The Company's share of the purchase price was approximately $2.0 million plus the Company's share of the closing costs.2018

The first parking lot is located at 1022 Hennepin Avenue (the "Hennepin lot"). The Hennepin lot consistsDuring the year ended December 31, 2018, the Company had an 87.09% ownership interest in one property that was listed as held for sale, with a carrying value of approximately 90,658 square feet and has approximately 270 parking spaces.  The second parking lot is located$6.1 million. This property was accounted for at 41 10th Street North (the "10th Street lot"). The 10th street lot consists of approximately 107,952 square feet and has approximately 185 parking spaces.  SP Plus Corporation will lease the Hennepin lot and 10th Street lot under a net lease agreement pursuant to which the Minneapolis Venture will be responsible for property taxes and SP Plus Corporation will pay for all insurance and maintenance costs. SP Plus Corporation will pay a cumulative annual rent of $800,000. In addition, the lease provides revenue participation with Minneapolis Venture receiving 70.0% of gross receipts over $1,060,000 but not in excess of $1,300,000 plus 80.0% of annual gross receipts in excess of $1,300,000. The term of the lease is for 5 years.  During April 2016, the Hennepin lot was put into a new entity Minneapolis City Park.fair value based on an appraisal. During June 2016, Minneapolis Venture entered into a purchase and sales agreement (the "PSA")PSA to sell the 10th Street lot "as is"“as is” to a third party for approximately $6.1 million, whichmillion. During October 2016, the PSA was cancelled. During February 2017, the Company entered into a letter of intent to sell a portion of the property (approximately 2.2 acres) to an unrelated third party for $3.0 million. During October 2018, the Company completed the partial sale for cash consideration of $3.0 million.

The remaining portion of the property will be retainedwas reported as held for use at December 31, 2018.


Note K – Disposition of Investments in Real Estate

2019

Ft Lauderdale

On September 23, 2019 the Company, through an entity wholly owned by the Company, sold a surface parking lot and will be leasedoffice building in Ft. Lauderdale for cash consideration of $6.1 million to Fort Lauderdale Properties Management, LLC, a parking operator.third-party buyer. The Company used $2.0 million of the proceeds to pay off the existing promissory note secured by the MVP PF Ft. Lauderdale 2013, LLC. The property was originally purchased in July 2013 by MVP REIT, Inc., and the property was later acquired by The Parking REIT, Inc. for approximately $3.4 million based upon original purchase price and the allocation of the merger consideration for the merger of MVP REIT, Inc. and MVP REIT II, Inc. in December 2017.  The gain on sale is approximately $2.3 million.

MVP Bridgeport Fairfield Garage, LLC

On March 30, 2016, the Company along with MVP REIT, through MVP Bridgeport Fairfield Garage, LLC, a Delaware limited liability company ("MVP Bridgeport"), an entity owned 10% by the Company and 90% by MVP REIT, closed on the purchase of a multi-level parking garage consisting of approximately 878 parking spaces, together with approximately 4,349 square feet of retail space, located in Bridgeport, Connecticut (the "Bridgeport lot"), for a purchase price of $7.8 million in cash, plus closing costs, of which the Company's share was approximately $0.8 million.  The Bridgeport lot is leased by SP Plus Corporation under a net lease agreement where MVP Bridgeport is responsible for property taxes above a $100,000 threshold, and SP Plus Corporation pays for insurance and maintenance costs.  SP Plus Corporation pays annual rent of $400,000.  In addition, the lease provides revenue participation with MVP Bridgeport receiving 65% of gross receipts over $775,000. The term of the lease is for 10 years.


The following is a summary of the Company'sresults of operations related to the surface parking lot in Ft. Lauderdale for the years ended December 31, 2019 and 2018:

  For the Years Ended December 13, 
  2019  2018 
Revenue
 
$
136,000
  
$
130,000
 
Expenses
  
(116,000
)
  
(167,000
)
Income (loss) from disposed assets, net of income taxes
 
$
20,000
  
$
(37,000
)

Memphis Court

On October 29, 2019, the Company, through an entity wholly owned by the Company, sold a surface parking lot and office building in Memphis for cash consideration of $675,000 to KNM Development Group, LLC, a third-party buyer.  The property was originally purchased in August 2013 by MVP REIT, Inc., and the property was later acquired by The Parking REIT, Inc. for approximately $1.0 million based upon the original purchase price and the allocation of the merger consideration for the merger of MVP REIT, Inc. and MVP REIT II, Inc. in December 2017.  The gain on sale is approximately $0.2.

  For the Years Ended December 31, 
  2019  2018 
Revenue
 
$
4,000
  
$
12,000
 
Expenses *
  
563,000
   
3,000
 
Income/(loss) from assets held for sale, net of income taxes
 
$
(559,000
)
 
$
9,000
 
*Includes $558,000 impairment for the year ended December 31, 2019.

2018

In May 2018, the Company entered into agreements with the Redevelopment Agency for the City of Milwaukee (“RACM”) and the Milwaukee Symphony (“Symphony”), regarding the MVP Milwaukee Wells surface parking lot (the “Lot”), wherein we acquired a parcel of land from RACM for $388,545 and sold a portion of the initial investments:Lot to the Symphony for $200,000. These transactions resulted in an addition of approximately 5,000 square feet to the Lot and will allow us to add an additional 53 parking spaces.

      Ownership 
Property NamePurchase Date Purchase Price  MVP REIT  MVP REIT II 
           
MVP Bridgeport Fairfield03/30/2016  792,000   90.00%  10.00%
Minneapolis City Parking01/06/2016  1,178,000   87.09%  12.91%
              
Total  $1,970,000         

Note L — Investment in Cost Method Investee – Held for Sale

Minneapolis Venture, LLC and Minneapolis City Parking, LLC

On January 6, 2016,June 14, 2018, the Company, along with MVP REIT closed on the purchase of two parking lots located in Minneapolis for a purchase price of approximately $15.5 million in cash plus closing costs.  The purchase was accomplished through Minneapolis Venture, LLC, a limited liability company (the "Minneapolis Venture")entities wholly owned jointly by the Company, sold two surface parking lots in St. Louis for $8.5 million to the Land Clearance For Redevelopment Authority of the City of St. Louis, a public body corporate and politic of the State of Missouri. Additionally, the purchaser agreed to pay 50% of the premium associated with defeasance of two CMBS loans which were cross-collateralized. The loans encumbered the following properties: MVP St. Louis Convention Plaza, MVP St. Louis Lucas, MVP KC Cherry Lot, MVP Indianapolis City Park Garage, and MVP REIT,Indianapolis Washington Street Lot. Subsequent to the defeasance of the loan that encumbered MVP Indianapolis City Park Garage and MVP Indianapolis Washington Street Lot, the Company added the two Indianapolis properties to the KeyBank Borrowing Base revolving credit facility, drawing approximately $8.7 million, of which approximately $1.6 million was used to pay down the Company owns 12.91%. The Company's shareKeyBank Working Capital revolving credit facility.

The following is a summary of the Company's portionresults of operations related to the two surface parking lots in St. Louis for the year ended December 31, 2018:

    
  For the Year Ended December 31, 2018 
Revenue
 
$
312,000
 
Expenses
  
(52,000
)
Income from disposed assets, net of income taxes
 
$
260,000
 

On August 8, 2018 the Company, through entities wholly owned by the Company, sold two surface parking lots in Kansas City for cash consideration of $4.0 million to Block 66, LLC, a third-party buyer. Approximately $2.9 million of the initial investments:proceeds were used to pay down the KeyBank Working Capital revolving credit facility. The properties were originally purchased in August 2013 and October 2015 by MVP I, for a combined total of $2.1 million. The properties were later acquired by The Parking REIT, Inc. for approximately $2.8 million based upon the allocation of the merger consideration for the merger of MVP I and the Company in December 2017.

      Ownership 
Property NamePurchase Date Purchase Price  MVP REIT  MVP REIT II 
           
MVP Minneapolis Venture01/06/2016 $822,000   87.09%  12.91%
              
Total  $822,000         
The following is a summary of the results of operations related to the two surface parking lots in Kansas City for the year ended December 31, 2018:

Note M — Line of Credit
    
  For the Year Ended December 31, 2018 
Revenue
 
$
107,000
 
Expenses
  
(24,000
)
Income from disposed assets, net of income taxes 
$
83,000
 

On October 5, 2016,2018, The Parking REIT, Inc., through an entity wholly owned by the Company, through its Operating Partnership,completed a partial sale of 36,155 square feet of land adjoining a surface parking lot in Minneapolis for cash consideration of $3.0 million to Camber Lodging, LLC and MVP REIT, (the "REITs") throughAmber Lodging, LLC, for a wholly owned subsidiary (the "Borrowers") entered intoproposed hotel development. The Company originally purchased the approximately 108,000 square foot parcel in January 2016 for $6.1 million.

The following is a credit agreement (the "Unsecured Credit Agreement") with KeyBank, National Association ('KeyBank") assummary of the administrative agent and KeyBank Capital Markets ("KeyBank Capital Markets") as the lead arranger.  Pursuantresults of operations related to the Unsecured Credit Agreement, the Borrowers were provided with a $30 million unsecured credit facility (the "Unsecured Credit Facility"), which may be increased up to $100 million, in minimum increments of $10 million.  The Unsecured Credit Facility has an initial term of two years, maturing on October 5, 2018, and may be extended for a one-year period if certain conditions are met and upon payment of an extension fee.  The Unsecured Credit Facility has an interest rate calculated based on LIBOR Rate plus 2.25% or Base Rate plus 1.25%, both as provided in the Unsecured Credit Agreement.  The Base Rate is calculated as the greater of (i) the KeyBank Prime rate or (ii) the Federal Funds rate plus ½ of 1%.  Payments under the Unsecured Credit Facility are interest only and are due on the first day of each quarter.  The obligationssold portion of the Borrowers ofsurface parking lot in Minneapolis for the Unsecured Credit Agreement are joint and several.  The REITs have entered into cross-indemnification provisions with respect to their joint and several obligations under the Unsecured Credit Agreement.year ended December 31, 2018:

    
  For the Year Ended December 31, 2018 
Revenue
 
$
--
 
Expenses
  
(270,000
)
Gain/(Loss) from disposed assets, net of income taxes 
$
(270,000
)


Note L — Notes Payable

2019

As of December 31, 2016,2019, the REITs had 13 properties listedprincipal balances on the linenotes payable are as follows:

Property Original Debt Amount  Monthly Payment  Balance as of 12/31/2019 LenderTerm Interest Rate Loan Maturity
MVP San Jose 88 Garage, LLC (5) $1,645,000  Interest Only  $2,500,000 Multiple1 Year  7.50%6/30/2020
MVP Cincinnati Race Street, LLC $2,550,000  Interest Only  $2,550,000 Multiple1 Year  7.50%4/19/2020
MVP Wildwood NJ Lot, LLC $1,000,000  Interest Only  $1,000,000 Tigges Construction Co.1 Year  7.50%4/29/2020
The Parking REIT D&O Insurance $1,681,000  $171,000  $679,000 MetaBank1 Year  3.60%4/30/2020
Minneapolis Venture $2,000,000  Interest Only  $2,000,000 Multiple1 Year  8.00%10/22/2020
MVP Raider Park Garage, LLC (4) $7,400,000  Interest Only  $7,400,000 LoanCore2 Year Variable 12/9/2020
MVP New Orleans Rampart, LLC (4) $5,300,000  Interest Only  $5,300,000 LoanCore2 Year Variable 12/9/2020
MVP Hawaii Marks Garage, LLC (4) $13,500,000  Interest Only  $13,500,000 LoanCore2 Year Variable 12/9/2020
MVP Milwaukee Wells, LLC (4) $2,700,000  Interest Only  $2,700,000 LoanCore2 Year Variable 12/9/2020
MVP Indianapolis City Park, LLC (4) $7,200,000  Interest Only  $7,200,000 LoanCore2 Year Variable 12/9/2020
MVP Indianapolis WA Street, LLC (4) $3,400,000  Interest Only  $3,400,000 LoanCore2 Year Variable 12/9/2020
MVP Memphis Poplar (3) $1,800,000  Interest Only  $1,800,000 LoanCore5 Year  5.38%3/6/2024
MVP St. Louis (3) $3,700,000  Interest Only  $3,700,000 LoanCore5 Year  5.38%3/6/2024
Mabley Place Garage, LLC $9,000,000  $44,000  $8,188,000 Barclays10 year  4.25%12/6/2024
MVP Houston Saks Garage, LLC $3,650,000  $20,000  $3,262,000 Barclays Bank PLC10 year  4.25%8/6/2025
Minneapolis City Parking, LLC $5,250,000  $29,000  $4,797,000 American National Insurance, of NY10 year  4.50%5/1/2026
MVP Bridgeport Fairfield Garage, LLC $4,400,000  $23,000  $4,025,000 FBL Financial Group, Inc.10 year  4.00%8/1/2026
West 9th Properties II, LLC
 $5,300,000  $30,000  $4,909,000 American National Insurance Co.10 year  4.50%11/1/2026
MVP Fort Worth Taylor, LLC $13,150,000  $73,000  $12,208,000 American National Insurance, of NY10 year  4.50%12/1/2026
MVP Detroit Center Garage, LLC $31,500,000  $194,000  $29,717,000 Bank of America10 year  5.52%2/1/2027
MVP St. Louis Washington, LLC (1) $1,380,000  $8,000  $1,362,000 KeyBank10 year *  4.90%5/1/2027
St. Paul Holiday Garage, LLC (1) $4,132,000  $24,000  $4,078,000 KeyBank10 year *  4.90%5/1/2027
Cleveland Lincoln Garage, LLC (1) $3,999,000  $23,000  $3,946,000 KeyBank10 year *  4.90%5/1/2027
MVP Denver Sherman, LLC (1) $286,000  $2,000  $282,000 KeyBank10 year *  4.90%5/1/2027
MVP Milwaukee Arena Lot, LLC (1) $2,142,000  $12,000  $2,114,000 KeyBank10 year *  4.90%5/1/2027
MVP Denver Sherman 1935, LLC (1) $762,000  $4,000  $752,000 KeyBank10 year *  4.90%5/1/2027
MVP Louisville Broadway Station, LLC (2) $1,682,000  Interest Only  $1,682,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
MVP Whitefront Garage, LLC (2) $6,454,000  Interest Only  $6,454,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
MVP Houston Preston Lot, LLC (2) $1,627,000  Interest Only  $1,627,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
MVP Houston San Jacinto Lot, LLC (2) $1,820,000  Interest Only  $1,820,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
St. Louis Broadway, LLC (2) $1,671,000  Interest Only  $1,671,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
St. Louis Seventh & Cerre, LLC (2) $2,057,000  Interest Only  $2,057,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
MVP Indianapolis Meridian Lot, LLC (2) $938,000  Interest Only  $938,000 Cantor Commercial Real Estate10 year **  5.03%5/6/2027
MVP Preferred Parking, LLC $11,330,000  Interest Only  $11,330,000 Key Bank10 year **  5.02%8/1/2027
Less unamortized loan issuance costs         $ (1,828,000)          
          $159,120,000           


(1)The Company issued a promissory note to KeyBank for $12.7 million secured by a pool of properties, including (i) MVP Denver Sherman, LLC, (ii) MVP Denver Sherman 1935, LLC, (iii) MVP Milwaukee Arena, LLC, (iv) MVP St. Louis Washington, LLC, (v) St. Paul Holiday Garage, LLC and (vi) Cleveland Lincoln Garage Owners, LLC.
(2)The Company issued a promissory note to Cantor Commercial Real Estate Lending, L.P. (“CCRE”) for $16.25 million secured by a pool of properties, including (i) MVP Indianapolis Meridian Lot, LLC, (ii) MVP Louisville Station Broadway, LLC, (iii) MVP White Front Garage Partners, LLC, (iv) MVP Houston Preston Lot, LLC, (v) MVP Houston San Jacinto Lot, LLC, (vi) St. Louis Broadway Group, LLC, and (vii) St. Louis Seventh & Cerre, LLC.
(3)On February 8, 2019, subsidiaries of the Company, consisting of MVP PF St. Louis 2013, LLC (“MVP St. Louis”), and MVP PF Memphis Poplar 2013 (“MVP Memphis Poplar”), LLC entered into a loan agreement, dated as of February 8, 2019, with LoanCore Capital Credit REIT LLC (“LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan MVP St. Louis and MVP Memphis Poplar $5.5 million to repay and discharge the outstanding KeyBank loan agreement. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by MVP St. Louis and MVP Memphis Poplar.
(4)On November 30, 2018, subsidiaries of the Company, consisting of MVP Hawaii Marks Garage, LLC, MVP Indianapolis City Park Garage, LLC, MVP Indianapolis Washington Street Lot, LLC, MVP New Orleans Rampart, LLC, MVP Raider Park Garage, LLC, and MVP Milwaukee Wells LLC (the “Borrowers”) entered into a loan agreement, dated as of November 30, 2018 (the “Loan Agreement”), with LoanCore Capital Credit REIT LLC (the “LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan the Borrowers $39.5 million to repay and discharge the outstanding KeyBank Revolving Credit Facility. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by the Borrowers (the “Properties”). The loan bears interest at a floating rate equal to the sum of one-month LIBOR plus 3.65%, subject to a LIBOR minimum of 1.95%. Additionally, the Borrowers were required to purchase an Interest Rate Protection Agreement which caps its maximum LIBOR at 3.50% for the duration of the loan. Payments are interest-only for the duration of the loan, with the $39.5 million principal repayment due in a balloon payment due on December 9, 2020, with an option to extend the term until December 9, 2021 subject to certain conditions and payment obligations. The Borrowers have the right to prepay all or any part of the loan, subject to payment of any applicable Spread Maintenance Premium and Exit Fee (as defined in the Loan Agreement). The loan is also subject to mandatory prepayment upon certain events of Insured Casualty or Condemnation (as defined in the Loan Agreement). The Borrowers made customary representations and warranties to LoanCore and agreed to maintain certain covenants under the Loan Agreement, including but not limited to, covenants involving their existence; property taxes and other charges; access to properties, repairs, maintenance and alterations; performance of other agreements; environmental matters; title to properties; leases; estoppel statements; management of the Properties; special purpose bankruptcy remote entity status; change in business or operation of the Properties; debt cancellation; affiliate transactions; indebtedness of the Borrowers limited to Permitted Indebtedness (as defined in the Loan Agreement); ground lease reserve relating to MVP New Orleans’ Property; property cash flow allocation; liens on the Properties; ERISA matters; approval of major contracts; payments upon a sale of a Property; and insurance, notice and reporting obligations as set forth in the loan agreement. The Loan Agreement contains customary events of default and indemnification obligations. The loan proceeds were used to repay and discharge the KeyBank Credit Agreement, dated as of December 29, 2017, as amended, per the terms outlined in the third amendment to the Credit Agreement dated September 28, 2018, as previously filed on Form 8-K on October 2, 2018 and incorporated herein by reference.
(5)Loan in the amount of $2,500,000 was originated on June 5, 2018 of which $1,645,000 was funded.  Remaining balance available of $855,000 was funded on December 11, 2018.

 * 2 Year Interest Only
** 10 Year Interest Only


The following table shows notes payable paid in full during the year ended December 31, 2016, we had accrued approximately $56,000 in2019.

Property Original Debt Amount  Monthly Payment  Balance as of 12/31/2019 LenderTerm Interest Rate Loan Maturity
MVP PF Ft. Lauderdale 2013, LLC
 
$
2,000,000
   
--
   
--
 Multiple1 Year  
8.00
%
6/24/2020
MVP PF Ft. Lauderdale 2013, LLC (1)
 
$
4,300,000
  
$
25,000
   
--
 Key Bank5 Year  
4.94
%
2/1/2019
The Parking REIT D&O Insurance
 
$
390,000
  
$
29,000
   
--
 First Insurance Funding1 Year  
3.70
%
4/30/2019

(1)Secured by four properties, including (i) MVP PF Ft. Lauderdale 2013, LLC, (ii) MVP PF Memphis Court 2013, LLC, (iii) MVP PF Memphis Poplar 2013, LLC and (iv) MVP PF St. Louis 2013, LLC

Total interest expense amortized approximately $37,000 in loan fees and $6,000 in unused line fees associated with our draw.  In addition, as ofincurred for the years ended December 31, 2016,2019, was approximately $8.6 million. Total loan amortization cost for the REITs had an available draw of approximate $12.7year months ended December 31, 2019, was approximately $0.9 million.  On January 11, 2017, the REITs use approximately $12.5 million from the line of credit to acquire the Detroit Center Garage described in Note R – Subsequent Events.

Note N — Notes Payable

In November 2016, we financed a 12-month insurance policy for Directors and Officers liability, with an annual interest rate of 3.8%.  The agreement required a down payment of $25,000 and nine monthly payments of $14,000 beginning on November 3, 2016.  As of December 31, 2016,2019, future principal payments on notes payable are as follows:

2020
 
$
50,183,000
 
2021
  
2,058,000
 
2022
  
2,252,000
 
2023
  
2,498,000
 
2024
  
15,283,000
 
Thereafter
  
88,674,000
 
Less unamortized loan issuance costs
  
(1,828,000
)
Total 
$
159,120,000
 

2018

As of December 31, 2018, the outstanding balanceprincipal balances on notes payable are as follows:

Property Original Debt Amount  Monthly Payment  Balance as of 12/31/2018 LenderTerm Interest Rate Loan Maturity
MVP PF Ft. Lauderdale 2013, LLC (3)
 
$
4,300,000
  
$
25,000
  
$
3,830,000
 KeyBank5 Year  
4.94
%
2/1/2019
MVP Cincinnati Race Street, LLC
 
$
2,550,000
  Interest Only  
$
2,550,000
 Multiple1 Year  
7.50
%
3/25/2019
MVP Wildwood NJ Lot, LLC
 
$
1,000,000
  Interest Only  
$
1,000,000
 Tigges Construction Co.1 Year  
7.50
%
4/1/2019
The Parking REIT D&O Insurance
 
$
390,000
  
$
28,000
  
$
30,000
 First Insurance Funding1 Year  
3.70
%
4/30/2019
MVP San Jose 88 Garage, LLC(5)
 
$
1,645,000
  Interest Only  
$
2,500,000
 Multiple1 Year  
7.50
%
6/3/2019
MVP Raider Park Garage, LLC (4)
 
$
7,400,000
  Interest Only  
$
7,400,000
 LoanCore2 Year Variable 12/9/2020
MVP New Orleans Rampart, LLC (4)
 
$
5,300,000
  Interest Only  
$
5,300,000
 LoanCore2 Year Variable 12/9/2020
MVP Hawaii Marks Garage, LLC (4)
 
$
13,500,000
  Interest Only  
$
13,500,000
 LoanCore2 Year Variable 12/9/2020
MVP Milwaukee Wells, LLC (4)
 
$
2,700,000
  Interest Only  
$
2,700,000
 LoanCore2 Year Variable 12/9/2020
MVP Indianapolis City Park, LLC (4)
 
$
7,200,000
  Interest Only  
$
7,200,000
 LoanCore2 Year Variable 12/9/2020
MVP Indianapolis WA Street, LLC (4)
 
$
3,400,000
  Interest Only  
$
3,400,000
 LoanCore2 Year Variable 12/9/2020
Mabley Place Garage, LLC
 
$
9,000,000
  
$
44,000
  
$
8,362,000
 Barclays10 year  
4.25
%
12/6/2024

-82-


During October 2016, Cleveland West 9th and 33740 Crown Colony issued a promissory note to American National Insurance Company

MVP Houston Saks Garage, LLC
 
$
3,650,000
  
$
20,000
  
$
3,357,000
 Barclays Bank PLC10 year  
4.25
%
8/6/2025
Minneapolis City Parking, LLC
 
$
5,250,000
  
$
29,000
  
$
4,928,000
 American National Insurance, of NY10 year  
4.50
%
5/1/2026
MVP Bridgeport Fairfield Garage, LLC
 
$
4,400,000
  
$
23,000
  
$
4,140,000
 FBL Financial Group, Inc.10 year  
4.00
%
8/1/2026
West 9th Properties II, LLC
 
$
5,300,000
  
$
30,000
  
$
5,039,000
 American National Insurance Co.10 year  
4.50
%
11/1/2026
MVP Fort Worth Taylor, LLC
 
$
13,150,000
  
$
73,000
  
$
12,528,000
 American National Insurance, of NY10 year  
4.50
%
12/1/2026
MVP Detroit Center Garage, LLC
 
$
31,500,000
  
$
194,000
  
$
30,360,000
 Bank of America10 year  
5.52
%
2/1/2027
MVP St Louis Washington, LLC (1)
 
$
1,380,000
  Interest Only  
$
1,380,000
 KeyBank10 year *  
4.90
%
5/1/2027
St Paul Holiday Garage, LLC (1)
 
$
4,132,000
  
Interest Only
  
$
4,132,000
 KeyBank10 year *  
4.90
%
5/1/2027
Cleveland Lincoln Garage, LLC (1)
 
$
3,999,000
  
Interest Only
  
$
3,999,000
 KeyBank10 year *  
4.90
%
5/1/2027
MVP Denver Sherman, LLC (1)
 
$
286,000
  Interest Only  
$
286,000
 KeyBank10 year *  
4.90
%
5/1/2027
MVP Milwaukee Arena Lot, LLC (1)
 
$
2,142,000
  Interest Only  
$
2,142,000
 KeyBank10 year *  
4.90
%
5/1/2027
MVP Denver Sherman 1935, LLC (1)
 
$
762,000
  Interest Only  
$
762,000
 KeyBank10 year *  
4.90
%
5/1/2027
MVP Louisville Broadway Station, LLC (2)
 
$
1,682,000
  Interest Only  
$
1,682,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
MVP Whitefront Garage, LLC (2)
 
$
6,454,000
  Interest Only  
$
6,454,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
MVP Houston Preston Lot, LLC (2)
 
$
1,627,000
  Interest Only  
$
1,627,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
MVP Houston San Jacinto Lot, LLC (2)
 
$
1,820,000
  Interest Only  
$
1,820,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
St. Louis Broadway, LLC (2)
 
$
1,671,000
  Interest Only  
$
1,671,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
St. Louis Seventh & Cerre, LLC (2)
 
$
2,057,000
  Interest Only  
$
2,057,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
MVP Indianapolis Meridian Lot, LLC (2)
 
$
938,000
  Interest Only  
$
938,000
 Cantor Commercial Real Estate10 year **  
5.03
%
5/6/2027
MVP Preferred Parking, LLC
 
$
11,330,000
  Interest Only  
$
11,330,000
 Key Bank10 year **  
5.02
%
8/1/2027
Less unamortized loan issuance costs
         
$ 
(2,443,000
)
 
 
    
    
          
$
155,961,000
           


(1)The Company issued a promissory note to KeyBank for $12.7 million secured by a pool of properties, including (i) MVP Denver Sherman, LLC, (ii) MVP Denver Sherman 1935, LLC, (iii) MVP Milwaukee Arena, LLC, (iv) MVP St. Louis Washington, LLC, (v) St Paul Holiday Garage, LLC and (vi) Cleveland Lincoln Garage Owners, LLC.
(2)The Company issued a promissory note to Cantor Commercial Real Estate Lending, L.P. (“CCRE”) for $16.25 million secured by a pool of properties, including (i) MVP Indianapolis Meridian Lot, LLC, (ii) MVP Louisville Station Broadway, LLC, (iii) MVP White Front Garage Partners, LLC, (iv) MVP Houston Preston Lot, LLC, (v) MVP Houston San Jacinto Lot, LLC, (vi) St. Louis Broadway Group, LLC, and (vii) St. Louis Seventh & Cerre, LLC.
(3)Secured by four properties, including (i) MVP PF Ft. Lauderdale 2013, LLC, (ii) MVP PF Memphis Court 2013, LLC, (iii) MVP PF Memphis Poplar 2013, LLC and (iv) MVP PF St. Louis 2013, LLC).

(4)On November 30, 2018, subsidiaries of the Company, consisting of MVP Hawaii Marks Garage, LLC, MVP Indianapolis City Park Garage, LLC, MVP Indianapolis Washington Street Lot, LLC, MVP New Orleans Rampart, LLC, MVP Raider Park Garage, LLC, and MVP Milwaukee Wells LLC (the “Borrowers”) entered into a loan agreement, dated as of November 30, 2018 (the “Loan Agreement”), with LoanCore Capital Credit REIT LLC (the “LoanCore”). Under the terms of the Loan Agreement, LoanCore agreed to loan the Borrowers $39.5 million to repay and discharge the outstanding KeyBank Revolving Credit Facility. The loan is secured by a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing on each of the properties owned by the Borrowers (the “Properties”). The loan bears interest at a floating rate equal to the sum of one-month LIBOR plus 3.65%, subject to a LIBOR minimum of 1.95%. Additionally, the Borrowers were required to purchase an Interest Rate Protection Agreement which caps its maximum LIBOR at 3.50% for the duration of the loan. Payments are interest-only for the duration of the loan, with the $39.5 million principal repayment due in a balloon payment due on December 9, 2020, with an option to extend the term until December 9, 2021 subject to certain conditions and payment obligations. The Borrowers have the right to prepay all or any part of the loan, subject to payment of any applicable Spread Maintenance Premium and Exit Fee (as defined in the Loan Agreement). The loan is also subject to mandatory prepayment upon certain events of Insured Casualty or Condemnation (as defined in the Loan Agreement). The Borrowers made customary representations and warranties to LoanCore and agreed to maintain certain covenants under the Loan Agreement, including but not limited to, covenants involving their existence; property taxes and other charges; access to properties, repairs, maintenance and alterations; performance of other agreements; environmental matters; title to properties; leases; estoppel statements; management of the Properties; special purpose bankruptcy remote entity status; change in business or operation of the Properties; debt cancellation; affiliate transactions; indebtedness of the Borrowers limited to Permitted Indebtedness (as defined in the Loan Agreement); ground lease reserve relating to MVP New Orleans’ Property; property cash flow allocation; liens on the Properties; ERISA matters; approval of major contracts; payments upon a sale of a Property; and insurance, notice and reporting obligations as set forth in the loan agreement. The Loan Agreement contains customary events of default and indemnification obligations. The loan proceeds were used to repay and discharge the KeyBank Credit Agreement, dated as of December 29, 2017, as amended, per the terms outlined in the third amendment to the Credit Agreement dated September 28, 2018, as previously filed on Form 8-K on October 2, 2018 and incorporated herein by reference.
(5)Loan in the amount of $2,500,000 was originated on June 5, 2018 of which $1,645,000 was funded.  Remaining balance available of $855,000 was funded on December 11, 2018.

 * 2 Year Interest Only
** 10 Year Interest Only

The following table shows notes payable that had been paid in Cleveland, OH, of which we own a 49% interest in these entities.  The loan has a term of 10 years, has an annual interest rate of 4.5% and is payable in monthly installment payments of principal and interest totaling approximately $30,000, maturing in October 2026.full during the year ended December 31, 2018.

Property Original Debt Amount  Monthly Payment  Balance as of 12/31/2018 LenderTerm Interest Rate Loan Maturity
St. Louis Lucas (1)(3)
 
$
3,490,000
  
$
20,000
   
--
 Key Bank10 year  
4.59
%
2/1/2026
Indianapolis Garage (2)(3)
 
$
8,200,000
  
$
46,000
   
--
 Key Bank10 year  
4.59
%
2/1/2026

(1)
Secured by three properties, including (i) MVP St. Louis Convention, (ii) MVP St. Louis Lucas and (iii) MVP KC Cherry.
(2)
Secured by two properties, including (i) MVP Indianapolis City Park and (ii) MVP Indianapolis Washington Street.
(3)
Loans were defeased through the sale of St Louis Lucas and Indianapolis Garage loans. MVP Indianapolis City Park and MVP Indianapolis Washington Street were added to the KeyBank Borrowing Base revolving credit facility, drawing approximately $8.7 million, of which approximately $1.6 million was used to pay down the KeyBank Working Capital revolving credit facility.

Total interest expense incurred for the year ended December 31, 20162018, was $39,000.approximately $7.8 million. Total loan amortization cost for the year ended December 31, 20162018, was $2,800.  The Company did not have any notes payable during the period from May 4, 2015 (Inception) through December 31, 2015.approximately $1.7 million.


As of December 31, 2016,2018, future principal payments on the notes payable are as follows:

2017 $231,000 
2018  124,000 
2019  129,000  
$
11,691,000
 
2020  135,000  
41,454,000
 
2021  142,000  
2,058,000
 
2022
 
2,252,000
 
2023
 
2,499,000
 
Thereafter  4,632,000  
98,450,000
 
Less unamortized loan issuance costs
  
(2,443,000
)
Total $5,393,000  
$
155,961,000
 

Principal payments table amount does not reflect
Note M — Fair Value

A fair value measurement is based on the unamortized loan issuance cost of $75,000 as of December 31, 2016.

As of December 31, 2016, the principal balances on notes payableassumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:
PropertyLocationCurrent Loan BalanceInterest RateLoan Maturity
D&O FinancingN/A$       112,0003.81%8/3/2017
West 9th Properties II, LLC
Cleveland, OH5,281,0004.50%10/25/2026
 Less unamortized loan issuance costs(75,000)  
 Total$    5,318,000  
Note O — Fair Value

As of December 31, 2016, the Company had no financial assets and liabilities utilizing Level 1 or Level 2.  The Company had assets and liabilities utilizing Level 3 inputs including investments in equity and cost method investees.
1.Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
2.Level 2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.
3.Level 3 – Model-derived valuations with unobservable inputs.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Accordingly, our degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.  In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability will be classified in its entiretyfor disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the measurementfair value measurement.

The Company's financial instruments include cash and cash equivalents, restricted cash, accounts payable and accrued expenses. Due to their short maturities, the carrying amounts of these assets and liabilities approximate fair value.

FairAssets and liabilities measured at fair value Level 3 on a non-recurring basis may include Assets Held for Sale.

Note N – Investment In DST

On May 31, 2017, the Company, through a wholly owned subsidiary of its Operating Partnership, purchased a 51.0% beneficial interest in MVP St. Louis Cardinal Lot, DST, a Delaware Statutory Trust (“MVP St. Louis”), for approximately $2.8 million. MVP St. Louis is a market-based measure considered from the perspectiveowner of a market participant who holds2.56-acre, 376-vehicle commercial parking lot located at 500 South Broadway, St. Louis, Missouri 63103, known as the asset or owesCardinal Lot (the “Property”), which is adjacent to Busch Stadium, the liability rather thanhome of the St. Louis Cardinals major league baseball team. The Property was purchased by MVP St. Louis from an entity-specific measure.  Therefore, even when market assumptions are not readily available, our own assumptions areunaffiliated seller for a purchase price of $11,350,000, plus payment of closing costs, financing costs, and related transactional costs.

Concurrently with the acquisition of the Property, MVP St. Louis obtained a first mortgage loan from Cantor Commercial Real Estate Lending, L.P (“St. Louis Lender”), in the principal amount of $6,000,000, with a 10-year, interest-only term at a fixed interest rate of 5.25%, resulting in an annual debt service payment of $315,000 (the “St. Louis Loan”). MVP St. Louis used the Company’s investment to fund a portion of the purchase price for the Property. The remaining equity portion was funded through short-term investments by VRM II, an affiliate of the former Advisor, pending the private placements of additional beneficial interest in MVP St. Louis exempt from registration under the Securities Act. VRM II and Michael V. Shustek, the Company’s Chairman and Chief Executive Officer, provided non-recourse carveout guaranties of the loan and environmental indemnities of St. Louis Lender.


setAlso, concurrently with the acquisition of the Property, MVP St. Louis, as landlord, entered into a 10-year master lease (the “St. Louis Master Lease”), with MVP St. Louis Cardinal Lot Master Tenant, LLC, an affiliate of MVP Realty, as tenant, (the “St. Louis Master Tenant”). St. Louis Master Tenant, in turn, concurrently entered into a 10-year sublease with Premier Parking of Missouri, LLC. The St. Louis Master Lease provides for annual rent payable monthly to reflect those that market participants would useMVP St. Louis, consisting of base rent in pricingan amount to pay debt service on the asset or liability atSt. Louis Loan, stated rent of $414,000 and potential bonus rent equal to a share of the measurement date.revenues payable under the sublease in excess of a threshold. The Company uses prices and inputs that are current aswill be entitled to its proportionate share of the measurement date, including during periods of market dislocation, such as the recent illiquidity in the auction rate securities market.  In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments.  This condition may cause our financial instruments to be reclassified from Level 1 to Level 2 or Level 3 and/or vice versa.

Our valuation techniques will be consistent with at least one of the three possible approaches: the market approach, income approach and/or cost approach.  Our Level 1 inputs arerent payments based on its ownership interest. Under the market approachSt. Louis Master Lease, MVP St. Louis is responsible for capital expenditures and consist primarily of quoted pricesthe St. Louis Master Tenant is responsible for identical items on active securities exchanges.  Our Level 2 inputs are primarily based ontaxes, insurance and operating expenses. For the market approach of quoted prices in active markets or current transactions in inactive markets foryears ended December 31, 2019 and 2018, income earned was $218,000 and $205,000, respectively.  For the same or similar collateral that do not require significant adjustment based on unobservable inputs.  Our Level 3 inputs are primarily based on the incomeyears ended December 31, 2019 and cost approaches, specifically, discounted cash flow analyses, which utilize significant inputs based on our estimates2018, distributions received were $203,000 and assumptions.$205,000, respectively.

The following table presentsCompany conducted an analysis and concluded that the valuation51% investment in the DST should not be consolidated. As a DST, the entity is subject to the Variable Interest Entity (“VIE”) Model under ASC 810-10.

As stated in ASC 810: “A controlling financial interest in the VIE model requires both of our financial assetsthe following:

a. The power to direct the activities that most significantly impact the VIE’s economic performance
b. The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.”

As a VIE, the DST is governed in a manner similar to a limited partnership (i.e., there are trustees and liabilitiesthere is no board) and the Company, as a beneficial owner, lacks the power though voting rights or otherwise to direct the activities of December 31, 2016 measured at fair value onthe DST that most significantly impact the entity’s economic performance. Specifically, the beneficial interest owners do not have the rights set forth in ASC 810-10-15-14(b)(1)(ii) – the beneficial owners can only remove the trustees if the trustees have engaged in fraud or gross negligence with respect to the trust and the beneficial owners have no substantive participating rights over the trustees.

The former Advisor was the advisor to the Company. The Company is controlled by its independent board of directors and its shareholders. In addition, the former Advisor is the 100% direct/indirect owner of the MVP Parking DST, LLC (“DST Sponsor”), the MVP St. Louis Cardinal Lot Signature Trustee, LLC (“Signature Trustee”) and MVP St. Louis Cardinal Lot Master Tenant, LLC (the “Master Tenant”), who have no direct or indirect ownership in the Company. The Signature Trustee and the Master Tenant can direct the most significant activities of the DST.

The former Advisor controls and consolidates the Signature Trustee, the Master Tenant, and the DST Sponsor. The Company concluded the Master Tenant/property management agreement exposes the Master Tenant to funding operating losses of the Property. As such, that agreement should be considered a recurring basisvariable interest in DST (ASC 810-10-55-37 and 810-10-55-37C). Accordingly, the former Advisor has a variable interest in the DST (through the master tenant/property manager) and has power over the significant activities of the DST (through the Signature Trustee and the master tenant/property manager). Accordingly, the Company believes that the Master Tenant is the primary beneficiary of the DST, which is ultimately owned and controlled by input levels:the former Advisor. In addition, the Company does not have the power to direct or change the activities of the Trust and shares income and losses pari passu with the other owners. As such, the Company accounts for its investment under the equity method and does not consolidate its investment in the DST.


  Quoted Prices in Active Markets For Identical Assets (Level 1)  Significant Other Observable Inputs (Level 2)  Significant Unobservable Inputs (Level 3)  Balance at 12/31/16  Carrying Value on Balance Sheet at 12/31/16 
Assets
Investment in equity method investee
 $--  $--  $1,150,000  $1,150,000  $1,150,000 
Investment in cost method investee – held for sale     $--  $836,000  $836,000  $836,000 
Investment in cost method investee $--  $--  $936,000  $936,000  $936,000 
Summarized Balance Sheets—Unconsolidated Real Estate Affiliates—Equity Method Investments

  December 31, 2019  December 31, 2018 
  (Unaudited)  (Unaudited) 
ASSETS 
Investments in real estate and fixed assets
 
$
11,512,000
  
$
11,512,000
 
Cash
  
28,000
   
32,000
 
Cash – restricted
  
24,000
   
15,000
 
Accounts receivable
  
--
   
141,000
 
Prepaid expenses
  
10,000
   
8,000
 
Total assets 
$
11,574,000
  
$
11,708,000
 
LIABILITIES AND EQUITY 
Liabilities        
Notes payable, net of unamortized loan issuance costs of approximately $62,000 and $65,000 as of December 31, 2019 and 2018, respectively
 
$
5,954,000
  
$
5,945,000
 
Accounts payable and accrued liabilities  
93,000
   
63,000
 
Due to related party  
57,000
   
181,000
 
Total liabilities  
6,104,000
   
6,189,000
 
Equity        
Member’s equity  
6,129,000
   
6,129,000
 
  Offering costs
  
(574,000
)
  
(574,000
)
  Accumulated earnings
  
952,000
   
606,000
 
  Distributions to members
  
(1,037,000
)
  
(642,000
)
Total equity  
5,470,000
   
5,519,000
 
Total liabilities and equity 
$
11,574,000
  
$
11,708,000
 

Summarized Statements of Operations—Unconsolidated Real Estate Affiliates—Equity Method Investments

  
For the Year Ended
December 31, 2019
  
For the Year Ended
December 31, 2018
 
Revenue
 
$
738,000
  
$
729,000
 
Expenses
  
(392,000
)
  
(348,000
)
  Net income
 
$
346,000
  
$
381,000
 

Note O — Investment in Equity Method Investee

2019

During the year ended December 31, 2019, the Company did not have any investments in an equity method investee.

2018

The Company did not have any investment in an equity method investee for the year ended December 31, 2018.

Prior to the Merger, the Company held an investment in an equity method investee in the following companies. Upon completion of the Merger on December 15, 2017 these properties were fully consolidated with the Company.


Note P — Assets held for saleLegal

AsFederal Action

On March 12, 2019, stockholder SIPDA Revocable Trust (“SIPDA”) filed a purported class action complaint in the United States District Court for the District of DecemberNevada, against the Company and certain of its current and former officers and directors. SIPDA filed an Amended Complaint on October 11, 2019. The Amended Complaint purports to assert class action claims on behalf of all public shareholders of the Company and MVP I between August 11, 2017 and April 1, 2019 in connection with the (i) August 2017 proxy statements filed with the SEC to obtain shareholder approval for the merger of the Company and MVP I (the “proxy statements”), and (ii) August 2018 proxy statement filed with the SEC to solicit proxies for the election of certain directors (the “2018 proxy statement”). The Amended Complaint alleges, among other things, that the 2017 proxy statements failed to disclose that two major reasons for the merger and certain charter amendments implemented in connection therewith were (i) to facilitate the execution of an amended advisory agreement that allegedly was designed to benefit Mr. Shustek financially in the event of an internalization and (ii) to give Mr. Shustek the ability to cause the Company to internalize based on terms set forth in the amended advisory agreement. The Amended Complaint further alleges, among other things, that the 2018 proxy statement failed to disclose the Company’s purported plan to internalize its management function.

The Amended Complaint alleges, among other things, (i) that all defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, by disseminating proxy statements that allegedly contain false and misleading statements or omit to state material facts; (ii) that the director defendants violated Section 20(a) of the Exchange Act; and (iii) that the director defendants breached their fiduciary duties to the members of the class and to the Company.

The Amended Complaint seeks, among other things, unspecified damages; declaratory relief; and the payment of reasonable attorneys' fees, accountants' and experts' fees, costs and expenses.

On June 13, 2019, the court granted SIPDA’s motion for Appointment as Lead Plaintiff. The litigation is still at a preliminary stage.   On January 9, 2020, the Company and the Board of Directors moved to dismiss the Amended Complaint.  The Company and the Board of Directors have reviewed the allegations in the Amended Complaint and believe the claims asserted against them in the Amended Complaint are without merit and intend to vigorously defend this action.

Maryland Actions

On May 31, 2016, we had2019, and June 27, 2019, alleged stockholders filed class action lawsuits alleging direct and derivative claims against the Company, certain of our officers and directors, MVP Realty Advisors, Vestin Realty Mortgage I, and Vestin Realty Mortgage II in the Circuit Court for Baltimore City, captioned Arthur Magowski v. The Parking REIT, Inc., et. al, No. 24-C-19003125 (filed on May 31, 2019) (the “Magowski Complaint”) and Michelle Barene v. The Parking REIT, Inc., et. al, No. 24-C-19003527 (filed on June 27, 2019) (the “Barene Complaint”).

The Magowski Complaint asserts purportedly direct claims on behalf of all stockholders (other than the defendants and persons or entities related to or affiliated with any defendant) for breach of fiduciary duty and unjust enrichment arising from the Company’s decision to internalize its advisory function. In this Complaint, Plaintiff Magowski asserts that the stockholders have allegedly been directly injured by the internalization and related transactions. The Barene Complaint asserts both direct and derivative claims for breach of fiduciary duty arising from substantially similar allegations as those contained in the Magowski Complaint. The purportedly direct claims are asserted on behalf of the same class of stockholder as the purportedly direct claims in the Magowski Complaint, and the derivative claims in the Barene Complaint are asserted on behalf of the Company.

On September 12 and 16, 2019, the defendants filed motions to dismiss the Magowski and Barene complaints, respectively. The Magowski and Barene Complaints seek, among other things, damages; declaratory relief; equitable relief to reverse and enjoin the internalization transaction; and the payment of reasonable attorneys' fees, accountants' and experts' fees, costs and expenses. The actions are at a 100% ownership interestpreliminary stage. The Company and the board of directors intend to vigorously defend against these lawsuits.


The Magowski Complaint also previewed that a stockholder demand would be made on the Board to take action with respect to claims belonging to the Company for the alleged injury to the Company. On June 19, 2019, Magowski submitted a formal demand letter to the Board asserting the same alleged wrongdoing as alleged in the Magowski Complaint and demanding that the Board investigate the alleged wrongdoing and take action to remedy the alleged injury to the Company. The demand includes that claims be initiated against the same defendants as are named in the Magowski Complaint. In response to this stockholder demand letter, on July 16, 2019, the Board established a demand review committee of one property that was listed as heldindependent director to investigate the allegations of wrongdoing made in the letter and to make a recommendation to the Board for sale,a response to the letter.  On September 27, 2019, the Board replaced the demand review committee with a carrying valuespecial litigation committee. The special litigation committee is responsible for investigating the allegations of approximately $700,000.  This property was acquired on November 22, 2016.  This propertywrongdoing made in the letter and making a final determination regarding the response for the Company to the demand. The work of the special litigation committee is accounted for at the fair value based on an appraisal.  During March 2017, Houston Jefferson entered into a PSA to sell the property "as is" to a third party for approximately $2.0 million.  on-going.

SEC Investigation

The followingSecurities and Exchange Commission (“SEC”) is conducting an investigation relating to the Parking REIT. In June 2019, the SEC issued subpoenas to the Company and its chairman and chief executive officer Michael V. Shustek. In connection with each subpoena, the SEC stated that: “this investigation is a summarynon-public, fact-finding inquiry. We are trying to determine whether there have been any violations of the resultsfederal securities laws. The investigation and the subpoena do not mean that we have concluded that the recipient of operations relatedthe subpoena or anyone else has violated the law. Also, the investigation does not mean that we have a negative opinion of any person, entity or security.” The Company has received additional requests for information and expects to receive more in the assets heldfuture. The Company and Mr. Shustek intend to cooperate fully with the SEC in this matter. However, the Company cannot predict the outcome or the duration of the SEC investigation or any other legal proceedings or any enforcement actions or other remedies, if any, that may be imposed on Mr. Shustek, the Company or any other entity arising out of the SEC investigation.

Nasdaq Notification Regarding Company’s Common Stock

Further, Nasdaq has informed the Company that (i) the Company’s common stock will not be approved for sale flisting currently on the Nasdaq Global Market, and (ii) it is highly unlikely that the Company’s common stock would be approved for listing while the SEC investigation is ongoing. There can be no assurance that the Company’s common stock will ever be approved for listing on the Nasdaq Global Market or period from November 22, 2016 (acquisition)any other stock exchange, even if the SEC investigation referred to December 31, 2016:
 For period of November 22, 2016 (acquisition) to December 31, 2016 
   
Revenue $5,000 
Expenses  (22,000)
Net loss $(19,000)
above is completed and no wrongdoing is found and no action is taken in connection therewith against the Company, Mr. Shustek or any other person.

Note Q — Income TaxTaxes and Critical Accounting Policy

Income Taxes and Distributions

As a REIT, itthe Company generally will not be subject to federal income tax on taxable income distributed to the stockholders. In 2016,2019, the Company has no distributable taxable income. In addition, the Company does not have any subsidiaries elected to be treated as TRSs pursuant to the Code to participate in services that would otherwise be considered impermissible for REITSREITs and are subject to federal and state income tax at regular corporate tax rates.


Tax Treatment of Distributions

For federal income tax purposes, distributions to stockholders are characterized as ordinary income, capital gain distributions, or nontaxable distributions. Nontaxable distributions will reduce U.S. stockholders' basis (but not below zero) in their shares. The income tax treatment for distributions reportable for the years ended December 31, 2019 and 2018 is as follows:

  2019  2018 
Return of Capital - Preferred
 
$
3,001,000
  
$
2,709,000
 
Capital Gain
  
--
   
--
 
Return of Capital - Common
  
--
   
1,224,000
 
 
 
$
3,001,000
  
$
3,933,000
 


Note R —Preferred Stock and Warrants

The Company reviewed the relevant ASC’s, specifically ASC 480 – Distinguishing Liabilities from Equity and ASC 815 – Derivatives and Hedging, in connection with the presentation of the Series A and Series 1 preferred stock. Below is a summary of the Company’s preferred stock offerings.

Series A Preferred Stock

On November 1, 2016, the Company commenced an offering of up to $50 million in shares of the Company’s Series A Convertible Redeemable Preferred Stock (“Series A”), par value $0.0001 per share, together with warrants to acquire the Company’s common stock, in a Regulation D 506(c) private placement to accredited investors. In connection with the private placement, on October 27, 2016, the Company filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary to the charter of the Company classifying and designating 50,000 shares of Series A Convertible Redeemable Preferred Stock. The Company closed the offering on March 24, 2017 and raised approximately $2.5 million, net of offering costs, in the Series A private placements.

The holders of the Series A Preferred Stock are entitled to receive, when and as authorized by the board of directors and declared by the Company out of funds legally available for the payment of dividends, cash dividends at the rate of 5.75% per annum of the initial stated value of $1,000 per share. Since a Listing Event, as defined in the charter, did not occur by March 31, 2018, the cash dividend rate has been increased to 7.50%, until a Listing Event at which time, the annual dividend rate will be reduced to 5.75% of the Stated Value. Based on the number of Series A shares outstanding at December 31, 2019, the increased dividend rate costs the Company approximately $13,000 more per quarter in Series A dividends.

Subject to the Company’s redemption rights as described below, each Series A share will be convertible into shares of the Company’s common stock, at the election of the holder thereof by written notice to the Company (each, a “Series A Conversion Notice”) containing the information required by the charter, at any time beginning upon the earlier of (i) 90 days after the occurrence of a Listing Event or (ii) the second anniversary of the final closing of the Series A offering (whether or not a Listing Event has occurred). Each Series A share will convert into a number of shares of the Company’s common stock determined by dividing (i) the sum of (A) 100% of the Stated Value, initially $1,000, plus (B) any accrued but unpaid dividends to, but not including, the date of conversion, by (ii) the conversion price for each share of the Company’s common stock (the “Series A Conversion Price”) determined as follows:

Provided there has been a Listing Event, if a Series A Conversion Notice with respect to any Series A share is received on or prior to the day immediately preceding the first anniversary of the issuance of such share, the Series A Conversion Price will be equal to 110% of the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Series A Conversion Notice.
Provided there has been a Listing Event, if a Series A Conversion Notice with respect to any Series A share is received after the first anniversary of the issuance of such share, the Series A Conversion Price will be equal to the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Series A Conversion Notice.
If a Series A Conversion Notice with respect to any Series A share is received on or after the second anniversary of the final closing of the Series A offering, and at the time of receipt of such Series A Conversion Notice, a Listing Event has not occurred, the Series A Conversion Price will be equal to 100% of the Company’s net asset value per share.

If the Amended Charter (as hereinafter defined) becomes effective, the date by which holders of Series A must provide notice of conversion will be changed from the day immediately preceding the first anniversary of the issuance of such share to December 31, 2017. This change will conform the terms of the Series A with the terms of the Series 1 with respect to conversions.


At any time, from time to time, after the 20th trading day after the date of a Listing Event, the Company (or its successor) will have the right (but not the obligation) to redeem, in whole or in part, the Series A at the redemption price equal to 100% of the Stated Value, initially $1,000 per share, plus any accrued but unpaid dividends if any, to and including the date fixed for redemption. If the Company (or its successor) chooses to redeem any Shares, the Company (or its successor) has the right, in its sole discretion, to pay the redemption price in cash or in equal value of common stock of the Company (or its successor), based on the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the redemption, in exchange for the Series A. The Company (or its successor) also will have the right (but not the obligation) to redeem all or any portion of the Series A subject to a Series A Conversion Notice for a cash payment to the holder thereof equal to the applicable redemption price, by delivering a redemption notice to the holder of such Shares on or prior to the 10th trading day prior to the close of trading on the applicable Conversion Date.

Each investor in the Series A received, for every $1,000 in shares subscribed by such investor, detachable warrants to purchase 30 shares of the Company’s common stock if the Company’s common stock is listed on a national securities exchange. The warrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with the terms of the warrant; however, in no event shall the exercise price be less than $25 per share. As of December 31, 2019, there were detachable warrants that may be exercised for 84,510 shares of the Company’s common stock after the 90th day following the occurrence of a listing event. These potential warrants will expire five years from the 90th day after the occurrence of a listing event. If all the potential warrants outstanding at December 31, 2019 became exercisable because of a listing event and were exercised at the minimum price of $25 per share, gross proceeds to the Company would be approximately $2.1 million and the Company would as a result issue an additional 84,510 shares of common stock. As of the date of this filing the Company had an estimated fair market value of potential warrants that was immaterial.

On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series A, however, such distributions will continue to accrue in accordance with the terms of the Series A.


Series 1 Preferred Stock

On March 29, 2017, the Company filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary to the charter of the Company classifying and designating 97,000 shares of its authorized capital stock as shares of Series 1 Convertible Redeemable Preferred Stock (“Series 1”), par value $0.0001 per share. On April 7, 2017, the Company commenced the Regulation D 506(b) private placement of shares of Series 1, together with warrants to acquire the Company’s common stock, to accredited investors. On January 31, 2018 the Company closed this offering.

The holders of the Series 1 Preferred Stock are entitled to receive, when and as authorized by the Company’s board of directors and declared by us out of legally available funds, cumulative, cash dividends on each Share at an annual rate of 5.50% of the Stated Value pari passu with the dividend preference of the Series A Preferred Stock and in preference to any payment of any dividend on the Company’s common stock; provided, however, that Qualified Purchasers (who purchased $1.0 million or more in a single closing) are entitled to receive, when and as authorized by the Company’s board of directors and declared by us out of legally available funds, cumulative, cash dividends on each Series 1 share held by such Qualified Purchaser at an annual rate of 5.75% of the Stated Value (instead of the annual rate of 5.50% for all other holders of the Series 1 shares) until April 7, 2018, at which time, the annual dividend rate will be reduced to 5.50% of Stated Value; provided further, however, that since a Listing Event has not occurred by April 7, 2018, the annual dividend rate on all Series 1 shares (without regard to Qualified Purchaser status) has been increased to 7.00% of the Stated Value until the occurrence of a Listing Event, at which time, the annual dividend rate will be reduced to 5.50% of the Stated Value. Based on the number of Series 1 shares outstanding at December 31, 2019, the increased dividend rate costs the Company approximately $150,000 more per quarter in Series 1 dividends.

Subject to the Company’s redemption rights as described below, each Series 1 share will be convertible into shares of the Company’s common stock, at the election of the holder thereof by written notice to the Company (each, a “Series 1 Conversion Notice”) containing the information required by the charter, at any time beginning upon the earlier of (i) 45 days after the occurrence of a Listing Event or (ii) April 7, 2019 (whether or not a Listing Event has occurred). Each Series 1 share will convert into a number of shares of the Company’s common stock determined by dividing (i) the sum of (A) 100% of the Stated Value, initially $1,000, plus (B) any accrued but unpaid dividends to, but not including, the date of conversion, by (ii) the conversion price for each share of the Company’s common stock (the “Series 1 Conversion Price”) determined as follows:


Provided there has been a Listing Event, if a Series 1 Conversion Notice is received prior to December 1, 2017, the Series 1 Conversion Price will be equal to 110% of the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Series 1 Conversion Notice.
Provided there has been a Listing Event, if a Series 1 Conversion Notice is received on or after December 1, 2017, the Series 1 Conversion Price will be equal to the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the delivery date of the Series 1 Conversion Notice.
If a Series 1 Conversion Notice is received on or after April 7, 2019, and at the time of receipt of such Series 1 Conversion Notice, a Listing Event has not occurred, the Series 1 Conversion Price for such Share will be equal to 100% of the Company’s net asset value per share, or NAV per share.

At any time, from time to time, on and after the later of (i) the 20th trading day after the date of a Listing Event, if any, or (ii) April 7, 2018, the Company (or its successor) will have the right (but not the obligation) to redeem, in whole or in part, the Series 1 Preferred Stock at the redemption price equal to 100% of the Stated Value, initially $1,000 per share, plus any accrued but unpaid dividends if any, to and including the date fixed for redemption. In case of any redemption of less than all of the shares by the Company, the shares to be redeemed will be selected either pro rata or in such other manner as the board of directors may determine. If the Company (or its successor) chooses to redeem any shares, the Company (or its successor) has the right, in its sole discretion, to pay the redemption price in cash or in equal value of common stock of the Company (or its successor), based on the volume weighted average price per share of the common stock of the Company (or its successor) for the 20 trading days prior to the redemption, in exchange for the shares. The Company (or its successor) also will have the right (but not the obligation) to redeem all or any portion of the Series 1 Preferred Stock subject to a Series 1 Conversion Notice for a cash payment to the holder thereof equal to the applicable redemption price, by delivering a Redemption Notice to the holder of such Shares on or prior to the 10th trading day prior to the close of trading on the Conversion Date for such Shares.

Each investor in the Series 1 received, for every $1,000 in shares subscribed by such investor, detachable warrants to purchase 35 shares of the Company’s common stock if the Company’s common stock is listed on a national securities exchange. The warrants’ exercise price is equal to 110% of the volume weighted average closing stock price of the Company’s common stock over a specified period as determined in accordance with the terms of the warrant; however, in no event shall the exercise price be less than $25 per share. As of December 31, 2019, there were detachable warrants that may be exercised for 1,382,675 shares of the Company’s common stock after the 90th day following the occurrence of a listing event. These potential warrants will expire five years from the 90th day after the occurrence of a listing event. If all the potential warrants outstanding at December 31, 2019 became exercisable because of a listing event and were exercised at the minimum price of $25 per share, gross proceeds to the Company would be approximately $34.6 million and as a result the Company would issue an additional 1,382,675 shares of common stock. As of the date of this filing the Company had an estimated fair market value of potential warrants that was immaterial.

On March 24, 2020, the Company’s board of directors unanimously authorized the suspension of the payment of distributions on the Series 1, however, such distributions will continue to accrue in accordance with the terms of the Series 1.

Note S — Deferred Management Internalization

Management Internalization

On March 29, 2019, the Company and the former Advisor entered into definitive agreements to internalize the Company’s management function effective April 1, 2019 (the “Internalization”). Since their formation, under the supervision of the board of directors (the “Board of Directors”), the former Advisor has been responsible for managing the operations of the Company and MVP I, which merged with a wholly owned indirect subsidiary of the Company in December 2017. As part of the Internalization, among other things, the Company agreed with the former Advisor to (i) terminate the Second Amended and Restated Advisory Agreement, dated as of May 26, 2017 and, for the avoidance of doubt, the Third Amended and Restated Advisory Agreement, dated as of September 21, 2018, which by its terms would have become effective only upon a listing of the Company’s common stock on a national securities exchange (collectively, the “Management Agreements”), each entered into among the Company, the former Advisor and MVP REIT II Operating Partnership, LP (the “Operating Partnership”); (ii) extend employment to the executives and other employees of the former Advisor; (iii) arrange for the former Advisor to continue to provide certain services with respect to outstanding indebtedness of the Company and its subsidiaries; and (iv) lease the employees of the former Advisor for a limited period of time prior to the time that such employees become employed by the Company.


Contribution Agreement

On March 29, 2019, the Company entered into a Contribution Agreement (the “Contribution Agreement”) with the former Advisor, Vestin Realty Mortgage I, Inc. (“VRTA”) (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc. (“VRTB”) (solely for purposes of Section 1.01(c) thereof) and Shustek (solely for purposes of Section 4.03 thereof). In exchange for the Contribution, the Company agreed to issue to the former Advisor 1,600,000 shares of Common Stock as consideration (the “Internalization Consideration”), issuable in four equal installments. The first and second installments of 400,000 shares of Common Stock per installment were issued on April 1, 2019 and December 31, 2019, respectively. The remaining installments will be issued on December 31, 2020 and December 31, 2021 (or if December 31st is not a business day, the day that is the last business day of such year). If requested by the Company in connection with any contemplated capital raise by the Company, the former Advisor has agreed not to sell, pledge or otherwise transfer or dispose of any of the Internalization Consideration for a period not to exceed the lock-up period that otherwise would apply to other stockholders of the Company in connection with such capital raise. See the Current Report on Form 8-K filed with the SEC on April 3, 2019 and Contribution Agreement in Part I, Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding the Management Internalization.

The Internalization transaction closed on April 1, 2019, and the following table shows the Internalization Consideration to be paid in aggregate to the former Advisor. The first and second installment of 400,000 shares of Common Stock per installment were issued to the former Advisor on April 1, 2019 and December 31, 2019, respectively.

  Number of shares     Internalization Contribution 
 Internalization consideration in common stock at $17.50
  
1,100,000
   
(1
)
 
$
19,250,000
 
 Internalization consideration in common stock at $25.10
  
500,000
   
(2
)
  
12,550,000
 
 Total internalization consideration
  
1,600,000
      
$
31,800,000
 
             
Internalization consideration issued April 1, 2019 at $17.50
  
(400,000
)
      
(7,000,000
)
Shares issued December 31, 2019 at $17.50
  
(400,000
)
      
(7,000,000
)
Deferred management internalization at December 31, 2019
  
800,000
      
$
17,800,000
 

1) The Company has the right to purchase 1,100,000 of these shares at $17.50 per share which potentially limits the cost to the Company.
2) $25.10 is the Company's stated NAV as of May 28, 2019.

Note T— Employee Benefit Plan

Effective July 1, 2019, the Company began participating in a multi-employer 401(k) Safe Harbor Plan (the “Plan”), which is a defined contribution plan covering all eligible employees. Under the provisions of the Plan, participants may direct the Company to defer a portion of their compensation to the Plan, subject to Internal Revenue Code limitations. The Company provides for an employer matching contribution equal to 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation contributed by each employee, which is funded in cash. All contributions vest immediately.

Total expense recorded for the matching 401(k) contribution in the year ended December 31, 2016 and2019 was approximately $12,000. There was no similar expense for the period May 4, 2015 (Date of inception) throughyear ended December 31, 2015 is as follows:

  2016  2015 
Ordinary $--  $-- 
Capital Gain  -   - 
Return of Capital  732,000   -- 
  $732,000  $-- 
2018.

Note RU — Subsequent Events

The following subsequent events have been evaluated throughOn March 24, 2020, the dateCompany’s board of this filingdirectors unanimously authorized the suspension of the payment of distributions on the Series A and Series 1, however, such distributions will continue to accrue in accordance with the SEC.

During January 2017, the Company and MVP REIT, through MVP Detroit Center Garage, LLC ("MVP Detroit Center"), an entity owned by the Company and MVP REIT, acquired a multi-level parking garage consisting of approximately 1,275 parking spaces, located in Detroit, Michigan, for a purchase price of $55.0 million, plus acquisition and financing-related transaction costs.  The Company owns an 80% equity interest in the MVP Detroit Center and MVP REIT owns an 20% equity interest.  The parking garage will be operated by SP Plus Corporation ("SP+") under a long-term lease, where SP will be responsible for the first $572,000 in property taxes, pay annual base rent of $3.4 million, and 80% of all gross revenue above $5.0 million.  As partterms of the acquisition MVP Detroit Center entered into a $31.5 million loan agreement with Bank of America, N.A., with a term of 10 years, amortized over 25 years, with monthly principalSeries A and interest payments totaling approximately $194,000, bearing an annual interest rate of 5.52%, secured by the parking garage, and maturing in February 2027.  In connection with this purchase the company paid a broker commission totaling 2% of the purchase price.

On February 1, 2017, the Company, through MVP St. Louis Broadway, LLC, a Delaware limited liability company ("Broadway"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 161 parking spaces, located in St. Louis, Missouri, for a purchase price of $2.4 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking Co, ("St. Louis Parking"), a regional parking operator, under a modified net lease agreement where Broadway is responsible for property taxes above a $19,600 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $180,000.  In addition, the lease provides revenue participation with Broadway receiving 75% of gross receipts over $270,000.

On February 1, 2017, the Company, through MVP St. Louis Seventh & Cerre, LLC, a Delaware limited liability company ("7th & Cerre"), an entity wholly owned by the Company, closed on the purchase of a parking lot consisting of approximately 174 parking spaces, located in St. Louis, Missouri, for a purchase price of $3.3 million in cash plus closing costs.  The parking lot is under a 5 year lease with St. Louis Parking, a regional parking operator, under a modified net lease agreement where 7th & Cerre is responsible for property taxes above a $14,885 threshold, and St. Louis Parking pays for insurance and maintenance costs.  St. Louis Parking pays annual rent of $225,000.  In addition, the lease provides revenue participation with 7th & Cerre receiving 75% of gross receipts over $345,000.Series 1.


The recent COVID-19 pandemic has resulted in reduced discretionary spending, reduced travel and other activity.  In particular, many of the Company’s properties are located near government buildings and sports centers, which depend in large part on customer traffic, and conditions that lead to a decline in customer traffic will have a material and adverse impact on those businesses. Many state and local governments are currently restricting public gatherings or requiring people to shelter in place, which has in some cases eliminated or severely reduced the demand for parking.  Such events are adversely impacting and may continue to adversely impact the Company’s tenants’ sales and/or cause the temporary closure of the Company’s tenants’ businesses, which could significantly disrupt or cause a closure of their operations and, in turn, may impact or eliminate the rental revenue the Company generates from its leases with them. The Company’s rental revenue and the return on its investments may be materially adversely affected by restrictions requiring people to shelter in place in reaction to the COVID-19 outbreak and may continue to be materially adversely affected to the extent that economic conditions result in the elimination of jobs or the migration of jobs from the urban centers where the Company’s parking facilities are situated to other locations. In particular, a majority of the Company’s property leases call for additional percentage rent, which will be adversely impacted by a decline in the demand for parking. The Company is in preliminary discussions with some of its tenants and currently expects to grant relief to some of its tenants to defer rent payments as a result of their estimated lost revenues from the current COVID-19 pandemic; however, there can be no assurance the Company will reach an agreement with any tenant or if an agreement is reached, that any such tenant will be able to repay any such deferred rent in the future. The extent of the impact of COVID-19 on the Company’s financial and operational performance will depend on certain developments, including the duration and spread of the outbreak and its impact on the Company’s tenants, all of which are uncertain and cannot be predicted. The extent to which COVID-19 may impact the Company’s financial condition or results of operations cannot be determined at this time.


SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20162019
      
Initial Cost
  Cost Capitalized Subsequent to Acquisition  
Gross Carrying Amount at December 31, 2019
          
 
 
Description
 
 
ST
 
Encumbrance
  
Land
  
Buildings and Improvements
  
Improvements
  
Carrying Costs
  
Land
  
Building and Improvements
  
Total
  
Accumulated Depreciation (1)
  
Date Acquired
  Life on which depr in latest statement is computed 
West 9th Street (2)OH $4,909,000  $5,675,000  $--  $170,000  $--  $5,845,000  $--  $5,845,000  $24,000   2016   15 
Crown Colony (2)OH  --   3,030,000   --   18,000   --   3,048,000   --   3,048,000   4,000   2016   15 
San Jose(4)CA  2,500,000   1,073,000   2,503,000   268,000   --   977,000   2,523,000   3,500,000   212,000   2016   39,15 
MCI 1372 StreetOH  --   700,000   --   --   --   700,000   --   700,000   --   2016   N/A 
Cincinnati Race StreetOH  2,550,000   2,142,000   2,358,000   1,832,000   --   2,142,000   4,190,000   6,332,000   411,000   2016   39,15 
St Louis WashingtonMO  1,362,000   3,000,000   --   7,000   --   2,957,000   --   2,957,000   1,000   2016   15 
St Paul Holiday GarageMN  4,077,000   1,673,000   6,527,000   196,000   --   1,673,000   6,723,000   8,396,000   593,000   2016   39,15 
Louisville StationKY  1,682,000   3,050,000   --   --   --   3,107,000   --   3,107,000   10,000   2016   15 
Whitefront GarageTN  6,454,000   3,116,000   8,380,000   --   --   3,116,000   8,556,000   11,672,000   727,000   2016   39,15 
Cleveland Lincoln GarageOH  3,946,000   2,195,000   5,122,000   3,332,000   --   2,195,000   8,454,000   10,649,000   664,000   2016   39,15 
Houston PrestonTX  1,627,000   2,800,000   --   --   --   2,820,000   --   2,820,000   3,000   2016   15 
Houston San JacintoTX  1,820,000   3,200,000   --   --   --   3,250,000   --   3,250,000   8,000   2016   15 
MVP Detroit Center GarageMI  29,717,000   7,000,000   48,000,000   477,000   --   7,000,000   48,476,000   55,476,000   3,699,000   2017   39,15 
St. Louis BroadwayMO  1,671,000   2,400,000   --   --   --   2,400,000   --   2,400,000   --   2017   N/A 
St. Louis Seventh & CerreMO  2,057,000   3,300,000   --   --   --   3,300,000   --   3,300,000   --   2017   N/A 
MVP Preferred ParkingTX  11,330,000   15,800,000   4,700,000   710,000   --   15,800,000   5,410,000   21,210,000   362,000   2017   39,15 
MVP Raider Park GarageTX  7,400,000   1,960,000   9,040,000   2,517,000   --   2,006,000   11,511,000   13,517,000   534,000   2017   39,15 
MVP PF Memphis Poplar 2013TN  1,800,000   3,735,000   --   13,000   --   3,748,000   --   3,748,000   83,000   2017   15 
MVP PF St. Louis 2013MO  3,700,000   5,145,000   --   --   --   5,145,000   --   5,145,000   118,000   2017   15 
Mabley Place GarageOH  8,188,000   1,585,000   19,557,000   43,000   --   1,592,000   19,593,000   21,185,000   1,168,000   2017   39,15 
MVP Denver ShermanCO  282,000   705,000   --   --   --   705,000   --   705,000   --   2017   N/A 
MVP Fort Worth TaylorTX  12,208,000   2,845,000   24,813,000   5,000   --   2,845,000   24,818,000   27,663,000   1,397,000   2017   39,15 
MVP Milwaukee Old WorldWI  --   2,044,000   --   --   --   2,044,000   --   2,044,000   46,000   2017   15 
MVP Houston Saks GarageTX  3,262,000   4,931,000   5,460,000   37,000   --   4,931,000   5,492,000   10,423,000   341,000   2017   39,15 
MVP Milwaukee WellsWI  2,700,000   4,873,000   --   --   --   5,083,000   --   5,083,000   57,000   2017   15 
MVP Wildwood NJ LotNJ  1,000,000   1,631,000   --   --   --   1,231,000   --   1,231,000   --   2017   N/A 
MVP Indianapolis City ParkIN  7,200,000   2,055,000   8,764,000   114,000   --   2,056,000   8,878,000   10,934,000   612,000   2017   39,15 
MVP Indianapolis WA Street LotIN  3,400,000   5,749,000   --   --   --   5,749,000   --   5,749,000   45,000   2017   15 
MVP Minneapolis VentureMN  2,000,000   6,543,000   --   --   --   4,012,000   --   4,012,000   --   2017   N/A 
MVP Indianapolis Meridian LotIN  938,000   1,601,000   --   --   --   1,601,000   --   1,601,000   10,000   2017   15 
MVP Milwaukee ClybournWI  --   262,000   --   --   --   262,000   --   262,000   5,000   2017   15 
MVP Milwaukee ArenaWI  2,114,000   4,632,000   --   --   --   4,631,000   --   4,631,000   --   2017   N/A 
MVP Clarksburg LotWV  --   715,000   --   --   --   715,000   --   715,000   10,000   2017   15 
MVP Denver Sherman 1935CO  752,000   2,534,000   --   --   --   2,533,000   --   2,533,000   --   2017   N/A 
MVP Bridgeport Fairfield GarageCT  4,025,000   498,000   7,758,000   --   --   498,000   7,758,000   8,256,000   465,000   2017   39,15 
Minneapolis City ParkingMN  4,797,000   9,838,000   --   --   --   9,338,000   --   9,338,000   178,000   2017   15 
MVP New Orleans RampartLA  5,300,000   8,105,000   --   --   --   8,105,000   --   8,105,000   --   2018   N/A 
MVP Hawaii MarksHI  13,500,000   9,118,000   11,716,000   294,000   --   9,118,000   12,010,000   21,128,000   475,000   2018   39,15 
    $160,268,000  $141,258,000  $164,698,000  $10,033,000  $--  $138,278,000  $174,392,000(3) $312,670,000(4) $12,262,000         
(1)The initial costs of buildings are depreciated over 39 years using a straight-line method of accounting; improvements capitalized subsequent to acquisition are depreciated over the shorter of the lease term or useful life, generally ranging from one to 20 years.
  Initial Cost Gross Carrying Amount at December 31, 2016
DescriptionSTEncumbranceLandBuildings and ImprovementsTotalCost Capitalized Subsequent to AcquisitionLandBuilding and ImprovementsTotalAccumulated Depreciation (1)Date AcquiredRentable Square Feet
West 9th Street
 --$5,675,000--$5,675,000--$5,675,000--$5,675,000--2016n/a
Crown Colony --$3,030,000--$3,030,000--$3,030,000--$3,030,000--2016n/a
San Jose --$1,073,000$2,503,000$3,576,000--$1,073,000$2,503,000$3,576,00035,0002016n/a
MCI 1372 Street --$700,000--$700,000--$700,000--$700,000--2016n/a
Cincinnati Race Street --$2,142,000$2,358,000$4,500,000--$2,142,000$2,358,000$4,500,00029,0002016n/a
St Louis Washington --$3,000,000--$3,000,000--$3,000,000--$3,000,000--2016n/a
St Paul Holiday Garage --$1,673,000$6,527,000$8,200,000--$1,673,000$6,527,000$8,200,00062,0002016n/a
Louisville Station --$3,050,000--$3,050,000--$3,050,000--$3,050,000--2016n/a
Whitefront Garage --$3,116,000$8,379,000$11,495,000--$3,116,000$8,379,000$11,495,00045,0002016n/a
Cleveland Lincoln Garage --$2,195,000$5,122,000$7,317,000--$2,195,000$5,122,000$7,317,00024,0002016n/a
Houston San Jacinto --$3,200,000--$3,200,000--$3,200,000--$3,200,000--2016n/a
  --$28,854,000$24,889,000$53,743,000$-$28,854,000$24,889,000$53,743,000$195,000  
 (1)The initial costs of buildings are depreciated over 39 years using a straight-line method of accounting; improvements capitalized subsequent to acquisition are depreciated over the shorter of the lease term or useful life, generally ranging from one to 20 years.
(2)
These properties are held by West 9th St. Properties II, LLC
(3)This amount does not include CIP of approximately $0.7 million.
(4)San Jose is listed as Held for Sale and includes approximately $0.2 million of accumulated depreciation.
(5)

The aggregate gross cost of property included above for federal income tax purposes approximated $53.7$300.4 million as of December 31, 2016.2019.

The following table reconciles the historical cost of total real estate held for investment for the years ended December 31, 20162019 and for the period May 4, 2015 (Date of inception) through December 31, 2015:2018.

  2019  2018 
Total real estate held for investment, inception (prior) 
$
315,101,000
  
$
287,052,000
 
Additions during period:        
    Acquisitions  
--
   
33,166,000
 
    Improvements  
2,895,000
   
5,068,000
 
Deductions during period:        
    Dispositions  
(3,874,000
)
  
--
 
    Impairments  
(1,452,000
)
  
(10,185,000
)
Total real estate held for investment, end of year (1) 
$
312,670,000
  
$
315,101,000
 

  2016  2015 
Total real estate held for investment, inception (prior) $--  $-- 
Additions during period:  --   -- 
Acquisitions  53,743,000   -- 
Total real estate held for investment, end of year
 
 $53,743,000  $-- 
(1)
This amount does not include investments in software and construction in progress totaling approximately $0.7 million as of December 31, 2019 and approximately $1.9 million as of December 31, 2018.

The following table reconciles the accumulated depreciation for the yearyears ended December 31, 20162019 and for the period May 4, 2015 (Date of inception) through December 31, 2015:2018.

  2019  2018 
Accumulated depreciation, inception (prior) 
$
7,110,000
  
$
2,231,000
 
Deductions during period:  
--
   
(38,000
)
Depreciation and amortization of real estate  
5,152,000
   
4,917,000
 
Accumulated depreciation, end of year (1) 
$
12,262,000
  
$
7,110,000
 

  2016  2015 
Accumulated depreciation, inception (prior) $--  $-- 
Additions during period:  --   -- 
Depreciation of real estate  195,000   -- 
Accumulated depreciation, end of year $195,000  $-- 
(1)
San Jose is listed as Held for Sale and includes approximately $0.2 million of accumulated depreciation.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in ourthe Company’s reports under the Exchange Act is processed, recorded, processed, summarized, and reported within the time periods specified in the SEC'sSEC’s rules and forms, and that such information is accumulated and communicated to management, including ourthe Chief Executive Officer ("CEO") and Chief Financial Officer, ("CFO"), as appropriate, to allow for timely decisions regarding required financial disclosure. In connection withdesigning and evaluating the preparationdisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of this Report on Form 10-K,achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of our CEOmanagement, including the Chief Executive Officer and CFO, as of December 31, 2016,Chief Financial Officer, of the effectiveness of the design and operation of ourthe disclosure controls and procedures as such term is defined under Rule 13a-15(e) under the Exchange Act.  Based upon management's evaluation, our CEO and CFO concluded that, as of December 31, 2016, our2019, the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of that time, the disclosure controls and procedures are designedwere effective at athe reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.level.

Because of the inherent limitations(b) Changes in all control systems, no evaluation of controls can provide absolute assurance that all control issues within our companyInternal Control over Financial Reporting

There have been or will be detected.  Even effectiveno changes in internal control over financial reporting can only provide reasonable assurance with respectduring the year ended 2019, that have materially affected, or are reasonably likely to financial statement preparation.  Furthermore, because of changes in conditions,materially affect, the effectiveness ofcompany’s internal control over financial reporting may vary over time.  Our management, including our CEO and CFO, does not expect that our controls and procedures will prevent all errors.reporting.

The certifications
During the Company's two most recent fiscal years ended December 31, 2019 and 2018 and the period from January 1, 2020 through March 30, 2020, the Company did not consult with RBSM on (i) the application of our CEOaccounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's consolidated financial statements, and CFO required under Section 302RBSM did not provide either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

Management'sManagement’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States,GAAP, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our Company's assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting as of December 31, 2016.2019. In making its assessment of internal control over financial reporting, management used the criteria in Internal Control -- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"(“COSO”). Based on this assessment, management, with the participation of the Chief Executive and Chief Financial Officers, believesconcluded that, as of December 31, 2016,2019, the Company'sCompany’s internal control over financial reporting iswas effective at a reasonable assurance level based on those criteria.

Auditor Attestation

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management'sManagement’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange CommissionSEC that permit us to provide only management'smanagement’s report in this annual report.

Changes in Internal Control Over Financial Reporting

As required by Rule 13a-15(d) under the Exchange Act, our management, including our CEO and CFO,There has evaluatednot been any change in our internal control over financial reporting to determine whether any changes occurred during the fourth fiscal quarter of 2016three months ended December 31, 2019, that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.  Based on that evaluation, there has been no such change during the fourth fiscal quarter of 2016.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Company will rely on the former Advisor to manage the day-to-day activities and to implement the Company'sCompany’s investment strategy, subject to the supervision of ourthe Company’s board of directors. The former Advisor performs its duties and responsibilities as the Company'sCompany’s fiduciary pursuant to an advisory agreement.Amended and Restated Advisory Agreement. The former Advisor is managed by Michael V. Shustek.

Directors and Executive Officers

The following table sets forth the names and ages as of March 24, 201730, 2020 and positions of the individuals who serve as our directors and executive officers as of March 24, 2017:30, 2020:

NameAgeTitle
Michael V. Shustek61Chief Executive Officer and Director
J. Kevin Bland56Chief Financial Officer
Dan Huberty51President& Chief Operating Officer
John E. Dawson (1)62Independent Director
Robert J. Aalberts68Independent Director
Nicholas Nilsen (1)83Independent Director
Shawn Nelson53Independent Director

(1)Member of the audit committee

The following table sets forth the names and ages as of March 30, 2020 and positions of the individuals who serve as directors, executive officers and certain significant employees of the former Advisor or our affiliates:

NameAgeTitle
   
Michael V. Shustek5861Chief Executive Officer and Director
Ed Bentzen40Chief Financial Officer
Allen Wolff(1)45Independent Director
David Chavez(1)51Independent Director
Erik Hart46Independent Director
John E. Dawson(1)59Independent Director

(1)Member of the audit committee.

The following table sets forth the names, ages as of March 24, 2017 and positions of the individuals who serve as directors, executive officers and certain significant employees of MVP Realty Advisors (the Advisor) or our affiliates:

NameAgeTitle
Michael V. Shustek58President & Chief Executive Officer
Ed BentzenJ. Kevin Bland4056Chief Financial Officer


Michael V. Shustek has beenis Chief Executive Officer President, Secretary and the Chairman of the board of directors of the Company since its inception and currently also serves as Chairman of the Chief Executive Officer of our Advisor.board.  He has also served as Chief Executive Officer and a director of MVP REIT, Inc. since its inception,I (prior to the Merger), Chairman of the Board of Directors, Chief Executive Officer and a director of Vestin Group since April 1999 and a director and CEO of Vestin Realty MortgageVRM II Inc. and Vestin Realty MortgageVRM I Inc. since January 2006.

In July 2012, Mr. Shustek became a principal of MVP American Securities.AMS. During January 2013,2014, Mr. Shustek became the sole owner of MVP American Securities.

In February 2004,AMS. Mr. Shustek became the President of Vestin Group.has held several securities licenses.  In 2003, Mr. Shustek became the Chief Executive Officer of Vestin Originations, Inc.  In 1995, Mr. Shustek founded Del Mar Mortgage, and has been involved in various aspects of the real estate industry in Nevada since 1990.  In 1993, he founded Foreclosures of Nevada, Inc., a company specializing in non-judicial foreclosures. In 1997, Mr. Shustek was involved in the initial founding of Nevada First Bank, with the largest initial capital base of any new state charter in Nevada's history.  In 1993, Mr. Shustek also started Shustek Investments, a companyNevada’s history at that originally specialized in property valuations for third-party lenders or investors.time.

Mr. Shustek has co-authored two books, entitled "Trust Deed Investments," on the topic of private mortgage lending, and "If I Can Do It, So Can You."  Mr. Shustek is a guest lecturer at the University of Nevada, Las Vegas, where he also has taught a course in Real Estate Law and Ethics.  Mr. Shustek received a Bachelor of Science degree in Finance at the University of Nevada, Las Vegas.  As our founder and CEO, Mr. Shustek is highly knowledgeable with regard to our business operations.  In addition, his participation on our board of directors is essential to ensure efficient communication between the Board and management.

Ed BentzenJ. Kevin Bland was appointed as ouris Chief Financial Officer (CFO) on June 14, 2016.  In addition,and is a certified public accountant. He has over 25 years of experience as a financial professional and executive. Mr. Bentzen was appointed the CFO of MVP REIT on June 14, 2016.  From August 2013, Mr. Bentzen has been theBland served as Chief Financial Officer of Western Funding,UMTH General Services, L.P. from June 2008 to November 2018. From 2007 to 2008 Mr. Bland served as Vice President, Controller and Principal Accounting Officer of Pizza Inn, Inc., (Nasdaq: RAVE). Mr. Bland spent three years with Metromedia Restaurant Group as Vice President, Controller from 2005 to 2007 and Accounting Manager from 2001 to 2002. From 2003 to 2005, Mr. Bland was Company Controller of Sendera Investment Group, LLC, a subsidiaryreal estate investment firm, and Controller of Westlake Financial Services, a company that specializeshomebuilding and land division with Lennar Corporation in sub-prime auto financing.  From January, 2013Dallas, Texas from 2002 to August, 2013,2003. Mr. Bentzen wasBland began his career with Ernst & Young in 1989. Mr. Bland earned a Bachelor of Business Administration degree in accounting from The University of Texas at Austin in 1985 and an MBA from Texas Christian University in 1989.

Dan Huberty is President and Chief Operating Officer. Prior to joining the AssistantCompany as Vice President of Finance for Western FundingParking Operations, Mr. Huberty spent nearly 25 years in various roles in and from October, 2010supporting the parking industry. Most recently, Mr. Huberty served as an Executive Vice President of SP Plus, where he oversaw the southern division of the company. He was named to this position after successfully overseeing the transition of his team through January, 2013, he was the corporate controllerintegration of Western Funding.  PreviousCentral Parking and Standard Parking. SP Plus's clients included some of the nation's largest owners and operators of mixed-use projects, office buildings, hotels, stadiums and arenas, as well as, airports, hospitals and municipalities.

Prior to his experience at Western Funding,role with SP Plus, he served as a Vice President for Clean Energy Fuels, the largest provider of Compressed Natural Gas in the Country focusing on the parking industry, from June 2009 through September 2011. However, the majority of his career was spent with ABM Industries. During his nearly 17 years with ABM, Mr. BentzenHuberty served in the capacityvarious roles starting as a Facility Manager, working his way up to Regional Manager, Regional Vice President, and finally Vice President of Financial AnalystSales for ABM's Parking Division. Mr. Huberty earned his BBA from January 2006 to April 2007Cleveland State University in 1991, and then as corporate controller from April 2007 to October 2010 of Vestin Realty Mortgage I, Inc. and Vestin Realty Mortgage II, Inc., which are the owners of MVP Realty Advisors, LLC, the Advisor to the Company.  Mr. Bentzen received his BS in Hotel AdministrationMBA from the University of Nevada Las VegasPhoenix in 19991998.

Mr. Huberty is active in political affairs, serving as a State Representative for Texas House District 127, representing a constituency of more than 160,000 residents. Elected in 2010, he travels to the Capitol in Austin, Texas, every other year to represent them during the legislative session. Mr. Huberty also served as a Trustee for the Humble Independent School District from 2006 to 2010.

Mr. Huberty serves on the Board for the Be an Angel Fund, which is a non-profit board that supports profoundly deaf and his Mastershandicapped children in Texas. Mr. Huberty is also a Board Member of Sciencethe Lake Houston Chamber of Commerce in AccountancyHarris County Texas, which has over 1,500 members focusing on growing the North East Region of Harris County. Mr. Huberty also served as a Trustee for the Humble Independent School District which has 42,000 students, from the University of Nevada Las Vegas in 2007.  In 2005 he passed the Certified Internal Auditor's exam and received his CIA Certification2006 to 2010, serving as its President from the Institute of Internal Auditors (currently inactive status).2009-2010.

Independent Directors of MVP REIT II, Inc.the Company

John E. Dawson is one of our independent directors. He has also been a director of MVP REIT, Inc. since its inception. He was a director of Vestin Group from March 2000 to December 2005, was a director of Vestin Realty MortgageVRM II Inc., from March 2007 until he resigned in November 2013 and was a director for Vestin Realty MortgageVRM I Inc. from March 2007 until January 2008.  Since January of 2015 Mr. Dawson has beenis a Partner at the International law firm of Dickinson Wright PLLC.  Mr. Dawson was a partner of thepracticing Lawyer in Las Vegas, Nevada.  Prior to founding Dawson and Lordahl PLLC in 2019, he worked at both very large and small law firmfirms for the prior 30 years, practicing primarily in the areas of Lionel Sawyer & Collins from 2005 until its closing in December of 2014.  Previous to that, from 1995 to 2005, Mr. Dawson was a partner at the law firm of Marquis & Aurbach.tax, business and estate planning.  Mr. Dawson received his Bachelor's Degreebachelor’s degree from Weber State and his Juris Doctor from Brigham Young University.  Mr. Dawson received his MastersMaster of Law (L.L.M.(L.L.M.) in Taxation from the University of San Diego in 1993. Mr. Dawson was admitted to the Nevada Bar in 1988 and the Utah Bar in 1989.

David Chavez is one of our independent directors. Since 2009, Mr. Chavez has served as Chief Executive Officer of Assured Strategies, LLC, a strategic consulting, coaching and advisory firm. From 1996 to 2007, Mr. Chavez served as Chief Executive Officer of the Chavez & Koch, a Professional Corporation, Certified Public Accountants (CPA's), Ltd., certified public accounting firm, and from 1995 to 1996, he was a private business and financial consultant.  From 1991 to 1995 Mr. Chavez worked with Arthur Andersen's Las Vegas office, taking several companies public, and working on auditing as well as consulting.  Mr. Chavez received a Bachelor of Science in Business Administration Degree, with a concentration in Accounting, from the University of Nevada, Las Vegas.

Erik A. Hart is one of our independent directors. Since May 2012, Mr. Hart has served as Managing Partner for Romandad Partners and the Romandad Trust.  Previous to that, from 2001 to July 2013, Mr. Hart practiced law at The Law Offices of Erik A. Hart, and from 1998 to 2001, Mr. Hart was a lawyer for the Business Affairs and Business Development Department of the Spelling Entertainment Group, Inc., formerly Republic Entertainment, Inc. Mr. Hart received his Bachelor's Degree from the University of the Pacific, and his Juris Doctor from McGeorge School of Law. Mr. Hart is a member of the California Bar and reactivated his California bar license and plan to keep it active indefinitely.


Allen Wolff Robert J. Aalbertsis one of our independent directors. Since December 2014, Mr. Wolff has served as Chief Financial Officer for NTN Buzztime,an independent director of MVP I, and was a director of Vestin Group, Inc. (NYSE MKT: NTN), a social entertainment and integrated marketing platform. Previous to that, from July 2013April 1999 to December 2014, Mr. Wolff served as Co-Founder and Financial Strategist for PlumDiggity, LLC,2005. He was a financial and marketing strategy firm. From January 2011 to July 2013, Mr. Wolff served as Chief Financial Officer and director for 365 Retail Markets, LLC, a micro-market self-checkout POS technology firm, andVRM I from January 2006 tountil he resigned in January 2011, Mr. Wolff served as Co-Founder2008 and Chief Financial Officer of Paysimple, Inc., a provider of payment management solutions. Fromfor VRM II from January 2003 to July 2009, Mr. Wolff served as President and Chief Financial Officer of The Conclave Group, LLC, a real estate industry publication serving 12,000 apartment communities nationwide. Mr. Wolff received his Bachelor's Degree from the University of Michigan, and his Master2006 until he resigned in November 2013.  Most recently, Professor Aalberts was Clinical Professor of Business Administration DegreeLaw in the Smeal College of Business at Pennsylvania State University in University Park, PA from 2014 to June 2017. Prior to his position at Penn State, Professor Aalberts held the R.H. Smith SchoolErnst Lied Professor of Legal Studies professorship in the Lee College of Business at the University of Maryland.Nevada, Las Vegas from 1991 to 2014. Before UNLV, Professor Aalberts was an Associate Professor of Business Law at Louisiana State University in Shreveport, LA from 1984 to 1991. From 1982 through 1984, he served as an attorney for the Gulf Oil Company in its New Orleans office, specializing in contract negotiations and mineral law. Professor Aalberts has co-authored books relating to the regulatory environment and the law and business of real estate; including Real Estate Law (2015), now in its 9th edition, published by the Cengage Book Company. He is also the author of numerous legal articles dealing with various aspects of real estate, business and the practice of law. From 1992 to 2016, Professor Aalberts was the Editor-in-chief of the Real Estate Law Journal published by the Thomson-West Publishing Company. Professor Aalberts received his Juris Doctor degree from Loyola University in New Orleans, Louisiana, a Master of Arts from the University of Missouri, Columbia, and a Bachelor of Arts degree in Social Sciences and Geography from Bemidji State University in Minnesota. He was admitted to the State Bar of Louisiana in 1982 (currently inactive status).

Our directorsNicholas Nilsen served as an independent director of MVP I. He has been involved in the financial industry for more than four decades. He has been in retirement during the past five years. Most recently, Mr. Nilsen served as a Senior Vice President of PNC Financial, a bank holding company, where he served from 1960 to 2000. He began his long career with PNC Financial as a stock analyst. Later, he managed corporate and executive officers will serve until their successors are elected and qualify. Our officers will devote such portion of their time to our affairs as is requiredTaft-Hartley pension plans for the performancebank. Mr. Nilsen served as an executive investment officer at the time of their duties, but they are not requiredhis retirement from PNC Financial. Mr. Nilsen is a CFA charter holder. Mr. Nilsen received a bachelor’s degree from Denison University and a Master of Business Administration from Northwestern University.

Shawn Nelson served as an independent director of MVP I. Effective January 7, 2019, Mr. Nelson became the Chief Assistant District Attorney of Orange County, California. Mr. Nelson had served as a member of the Orange County Board of Supervisors in Orange County, California, since June 2010, serving as chairman in 2013 and 2014. Mr. Nelson currently serves on the board of the Southern California Regional Rail Authority (Metrolink) and was the former Chairman. He is a director of the Orange County Transportation Authority having served as the chair in 2014 and is a director of the South Coast Air Quality Management District, Southern California Association of Governments, Transportation Corridor Agency, Foothill/Eastern, Southern California Water Committee, Orange County Council of Governments and Orange County Housing Authority Board of Commissioners. From 1994 to devote all2010, Mr. Nelson was the managing partner of their timethe law firm of Rizio & Nelson. From 1992 to us.1994, he was the Leasing Director/Project Manager of S&P Company. Prior to that, from 1989 to 1992 Mr. Nelson served as the Leasing Director/Acquisitions Analyst for IDM Corp and from 1988 to 1989 he served as a Construction Superintendent for Pulte Homes. Mr. Nelson has a Bachelor of Science degree in business with a certificate in real property development from the University of Southern California and a Juris Doctor Degree from Western State University College of Law.

CORPORATE GOVERNANCE

Board of Directors

We operateThe Company operates under the direction of ourthe Company’s board of directors, the members of which are accountable to usthe Company and ourthe stockholders as fiduciaries. The board of directors is responsible for directing the management of ourthe Company’s business and affairs. The board of directors has retained the Advisor to manage our day-to-day affairs and to implement our investment strategy, subject to the board of directors' direction, oversight and approval.

We have
-100-

The Company has a total of five directors, four of whom are independent, of us, the former Advisor, ourthe Sponsor and ourtheir respective affiliates as determined in accordance with the North American Securities Administrators Association'sAssociation’s Statement of Policy Regarding Real Estate Investment Trusts, as revised and adopted on May 7, 2007 or the NASAA(the “NASAA REIT Guidelines.Guidelines”). The NASAA REIT Guidelines require ourthe Company’s charter to define an independent director as a director who is not and has not for the last two years been associated, directly or indirectly, with ourthe Sponsor or the former Advisor. A director is deemed to be associated with ourthe Sponsor or the former Advisor if he or she owns any interest in, is employed by, is an officer or director of, or has any material business or professional relationship with ourthe Sponsor, the former Advisor or any of their affiliates, performs services (other than as a director) for us,the Company, or serves as a director or trustee for more than three REITs sponsored by ourthe Sponsor or advised by the former Advisor. A business or professional relationship will be deemed material per se if the gross revenue derived by the director from ourthe Sponsor, the former Advisor or any of their affiliates exceeds five percent of (1) the director'sdirector’s annual gross revenue derived from all sources during either of the last two years or (2) the director'sdirector’s net worth on a fair market value basis. An indirect relationship is defined to include circumstances in which the director'sdirector’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law is or has been associated with us, ourthe Company, the Sponsor, the former Advisor or any of its affiliates. OurThe Company’s board of directors has determined that each of Allen Wolff, David Chavez, Erik HartJohn Dawson, Robert J. Aalberts, Nicholas Nilsen and John DawsonShawn Nelson qualifies as an independent director under the NASAA REIT Guidelines.

We referThe Company refers to ourthe directors who are not independent as our "affiliatedthe “affiliated directors."” Currently, ourthe only affiliated director is Michael V. ShustekShustek.

OurThe Company’s charter provides that the number of directors shall beis currently five, which number may be increased or decreased as set forth in the bylaws. OurThe Company’s charter also provides that a majority of the directors must be independent directors and that at least one of the independent directors must have at least three years of relevant real estate experience. The independent directors will nominate replacements for vacancies among the independent directors.

OurThe Company’s board of directors is elected by ourthe Company’s common stockholders on an annual basis. Any director may resign at any time and may be removed with or without cause by the stockholders upon the affirmative vote of stockholders entitled to cast at least a majority of all the votes entitled to be cast generally in the election of directors. The notice of any special meeting called to remove a director will indicate that the purpose, or one of the purposes, of the meeting is to determine if the director will be removed.

At such time as we arethe Company is subject to Subtitle 8 of the MGCL, we havethe Company has elected to provide that a vacancy following the removal of a director or a vacancy created by an increase in the number of directors or the death, resignation,

adjudicated incompetence or other incapacity of a director may be filled only by a vote of a majority of the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred and, in the case of an independent director, the director must also be nominated by the remaining independent directors.

Responsibilities of Directors

The responsibilities of the members of the board of directors include:

·approving and overseeing our overall investment strategy, which will consist of elements such as investment selection criteria, diversification strategies and asset disposition strategies;
approving and overseeing the Company’s overall investment strategy, which will consist of elements such as investment selection criteria, diversification strategies and asset disposition strategies;
·approving and overseeing our debt financing strategies;
approving and overseeing the Company’s debt financing strategies;
·approving joint ventures and other such relationships with third parties;
approving joint ventures and other such relationships with third parties;
·approving a potential liquidity transaction;
approving a potential liquidity transaction;
·determining our distribution policy and authorizing distributions from time to time; and
determining the Company’s distribution policy and authorizing distributions from time to time; and
·approving amounts available for repurchases of shares of our common stock.
approving amounts available for repurchases of shares of the Company’s common stock.

The directors are accountable to us the Company and our the Company’s stockholders as fiduciaries. This means that the directors must perform their duties in good faith and in a manner each director believes to be in our the Company’s best interests. Further, our the Company’s directors must act with such care as an ordinarily prudent person in a like position would use under similar circumstances, including exercising reasonable inquiry when taking actions. Our directors and executive officers will serve until their successors are elected and qualify. The directors are not required to devote all of their time to ourthe Company’s business and are only required to devote such time to ourthe Company’s affairs as their duties require. The directors meet quarterly or more frequently as necessary.

The Company will follow investment guidelines adopted by ourthe Company’s board of directors and the investment and borrowing policies described in this reportAnnual Report unless they are modified by our directors. OurThe Company’s board of directors may establish further written policies on investments and borrowings and shall monitor our administrative procedures, investment operations and performance to ensure that the policies are fulfilled and are in the best interests of our stockholders. Any change in our investment objectives as set forth in ourthe Company’s charter must be approved by the stockholders.

In order to reduce or eliminate and address certain potential conflicts of interest, ourthe Company’s charter requires that a majority of ourthe Company’s board of directors (including a majority of the independent directors) not otherwise interested in the transaction approve any transaction with any of ourthe Company’s directors, ourthe Sponsor, the former Advisor, or any of their affiliates. The independent directors will also be responsible for reviewing from time to time but at least annually (1) the performance of the former Advisor and determining that the compensation to be paid to the former Advisor is reasonable in relation to the nature and quality of services performed; (2) that ourthe Company’s total fees and expenses are otherwise reasonable in light of ourthe Company’s investment performance, our net assets, our net income, the fees and expenses of other comparable unaffiliated REITs and other factors deemed relevant by our independent directors; and (3) that the provisions of the advisory agreementAmended and Restated Advisory Agreement are being carried out. Each such determination shall be reflected in the applicable board minutes.

Board Committees

OurThe board of directors may establishhas delegated various responsibilities and authority to three standing committees it deems appropriateand one special committee. Each committee regularly reports on its activities to address specific areas in more depth than may be possible at athe full board of directors meeting, provided thatdirectors. The Audit Committee, the majorityCompensation Committee, the Nominating and Governance Committee and the Special Committee are composed entirely of independent directors. The table below sets forth the current membership of the membersthree standing committees of each committee are independentthe board of directors.

NameAuditCompensationNominating and Corporate Governance
John Dawson
Chair
Robert J. Aalberts
Chair
Nicholas Nilsen
XChairX
Shawn Nelson
XX

Audit Committee

The audit committee will meetAudit Committee meets on a regular basis, at least quarterly and more frequently as necessary. The audit committee'sAudit Committee’s primary function will beis to assist the board of directors in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the stockholders and others, the system of internal controls which management has established and the audit and financial reporting process. The audit committeeAudit Committee is comprised of threetwo directors, all of whom are independent directors, and one of whom iswhich have been deemed an audit committeeas Audit Committee financial expert. Our audit committeeexperts. The Company’s Audit Committee consists of John Dawson David Chavez and Allen Wolff.  Nicholas Nilsen. The Boardboard of directors also determined that Mr. Dawson meetsNilsen met the audit committeeAudit Committee financial expert requirements. For the years ended December 31, 20162019 and 2015,2018, the auditAudit Committee held 4 and 20 meetings, respectively. Mr. Dawson serves as chair of the Audit Committee.

Compensation Committee

The Company’s board of directors maintains a separately designated standing compensation committee (the “Compensation Committee”). The Compensation Committee establishes and oversees our executive and director compensation. The Compensation Committee consists of two independent directors: Nicholas Nilsen and Shawn Nelson. The Compensation Committee establishes and oversees director compensation. For the years ended December 31, 2019 and 2018, the Compensation Committee held __three meetings and zero meetings,one meeting, respectively.


The Company’s independent directors receive certain compensation from the Company, which is described in more detail under “Item 11. Executive Compensation.”

Nominating and Corporate Governance Committee

We do not have a separate nominatingThe Nominating and Governance Committee is responsible for establishing the requisite qualifications for directors, identifying and recommending the nomination of individuals qualified to serve as directors and recommending directors for each board committee. The Nominating and Governance Committee also establishes corporate governance committee. We believe that ourpractices in compliance with applicable regulatory requirements and consistent with the highest standards and recommends to the board of directors is qualified to perform the functions typically delegated to a nominating and corporate governance guidelines applicable to the Company. The Company’s Nominating and Corporate Governance Committee consists of Robert Aalberts as Nominating and Corporate Governance Committee Chair, with Shawn Nelson and Nicholas Nilsen as committee members. For the years ended December 31, 2019 and that2018, the formationNominating and Corporate Governance Committee held 2 meetings and no meetings, respectively.

Special Committees

On July 16, 2019, the Board established a demand review committee of two independent directors to investigate the allegations of wrongdoing made in the Magowski Complaint and to make a separaterecommendation to the Board for a response to the stockholder demand letter. On September 27, 2019, the Board replaced the demand review committee with a special litigation committee of one independent director. The special litigation committee is not necessary at this time. Instead, our full boardresponsible for investigating the allegations of directors performs functions similar to those which might otherwise normally be delegated to suchwrongdoing made in the letter and making a committee, including, among other things, developing a set of corporate governance principles, adopting a code of ethics, adopting objectives with respect to conflicts of interest, monitoring our compliance with corporate governance requirements of state and federal law, establishing criteriafinal determination regarding the response for prospective members of our board of directors, conducting candidate searches and interviews, overseeing and evaluating our board of directors and our management, evaluating from time to time the appropriate size and composition of our board of directors and recommending, as appropriate, increases, decreases and changesCompany to the compositiondemand. The work of our board of directors and formally proposing the slate of directors to be elected at each annual meeting of our stockholders.

Compensation Committee

Our board of directors believes that itspecial litigation committee is appropriate for our board of directors not to have a standing compensation committee based upon the fact that our executive officers and our affiliated directors do not receive compensation directly from us for services rendered to us, and we do not intend to pay compensation directly to our executive officers or our affiliated directors. Our independent directors receive certain compensation from us, which is described in more detail under "Item 11. Executive Compensation."on-going.

Code of Ethics

We haveThe Company has adopted a Code of Business Conduct and Ethics or the Code(the “Code of Ethics,Ethics”), which contains general guidelines for conducting ourthe Company’s business and is designed to help directors, employees and independent consultants resolve ethical issues in an increasingly complex business environment. The Code of Ethics applies to all of ourthe Company’s officers, including ourthe Company’s principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, andas well as all members of ourthe Company’s board of directors. The Code of Ethics covers topics including, but not limited to, conflicts of interest, record keeping and reporting, payments to foreign and U.S. government personnel and compliance with laws, rules and regulations. WeThe Company will provide to any person without charge a copy of ourthe Company’s Code of Ethics, including any amendments or waivers, upon written request delivered to ourthe Company’s principal executive office at the address listed on the cover page of this annual report.Annual Report.

Board Meetings and Annual Stockholder Meeting

The board of directors held one meeting23 meetings and nineteen meetings during the fiscal yearyears ended December 31, 2016.2019 and 2018, respectively. Each director attended at least 75% of his board and committee meetings in 2016.2019 and 2018. Although we dothe Company does not have a formal policy regarding attendance by members of ourthe Company’s board of directors at ourthe Company’s Annual Meeting of Stockholders, we encouragethe Company encourages all of our directors to attend.

Communication with Directors

We haveThe Company has established procedures for stockholders or other interested parties to communicate directly with ourthe Company’s board of directors. Such parties can contact the board by mail at: John Dawson, Chairman of the MVPThe Parking REIT II Audit Committee, c/o Corporate Secretary, 88809130 W. Sunset Road,Post Rd Suite 240,200, Las Vegas, NevadaNV 89148.

The chairman of the audit committeeAudit Committee will receive all communications made by these means and will distribute such communications to such member or members of ourthe Company’s board of directors as he or she deems appropriate, depending on the facts and circumstances outlined in the communication received. For example, if any questions regarding accounting, internal controls and auditing matters are received, they will be forwarded by the chairmanco-chairmen of the audit committeeAudit Committee to the members of the audit committeeAudit Committee for review.


ITEM 11. EXECUTIVE COMPENSATION

Executive Officers

We do not currently have any employees nor do we currently intendPrior to hire any employees who will be compensated directly by us.the Internalization, effective April 1, 2019, and during the fiscal year ended December 31, 2018, the Company had no employees. Each of ourthe Company’s executive officers including each executive officer who serves as a director, iswas employed or compensated by our Sponsor and also serves as an executive officer of the former Advisor. Each of these individuals receives compensation from our Sponsor for his or her services, including services performed for us and forAlthough the Advisor. As executive officers ofCompany reimbursed the Advisor, these individuals will manage our day-to-day affairs and carry out the directives of our board of directors in the review and selection of investment opportunities and will oversee and monitor our acquired investments to ensure they are consistent with our investment objectives. The duties that these executive officers will perform on our behalf will also serve to fulfill the corporate governance obligations of these persons as our appointed officers pursuant to our charter and bylaws. As such, these duties will involve the performance of corporate governance activities that require the attention of one of our corporate officers, including signing certifications required under the Sarbanes-Oxley Act of 2002, as amended, for filing with our periodic reports. Although we will reimburse theformer Advisor for certain expenses incurred in connection with providing these services to us, we dothe Company, prior to the Internalization, the Company did not intend to pay any compensation directly to the Company’s executive officers. Consequently, with respect to the fiscal year ended December 31, 2018 and through March 31, 2019, we did not have a compensation policy or program for our executive officers.

In connection with the Internalization, effective April 1, 2019, the Company entered into employment agreements (collectively, the “Employment Agreements”) with Michael V. Shustek, Chief Executive Officer (the “CEO”); Daniel Huberty, President and Chief Operating Officer (the “COO”); and James Kevin Bland, Chief Financial Officer (the “CFO” and together with the CEO and COO, the “Executives” or the “Named Executive Officers”).  As of March 30, 2020, the Company had 16 employees.

As part of the Company’s transition to self-management, the Compensation Committee retained FTI Consulting as an independent compensation consultant to advise the Compensation Committee with respect to the terms of the Employment Agreements.

Employment Agreements

Following is a brief summary and discussion of the terms of the Employment Agreements.

Term.  Each of the Employment Agreements provides for a three-year initial term that will commence on June 30, 2019 and ends on the third anniversary of such date.  Thereafter, the employment term extends automatically for successive one-year periods unless either the Executive or the Company provides notice of non-renewal to the other party at least ninety (90) days before the end of the then-existing term.

Duties.  The Employment Agreements provide that the CEO, the COO and the CFO will perform duties and provide services to us that are customarily associated with the duties, authorities and responsibilities of persons in similar positions as well as such other duties as may be assigned from time to time. The Employment Agreements also provide that the Executives generally will devote substantially all of their business time and attention to the business and affairs of the Company, except that the Executives may engage in certain outside activities that do not materially interfere with the performance of their duties.

Compensation. The Employment Agreements provide that the CEO, the COO and the CFO will receive an annual initial base salary of $550,000, $300,000 and $250,000, respectively.  The CEO, COO and CFO will be eligible to receive a target annual incentive award of not more than $250,000, $153,000 and $50,000, respectively, and each will be eligible to receive an annual target equity award of not more than $1,000,000, $153,000 and $130,000 in the form of restricted shares of common stock, respectively.  Each annual equity award shall vest equally in annual installments over a three-year period.  The amounts and conditions for the payment and vesting (as applicable) of each target annual incentive award and each annual target equity award will be determined by the Compensation Committee.  The Company at its discretion may pay any target annual incentive awards payable to the COO or the CFO in cash or shares of common stock.  Each of the Executives will be eligible to participate in employee benefit programs made available to the Company’s employees from time to time and to receive certain other perquisites, each as set forth in their respective Employment Agreements.

Severance Payments.  The CEO Employment Agreement provides that, subject to the execution of a release and other conditions set forth in the CEO Employment Agreement, upon a “qualifying termination” (as defined in the CEO Employment Agreement), the CEO will be entitled to severance based on a multiple of the total of the CEO’s then-current annual base salary plus the amount of the last annual incentive award earned by the CEO in the year prior to termination (referred to herein as “total cash compensation”).  If the qualifying termination results from the death or disability of the CEO, the CEO will be entitled to severance equal to one times (1x) his total cash compensation.  If the CEO is terminated by the Company without “cause” (as defined in the CEO Employment Agreement), or the CEO quits for “good reason” (as defined in the CEO Employment Agreement) or the Company elects not to renew the term of the CEO employment agreement, then the CEO will be entitled to severance equal to two times (2x) his total cash compensation.   In the event that any qualifying termination occurs on or within 12 months after a change in control of the Company, the CEO will be entitled to severance equal to three times (3x) his total cash compensation.

The COO and CFO Employment Agreements provide that, subject to the execution of  a release and other conditions set forth in the Employment Agreements, the COO and CFO will be entitled to receive severance based on a multiple of the sum of their annual base salary and target annual incentive award (referred to herein as “total cash compensation”).  If the COO is terminated due to his death or disability or if the COO Employment Agreement is not renewed by the Company during the first five years of the term of such agreement, then the COO will be entitled to severance equal to one times (1x) his total cash compensation.  Such severance is not payable if the COO Employment Agreement is not renewed by the Company after the first five years of the term.  If the COO is terminated without “cause” or the COO quits for “good reason,” (each as defined in the COO Employment Agreement) he will be entitled to severance equal to two times (2x) his total cash compensation.  If the CFO is terminated due to his death or disability, he is terminated by the Company without “cause” or he quits for “good reason,” (each as defined in the CFO Employment Agreement) then the CFO will be entitled to severance equal to one times (1x) his total cash compensation.  If the CFO is terminated without “cause” or quits for “good reason”, in each case, on or within 12 months after a change in control of the Company, then the CFO will be entitled to severance equal to one and one-half times (1.5x) his total cash compensation.

Upon termination where severance is due and payable, the Employment Agreements also provide that the Executives will be entitled to receive (i) unpaid base salary earned through the termination date; (ii) any restricted shares of common stock that have vested as of the termination date; (iii) all other equity-based awards held by Executive (which, to the extent subject to time-based vesting, will vest in full at the termination date); (iv) health insurance coverage, including through COBRA, for an 18 month period following the termination date (other than, with respect to the COO and CFO in the event of a termination due to death, disability or non-renewal); and (v) reimbursements of unpaid business expenses.

Non-Competition, Non-Solicitation and Confidentiality.  Each Employment Agreement provides that for a two-year period following the termination of the Executive’s employment with us, the Executive will not solicit our employees or consultants or any of our customers, vendors or other parties doing business with us.  Pursuant to the Contribution Agreement (as defined below), the CEO has agreed not to compete with us for a period of three years after the Effective Date. (as defined below) Pursuant to the COO and CFO Employment Agreements, each of the COO and CFO has agreed not to compete with us for a period of two years following the termination of their employment with us. Each Employment Agreement also contains covenants relating to the treatment of confidential information, Company property and certain other matters.

Savings and Health and Welfare Benefits

The CEO, the COO and the CFO are eligible to participate in the broad-based 401(k) retirement savings plan generally applicable to our employees, which includes an opportunity to receive employer matching contributions. We do not currently provide for pension plans, supplemental retirement plans or deferred compensation plans for our officers.

The CEO, the COO and the CFO are also eligible to participate in the health, life insurance, disability benefits and other welfare programs that are provided generally to our employees.

Perquisites and Other Personal Benefits

We do not currently provide our officers with any material perquisites or other personal benefits.

Summary Compensation Table

Prior to the Internalization, effective April 1, 2019, the Company had no employees. Each of the Company’s Named Executive Officers was employed or compensated by the former Advisor, and the Company did not pay any compensation directly to the Named Executive Officers. Consequently, with respect to the fiscal year ended December 31, 2018 and through March 31, 2019, we did not have a compensation policy or program for our Named Executive Officers and no amounts were paid to them by the Company to the executive officers.


Accordingly, the following Summary Compensation Table shows compensation (rounded to the nearest thousand) paid or accrued by us for services rendered from April 1, 2019 through December 30, 2019 to the Named Executive Officers.

Name and
Principal Position
Fiscal Year 
Salary
($)
  
Bonus
($)
  
Stock
Awards ($)
  
Option
Awards
($)
  
Non-Equity Incentive Plan Compensation
($)
  
Change in
Pension Value
And Nonqualified
Deferred Compensation
Earnings
($)
  
All Other
Compensation ($) (1)
  Total ($) 
Michael V. Shustek
2019 
$
275,000
   
-
   
-
   
-
   
-
   
-
   
-
  
$
275,000
 
   Chief Executive Officer
2018  
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
                                  
                                  
Daniel Huberty
2019 
$
150,000
   
-
   
-
   
-
   
-
   
-
   
-
  
$
150,000
 
   President and Chief
2018  
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
   Operating Officer
                                 
                                  
James Kevin Bland
2019 
$
125,000
  
$
90,000
   
-
   
-
   
-
   
-
   
-
  
$
215,000
 
    Chief Financial Officer
2018  
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
                                  

Independent Directors

We payUnder the Company’s independent director compensation program in effect during 2018, the Company paid each of our independent directorsdirector an annual retainer of $30,000 (to be prorated for a partial term), plus the audit committee chairperson receiveswith an additional $5,000 annual retainer (to be prorated for a partial term). paid to the Audit Committee chairperson. Each independent director also will receive $1,000$500 for each meeting of the board of directors attended in-person or by telephone. Special Committee members were paid an additional $35,000 for the Chair and $30,000 for the remaining members in connection with the Internalization. These committees were disbanded in 2018.

On April 13, 2019, the Board of Directors voted to change the compensation structure of independent directors. Effective June 5, 2019, the date of the Company’s annual shareholder meeting, each independent director will receive an annual retainer of $70,000, pro-rated for any director with service less than a full year. There will be no additional meeting fees paid. An additional $20,000 in cash will also be paid to the Lead Independent Director and an additional $15,000 in cash will be paid to the chairman of the Audit Committee. Once the Company’s stock begins trading, each independent director will receive his or her compensation in stock until he or she holds shares of the Company's stock equal to $105,000 (i.e., three times the anticipated cash portion of his or her annual retainer), and once the threshold is met, each independent director will receive his or her annual retainer half in shares of stock and half in cash.

Until the Company’s stock begins trading one half of the retainer that would otherwise have been paid in shares of stock will be accrued in a bookkeeping account for the benefit of the applicable Director, to be issued to the Director in shares when the Company’s stock begins trading. If the Company’s stock does not begin trading before June 1, 2020 all amounts accrued for issuance as stock pursuant to the compensation plan will instead be paid in cash on such date.


All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings of the board of directors. If a director is also one of our officers, we will not pay any compensation to such person for services rendered as a director. The following table sets forth information with respect to our independent director compensation during the fiscal year ended December 31, 2016:2019:

Name Fees Earned or Paid in Cash  
Stock
Awards ($)
  
Option
Awards ($)
  Non-Equity Incentive Plan Compensation ($)  Change in Pension Value and Nonqualified Deferred Compensation Earnings  All Other Compensation (1)($)  Total ($)  Fees Earned or Paid in Cash  
Stock
Awards ($)
  
Option
Awards ($)
  Non-Equity Incentive Plan Compensation ($)  Change in Pension Value and Nonqualified Deferred Compensation Earnings  All Other Compensation ($)  Total ($) 
                     
Allen Wolff $48,500  $--  $--  $--  $--  $--  $48,500 
David Chavez $47,500  $--  $--  $--  $--  $--  $47,500 
Erik Hart $46,500  $--  $--  $--  $--  $--  $46,500 
David Chavez (1)
 
$
11,250
  
$
--
  
$
--
  
$
--
  
$
--
  
$
--
  
$
11,250
 
John Dawson $54,750  $--  $--  $--  $--  $--  $54,750  
60,333
  
--
  
--
  
--
  
--
  
--
  
60,333
 
                            
Robert J. Aalberts
 
56,292
  
--
  
--
  
--
  
--
  
--
  
56,292
 
Nicholas Nilsen
 
39,167
  
--
  
--
  
--
  
--
  
--
  
39,167
 
Shawn Nelson
 
63,821
  
--
  
--
  
--
  
--
  
--
  
63,821
 
William Wells (1)
  
11,250
   
--
   
--
   
--
   
--
   
--
   
11,250
 
Total $197,250   --   --   --   --   --  $197,250  
$
242,113
  
$
--
  
$
--
  
$
--
  
$
--
  
$
--
  
$
242,113
 
(1)Amount represents reimbursement of travelThe Nominating Committee did not re-nominate Mr. Wells and other expenses incurred byMr. Chavez in June 2019. These directors to attend various director meetings.served out their terms which ended on June 5, 2019.

Compensation Committee Interlocks and Insider Participation

Other than Michael V. Shustek, no member of ourthe Company’s board of directors served as an officer, and no member of ourthe Company’s board of directors served as an employee, of the Company or any of its subsidiaries during the year ended December 31, 2016.2019. In addition, during the year ended December 31, 2016,2019, none of ourthe Company’s executive officers served as a member of a compensation committeethe Compensation Committee (or other committee of ourthe Company’s board of directors performing equivalent functions or, in the absence of any such committee, our entire board of directors) of any entity that has one or more executive officers serving as a member of ourthe Company’s board of directors or compensation committee.Compensation Committee.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership

Shown below is certain information asAs of March 21, 2017,30, 2020, with respect to beneficial ownership, as that term is defined in Rule 13d-3 under the Securities Exchange Act, of 1934, as amended (the "Exchange Act"), of shares of common stock by the only persons or entities known to us to be a beneficial owner of more than 5% of the outstanding shares of common stock. Unless otherwise noted, the percentage ownership is calculated based on 2,490,685 shares7,330,071shares of our common stock asoutstanding As of March 21, 2017.30, 2020.

Name and Address of
Beneficial Owner
 
Amount and Nature of
Beneficial Ownership
 Percent of Class
Vestin Realty Mortgage II, Inc.
9130 W. Post Rd Suite 130
Las Vegas, NV 89148
 
Sole voting and investment power of 844,960 shares
 11.52%
Vestin Realty Mortgage I, Inc.
9130 W Post Rd Suite 130
Las Vegas, NV 89148
 
Sole voting and investment power of 456,834 shares
 6.23%

The following table sets forth the total number and percentage of our common stock beneficially owned as of March 21, 2017,30, 2020, by:
Each director;
Our chief executive officer and the officers of our manager who function as the equivalent of our executive officers; and
All executive officers and directors as a group.

·Each director;
·Our chief executive officer, chief financial officer and the officers of our manager who function as the equivalent of our executive officers; and
-107-
·All executive officers and directors as a group.

Unless otherwise noted, the percentage ownership is calculated based on 2,490,685 shares7,330,071shares of our total outstanding common stock and 2,67842,672 shares of our total outstanding preferred stock as of March 21, 2017:30, 2020:

    
Common Shares
Beneficially Owned
 
Preferred Shares
Beneficially Owned
Beneficial Owner Address Number Percent Number Percent
Michael V. Shustek 
8880 W. Sunset Rd
Las Vegas, NV 89148
 8,579 <1% -- --
Ed Bentzen 
8880 W. Sunset Rd
Las Vegas, NV 89148
 -- -- -- --
Allen Wolff 
7275 Sitio Lima
Carlsbad, CA 92009
 -- -- *26.5 1.32%
David Chavez 
28 Strada Prinicipale
Henderson, NV 89011
 -- -- -- --
Erik Hart 
4004 Murphy Rd.
Memphis, IN 47143
 -- -- -- --
John E. Dawson 
1321 Imperia Drive
Henderson, NV 89052
 ** 4,390 <1% -- --
           
           
All directors and executive officers as a group   12,969 <1% 26.5 1.32%
    
Common Shares
Beneficially Owned
  
Preferred Shares
Beneficially Owned
 
Beneficial OwnerAddress Number  Percent  Number  Percent 
Michael V. Shustek
9130 W. Post Rd Suite 200,
 Las Vegas, NV 89148
  
13,423
  <1%   
--
   
--
 
Dan Huberty
9130 W. Post Rd Suite 200,
 Las Vegas, NV 89148
  
3,599
  <1%   
--
   
--
 
John E. Dawson
8925 W. Post Rd Suite 210,
 Las Vegas, NV 89148
  
2,570
  <1%   
*54
  <1% 
Robert J. Aalberts
311 Vallarte Dr.
Henderson NV 89014
  
--
   
--
   
--
   
--
 
Nicholas Nilsen
3074 Soft Horizon Way
Las Vegas, NV 89135
  
2,141
  <1%   
--
   
--
 
Shawn Nelson
Hall of Administration
333 W. Santa Ana Blvd.
Santa Ana, CA 92701
  
--
   
--
   
--
   
--
 
All directors and officers   
21,733
  <1%   
54
  <1% 

* AlongMr. Dawson received 1,750 warrants with thehis purchase of these 26.554 shares Mr. Wolff received 750 warrants.of preferred stock. The Warrantswarrants may be exercised after the 90th day following the occurrence of a Listing Event, at an exercise price, per share, equal to 110% of the volume weighted average closing price during the 20 trading days ending on the 90th day after the occurrence of such Listing Event; however, in no event shall the exercise price of the Warrantswarrants be less than $25 per share.

** These shares are held by the Darlene Lyndes TTEE & John Dawson TTEE - GST Trust under the Redd 1996 Trust. Mr. Dawson has control of the trust, but has no economic benefit in the trust.


ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Conflicts of Interests

We areThe Company is subject to various conflicts of interest arising out of ourthe Company’s relationship with the former Advisor and other affiliates, including (1) conflicts related to the compensation arrangements between the former Advisor, certain affiliates and us,the Company, (2) conflicts with respect to the allocation of the time of the former Advisor and its key personnel and (3) conflicts with respect to the allocation of investment opportunities. OurThe Company’s independent directors have an obligation to function on ourthe Company’s behalf in all situations in which a conflict of interest may arise and will have a fiduciary obligation to act on behalf of the stockholders.

Please refer to Note E – Related Party Transactions and Arrangements in Part II, Item 8 Financial Statements of this Annual Report on Form 10-K, for information regarding our related party transactions, which are incorporated herein by reference. Please also see "Risk Factors – “Risk Factors–Risks Related to Conflict of Interests."” in Part I, Item 1A Financial Statements“Risk Factors” of this Annual Report on Form 10-KReport.

Certain Conflict Mitigation Measures

In order to reduce or mitigate certain potential conflicts of interests, we havethe Company has adopted the procedures set forth below.

Advisor Compensation

below, which includes procedures imposed by the NASAA REIT Guidelines. The independent directors evaluate at least annually whether the compensation that we contract to payCompany will no longer be subject to the Advisorrequirements imposed by the NASAA REIT Guidelines if and when the Company lists its affiliates is reasonable in relation to the nature and quality of services performed and whether such compensation is within the limits prescribed by our charter. The independent directors supervise the performance of the Advisor and its affiliates and the compensation we pay to them to determine whether the provisions of the advisory agreement are being carried out. This evaluation is basedshares on the following factors as well as any other factors they deem relevant:

·the amount of the fees and any other compensation, including stock-based compensation, paid to our advisor and its affiliates in relation to the size, composition and performance of the assets;

·the success of our advisor in generating appropriate investment opportunities;

·the rates charged to other companies, including other REITs, by advisors performing similar services;

·additional revenues realized by our advisor and its affiliates through their relationship with us, including whether we pay them or they are paid by others with whom we do business;

·the quality and extent of service and advice furnished by our advisor and its affiliates;

·the performance of our investment portfolio; and

·the quality of our portfolio relative to the investments generated by our advisor and its affiliates for their own account and for their other clients.


Term of Advisory Agreement

Each contract for the services of the Advisor may not exceed one year, although there is no limit on the number of times that we may retain a particular advisor. Our charter provides that a majority of the independent directors may terminate the advisory agreement with MVP Realty Advisors, LLC without cause or penalty on 60 days' written notice. MVP Realty Advisors, LLC may terminate the advisory agreement with good reason on 60 days' written notice.national securities exchange.


Independent Directors

The NASAA REIT Guidelines require ourthe Company’s charter to define an independent director as a director who is not and has not for the last two years been associated, directly or indirectly, with ourthe Sponsor or the former Advisor. A director is deemed to be associated with ourthe Sponsor or the former Advisor if he or she owns any interest in, is employed by, is an officer or director of, or has any material business or professional relationship with ourthe Sponsor, the former Advisor or any of their affiliates, performs services (other than as a director) for us, or serves as a director or trustee for more than three REITs sponsored by ourthe Sponsor or advised by the former Advisor. A business or professional relationship will be deemed material per se if the gross revenue derived by the director from ourthe Sponsor, the former Advisor or any of their affiliates exceeds five percent of (1) the director'sdirector’s annual gross revenue derived from all sources during either of the last two years or (2) the director'sdirector’s net worth on a fair market value basis. An indirect relationship is defined to include circumstances in which the director'sdirector’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law is or has been associated with us, ourthe Company, the Sponsor, the former Advisor or any of its affiliates.

A majority of ourthe Company’s board of directors, including a majority of the independent directors, must determine the method used by the former Advisor for the allocation of the acquisition of investments by two or more affiliated programs seeking to acquire similar types of assets is fair and reasonable to us. OurThe Company’s independent directors, acting as a group, will resolve potential conflicts of interest whenever they determine that the exercise of independent judgment by the full board of directors or the former Advisor or its affiliates could reasonably be compromised. However, the independent directors may not take any action which, under Maryland law, must be taken by the entire board of directors or which is otherwise not within their authority. The independent directors, as a group, are authorized to retain their own legal and financial advisors. Among the matters we expect the independent directors to review and act upon are:

·the continuation, renewal or enforcement of our agreements with our advisor and its affiliates, including the advisory agreement and the property management agreement;
transactions with affiliates, including our directors and officers;

awards under our equity incentive plan; and
·transactions with affiliates, including our directors and officers;
pursuit of a potential liquidity event.

·awards under our equity incentive plan; and

·pursuit of a potential liquidity event.

Those conflict of interest matters that cannot be delegated to the independent directors, as a group, under Maryland law must be acted upon by both the board of directors and the independent directors.

OurThe Company’s Acquisitions

WeThe Company will not purchase or lease assets in which ourthe Sponsor, the former Advisor, any of ourthe Company’s directors or any of their affiliates has an interest without a determination by a majority of ourthe Company’s directors (including a majority of the independent directors) not otherwise interested in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the asset to ourthe Sponsor, the former Advisor, the director or the affiliated seller or lessor, unless there is substantial justification for the excess amount and such excess is reasonable. In no event may wethe Company acquire any such asset at an amount in excess of its current appraised value.

The consideration we paythe Company pays for real property will ordinarily be based on the fair market value of the property as determined by a majority of the members of the board of directors or the members of a duly authorized committee of the board. In cases in which a majority of ourthe Company’s independent directors so determine, and in all cases in which real property is acquired from ourthe Sponsor, the former Advisor, any of ourthe Company’s directors or any of their affiliates, the fair market value shall be determined by an independent expert selected by ourthe Company’s independent directors not otherwise interested in the transaction.

Loans

WeThe Company will not make any loans to ourthe Sponsor, ourthe former Advisor or ourthe Company’s directors or officers or any of their affiliates (other than mortgage loans complying with the limitations set forth in Section V.K.3 of the NASAA REIT Guidelines or loans to wholly owned subsidiaries). In addition, wethe Company will not borrow from these affiliates unless a majority of ourthe Company’s board of directors (including a majority of the independent directors) not otherwise interested in the transaction

approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by ourthe Company’s board of directors.

Other Transactions Involving Affiliates

A majority of ourthe Company’s directors, including a majority of the independent directors not otherwise interested in the transaction, must conclude that all other transactions between us the Company and ourthe Sponsor, the former Advisor, any of ourthe Company’s directors or any of their affiliates are fair and reasonable to us the Company and on terms and conditions not less favorable to us the Company than those available from unaffiliated third parties. To the extent that we contemplatethe Company contemplates any transactions with affiliates, members of ourthe Company’s board of directors who serve on the board of the affiliated entity will be deemed "interested directors"“interested directors” and will not participate in approving or making other substantive decisions with respect to such related party transactions.

Limitation on Operating Expenses

After commencement of this offering, in compliance with the NASAA REIT Guidelines, our Advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. "Average invested assets" means the average of the aggregate monthly book value of our assets during a specified period invested, directly or indirectly in equity interests in and loans secured by real estate, before deducting depreciation, bad debts or other non-cash reserves. "Total operating expenses" means all costs and expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding (i) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (ii) interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves; (v) incentive fees paid in compliance with the NASAA REIT Guidelines; (vi) acquisition fees and expenses; (vii) real estate commissions on the sale of real property; and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).

Notwithstanding the foregoing, to the extent that operating expenses payable or reimbursable by us exceed these limits and the independent directors determine that the excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient, our Advisor may be reimbursed in future periods for the full amount of the excess expenses or any portion thereof. Within 60 days after the end of any fiscal quarter for which our total operating expenses for the four consecutive fiscal quarters then ended exceed these limits, we will send our stockholders a written disclosure of such fact, together with an explanation of the factors our independent directors considered in determining that such excess expenses were justified. In addition, our independent directors will review the total fees and expense reimbursements for operating expenses paid to our Advisor to determine if they are reasonable in light of our performance, our net assets and income, and the fees and expenses of other comparable unaffiliated REITs.

Issuance of Options and Warrants to Certain Affiliates

Until ourthe Company’s shares of common stock are listed on a national securities exchange, wethe Company will not issue options or warrants to purchase our common stock to ourthe former Advisor, ourthe Sponsor, any of ourthe Company’s directors or any of their affiliates, except on the same terms as such options or warrants, if any, are sold to the general public. We may issue options or warrants to persons other than ourthe former Advisor, ourthe Sponsor, ourthe Company’s directors and their affiliates prior to listing ourthe Company’s common stock on a national securities exchange, but not at an exercise price less than the fair market value of the underlying securities on the date of grant and not for consideration (which may include services) that in the judgment of ourthe Company’s board of directors has a market value less than the value of such option or warrant on the date of grant. Any options or warrants we issue to ourthe former Advisor, ourthe Sponsor or any of their affiliates shall not exceed an amount equal to 10% of the outstanding shares of ourthe Company’s common stock on the date of grant.

-98-

Reports to Stockholders

WeThe Company will prepare an annual report and deliver it to ourthe Company’s common stockholders within 120 days after the end of each fiscal year. OurThe Company’s directors are required to take reasonable steps to ensure that the annual report complies with ourthe Company’s charter provisions.provisions as applicable. Among the matters that must be included in the annual report or included in a proxy statement delivered with the annual report are:

•financial statements prepared in accordance with GAAP that are audited and reported on by independent certified public accountants;
•the ratio of the costs of raising capital during the year to the capital raised;
•the aggregate amount of advisory fees and the aggregate amount of other fees paid to our Advisor and any affiliates of our Advisor by us or third parties doing business with us during the year;
•our total operating expenses for the year stated as a percentage of our average invested assets and as a percentage of our net income;
•a report from the independent directors that our policies are in the best interests of our stockholders and the basis for such determination; and
•a separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and our Advisor, a director or any affiliate thereof during the year, which disclosure has been examined and commented upon in the report by the independent directors with regard to the fairness of such transactions.
financial statements prepared in accordance with GAAP that are audited and reported on by independent certified public accountants;

the ratio of the costs of raising capital during the year to the capital raised;
the aggregate amount of advisory fees and the aggregate amount of other fees paid to the former Advisor and any affiliates of the former Advisor by the Company or third parties doing business with the Company during the year;
the Company’s total operating expenses for the year stated as a percentage of the Company’s average invested assets and as a percentage of the Company’s net income;
a report from the independent directors that the Company’s policies are in the best interests of the Company’s stockholders and the basis for such determination; and
a separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and the former Advisor, a director or any affiliate thereof during the year, which disclosure has been examined and commented upon in the report by the independent directors regarding the fairness of such transactions.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES; AUDIT COMMITTEE REPORT

Principal Accounting Fees and Services

For the yearyears ended December 31, 20162019 and during the period from May 4, 2015 (date of inception) through December 31, 20152018 RBSM LLP ("RBSM"(“RBSM”), our independent public accounting firm, billed the Company approximately $405,000 and $520,000, respectively, for their professional services rendered as follows:services.

  December 31, 2016  For the period May 4, 2015 (date of inception) December 31, 2015 
Audit Fees $61,000  $-- 
Audit Related Fees $7,500  $34,000 
Tax Fees $--  $-- 
All Other Fees $--  $-- 
For the year ended December 31, 2018, RSM US LLP (“RSM”), our former independent public accounting firm, billed the Company approximately $443,000 for their professional services.

RBSM did not perform any non-audit services for us during
-110-

For the year ended December 31, 20162019 and during2018, Armanino, LLP (“Armanino”) HCVT LLP (“HCVT”), our independent accounting firm, billed the period May 4, 2015 (date of inception) December 31, 2015.Company approximately $98,000 and $219,000, respectively, for their professional services.

  RBSM 12/31/2019  RBSM 12/31/2018  RSM 12/31/2019  RSM 12/31/2018  Armanino 12/31/2019  HCVT 12/31/2018 
Audit Fees 
$
405,000
  
$
495,000
  
$
--
  
$
343,000
  
$
--
  
$
--
 
Audit Related Fees 
$
--
  
$
--
  
$
--
  
$
--
  
$
--
  
$
--
 
Tax Fees
 
$
--
  
$
--
  
$
--
  
$
--
  
$
98,000
  
$
219,000
 
All Other Fees
 
$
--
  
$
25,000
  
$
--
  
$
100,000
  
$
--
  
$
--
 
Total 
$
405,000
  
$
520,000
  
$
--
  
$
443,000
  
$
98,000
  
$
219,000
 

Audit fees. Consists of fees billed for the audit of ourthe Company’s annual financial statements, review of ourthe Company’s Form 10-K, review of ourthe Company’s interim financial statements included in ourthe Company’s Form 10-Q and services that are normally provided by the accountant in connection with year-end statutory and regulatory filings or engagements.

Audit-related fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of ourthe Company’s financial statements and are not reported under "Audit Fees",“Audit Fees,” such as acquisition audit, and audit of ourthe Company’s financial statements, and review of our Form 8-K, review of the Company’s registration statement on Form S-11 and Form S-4 filings.

Tax fees. Consists of professional services rendered by a company aligned with ourthe Company’s principal accountant for tax compliance, tax advice and tax planning.

Other fees. The services provided by ourthe Company’s accountants within this category consisted of advice and other services.


Pre-Approval Policy

The Audit Committee has direct responsibility to review and approve the engagement of the independent auditors to perform audit services or any permissible non-audit services. All audit and non-audit services to be provided by the independent auditors must be approved in advance by the Audit Committee. The Audit Committee may not engage the independent auditors to perform specific non-audit services proscribed by law or regulation. All services performed by our independent auditors under engagements entered into were approved by ourthe Company’s Audit Committee, pursuant to ourthe Company’s pre-approval policy, and none was approved pursuant to the de minimis exception to the rules and regulations of the Securities Exchange Act, of 1934, Section 10A(i)(1)(B), on pre-approval.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following are filed as part of this Report:

(a) 1. Financial Statements

The list of the financial statements contained herein are contained in Part II, Item 8. Financial Statements on this Annual Report, on Form 10-K, which is hereby incorporated by reference.

(a) 2. Financial Statement Schedules

Schedule III – Combined Real Estate and Accumulated Depreciation

3. Exhibits

Reference is made to the Exhibit Index appearing immediately afterbefore the signature page to this report for a list of exhibits filed as part of this report.

ITEM 16.Summary

None.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 MVPThe Parking REIT, II, Inc.
   
 By:/s/ Michael V. Shustek
  Michael V. Shustek
  Chief Executive Officer
 Date:March 24, 201730, 2020
   
 By:/s/ Ed BentzenJ. Kevin Bland
  Ed BentzenJ. Kevin Bland
  Chief Financial Officer
 Date:March 24, 201730, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Capacity Date
     
/s/ Michael V. Shustek 
Chief Executive Officer and Director
 
March 24, 201730, 2020
Michael V. Shustek
 
(Principal Executive Officer)
  
     
/s/ Ed BentzenJ. Kevin Bland 
Chief Financial Officer
 
March 24, 201730, 2020
Ed Bentzen
J. Kevin Bland
 
(Principal Financial and Accounting Officer)
  
     
/s/ John E. Dawson 
Director
 
March 24, 201730, 2020
John E. Dawson
    
     
/s/ Allen WolffRobert J. Aalberts 
Director
 
March 24, 201730, 2020
Allen Wolff
Robert J. Aalberts
    
     
/s/ David ChavezNicholas Nilsen 
Director
 
March 24, 201730, 2020
David Chavez
Nicholas Nilsen
    
     
/s/ Erik HartShawn Nelson 
Director
 
March 24, 201730, 2020
Erik Hart
Shawn Nelson
    
-112-


-101-

EXHIBIT INDEX

3.1(1)
Agreement and Plan of Merger, dated May 26, 2017, among THE PARKING REIT, Inc., MVP Realty Advisors, LLC, MVP Merger Sub, LLC and MVP REIT, Inc.
Contribution Agreement, dated as of March 29, 2019 and effective as of April 1, 2019, among The Parking REIT, Inc., MVP Realty Advisors, LLC, dba The Parking REIT Advisors, Vestin Realty Mortgage I, Inc. (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc. (solely for purposes of Section 1.01(c) thereof) and Michael V. Shustek (solely for purposes of Section 4.03 thereof)
Articles of Amendment and Restatement of MVPTHE PARKING REIT, II, Inc.
3.2(9)
Articles of Amendment of THE PARKING REIT, Inc.
Articles Supplementary for Series A Convertible Redeemable Preferred Stock of THE PARKING REIT, Inc.
Articles Supplementary for Series 1 Convertible Redeemable Preferred Stock of THE PARKING REIT, Inc.
Bylaws of THE PARKING REIT, Inc.
Form of Common Stock Warrants (issued to Series A Preferred Stockholders)
Form of Common Stock Warrants (issued to Series 1 Preferred Stockholders)
Distribution Reinvestment Plan
4.4
 Articles SupplementaryDescription of MVP REIT II, Inc.Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
3.3(2)Bylaws of MVP REIT II, Inc.
4.1(3)Form of Subscription Agreement
4.2(4)Distribution Reinvestment Plan
4.3(5)Amended and Restated Escrow Agreement, dated October 5, 2015, between MVP REIT II, Inc. and UMB Bank, N.A.
4.4(6)Second Amended and Restated Escrow Agreement, dated November 30, 2015, by and among MVP REIT II, Inc., MVP American Securities, LLC, and UMB Bank, N.A.
10.1(5)Amended and Restated Advisory Agreement, dated October 5, 2015, between MVP REIT II, Inc. and MVP Realty Advisors, LLC
10.2(6)Amendment No. 1 to the Amended and Restated Advisory Agreement, dated November 30, 2015, between MVP REIT II, Inc., MVP REIT II Operating Partnership, LP, and MVP Realty Advisors, LLC
10.3(5)Amended and Restated Selling Agreement, dated October 5, 2015, between MVP REIT II, Inc. and MVP American Securities, LLC
10.4(1)
Agreement of Limited Partnership of MVP REIT II Operating Partnership, LP
10.5(1)MVP
THE PARKING REIT, II, Inc. Long-Term Incentive Plan
10.6(1)MVP
THE PARKING REIT, II, Inc. Independent Directors Compensation Plan
10.7(1)
Form of Indemnification Agreement
10.8(7)Operating Agreement of MVP Minneapolis Orpheum Lots, LLC
10.9(7)Membership Interest Purchase Agreement, dated as of December 4, 2015, by and between MVP Minneapolis Orpheum Lots, LLC and Minneapolis Parking Venture LLC
10.10(7)First Amendment to Membership Interest Purchase Agreement, dated as of December 29, 2015, by and between MVP Minneapolis Orpheum Lots, LLC and Minneapolis Parking Venture LLC
10.11(7)Operating Agreement of MVP Denver 1935 Sherman, LLC
10.12(7)Agreement of Purchase and Sale, dated as of November 19, 2015, by and among MVP Denver 1935 Sherman, LLC, Robert A. Bruhn, Jr., Kristina Cleary, Lisa L. Westwood, and Annah E. Palm
10.13(7)First Amendment of Agreement of Purchase and Sale, dated as of January 20, 2016, by and among MVP Denver 1935 Sherman, LLC, Robert A. Bruhn, Jr., Kristina Cleary, Lisa L. Westwood, and Annah E. Palm
10.14(7)Second Amendment of Agreement of Purchase and Sale, dated as of February 1, 2016, by and among MVP Denver 1935 Sherman, LLC, Robert A. Bruhn, Jr., Kristina Cleary, Lisa L. Westwood, and Annah E. Palm
10.15(7)Operating Agreement of MVP Bridgeport Fairfield Garage, LLC
10.16(7)Purchase and Sale Agreement, dated as of February 19, 2016, by and between Fairfield Avenue Parking Corporation and MVP Bridgeport Fairfield Garage, LLC
10.17(7)First Amendment to Purchase and Sale Agreement, dated as of March 18, 2016, by and between Fairfield Avenue Parking Corporation and MVP Bridgeport Fairfield Garage, LLC
10.18(8)Credit Agreement dated as of October 5, 2016 among MVP Real Estate Holding, LLC, MVP REIT II Operating Partnership, L.P., certain of their subsidiaries and KeyBank National Association
10.19(8)MVP Guaranty dated as of October 5, 2016, by and among MVP REIT, Inc. and MVP REIT II, Inc.
10.20(8)Pledge and Security Agreement dated as of October 5, 2016 among MVP Real Estate Holdings, LLC, MVP REIT II Operating Partnership, LP, certain of their Subsidiaries and KeyBank National Association
10.21(8)Promissory Note dated October 5, 2016 2016 among MVP Real Estate Holdings, LLC, MVP REIT II Operating Partnership, LP, certain of their Subsidiaries and KeyBank National Association
10. 22(9)Form of Warrant to Purchase Common Stock
10.23(10)Form of Subscription Agreement For Shares of Series A Convertible Redeemable Preferred Stock
10.24(10)Lead Placement Agent Agreement, dated as of November 1, 2016, by and between MVP American Securities, LLC and MVP REIT II, Inc.
10.25(10)Form of MVP American Securities, LLC Selling Agent Agreement for the Private Place of Series A Convertible Redeemable Preferred Stock  of MVP REIT II, Inc.
10.26(11)
Purchase and Sale Agreement, dated as of October 31, 2016, by and between Center Parking Associates Limited Partnership and MVP Detroit Center Garage, LLC
10.27(12)
Loan Agreement, dated as of January 10, 2017, by and between MVP Detroit Center Garage, LLC and Bank of America, N.A.
21.1(2)
Loan Agreement, dated as of November 30, 2018, by and among certain subsidiaries of Parking REIT, Inc. as        borrowers party thereto and LoanCore Capital Credit REIT LLC as lender.
Contribution Agreement dated March 29, 2019 and effective as of April 1, 2019, among The Parking REIT, Inc., MVP Realty Advisors, LLC, dba The Parking REIT Advisors, Vestin Realty Mortgage I, Inc. (solely for purposes of Section 1.01(c) thereof), Vestin Realty Mortgage II, Inc, (solely for purposes of Section 1.01(c) thereof) and Michael V. Shustek (solely for purposes of Section 4.03 thereof)
Employee Leasing Agreement dated as of March 29, 2019, by and between The Parking REIT, Inc. and MVP Realty Advisors, LLC, dba The Parking REIT Advisors
Registration Rights Agreement dated as of March 29, 2019, by and among The Parking REIT, Inc. and the Holders
Termination Agreement dated as of March 29, 2019, by and among The Parking REIT, Inc., MVP REIT II Operating Partnership, LP and MVP Realty Advisors, LLC, dba The Parking REIT Advisors
Services Agreement, dated as of March 29, 2019, by and among The Parking REIT, Inc., MVP REIT II Operating Partnership, LP, Vestin Realty Mortgage I, Inc., Vestin Realty Mortgage II, Inc., MVP Realty Advisors, LLC, dba The Parking REIT Advisors, and Michael V. Shustek
Employment Agreements, dated as of March 29, 2019 by and between the Company and Michael Shustek, Dan Huberty and J Kevin Bland
21.1(*)
 
  Subsidiaries of the Registrant.
23.1
23.1(*)
 Consent of Independent Registered Public Accounting Firm
31.1(*)
 Certification of Chief Executive Officer pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(*)
 Certification of Chief Financial Officer pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.
32(*)
 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101(*)
 
The following materials from the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (extensible Business Reporting Language (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Stockholder'sStockholder’s Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Financial Statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
   
 *
Filed concurrently herewith.
(2)
(3)
(4)
(5)Filed previously with Pre-Effective Amendment No. 3 to the Registration Statement on Form S-11 on October 6, 2015 and incorporated herein by reference.
(6)
(7)Filed previously with Post-Effective Amendment No. 1 to the Registration Statement on Form S-11 on April 6, 2016 and incorporated herein by reference.
(8)Filed previously on Form 8-K on October 6, 2016 and incorporated herein by reference.
(9)Filed previously on Form 8-K on October 28, 2016 and incorporated herein by reference.
(10)Filed previously on Form 8-K on November 2, 2016 and incorporated herein by reference.
(11)
(12)