U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
☒ | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
For the quarterly period ended | |||
☐ | |||
Transition Report Pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 | |||
For the transition period of | to | ||
Commission File Number 0-7865. |
Commission File Number 0-7865.
SECURITY LAND AND DEVELOPMENT CORPORATION
(Exact name of issuer as specified in its charter)
(Exact name of issuer as specified in its charter) | |||
Georgia | 58-1088232 | ||
(State or other Jurisdiction of | (I.R.S. Employer | ||
Incorporation or Organization) |
Identification Number) |
2816 Washington Road, #103, Augusta, Georgia 30909
(Address of Principal Executive Offices)
Issuers Telephone Number(706) 736-6334
(Former(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Year)
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large"large accelerated filer,” “accelerated filer”" "accelerated filer" and “smaller"smaller reporting company”company" in rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | ||
Non-accelerated filer | Smaller reporting company | ☒ |
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 (§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 o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o☐Yes xNo
☒No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
Class | Outstanding at | |
Common Stock, $0.10 Par Value | 5,243,107 shares |
SECURITY LAND AND DEVELOPMENT CORPORATION
Form 10-Q
Index
Part I | FINANCIAL INFORMATION | |
Item 1. | Financial Statements | |
| ||
Consolidated Balance Sheets as of | 1 | |
Nine Month | 2 | |
Month | 3 | |
4-8 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of | 9-10 |
Item 3. | 10 | |
Item 4. | 10-11 | |
Part II | 11 | |
| 11 | |
Item 1A. | 11 | |
| ||
Item 2. | 11 | |
Item 3. | 11 | |
Item 4. | 11 | |
Item 5. | 11 | |
Item | 11 | |
12-14 |
PART I. FINANCIAL INFORMATION
|
| June 30, | September 30, | ||
|
| 2015 | 2014 | ||
|
| (unaudited) | |||
ASSETS |
|
| |||
CURRENT ASSETS |
|
| |||
Cash | $ | 777,253 | $ | 65,982 | |
Receivables from tenants, net of allowance of $46,392 and $43,578 |
|
|
| ||
at June 30, 2015 and September 30, 2014, respectively |
| 359,424 |
| 527,579 | |
Total current assets |
| 1,136,677 |
| 593,561 | |
RESTRICTED CASH HELD BY QUALIFIED INTERMEDIARY |
| 1,791,839 |
| - | |
INVESTMENT PROPERTIES |
|
|
| ||
Investment properties for lease, net of accumulated depreciation |
| 5,208,797 |
| 5,459,560 | |
Land and improvements held for investment or development |
| 3,639,598 |
| 3,639,598 | |
|
| 8,848,395 |
| 9,099,158 | |
OTHER ASSETS |
| 81,636 |
| 76,239 | |
| $ | 11,858,547 | $ | 9,768,958 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
| ||
CURRENT LIABILITIES |
|
|
| ||
Accounts payable and accrued expenses | $ | 189,450 | $ | 452,669 | |
Income taxes payable |
| 49,902 |
| 229,031 | |
Current maturities of notes payable |
| 236,281 |
| 554,065 | |
Current maturities of deferred revenue |
|
|
| 18,489 | |
Current note payable to stockholder |
| - |
| 50,433 | |
Total current liabilities |
| 475,633 |
| 1,304,687 | |
LONG-TERM LIABILITIES |
|
|
| ||
Notes payable, less current portion |
| 3,086,192 |
| 2,435,541 | |
Deferred income taxes |
| 1,490,712 |
| 737,230 | |
Total long-term liabilities |
| 4,576,904 |
| 3,172,771 | |
Total liabilities |
| 5,052,537 |
| 4,477,458 | |
STOCKHOLDERS' EQUITY |
|
|
| ||
Common stock, par value $.10 per share; 30,000,000 shares authorized; |
|
|
| ||
5,243,107 shares issued and outstanding |
| 524,311 |
| 524,311 | |
Additional paid-in capital |
| 333,216 |
| 333,216 | |
Retained earnings |
| 5,948,483 |
| 4,433,973 | |
Total Stockholders' Equity |
| 6,806,010 |
| 5,291,500 | |
Liabilities and Stockholders' Equity | $ | 11,858,547 | $ | 9,768,958 |
The accompanying notes are an integral part of these consolidated financial statements.
- 1 -
SECURITY LAND AND DEVELOPMENT CORPORATION
March 31, | September 30, | |||||||
2015 | 2014 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 464,311 | $ | 65,982 | ||||
Receivables from tenants, net of allowance of $46,392 and $43,578 at March 31, 2015 and September 30, 2014, respectively | 443,594 | 527,579 | ||||||
Total current assets | 907,905 | 593,561 | ||||||
INVESTMENT PROPERTIES | ||||||||
Investment properties for lease, net of accumulated depreciation | 5,367,959 | 5,459,560 | ||||||
Land and improvements held for investment or development | 3,639,598 | 3,639,598 | ||||||
9,007,557 | 9,099,158 | |||||||
OTHER ASSETS | 83,919 | 76,239 | ||||||
$ | 9,999,381 | $ | 9,768,958 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | 289,908 | $ | 452,669 | |||||
Income taxes payable | 125,637 | 229,031 | ||||||
Current maturities of notes payable | 219,933 | 554,065 | ||||||
Current maturities of deferred revenue | 6,163 | 18,489 | ||||||
Current note payable to stockholder | - | 50,433 | ||||||
Total current liabilities | 641,641 | 1,304,687 | ||||||
LONG-TERM LIABILITIES | ||||||||
Notes payable, less current portion | 3,146,194 | 2,435,541 | ||||||
Deferred income taxes | 730,239 | 737,230 | ||||||
Total long-term liabilities | 3,876,433 | 3,172,771 | ||||||
Total liabilities | 4,518,074 | 4,477,458 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, par value $.10 per share; 30,000,000 shares authorized; 5,243,107 shares issued and outstanding | 524,311 | 524,311 | ||||||
Additional paid-in capital | 333,216 | 333,216 | ||||||
Retained earnings | 4,623,780 | 4,433,973 | ||||||
Total Stockholders’ Equity | 5,481,307 | 5,291,500 | ||||||
Liabilities and Stockholders’ Equity | $ | 9,999,381 | $ | 9,768,958 |
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
|
| For the Three Month |
|
| For the Nine Month |
| ||||||
|
| Period Ended June 30, |
|
| Period Ended June 30, |
| ||||||
|
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
|
|
| (unaudited) |
|
| (unaudited) |
|
| (unaudited) |
|
| (unaudited) |
|
OPERATING REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Rent Revenue | $ | 383,518 |
| $ | 375,529 |
| $ | 1,148,443 |
| $ | 1,109,529 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 41,780 |
|
| 42,636 |
|
| 126,400 |
|
| 108,511 |
|
Property taxes |
| 66,158 |
|
| 67,549 |
|
| 199,808 |
|
| 199,519 |
|
Payroll and related costs |
| 19,368 |
|
| 18,777 |
|
| 61,461 |
|
| 58,840 |
|
Insurance and utilities |
| 18,679 |
|
| 19,762 |
|
| 36,127 |
|
| 37,897 |
|
Repairs and maintenance |
| 49,754 |
|
| 13,851 |
|
| 73,255 |
|
| 47,121 |
|
Professional services |
| 11,763 |
|
| 66,658 |
|
| 54,707 |
|
| 106,814 |
|
Bad debt |
| - |
|
| 16,466 |
|
| 2,814 |
|
| 16,466 |
|
Penalties |
| 7 |
|
| - |
|
| 11,551 |
|
| - |
|
Other |
| 1,738 |
|
| 1,011 |
|
| 4,180 |
|
| 3,584 |
|
|
| 209,247 |
|
| 246,710 |
|
| 570,303 |
|
| 578,752 |
|
Operating income |
| 174,271 |
|
| 128,819 |
|
| 578,140 |
|
| 530,777 |
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale |
| 1,862,235 |
|
| - |
|
| 1,862,235 |
|
| - |
|
Interest |
| (40,296) |
|
| (47,250) |
|
| (131,609) |
|
| (142,619) |
|
Other Income |
| 138,868 |
|
| - |
|
| 138,868 |
|
| - |
|
|
| 1,960,807 |
|
| (47,250) |
|
| 1,869,494 |
|
| (142,619) |
|
Income before income taxes |
| 2,135,078 |
|
| 81,569 |
|
| 2,447,634 |
|
| 388,158 |
|
INCOME TAXES PROVISION (BENEFIT) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
| 49,902 |
|
| 50,113 |
|
| 179,642 |
|
| 165,941 |
|
Income tax deferred expense (benefit) |
| 760,473 |
|
| (15,118) |
|
| 753,482 |
|
| (14,564) |
|
|
| 810,375 |
|
| 34,995 |
|
| 933,124 |
|
| 151,377 |
|
Net income |
| 1,324,703 |
|
| 46,574 |
|
| 1,514,510 |
|
| 236,781 |
|
RETAINED EARNINGS, BEGINNING OF PERIOD |
| 4,623,780 |
|
| 4,294,362 |
|
| 4,433,973 |
|
| 4,104,155 |
|
RETAINED EARNINGS, END OF PERIOD | $ | 5,948,483 |
| $ | 4,340,936 |
| $ | 5,948,483 |
| $ | 4,340,936 |
|
PER SHARE DATA |
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| |
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| |
Net income per common share | $ | 0.25 |
| $ | 0.01 |
| $ | 0.29 |
| $ | 0.05 |
|
|
|
|
|
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|
The accompanying notes are an integral part of these consolidated financial statements.
-2-
SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGSCASH FLOWS
For the Three Month | For the Six Month | |||||||||||||||
Period Ended March 31, | Period Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
OPERATING REVENUE | ||||||||||||||||
Rent revenue | $ | 383,653 | $ | 360,252 | $ | 764,925 | $ | 734,000 | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Depreciation and amortization | 42,309 | 32,938 | 84,620 | 65,875 | ||||||||||||
Property taxes | 69,228 | 64,107 | 133,650 | 131,970 | ||||||||||||
Payroll and related costs | 20,222 | 19,930 | 42,093 | 40,063 | ||||||||||||
Insurance and utilities | 8,677 | 10,500 | 17,448 | 18,135 | ||||||||||||
Repairs and maintenance | 7,377 | 9,550 | 23,501 | 33,270 | ||||||||||||
Professional services | 18,000 | 28,576 | 42,944 | 40,156 | ||||||||||||
Bad debt | - | - | 2,814 | - | ||||||||||||
Penalties | 7,026 | - | 11,544 | - | ||||||||||||
Other | 728 | 1,969 | 2,442 | 2,573 | ||||||||||||
173,567 | 167,570 | 361,056 | 332,042 | |||||||||||||
Operating income | 210,086 | 192,682 | 403,869 | 401,958 | ||||||||||||
OTHER EXPENSE | ||||||||||||||||
Interest | 46,426 | 47,970 | 91,313 | 95,369 | ||||||||||||
Income before income taxes | 163,660 | 144,712 | 312,556 | 306,589 | ||||||||||||
INCOME TAXES PROVISION (BENEFIT) | ||||||||||||||||
Income tax expense | 69,723 | 53,897 | 129,740 | 115,828 | ||||||||||||
Income tax deferred expense (benefit) | (3,494 | ) | 1,035 | (6,991 | ) | 554 | ||||||||||
66,229 | 54,932 | 122,749 | 116,382 | |||||||||||||
Net income | 97,431 | 89,780 | 189,807 | 190,207 | ||||||||||||
RETAINED EARNINGS, BEGINNING OF PERIOD | 4,526,349 | 4,204,582 | 4,433,973 | 4,104,155 | ||||||||||||
RETAINED EARNINGS, END OF PERIOD | $ | 4,623,780 | $ | 4,294,362 | $ | 4,623,780 | $ | 4,294,362 | ||||||||
PER SHARE DATA | ||||||||||||||||
Net income per common share | $ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 |
|
| For the Three Month |
|
| For the Nine Month |
| ||||||
|
| Period Ended June 30, |
|
| Period Ended June 30, |
| ||||||
|
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
|
|
| (unaudited) |
|
| (unaudited) |
|
| (unaudited) |
|
| (unaudited) |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
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|
|
|
Net income | $ | 1,324,703 | $ | 46,574 | $ | 1,514,510 | $ | 236,781 |
| |||
Adjustments to reconcile net income to net cash provided |
|
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|
|
by operating activities: |
|
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|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 41,780 |
|
| 42,636 |
|
| 126,400 |
|
| 108,511 |
|
Gain on sale |
| (1,862,235) |
|
| - |
|
| (1,862,235) |
|
| - |
|
Deferred income tax |
| 760,473 |
|
| (15,118) |
|
| 753,482 |
|
| (14,564) |
|
Changes in deferred and accrued amounts: |
| (96,116) |
|
| 86,577 |
|
| (290,612) |
|
| 66,194 |
|
Net cash provided by operating activities |
| 168,605 |
|
| 160,669 |
|
| 241,545 |
|
| 396,922 |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of investment properties |
| 1,981,900 |
|
| - |
|
| 1,993,150 |
|
| - |
|
Addition to restricted cash held by qualified intermediary | (1,791,839) | - | (1,791,839) | - | ||||||||
Additions to investment properties |
| - |
|
| (196,591) |
|
| (11,949) |
|
| (200,591) |
|
Net cash provided by (used in) investing activities |
| 190,061 |
|
| (196,591) |
|
| 189,362 |
|
| (200,591) |
|
FINANCING ACTIVITIES |
|
|
|
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|
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Repayments to stockholder |
| - |
|
| - |
|
| (50,433) |
|
| - |
|
Proceeds from stockholder |
| - |
|
| - |
|
| - |
|
| 50,015 |
|
Proceeds from notes payable |
| - |
|
| 182,797 |
|
| 1,500,000 |
|
| 186,804 |
|
Principal payments on notes payable |
| (45,724) |
|
| (146,688) |
|
| (1,169,203) |
|
| (433,548) |
|
Net cash provided by (used in) financing activities |
| (45,724) |
|
| 36,109 |
|
| 280,364 |
|
| (196,729) |
|
Net increase (decrease) in cash |
| 312,942 |
|
| 187 |
|
| 711,271 |
|
| (398) |
|
CASH, BEGINNING OF PERIOD |
| 464,311 |
|
| 24,014 |
|
| 65,982 |
|
| 24,599 |
|
CASH, END OF PERIOD | $ | 777,253 |
| $ | 24,201 | $ | 777,253 |
| $ | 24,201 |
| |
SUPPLEMENTAL CASH FLOW INFORMATION: |
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| |
Cash paid for interest | $ | 47,752 |
| $ | 39,823 |
| $ | 137,956 |
| $ | 139,955 |
|
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Cash paid for income taxes | $ | 125,737 |
| $ | 6,381 |
| $ | 351,880 |
| $ | 93,216 |
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The accompanying notes are an integral part of these consolidated financial statements.
-3-
SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Month | For the Six Month | |||||||||||||||
Period Ended March 31, | Period Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||
Net income | $ | 97,431 | $ | 89,780 | $ | 189,807 | $ | 190,207 | ||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 42,309 | 32,938 | 84,620 | 65,875 | ||||||||||||
Deferred income tax | (3,494 | ) | 1,035 | (6,991 | ) | 554 | ||||||||||
Changes in deferred and accrued amount: | (188,600 | ) | (30,032 | ) | (194,496 | ) | (20,383 | ) | ||||||||
Net cash (used in) provided by operating activities | (52,354 | ) | 93,721 | 72,940 | 236,253 | |||||||||||
INVESTING ACTIVITIES | ||||||||||||||||
Sale of investment properties and other assets for improvements to property held for lease | 11,250 | - | 11,250 | - | ||||||||||||
Additions to investment properties and other assets for improvements to property held for lease | (11,949 | ) | (4,000 | ) | (11,949 | ) | (4,000 | ) | ||||||||
Net cash used in investing activities | (699 | ) | (4,000 | ) | (699 | ) | (4,000 | ) | ||||||||
FINANCING ACTIVITIES | ||||||||||||||||
Repayments to stockholder | (50,433 | ) | - | (50,433 | ) | - | ||||||||||
Proceeds from stockholder | - | 50,015 | - | 50,015 | ||||||||||||
Proceeds from note payable | 1,500,000 | 4,007 | 1,500,000 | 4,007 | ||||||||||||
Principal payments on notes payable | (962,485 | ) | (144,710 | ) | (1,123,479 | ) | (286,860 | ) | ||||||||
Net cash provided by (used in) financing activities | 487,082 | (90,688 | ) | 326,088 | (232,838 | ) | ||||||||||
Net increase (decrease) in cash | 434,029 | (967 | ) | 398,329 | (585 | ) | ||||||||||
CASH, BEGINNING OF PERIOD | 30,282 | 24,981 | 65,982 | 24,599 | ||||||||||||
CASH, END OF PERIOD | $ | 464,311 | $ | 24,014 | $ | 464,311 | $ | 24,014 | ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 46,815 | $ | 52,733 | $ | 90,204 | $ | 100,132 | ||||||||
Cash paid for income taxes | $ | 188,241 | $ | 86,835 | $ | 226,143 | $ | 86,835 |
The accompanying notes are an integral part of these consolidated financial statements.
SECURITY LAND AND DEVELOPMENT CORPORATION
Notes to the Consolidated Financial Statements
Note 1 – Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q, Article 8 of Regulation S-X and accounting principles generally accepted in the United States of America; therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows. Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited financial statements appearing in our Form 10-K for the year ended September 30, 2014 when reviewing these interim financial statements.
The financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Security Land and Development Corporation and its four wholly owned subsidiaries, Royal Palms Motel, Inc., SLDC, LLC, SLDC 2, LLC and SLDC III, LLC (described on a consolidated basis as the “Company”). Significant intercompany transactions and accounts are eliminated in consolidation.
Critical Accounting Policies:
Estimates of Useful Lives of Investment Properties for Purposes of Depreciation
Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from management’s estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties.
Evaluation of Long-Lived Assets for Impairment
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount.
Estimates of Income Tax Rates Applicable to Deferred Taxes
The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from management’s estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due.
Refer to the Company’s Form 10-K for the year ended September 30, 2014 for further information regarding its critical accounting policies.
Note 1 – Basis of Presentation, Continued
In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition
- 4 -
Note 1 – Basis of Presentation, Continued
for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.
Note 2 – Investment Properties
Investment properties leased or held for lease to others under operating leases consisted of the following at March 31,June 30, 2015 and September 30, 2014:
March 31, | September 30, | ||||||||||||
2015 | 2014 | June 30, | September 30, | ||||||||||
(unaudited) | 2015 | 2014 | |||||||||||
(unaudited) |
|
| |||||||||||
National Plaza building, land and improvements | $ | 5,325,348 | $ | 5,325,348 | $ | 5,305,419 | $ | 5,325,348 | |||||
Evans Ground Lease, land and improvements | 2,382,673 | 2,382,673 |
| 2,382,673 |
| 2,382,673 | |||||||
Commercial land and improvements | 3,639,598 | 3,639,598 |
| 3,639,598 |
| 3,639,598 | |||||||
11,347,619 | 11,347,619 |
| 11,327,690 |
| 11,347,619 | ||||||||
Less accumulated depreciation | (2,439,796 | ) | (2,360,803 | ) |
| (2,479,295) |
| (2,360,803) | |||||
8,907,823 | 8,986,816 | ||||||||||||
| 8,848,395 |
| 8,986,816 | ||||||||||
Residential rental property | 134,597 | 145,847 |
| - |
| 145,847 | |||||||
Less accumulated depreciation | (34,863 | ) | (33,505 | ) |
| - |
| (33,505) | |||||
99,734 | 112,342 |
| - |
| 112,342 | ||||||||
Investment properties for lease, net of accumulated depreciation | $ | 9,007,557 | $ | 9,099,158 | |||||||||
Investment properties for lease, net of accumulated |
|
|
|
| |||||||||
depreciation | $ | 8,848,395 | $ | 9,099,158 |
Depreciation expense totaled approximately $40,000$39,000 and $31,000$42,000 for the three-month periods ended March 31,June 30, 2015 and 2014, respectively and approximately $80,000$120,000 and $62,000$105,000 for the six-monthnine-month periods ended March 31,June 30, 2015 and 2014, respectively.
The National Plaza is a retail strip center located on Washington Road in Augusta Georgia. Approximately 81% of the rentable space at the National Plaza is leased to Publix Supermarkets, Inc., the National Plaza’s anchor tenant.
In April 2015, the Company sold .038 acres of fee simple right-of-way, .191 acres of temporary easement for construction and .158 acres of permanent easement for construction. The sales proceeds from these transactions were $186,900. In June of 2015 the Company sold an outparcel approximating 1 acre in size on Stanley Drive and a rental house on Stanley Drive for $1,795,000. Together, the Company recognized a gain of approximately $1,862,000 on these sales. The Company is planning to reinvest the proceeds through a like kind exchange for other similar real estate held for development or lease and defer the related tax liability. The Company’s management has identified property suitable for investment and has made an offer on one. A qualified intermediary holds the proceeds from the sale approximating $1,792,000.
The Company entered into a long-term ground lease with a major national tenant and its developer in May 2006 on approximately 18 acres of land in Columbia County, Georgia. The agreement required monthly rental payments of $20,833 during the development period, which was completed in January 2007. Following the expiration of the development period, the lease requires annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lessee has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years. The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term.
- 5 - Note 2 – Investment Properties, Continued The Company holds several parcels of land for investment or development purposes, including 19.38 acres of land in North Augusta, South Carolina, purchased in parcels during 2007 and 2008. The Company also owns approximately 85 acres of land in south Richmond County, Georgia and a 1.1 acre parcel along Washington Road in Augusta, Georgia that adjoins the Company’s National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,639,598 at Refer to the Company’s Form 10-K for the year ended September 30, 2014 for further information on operating lease agreements and land held for investment or development purposes.
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