Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 08, 2021 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Sterling Real Estate Trust | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-54295 | |
Entity Incorporation, State or Country Code | ND | |
Entity Tax Identification Number | 90-0115411 | |
Entity Address, Address Line One | 4340 18th Ave S., Suite 200 | |
Entity Address, City or Town | Fargo | |
Entity Address, State or Province | ND | |
Entity Address, Postal Zip Code | 58103 | |
City Area Code | 701 | |
Local Phone Number | 353-2720 | |
Title of 12(b) Security | Common Shares, par value $0.01 per share | |
No Trading Symbol Flag | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,357,118.45 | |
Entity Central Index Key | 0001412502 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Land and land improvements | $ 125,333 | $ 119,088 |
Building and improvements | 755,294 | 712,560 |
Construction in progress | 10,804 | 13,640 |
Real estate investments | 891,431 | 845,288 |
Less accumulated depreciation | (174,088) | (160,575) |
Real estate investments, net | 717,343 | 684,713 |
Cash and cash equivalents | 22,168 | 11,716 |
Restricted deposits | 10,879 | 15,919 |
Investment in unconsolidated affiliates | 15,147 | 9,659 |
Notes receivable | 5,456 | 2,026 |
Assets held for sale | 831 | |
Lease intangible assets, less accumulated amortization | 6,519 | 7,367 |
Other assets, net | 10,888 | 10,798 |
Total Assets | 788,400 | 743,029 |
LIABILITIES | ||
Mortgage notes payable, net | 462,150 | 421,278 |
Dividends payable | 7,543 | 7,447 |
Tenant security deposits payable | 5,174 | 4,908 |
Lease intangible liabilities, less accumulated amortization | 856 | 994 |
Liabilities related to assets held for sale | 5 | |
Accrued expenses and other liabilities | 15,761 | 16,869 |
Total Liabilities | 491,484 | 451,501 |
COMMITMENTS and CONTINGENCIES - Note 13 | ||
SHAREHOLDERS' EQUITY | ||
Beneficial interest | 115,468 | 109,366 |
Operating partnership | 179,582 | 181,621 |
Partially owned properties | 2,198 | 2,346 |
Accumulated other comprehensive loss | (332) | (1,805) |
Total Shareholders' Equity | 296,916 | 291,528 |
Total liabilities and shareholders' equity | $ 788,400 | $ 743,029 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income from rental operations | ||||
Real estate rental income | $ 33,053 | $ 30,866 | $ 96,736 | $ 91,593 |
Expenses from rental operations | ||||
Operating expenses | 14,184 | 12,142 | 37,956 | 35,639 |
Real estate taxes | 3,489 | 3,160 | 10,123 | 9,463 |
Depreciation and amortization | 5,551 | 5,328 | 16,634 | 15,826 |
Interest | 4,671 | 4,187 | 13,261 | 12,761 |
Total expenses from rental operations | 27,895 | 24,817 | 77,974 | 73,689 |
Administration of REIT | ||||
Administration of REIT | 1,007 | 972 | 3,267 | 3,218 |
Total expenses | 28,902 | 25,789 | 81,241 | 76,907 |
Income from operations | 4,151 | 5,077 | 15,495 | 14,686 |
Other income | ||||
Equity in (losses) income of unconsolidated affiliates | (67) | 125 | (183) | 363 |
Other income | 1,085 | 64 | 1,574 | 333 |
Gain on sale of real estate investments | 1,710 | 1,456 | ||
Gain on involuntary conversion | 549 | 1,236 | 52 | |
Total other income | 1,567 | 189 | 4,337 | 2,204 |
Net income | 5,718 | 5,266 | 19,832 | 16,890 |
Net income (loss) attributable to noncontrolling interest in operating partnership | 3,753 | 3,450 | 12,861 | 11,046 |
Net income (loss) attributable to noncontrolling interest in partially owned properties | (139) | (28) | (148) | (15) |
Net income attributable to Sterling Real Estate Trust | $ 2,104 | $ 1,844 | $ 7,119 | $ 5,859 |
Net income attributable to Sterling Real Estate Trust per common share, basic and diluted | $ 0.21 | $ 0.19 | $ 0.71 | $ 0.61 |
Comprehensive income: | ||||
Net income | $ 5,718 | $ 5,266 | $ 19,832 | $ 16,890 |
Other comprehensive gain (loss) - change in fair value of interest rate swaps | (66) | (17) | 1,473 | (2,125) |
Comprehensive income | 5,652 | 5,249 | 21,305 | 14,765 |
Comprehensive income attributable to noncontrolling interest | 3,571 | 3,411 | 13,661 | 9,641 |
Comprehensive income attributable to Sterling Real Estate Trust | $ 2,081 | $ 1,838 | $ 7,644 | $ 5,124 |
Weighted average Common Shares outstanding, basic and diluted | 10,215 | 9,740 | 10,095 | 9,638 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Shares | Paid-in Capital | Accumulated Distributions in Excess of Earnings | Total Beneficial Interest | Noncontrolling Interest in Operating Partnership | Noncontrolling Interest in Partially Owned Properties | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance at Dec. 31, 2019 | $ 131,261 | $ (28,888) | $ 102,373 | $ 174,221 | $ 2,416 | $ 37 | $ 279,047 | |
Beginning Balance (in shares) at Dec. 31, 2019 | 9,436 | |||||||
Contribution of assets in exchange for the issuance of noncontrolling interest shares | 9,031 | 9,031 | ||||||
Shares/units redeemed | (696) | (696) | (541) | (1,237) | ||||
Shares/units redeemed (in shares) | (38) | |||||||
Dividends and distributions declared | (2,527) | (2,527) | (4,831) | (7,358) | ||||
Dividends reinvested - stock dividend | 1,584 | 1,584 | 1,584 | |||||
Dividends reinvested - stock dividend (in shares) | 87 | |||||||
Issuance of shares under optional purchase plan | 1,203 | 1,203 | 1,203 | |||||
Issuance of shares under optional purchase plan (in shares) | 62 | |||||||
Change in fair value of interest rate swaps | (1,486) | (1,486) | ||||||
Net Income (loss) | 1,813 | 1,813 | 3,419 | (5) | 5,227 | |||
Ending balance at Mar. 31, 2020 | 133,352 | (29,602) | 103,750 | 181,299 | 2,411 | (1,449) | 286,011 | |
Ending balance (in shares) at Mar. 31, 2020 | 9,547 | |||||||
Beginning Balance at Dec. 31, 2019 | 131,261 | (28,888) | 102,373 | 174,221 | 2,416 | 37 | 279,047 | |
Beginning Balance (in shares) at Dec. 31, 2019 | 9,436 | |||||||
Change in fair value of interest rate swaps | (2,125) | |||||||
Net Income (loss) | 16,890 | |||||||
Ending balance at Sep. 30, 2020 | 136,887 | (30,677) | 106,210 | 178,881 | 2,401 | (2,088) | 285,404 | |
Ending balance (in shares) at Sep. 30, 2020 | 9,737 | |||||||
Beginning Balance at Mar. 31, 2020 | 133,352 | (29,602) | 103,750 | 181,299 | 2,411 | (1,449) | 286,011 | |
Beginning Balance (in shares) at Mar. 31, 2020 | 9,547 | |||||||
Shares/units redeemed | (1,039) | (1,039) | (209) | (1,248) | ||||
Shares/units redeemed (in shares) | (57) | |||||||
Dividends and distributions declared | (2,544) | (2,544) | (4,828) | (7,372) | ||||
Dividends reinvested - stock dividend | 1,608 | 1,608 | 1,608 | |||||
Dividends reinvested - stock dividend (in shares) | 88 | |||||||
Issuance of shares under optional purchase plan | 611 | 611 | 611 | |||||
Issuance of shares under optional purchase plan (in shares) | 32 | |||||||
Change in fair value of interest rate swaps | (622) | (622) | ||||||
Net Income (loss) | 2,202 | 2,202 | 4,177 | 18 | 6,397 | |||
Ending balance at Jun. 30, 2020 | 134,532 | (29,944) | 104,588 | 180,439 | 2,429 | (2,071) | 285,385 | |
Ending balance (in shares) at Jun. 30, 2020 | 9,610 | |||||||
Shares issued under trustee compensation plan | 64 | 64 | 64 | |||||
Shares issued under trustee compensation plan (in shares) | 3 | |||||||
Shares/units redeemed | (118) | (118) | (183) | (301) | ||||
Shares/units redeemed (in shares) | (6) | |||||||
Dividends and distributions declared | (2,577) | (2,577) | (4,825) | (7,402) | ||||
Dividends reinvested - stock dividend | 1,644 | 1,644 | 1,644 | |||||
Dividends reinvested - stock dividend (in shares) | 90 | |||||||
Issuance of shares under optional purchase plan | 765 | 765 | 765 | |||||
Issuance of shares under optional purchase plan (in shares) | 40 | |||||||
Change in fair value of interest rate swaps | (17) | (17) | ||||||
Net Income (loss) | 1,844 | 1,844 | 3,450 | (28) | 5,266 | |||
Ending balance at Sep. 30, 2020 | 136,887 | (30,677) | 106,210 | 178,881 | 2,401 | (2,088) | 285,404 | |
Ending balance (in shares) at Sep. 30, 2020 | 9,737 | |||||||
Beginning Balance at Dec. 31, 2020 | 139,105 | (29,739) | 109,366 | 181,621 | 2,346 | (1,805) | 291,528 | |
Beginning Balance (in shares) at Dec. 31, 2020 | 9,855 | |||||||
Shares/units redeemed | (777) | (777) | (628) | (1,405) | ||||
Shares/units redeemed (in shares) | (41) | |||||||
Dividends and distributions declared | (2,642) | (2,642) | (4,835) | (7,477) | ||||
Dividends reinvested - stock dividend | 1,686 | 1,686 | 1,686 | |||||
Dividends reinvested - stock dividend (in shares) | 89 | |||||||
Issuance of shares under optional purchase plan | 1,307 | 1,307 | 1,307 | |||||
Issuance of shares under optional purchase plan (in shares) | 65 | |||||||
Change in fair value of interest rate swaps | 2,384 | 2,384 | ||||||
Net Income (loss) | 2,052 | 2,052 | 3,753 | 31 | 5,836 | |||
Ending balance at Mar. 31, 2021 | 141,321 | (30,329) | 110,992 | 179,911 | 2,377 | 579 | 293,859 | |
Ending balance (in shares) at Mar. 31, 2021 | 9,968 | |||||||
Beginning Balance at Dec. 31, 2020 | 139,105 | (29,739) | 109,366 | 181,621 | 2,346 | (1,805) | 291,528 | |
Beginning Balance (in shares) at Dec. 31, 2020 | 9,855 | |||||||
Change in fair value of interest rate swaps | 1,473 | |||||||
Net Income (loss) | 19,832 | |||||||
Ending balance at Sep. 30, 2021 | 146,109 | (30,641) | 115,468 | 179,582 | 2,198 | (332) | 296,916 | |
Ending balance (in shares) at Sep. 30, 2021 | 10,215 | |||||||
Beginning Balance at Mar. 31, 2021 | 141,321 | (30,329) | 110,992 | 179,911 | 2,377 | 579 | 293,859 | |
Beginning Balance (in shares) at Mar. 31, 2021 | 9,968 | |||||||
Contribution of assets in exchange for the issuance of noncontrolling interest shares | 890 | 890 | ||||||
Shares/units redeemed | (292) | (292) | (1,853) | (2,145) | ||||
Shares/units redeemed (in shares) | (15) | |||||||
Dividends and distributions declared | (2,672) | (2,672) | (4,821) | (7,493) | ||||
Dividends reinvested - stock dividend | 1,679 | 1,679 | 1,679 | |||||
Dividends reinvested - stock dividend (in shares) | 88 | |||||||
Issuance of shares under optional purchase plan | 820 | 820 | 820 | |||||
Issuance of shares under optional purchase plan (in shares) | 41 | |||||||
Change in fair value of interest rate swaps | (845) | (845) | ||||||
Net Income (loss) | 2,963 | 2,963 | 5,355 | (40) | 8,278 | |||
Ending balance at Jun. 30, 2021 | 143,528 | (30,038) | 113,490 | 179,482 | 2,337 | (266) | 295,043 | |
Ending balance (in shares) at Jun. 30, 2021 | 10,082 | |||||||
Contribution of assets in exchange for the issuance of noncontrolling interest shares | 1,993 | 1,993 | ||||||
Shares issued under trustee compensation plan | 57 | 57 | 57 | |||||
Shares issued under trustee compensation plan (in shares) | 3 | |||||||
Shares/units redeemed | (105) | (105) | (810) | (915) | ||||
Shares/units redeemed (in shares) | (6) | |||||||
Dividends and distributions declared | (2,707) | (2,707) | (4,836) | (7,543) | ||||
Dividends reinvested - stock dividend | 1,743 | 1,743 | 1,743 | |||||
Dividends reinvested - stock dividend (in shares) | 92 | |||||||
Issuance of shares under optional purchase plan | 886 | 886 | 886 | |||||
Issuance of shares under optional purchase plan (in shares) | 44 | |||||||
Change in fair value of interest rate swaps | (66) | (66) | ||||||
Net Income (loss) | 2,104 | 2,104 | 3,753 | (139) | 5,718 | |||
Ending balance at Sep. 30, 2021 | $ 146,109 | $ (30,641) | $ 115,468 | $ 179,582 | $ 2,198 | $ (332) | $ 296,916 | |
Ending balance (in shares) at Sep. 30, 2021 | 10,215 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
OPERATING ACTIVITIES | ||
Net income | $ 19,832 | $ 16,890 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Gain on sale of real estate investments | (1,710) | (1,456) |
Gain on involuntary conversion | (1,236) | (52) |
Equity in loss (income) of unconsolidated affiliates | 183 | (363) |
Distributions of earnings of unconsolidated affiliates | 174 | 363 |
Allowance for uncollectible accounts receivable | 502 | 52 |
Depreciation | 15,665 | 14,716 |
Amortization | 971 | 1,095 |
Amortization of debt issuance costs | 402 | 463 |
Effects on operating cash flows due to changes in | ||
Other assets | (1,160) | 2,389 |
Tenant security deposits payable | 298 | 380 |
Accrued expenses and other liabilities | (1,081) | 1,511 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 32,840 | 35,988 |
INVESTING ACTIVITIES | ||
Purchase of real estate investment properties | (35,893) | (11,622) |
Capital expenditures and tenant improvements | (13,629) | (24,662) |
Proceeds from sale of real estate investments and non-real estate investments | 5,590 | 5,483 |
Proceeds from involuntary conversion | 4,095 | 1,077 |
Investment in unconsolidated affiliates | (5,845) | (1,170) |
Distributions in excess of earnings received from unconsolidated affiliates | 239 | |
Notes receivable issued net of payments received | (3,430) | (743) |
NET CASH USED IN INVESTING ACTIVITIES | (49,112) | (31,398) |
FINANCING ACTIVITIES | ||
Payments for financing, debt issuance | (700) | (349) |
Payments on investment certificates and subordinated debt | (25) | (50) |
Principal payments on special assessments payable | (290) | |
Proceeds from issuance of mortgage notes payable and subordinated debt | 71,530 | 26,135 |
Principal payments on mortgage notes payable | (30,360) | (15,249) |
Proceeds from issuance of shares under optional purchase plan | 3,013 | 2,579 |
Shares/units redeemed | (4,465) | (2,786) |
Dividends/distributions paid | (17,309) | (17,012) |
NET CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES | 21,684 | (7,022) |
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS | 5,412 | (2,432) |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF PERIOD | 27,635 | 17,382 |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD | $ 33,047 | $ 14,950 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Disclosures - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD | ||
Cash and cash equivalents | $ 22,168 | $ 6,499 |
Restricted deposits | 10,879 | 8,451 |
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS, END OF PERIOD | 33,047 | 14,950 |
SCHEDULE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest, net of capitalized interest | 12,812 | 12,381 |
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Dividends reinvested | 5,108 | 4,836 |
Dividends declared and not paid | 2,707 | 2,577 |
UPREIT distributions declared and not paid | 4,836 | 4,825 |
Shares issued pursuant to trustee compensation plan | 57 | 64 |
Acquisition of assets in exchange for the issuance of noncontrolling interest units in UPREIT | 2,883 | 9,031 |
Increase in land improvements due to increase in special assessments payable | 204 | 72 |
Unrealized gain (loss) on interest rate swaps | 1,473 | (2,125) |
Acquisition of assets through assumption of debt and liabilities | 569 | 538 |
Capitalized interest and real estate taxes related to construction in progress | $ 200 | $ 524 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2021 | |
ORGANIZATION | |
ORGANIZATION | Note 1 - Organization Sterling Real Estate Trust d/b/a Sterling Multifamily Trust (“Sterling”, “the Trust” or “the Company”) is a registered, but unincorporated business trust organized in North Dakota in December 2002. Sterling has elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code. Sterling previously established an Operating Partnership (“Sterling Properties, LLLP” or the “Operating Partnership”) and transferred all of its assets and liabilities to the operating partnership in exchange for general partnership units. As the general partner of Sterling Properties, LLLP, Sterling has management responsibility for all activities of the Operating Partnership. As of September 30, 2021 and December 31, 2020, Sterling owned approximately 35.89% and 35.03%, respectively, of the Operating Partnership. |
PRINCIPAL ACTIVITY AND SIGNIFIC
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020, which have previously been filed with the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC. The results for the interim periods shown in this report are not necessarily indicative of future financial results. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our consolidated financial statements as of and for the three and nine months ended September 30, 2021. These adjustments are of a normal recurring nature. For a complete set of the Company’s significant accounting policies, refer to Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Principles of Consolidation The consolidated financial statements include the accounts of , Properties, LLLP, and wholly-owned limited liability companies. All significant intercompany transactions and balances have been eliminated in consolidation. As of September 30, 2021, the Trust owned approximately 35.89% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the partnership agreement, these persons have the right to tender their OP Units for redemption to the Operating Partnership at any time following a specified restricted period for cash equal to the fair value of an equivalent number of common shares of the Trust. In lieu of delivering cash, however, the Trust, as the Operating Partnership’s general partner, may, at its option, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Trust so chooses, its common shares will be exchanged for OP Units on a one-for-one basis. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Trust’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Trust issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Trust an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.” Additionally, we evaluate the need to consolidate affiliates based on standards set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). In determining whether we have a requirement to consolidate the accounts of an entity, management considers factors such as our ownership interest, our authority to make decisions and contractual and substantive participating rights of the limited partners and shareholders, as well as whether the entity is a variable interest entity (“VIE”) for which we have both: a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and b) the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE. The Trust will consolidate the operations of a joint venture if the Trust determines that it is the primary beneficiary of a variable interest entity (VIE) and has substantial influence and control of the entity. In instances where the Trust determines that it is not the primary beneficiary of a VIE and the Trust does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Trust will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Trust’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Trust’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. See Note 5 for additional details regarding variable interest entities where the Trust uses the equity method of investing. The Operating Partnership meets the criteria as a variable interest entity (“VIE”). The Trust’s sole significant asset is its investment in the Operating Partnership. As a result, substantially all of the Trust’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Trust’s debt is an obligation of the Operating Partnership, and the Trust guarantees the unsecured debt obligations of the Operating Partnership Use of Estimates The preparation of consolidated 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. Estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Real Estate Investments Real estate investments are recorded at cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. The Trust allocates the purchase price of each acquired investment property accounted for as an asset acquisition based upon the estimated acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, and (v) assumed financing that is determined to be above or below market, if any. Transaction costs related to acquisitions accounted for as asset acquisitions are capitalized as incurred and included as a cost of the building in the accompanying balance sheet. For tangible assets acquired, including land, building and other improvements, the Trust considers available comparable market and industry information in estimating fair value on the acquisition date. Key factors considered in the calculation of fair value of both real property and intangible assets include the current market rent values, “dark” periods (building in vacant status), direct costs estimated with obtaining a new tenant, discount rates, escalation factors, standard lease terms, and tenant improvement costs. Furniture and fixtures are stated at cost less accumulated depreciation. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Furniture and fixtures are included in the accompying consolidated balance sheets. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are charged to expense as incurred. Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method over the following estimated useful lives: Buildings and improvements 40 years Furniture, fixtures and equipment 5 The Trust’s investment properties are reviewed for potential impairment indicators on each property, at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Based on evaluation, there were no impairment losses during the nine months ended September 30, 2021 and 2020. Federal Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code, as amended. A REIT calculates taxable income similar to other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. REIT shareholders are taxed on REIT distributions of ordinary income in generally the same manner as they are taxed on other corporate distributions. We intend to continue to qualify as a REIT and, provided we maintain such status, will not be taxed on the portion of the income that is distributed to shareholders. In addition, we intend to distribute all of our taxable income; therefore, no provisions or liabilities for income taxes have been recorded in the financial statements. We follow FASB ASC Topic 740, Income Taxes, Revenue Recognition We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted with the purpose that average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $167 and deceased revenue $31 for the three months ended September 30, 2021 and 2020, respectively. The straight-line rent adjustment increased revenue by $359 and decreased revenue by $169 for the nine months ended September 30, 2021 and 2020, respectively. The straight-line receivable balance included in receivables on the consolidated balance sheets as of September 30, 2021 and December 31, 2020 was $3,377 and $3,012, respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimates. Reclassifications Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications have not changed the results of operations or equity. |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2021 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 3 – segment reporting We report our results in two reportable segments: residential and commercial properties. Our residential properties include multifamily properties. Our commercial properties include retail, office, industrial, restaurant and medical properties. We assess and measure operating results based on net operating income (“NOI”), which we define as total segment income from rental operations less total segment expenses from rental operations (which consist of real estate taxes, property management fees, utilities, repairs and maintenance, insurance and direct administrative costs). We believe NOI is an important measure of operating performance even though it should not be considered an alternative to net income or cash flow from operating activities. NOI is unaffected by financing, depreciation, amortization and certain general and administrative expenses. Segment Revenues and Net Operating Income The revenues and net operating income for the reportable segments (residential and commercial) are summarized as follows for the three and nine months ended September 30, 2021 and 2020, along with reconciliations to the consolidated financial statements. Segment assets are also reconciled to Total Assets as reported in the consolidated financial statements. Three months ended September 30, 2021 Three months ended September 30, 2020 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 27,838 $ 5,215 $ 33,053 $ 24,858 $ 6,008 $ 30,866 Expenses from rental operations 15,352 2,321 17,673 13,506 1,796 15,302 Net operating income $ 12,486 $ 2,894 $ 15,380 $ 11,352 $ 4,212 $ 15,564 Depreciation and amortization 5,551 5,328 Interest 4,671 4,187 Administration of REIT 1,007 972 Other (income)expense (1,567) (189) Net income $ 5,718 $ 5,266 Nine months ended September 30, 2021 Nine months ended September 30, 2020 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 80,028 $ 16,708 $ 96,736 $ 73,234 $ 18,359 $ 91,593 Expenses from rental operations 42,564 5,515 48,079 39,978 5,124 45,102 Net operating income $ 37,464 $ 11,193 $ 48,657 $ 33,256 $ 13,235 $ 46,491 Depreciation and amortization 16,634 15,826 Interest 13,261 12,761 Administration of REIT 3,267 3,218 Other income (4,337) (2,204) Net income $ 19,832 $ 16,890 Segment Assets and Accumulated Depreciation As of September 30, 2021 Residential Commercial Total (in thousands) Real estate investments $ 688,151 $ 203,280 $ 891,431 Accumulated depreciation (129,054) (45,034) (174,088) $ 559,097 $ 158,246 717,343 Cash and cash equivalents 22,168 Restricted deposits 10,879 Investment in unconsolidated affiliates 15,147 Notes receivable 5,456 Intangible assets, less accumulated amortization 6,519 Other assets, net 10,888 Total Assets $ 788,400 As of December 31, 2020 Residential Commercial Total (in thousands) Real estate investments $ 647,083 $ 198,205 $ 845,288 Accumulated depreciation (118,363) (42,212) (160,575) $ 528,720 $ 155,993 684,713 Cash and cash equivalents 11,716 Restricted deposits 15,919 Investment in unconsolidated affiliates 9,659 Notes receivable 2,026 Assets held for sale 831 Intangible assets, less accumulated amortization 7,367 Other assets, net 10,798 Total Assets $ 743,029 |
RESTRICTED DEPOSITS
RESTRICTED DEPOSITS | 9 Months Ended |
Sep. 30, 2021 | |
RESTRICTED DEPOSITS | |
RESTRICTED DEPOSITS | NOTE 4 – Restricted deposits As of September 30, As of December 31, 2021 2020 (in thousands) Tenant security deposits $ 5,034 $ 4,730 Real estate tax and insurance escrows 1,491 2,058 Replacement reserves 2,090 2,137 Other funded reserves 2,264 6,994 $ 10,879 $ 15,919 Included in other funded reserves are insurance proceeds of $2,264 that were received during the nine months ended September 30, 2021, and are held in an escrow reserve account per the agreement set in place with various lenders. Funds will be released as construction costs related to the insurance claims are incurred. No such proceeds were received as of December 31, 2020. |
INVESTMENT IN UNCONSOLIDATED AF
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 9 Months Ended |
Sep. 30, 2021 | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | NOTE 5 – Investment in unconsolidated affiliates Unconsolidated Affiliates Date Acquired Trust Ownership Interest Total Investment in Unconsolidated Affiliates Banner Building 2007 66.67% $ 60 Grand Forks INREIT, LLC 2003 50% 2,508 SE Savage, LLC 2019 60% 2,925 SE Maple Grove, LLC 2019 60% 2,886 SE Rogers, LLC 2020 60% 3,013 ST Oak Cliff, LLC 2021 70% 3,075 SE Brooklyn Park, LLC 2021 60% 680 $ 15,147 The Operating Partnership owns a 66.67% interest as tenant in common in an office building with approximately 75,000 square feet of commercial rental space in Fargo, North Dakota. The property is encumbered by a first mortgage with a balance at September 30, 2021 and December 31, 2020 of $6,076 and $6,232, respectively. The Trust is jointly and severally liable for the full mortgage balance. The Operating Partnership owns 50% interest as tenant in common through 100% ownership in a limited liability company. The property has approximately 183,000 square feet of commercial space in Grand Forks, North Dakota. The property is encumbered by a non-recourse first mortgage with a balance at September 30, 2021 and December 31, 2020 of $9,856 and $10,036, respectively. The Trust is jointly and severally liable for the full mortgage balance. The Operating Partnership owns a 60% interest in a limited liability company that holds a 190-unit multifamily property. As of September 30, 2021, the Operating Partnership has contributed $2,077 in cash to the LLC. The LLC is located in Savage, Minnesota, with total assets of $37,256 and $27,015 as of September 30, 2021 and December 31, 2020, respectively. The development was completed in the third quarter of 2021. The property is encumbered by a first mortgage with a balance at September 30, 2021 and December 31, 2020, of $26,210 and $19,436, respectively. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at September 30, 2021 of $4,835. The Trust is jointly and severally liable for the full mortgage balance. The Operating Partnership owns a 60% interest in a limited liability company that is currently developing a 160-unit multifamily property. As of September 30, 2021, the Operating Partnership has contributed $2,975 in cash to the LLC. The LLC is located in Maple Grove, Minnesota, with total assets of $29,424 and $13,106 as of September 30, 2021 and December 31, 2020, respectively. At its current projection, the development is expected to be completed in the fourth quarter of 2021 and the current project budget approximates $33,029 of which $27,907 has been incurred as of September 30, 2021. The property is encumbered by a first mortgage with a balance at September 30, 2021 and December 31, 2020 of $23,107 and $5,710, respectively. The Trust is jointly and severally liable for the full mortgage balance. The Operating Partnership owns a 60% interest in a limited liability company that is currently developing a 165-unit multifamily property. As of September 30, 2021, the Operating Partnership has contributed $3,089 in cash to the LLC. The LLC holds land located in Rogers, Minnesota, with total assets of $17,818 and $4,161 as of September 30, 2021 and December 31, 2020, respectively. At its current projection, the development is expected to be completed in the second quarter of 2022 and the current project budget approximates $35,042 of which $16,530 has been incurred as of September 30, 2021. The property is encumbered by a first mortgage that has a balance of $10,993 at September 30,2021. There was no balance outstanding related to the first mortgage at December 30, 2020. The Company is jointly and severally liable for the full mortgage balance. On August 25, 2021, the Trust purchased a 70% interest in a limited liability company, with a related party. The LLC is currently developing a 318-unit multifamily property. As of September 30, 2021, the Operating Partnership has contributed $3,075 in cash to the LLC. The entity holds land located in Dallas, Texas with total assets of $4,653 as of September 30, 2021. At its current projection, the development is expected to be completed in the third quarter of 2023 and the current project budget approximates $53,138 of which $4,342 has been incurred as of September 30, 2021. The property is encumbered by a construction mortgage. There was no balance outstanding related to the mortgage at September 30, 2021. The Company is jointly and severally liable for the full mortgage balance. On September 17, 2021, the Trust purchased a 60% interest in a limited liability company, with an unrelated third party. The LLC is currently developing a 146-unit multifamily property. As of September 30, 2021, the Operating Partnership has contributed $680 in cash to the LLC. The property is located in Brooklyn Park, Minnesota, with total assets of $2,371 of September 30, 2021. At its current projection, the development is expected to be completed in the second quarter of 2023 and the current project budget approximates $32,789 of which $2,370 has been incurred as of September 30, 2021. The following is a summary of the financial position of the unconsolidated affiliates at September 30, 2021 and December 31, 2020. September 30, 2021 December 31, 2020 (in thousands) ASSETS Real estate investments $ 121,916 $ 74,991 Accumulated depreciation (10,563) (9,692) 111,353 65,299 Cash and cash equivalents 878 249 Restricted deposits 493 384 Other assets, net 526 180 Total Assets $ 113,250 $ 66,112 LIABILITIES Mortgage notes payable, net $ 79,749 $ 41,405 Tenant security deposits payable 97 2 Accrued expenses and other liabilities 8,072 6,533 Total Liabilities $ 87,918 $ 47,940 SHAREHOLDERS' EQUITY Total Shareholders' Equity $ 25,332 $ 18,172 Total liabilities and shareholders' equity $ 113,250 $ 66,112 The following is a summary of results of operations of the unconsolidated affiliates for the three and nine months ended September 30, 2021 Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Income from rental operations $ 1,296 $ 812 $ 3,109 $ 2,453 Expenses from rental operations 417 182 999 614 Net operating income $ 879 $ 630 $ 2,110 $ 1,839 Depreciation and Amortization 358 172 871 515 Interest 644 236 1,524 715 Other Income (9) - (9) (25) Net (loss) income $ (114) $ 222 $ (276) $ 634 |
LEASE INTANGIBLES
LEASE INTANGIBLES | 9 Months Ended |
Sep. 30, 2021 | |
LEASE INTANGIBLES | |
LEASE INTANGIBLES | NOTE 6 - Lease intangibles The following table summarizes the net value of other intangible assets and liabilities and the accumulated amortization for each class of intangible: Lease Accumulated Lease As of September 30, 2021 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 16,002 $ (10,693) $ 5,309 Above-market leases 2,617 (1,407) 1,210 $ 18,619 $ (12,100) $ 6,519 Lease Intangible Liabilities Below-market leases $ (2,555) $ 1,699 $ (856) Lease Accumulated Lease As of December 31, 2020 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 19,768 $ (13,727) $ 6,041 Above-market leases 2,618 (1,292) 1,326 $ 22,386 $ (15,019) $ 7,367 Lease Intangible Liabilities Below-market leases $ (2,957) $ 1,963 $ (994) The estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows: Intangible Intangible Years ending December 31, Assets Liabilities (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 273 $ 45 2022 987 164 2023 849 151 2024 849 151 2025 849 151 Thereafter 2,712 194 $ 6,519 $ 856 |
LINES OF CREDIT
LINES OF CREDIT | 9 Months Ended |
Sep. 30, 2021 | |
LINES OF CREDIT | |
LINES OF CREDIT | NOTE 7 – LINES OF CREDIT We have a $4,915 variable rate (floating LIBOR plus 2.00%) line of credit agreement with Bremer Bank, which expires in June 2022 December 2022 Certain line of credit agreements include covenants that, in part, impose maintenance of certain debt service coverage and debt to net worth ratios on an annual and semi-annual basis. |
MORTGAGE NOTES PAYABLE
MORTGAGE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
MORTGAGE NOTES PAYABLE | |
MORTGAGE NOTES PAYABLE | NOTE 8 - MORTGAGE NOTES PAYABLE The following table summarizes the Trust’s mortgage notes payable. Principal Balance At September 30, December 31, 2021 2020 (in thousands) Fixed rate mortgage notes payable (a) $ 457,071 $ 415,665 Variable rate mortgage notes payable 7,210 7,446 Mortgage notes payable 464,281 423,111 Less unamortized debt issuance costs 2,131 1,833 $ 462,150 $ 421,278 (a) Includes $69,490 and $43,613 of variable rate mortgage debt that was swapped to a fixed rate at September 30, 2021 and December 31, 2020, respectively. We are required to make the following principal payments on our outstanding mortgage notes payable for each of the five succeeding fiscal years and thereafter as follows: Years ending December 31, Amount (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 5,589 2022 27,983 2023 51,310 2024 20,840 2025 51,244 Thereafter 307,315 Total payments $ 464,281 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2021 | |
DERIVATIVES AND HEDGING ACTIVITIES | |
DERIVATIVES AND HEDGING ACTIVITIES | NOTE 9 – DERIVATIVES AND HEDGING ACTIVITIES As part of our interest rate risk management strategy, we have used derivative instruments to manage our exposure to interest rate movements and add stability to interest expense. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty; In exchange, the Trust makes fixed rate payments over the life of the agreement without exchange of the underlying notional amount. As of September 30, 2021, the Trust used 10 interest rate swaps to hedge the variable cash flows associated with variable rate debt. Changes in fair value of the derivatives that are designated and qualify as cash flow hedges are recorded in accumulated other comprehensive loss and are reclassified into interest expense as interest payments are made on the Trust’s variable rate debt. Over the next twelve months, the Trust estimates that an additional $869 will be reclassified as an increase to interest expense. The following table summarizes the Trust’s interest rate swaps as of September 30, 2021, which effectively convert one month floating rate LIBOR to a fixed rate: Fixed Effective Date Notional Interest Rate Maturity Date November 1, 2019 $ 6,830 3.15% November 1, 2029 November 1, 2019 $ 4,746 3.28% November 1, 2029 January 10, 2020 $ 3,087 3.39% January 10, 2030 June 11, 2020 $ 1,547 3.07% June 15, 2030 June 11, 2020 $ 2,997 3.07% June 15, 2030 June 15, 2020 $ 1,676 2.94% June 15, 2030 June 15, 2020 $ 4,435 2.94% June 15, 2030 July 1, 2020 $ 4,879 2.79% June 10, 2030 December 2, 2020 $ 12,800 2.91% December 2, 2027 July 1, 2021 $ 26,493 2.99% July 1, 2031 The following table summarizes the Trust’s interest rate swaps that were designated as cash flow hedges of interest rate risk: Number of Instruments Notional Interest Rate Derivatives September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 Interest rate swaps 10 9 $ 69,490 $ 43,613 The table below presents the estimated fair value of the Trust’s derivative financial instruments as well as their classification in the accompanying consolidated balance sheets. The valuation techniques are described in Note 10 to the consolidated financial statements. Derivatives Derivatives designated as September 30, 2021 December 31, 2020 cash flow hedges: Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest rate swaps Other assets, net $ 524 Other assets, net $ — Interest rate swaps Accrued expenses and other liabilities $ 856 Accrued expenses and other liabilities $ 1,805 The carrying amounts of the swaps have been adjusted to their fair value at the end of the quarter. Because of changes in forecasted levels of LIBOR, an asset and a liability for the fair value of the future net payments forecasted under the swap were reported. The interest rate swaps are accounted for as effective hedges in accordance with ASC 815-20 whereby it is recorded at fair value and changes in fair value are recorded to comprehensive income. The following table presents the effect of the Trust’s derivative financial instruments on the accompanying consolidated statements of operations and other comprehensive loss (income) for the three months ended September 30, 2021and 2020: Location of Gain Amount of (Gain)/Loss Reclassified from Derivatives in Recognized in Other Accumulated other Amount of (Gain)/Loss Cash Flow Hedging Comprehensive Income Comprehensive Income Reclassified from Relationships on Derivatives (AOCI) into Income AOCI into Income 2021 2021 Interest rate swaps $ 66 Interest expense $ 199 2020 2020 Interest rate swaps $ 17 Interest expense $ 89 The following table presents the effect of the Trust’s derivative financial instruments on the accompanying consolidated statements of operations and other comprehensive loss (income) for the nine months ended September 30, 2021and 2020 Location of Gain Amount of (Gain)/Loss Reclassified from Derivatives in Recognized in Other Accumulated other Amount of (Gain)/Loss Cash Flow Hedging Comprehensive Income Comprehensive Income Reclassified from Relationships on Derivatives (AOCI) into Income AOCI into Income 2021 2021 Interest rate swaps $ (1,473) Interest expense $ 433 2020 2020 Interest rate swaps $ 2,125 Interest expense $ 145 Credit-risk-related Contingent Features The Trust has agreements with each of its derivative counterparties containing a provision whereby, if the Trust defaults on the related indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Trust could also be declared in default on its corresponding derivative obligation. The Trust’s agreements with each of its derivative counterparties also contain a provision whereby if the Trust consolidates with, merges with or into, or transfers all or substantially all of its assets to another entity, and the creditworthiness of the resulting, surviving or transferee entity, is materially weaker than the Trust’s, the counterparty has the right to terminate the derivative obligations. As of September 30, 2021, the termination value of derivatives in a liability position was $856 and the termination value of derivatives in an asset position was $524. As of September 30, 2021, the Trust has pledged the properties related to the loans which are hedged as collateral . |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Sep. 30, 2021 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 10 - FAIR VALUE MEASUREMENT The following table presents the carrying value and estimated fair value of the Trust’s financial instruments: September 30, 2021 December 31, 2020 Carrying Carrying Value Fair Value Value Fair Value (in thousands) Financial assets: Notes receivable $ 5,456 $ 6,642 $ 2,026 $ 2,117 Derivative assets $ 524 $ 524 $ — $ — Financial liabilities: Mortgage notes payable $ 464,281 $ 486,276 $ 421,278 $ 443,100 Derivative liabilities $ 856 $ 856 $ 1,805 $ 1,805 ASC 820-10 established a three-level valuation hierarchy for fair value measurement. Management uses these valuation techniques to establish the fair value of the assets at the measurement date. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s assumptions. These two types of inputs create the following fair value hierarchy: ● Level 1 – Quoted prices for identical instruments in active markets; ● Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; ● Level 3 – Instruments whose significant inputs are unobservable. The guidance requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Recurring Fair Value Measurements The following table presents the Trust’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table. Level 1 Level 2 Level 3 Total (in thousands) September 30, 2021 Derivative assets $ — $ 524 $ — $ 524 Derivative liabilities $ — $ 856 $ — $ 856 December 31, 2020 Derivative liabilities $ — $ 1,805 $ — $ 1,805 Derivatives: The Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. Fair Value Disclosures The following table presents the Trust’s financial assets and liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which they fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table. Level 1 Level 2 Level 3 Total (in thousands) September 30, 2021 Mortgage notes payable $ — $ — $ 486,276 $ 486,276 Notes receivable $ — $ — $ 6,642 $ 6,642 December 31, 2020 Mortgage notes payable $ — $ — $ 443,100 $ 443,100 Notes receivable $ — $ — $ 2,117 $ 2,117 Mortgage notes payable: Notes receivable: |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
LEASES | NOTE 11 – LEASES As of September 30, 2021, we derived 83% of our revenues from residential leases that are generally for terms of one year or less. The residential leases may include lease income related items such as parking, storage and non-refundable deposits that we treat as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore we subsequently recognize lease income over the lease term on a straight-line basis. Residential leases are renewable upon consent of both parties on an annual or monthly basis. As of September 30, 2021, we derived 17% of our revenues from commercial leases primarily under long-term lease agreements. Substantially all commercial leases contain fixed escalations or, in some instances, changes based on the Consumer Price Index, which occur at specified times during the term of the lease. In certain commercial leases, variable lease income, such as percentage rent, is recognized when rents are earned. We recognize rental income and rental abatements from our commercial leases on a straight-line basis over the lease term. Recognition of rental income commences when control of the leased space has been transferred to the tenant. The Trust’s leases contain lease and non-lease components for utility reimbursement from our residents. We have elected to combine lease and non-lease components for all asset classes. The combined components are included in real estate rental income in our consolidated financial statements and are accounted for under ASC 842. Lease income related to the Company’s operating leases is comprised of the following: Three months ended September 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 26,748 $ 3,879 $ 30,627 Lease income related to variable lease payments — 1,130 1,130 Other (a) (35) 174 139 Lease Income (b) $ 26,713 $ 5,183 $ 31,896 Three months ended September 30, 2020 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 24,080 $ 4,630 $ 28,710 Lease income related to variable lease payments — 1,352 1,352 Other (a) (170) (36) (206) Lease Income (b) $ 23,910 $ 5,946 $ 29,856 (a) For the three months ended September 30, 2021 and 2020, “other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. (b) Excludes other rental income for the three months ended September 30, 2021 and 2020 of $1,157 and $1,010, respectively, which is accounted for under the revenue recognition standard. Nine months ended September 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 76,722 $ 12,531 $ 89,253 Lease income related to variable lease payments — 3,424 3,424 Other (a) (212) 432 220 Lease Income (b) $ 76,510 $ 16,387 $ 92,897 Nine months ended September 30, 2020 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 70,896 $ 14,378 $ 85,274 Lease income related to variable lease payments — 4,064 4,064 Other (a) (512) (202) (714) Lease Income (b) $ 70,384 $ 18,240 $ 88,624 (a) For the nine months ended September 30, 2021 and 2020, “other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. (b) Excludes other rental income for the nine months ended September 30, 2021 and 2020 of $3,839 and $2,969, respectively, which is accounted for under the revenue recognition standard. As of September 30, 2021, non-cancelable commercial operating leases provide for future minimum rental income as follows. Residential leases are not included, as the terms are generally for one year or less. Years ending December 31, Amount (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 3,782 2022 15,061 2023 14,474 2024 13,856 2025 13,688 Thereafter 64,381 $ 125,242 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS Effective January 1, 2021, Alloy Enterprises, Inc. was formed to act as the holding company for Sterling Management, LLC and GOLDMARK Property Management, Inc. In connection with this restructuring transaction, the owners of Alloy Enterprises, Inc. indirectly own Sterling Management, LLC and GOLDMARK Property Management, Inc. Alloy Enterprises, Inc. is owned in part by the Trust’s Chief Executive Officer and Trustee Mr. Kenneth P. Regan, by Trustee Mr. James S. Wieland, by President and CIO Joel Thomsen, and by the Chief Financial Officer and Treasurer Erica J. Chaffee. In addition, Mr. Regan serves as the Executive Chairman of the Advisor and GOLDMARK Property Management, Inc., and Messrs. Wieland and Thomsen, and Ms. Chaffee serve on the Board of Governors of the Advisor and the Board of Directors of GOLDMARK Property Management, Inc. Sterling Management, LLC, (the “Advisor”), is a North Dakota limited liability company formed in November 2002. The Advisor is responsible for managing day-to-day affairs, overseeing capital projects and identifying, acquiring and disposing investments on behalf of the Trust. GOLDMARK Property Management, Inc., is a North Dakota corporation formed in 1981. GOLDMARK Property Management, Inc. performs property management services for the Trust. We have a historical and ongoing relationship with Bell Bank. Bell Bank has provided the Trust certain financial services throughout the relationship. Mr. Wieland, a Trustee, also serves as a Board Member of Bell Bank. Further, a family member of Erica J. Chaffee, our Chief Financial Officer, is an employee of Bell Bank. Both Mr. Wieland and Ms. Chaffee could have an indirect material interest in any such engagement and related transactions. Property Management Fees During the nine months ended September 30, 2021 and 2020, we paid property management and administrative fees to GOLDMARK Property Management, Inc. of $9,634 and $9,518, respectively. Management fees which approximate 5% of net collected rents, account for $3,862 and $3,692 of these fees during the nine months ended September 30, 2021 and 2020, respectively. In addition, during the nine months ended September 30, 2021 and 2020, we paid repair and maintenance expenses, and payroll related expenses to GOLDMARK Property Management, Inc. totaling $5,012 and $4,849, respectively. During the nine months ended September 30, 2021, the Trust paid commercial property management fees to our Advisor of $87. There were no commercial property management fees paid during the nine months ended September 30, 2020 to our advisor. Commercial property management fees are determined on a property by property basis. Property management fees are included in operating expenses on the consolidated statement of operations. Advisory Agreement We are an externally managed trust and as such, although we have a Board of Trustees and executive officers responsible for our management, we have no paid employees. The Advisor may receive fees related to management of the Trust, acquiring, disposing, or developing real estate property, project management fees, and financing fees related to lending relationships, under the Advisory Agreement, which must be renewed on an annual basis and approved by a majority of the independent trustees. The Advisory Agreement was approved by the Board of Trustees (including all the independent Trustees) on March 24, 2021, and is effective until March 31, 2022. Effective April , 2021, if the Advisor shares responsibility for providing Development Services with one or more third parties, Advisor’s set Development Fee shall be reduced by the fees charged by any such third parties; provided, such adjustment is subject to a 2.5% minimum Advisor’s Development Fee. Additionally, in cases where the Advisor is sharing responsibility for providing Development Services, the Development Fee shall be capped at 2.5% of $20,000,000 ($500,000). The below table summarizes the fees incurred and payable to our Advisor. Nine months ended Due and Payable at September 30, 2021 September 30, 2020 September 30, 2021 December 31, 2020 Fee Fee Payable Payable (in thousands) Fee: Advisory $ 2,474 $ 2,321 $ 285 $ 278 Acquisition $ 375 $ 500 $ - $ - Disposition $ 146 $ 143 $ - $ 175 Financing $ 146 $ 82 $ 5 $ - Development $ - $ - $ 79 $ 79 Project Management $ 409 $ 226 $ 11 $ 51 Operating Partnership Units Issued in Connection with Acquisitions During the nine months ended September 30, 2021, there were no Operating Partnership units issued directly or indirectly, to affiliated entities. During the nine months ended September 30, 2020, we issued directly or indirectly, 176,000 Operating Partnership units to an entity affiliated with Messrs. Regan and Wieland, two of our trustees, in connection with the acquisition of various properties. The aggregate value of these units was $3,373. Commissions During the nine months ended September 30, 2021 and 2020, we incurred real estate commissions of $297 and $583, respectively, to GOLDMARK Commercial Real Estate, Inc., in which Messrs. Regan and Wieland jointly own a controlling interest. As of September 30, 2021 and December 30, 2020, there were no unpaid commissions to GOLDMARK Commercial Real Estate. During the nine months ended September 30, 2021 and 2020, we incurred real estate commissions of $217 and $308, respectively to GOLDMARK Property Management. As of September 30, 2021 and December 30, 2020, there were no unpaid commissions to GOLDMARK Property Management. Rental Income During the nine months ended September 30, 2021 and 2020, we received rental income of $77 and $63, respectively, under an operating lease agreement with our Advisor. During the nine months ended September 30, 2021 and 2020, we received rental income of $19 and $43, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate, Inc. During the nine months ended September 30, 2021 and 2020, we received rental income of $224 and $202, respectively, under operating lease agreements with GOLDMARK Property Management, Inc. During the nine months ended September 30, 2021 and 2020, we received rental income of $278 and $362, respectively, under operating lease agreements with Bell Bank. Other operational costs During the nine months ended September 30, 2021 and 2020, the Trust incurred $187 and $1,575, respectively, for general costs related to business operations as well as capital expenditures related to construction in progress that were paid to related parties. At September 30, 2021 and December 31, 2020, operational outstanding liabilities were $62 and $191, respectively. During the nine months ended September 30, 2021, the Trust received $1,000 from related parties, in reimbursement for expenses paid that were associated with capital projects. No reimbursements were received during the nine months ending September 30, 2020. Debt Financing At September 30, 2021 and December 31, 2020, the Trust had $66,915 and $51,915, respectively, of outstanding principal on loans entered into with Bell Bank. During the nine months ended September 30, 2021 and 2020, the Trust incurred interest expense on debt held with Bell Bank of $1,511 and $1,571, respectively. Accrued interest as of September 30, 2021 and December 31, 2020, related to this debt was $142 and $121, respectively. Mezzanine Financing As of September 30, 2021, Sterling issued $4,835 in second mortgage financing to SE Savage, LLC. There was no outstanding receivable at December 31, 2020. During the nine months ended September 30, 2021, the Trust earned interest income of $103 related to the second mortgage financing to SE Savage, LLC. No interest income was earned during the nine months ended September 30, 2020. Insurance Services On November 1, 2020, the Operating Partnership obtained a traditional insurance policy with Bell Insurance. The policy provides coverage for the Trust’s Commercial segment. As of September 30, 2021, total premiums incurred for this policy was $118. There was no such policy in place with Bell Bank as of September 30, 2020. Development Arrangements Effective August 25, 2021, the Operating Partnership purchased a 70% interest in ST Oak Cliff Dallas, LLC. The purpose of the entity is to develop and construct a 318 unit multifamily property located in Dallas, Texas. The 30% owner, TG Oak Cliff Dallas, LLC is owned in part by Kenneth P. Regan, the Trust’s Chief Executive Officer and Trustee. Mr. Regan is also a member in Trumont Group, LLC, the developer engaged by ST Oak Cliff Dallas, LLC to oversee the development of the property. Further, Mr. Regan is also a partner in Trumont Construction, LLC, the company who was engaged to oversee the day to day construction operations of the property. During the nine months ended September 30, 2021, the Trust incurred and paid $51 in development fees to Trumont Group, LLC. No such fees were paid during the nine months ended September 30, 2020. At September 30, 2021 the Trust owed $51 in development fees to Trumont Group, LLC. At December 31, 2020, no development fees were owed to Trumont Group, LLC. During the nine months ended September 30, 2021, the Trust incurred and paid $12 in construction fees to Trumont Construction, LLC. No such fees were paid during the nine months ended September 30, 2020. At September 30, 2021 the Trust owed $6 in construction fees to Trumont Construction, LLC. At December 31, 2020, no construction fees were owed to Trumont Construction, LLC. During the nine months ended September 30, 2021, the Trust incurred and paid $41 in general construction costs to Trumont Construction, LLC. No such fees were paid during the nine months ended September 30, 2020. At September 30, 2021 and December 31, 2020, no general construction costs were owed to Trumont Construction, LLC. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 - COMMITMENTS AND CONTINGENCIES Environmental Matters Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property acquired by us, we could incur liability for the removal of the substances and the cleanup of the property. There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup. Risk of Uninsured Property Losses We maintain property damage, fire loss, and liability insurance. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, certain environmental hazards, and floods. Should such events occur, (i) we might suffer a loss of capital invested, (ii) tenants may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties. Litigation The Trust is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the financial statements of the Trust. Significant Risks and Uncertainties The Trust continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how it will impact its tenants and business partners. A number of uncertainties continue to exist at this time, including but not limited to the uncertainty of additional state and/or federal stimulus and the effect of the recent impacts of the COVID-19, delta variant. While the Trust did not incur significant disruptions during the nine months ended September 30, 2021 from the COVID-19 pandemic, the effects of the ongoing COVID-19 pandemic could have material adverse effects on our business and results of operations, so long as COVID-19 continues to impact the U.S. economy in general and multifamily apartment communities in particular. The extent to which the economic disruption associated with the COVID-19 pandemic impacts our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others . |
DISPOSITIONS
DISPOSITIONS | 9 Months Ended |
Sep. 30, 2021 | |
DISPOSITIONS | |
DISPOSITIONS | NOTE 14 – DISPOSITIONS During the nine months ended September 30, 2021, the Operating Partnership sold two properties. We sold a retail property located in Waite Park, Minnesota, for a sale price of $900. Net proceeds received were $853 and the Trust recognized a gain of $2 in April 2021. We sold a residential property located in Moorhead, Minnesota, for a sale price of $4,950. Net proeeds received were $4,757 and the Trust recognized a gain of $1,708 in June 2021. During the nine months ended September 30, 2020, the Operating Partnership sold two properties. We sold a retail property located in Apple Valley, Minnesota, for $3,670 and recognized a gain of $1,455 in March 2020. We sold an office property located in St. Cloud, Minnesota, for $2,050 and recognized a gain of $1 in May 2020. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2021 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 15 – ACQUISITIONS Date Property Name Location Property Type Units/ Square Footage/ Acres Purchase Price 6/1/21 Flagstone Fargo, ND Apartment Complex 120 units $ 7,789 6/1/21 Brownstone Fargo, ND Apartment Complex 72 units 4,392 6/1/21 Briar Pointe Fargo, ND Apartment Complex 30 units 1,936 7/1/21 Oxford Fargo, ND Apartment Complex 144 units 10,227 7/1/21 Pinehurst Fargo, ND Apartment Complex 210 units 15,001 $ 39,345 Total consideration given for acquisitions through September 30, 2021 was completed through issuing approximately 144,000 limited partnership units of the Operating Partnership valued at $20.00 per unit for an aggregate consideration of approximately $2,883, assumed liabilities of $569, new debt of $26,250 and cash of $9,643. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees, and reflects the fair value at the time of issuance. The following table summarizes the fair values of the asset acquisitions, the Trust recorded in conjunction with the acquisitions discussed above, as of the acquisition date: Nine Months Ended September 30, 2021 2020 Land, building, tenant improvements and FF&E $ 39,345 $ 21,191 Other liabilities (569) (538) Net assets acquired 38,776 20,653 Equity/limited partnership unit consideration (2,883) (9,031) New loans (26,250) (3,225) Net cash consideration $ 9,643 $ 8,397 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | NOTE 16 - SUBSEQUENT EVENTS On October 15, 2021, we paid a dividend or distribution of $0.2650 per share on our common shares of beneficial interest or limited partnership units, respectively, to common shareholders and limited partnership unit holders of record on September 30, 2021. On October 1, 2021, the Trust paid off a loan totaling $1,923 . The property is unencumbered as of October 1, 2021. On October 1, 2021, the Trust contributed $1,050 in additional equity to Bell Plaza. The Trust holds a 70% investing interest in the property. On October 8, 2021, the Trust issued $649 in second mortgage financing to SE Savage, LLC. On October 8, 2021, the Trust made an additional equity contribution of $742 to SE Brooklyn Park, LLC. On October 13, 2021, the Trust made an additional equity contribution of $385 to ST Oak Cliff Dallas, LLC. We have evaluated subsequent events through the date of this filing. We are not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements. |
PRINCIPAL ACTIVITY AND SIGNIF_2
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020, which have previously been filed with the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC. The results for the interim periods shown in this report are not necessarily indicative of future financial results. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our consolidated financial statements as of and for the three and nine months ended September 30, 2021. These adjustments are of a normal recurring nature. For a complete set of the Company’s significant accounting policies, refer to Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of , Properties, LLLP, and wholly-owned limited liability companies. All significant intercompany transactions and balances have been eliminated in consolidation. As of September 30, 2021, the Trust owned approximately 35.89% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the partnership agreement, these persons have the right to tender their OP Units for redemption to the Operating Partnership at any time following a specified restricted period for cash equal to the fair value of an equivalent number of common shares of the Trust. In lieu of delivering cash, however, the Trust, as the Operating Partnership’s general partner, may, at its option, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Trust so chooses, its common shares will be exchanged for OP Units on a one-for-one basis. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Trust’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Trust issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Trust an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.” Additionally, we evaluate the need to consolidate affiliates based on standards set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). In determining whether we have a requirement to consolidate the accounts of an entity, management considers factors such as our ownership interest, our authority to make decisions and contractual and substantive participating rights of the limited partners and shareholders, as well as whether the entity is a variable interest entity (“VIE”) for which we have both: a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and b) the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE. The Trust will consolidate the operations of a joint venture if the Trust determines that it is the primary beneficiary of a variable interest entity (VIE) and has substantial influence and control of the entity. In instances where the Trust determines that it is not the primary beneficiary of a VIE and the Trust does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Trust will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Trust’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Trust’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. See Note 5 for additional details regarding variable interest entities where the Trust uses the equity method of investing. The Operating Partnership meets the criteria as a variable interest entity (“VIE”). The Trust’s sole significant asset is its investment in the Operating Partnership. As a result, substantially all of the Trust’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Trust’s debt is an obligation of the Operating Partnership, and the Trust guarantees the unsecured debt obligations of the Operating Partnership |
Use of Estimates | Use of Estimates The preparation of consolidated 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. Estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate Investments | Real Estate Investments Real estate investments are recorded at cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred. The Trust allocates the purchase price of each acquired investment property accounted for as an asset acquisition based upon the estimated acquisition date fair value of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease value intangibles, (iv) acquired above and below market lease intangibles, and (v) assumed financing that is determined to be above or below market, if any. Transaction costs related to acquisitions accounted for as asset acquisitions are capitalized as incurred and included as a cost of the building in the accompanying balance sheet. For tangible assets acquired, including land, building and other improvements, the Trust considers available comparable market and industry information in estimating fair value on the acquisition date. Key factors considered in the calculation of fair value of both real property and intangible assets include the current market rent values, “dark” periods (building in vacant status), direct costs estimated with obtaining a new tenant, discount rates, escalation factors, standard lease terms, and tenant improvement costs. Furniture and fixtures are stated at cost less accumulated depreciation. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Furniture and fixtures are included in the accompying consolidated balance sheets. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are charged to expense as incurred. Depreciation is provided for over the estimated useful lives of the individual assets using the straight-line method over the following estimated useful lives: Buildings and improvements 40 years Furniture, fixtures and equipment 5 The Trust’s investment properties are reviewed for potential impairment indicators on each property, at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Based on evaluation, there were no impairment losses during the nine months ended September 30, 2021 and 2020. |
Federal Income Taxes | Federal Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code, as amended. A REIT calculates taxable income similar to other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. REIT shareholders are taxed on REIT distributions of ordinary income in generally the same manner as they are taxed on other corporate distributions. We intend to continue to qualify as a REIT and, provided we maintain such status, will not be taxed on the portion of the income that is distributed to shareholders. In addition, we intend to distribute all of our taxable income; therefore, no provisions or liabilities for income taxes have been recorded in the financial statements. We follow FASB ASC Topic 740, Income Taxes, |
Revenue Recognition | Revenue Recognition We record base rents on a straight-line basis. The monthly base rent income according to the terms of our leases is adjusted with the purpose that average monthly rent is recorded for each tenant over the term of its lease. The straight-line rent adjustment increased revenue by $167 and deceased revenue $31 for the three months ended September 30, 2021 and 2020, respectively. The straight-line rent adjustment increased revenue by $359 and decreased revenue by $169 for the nine months ended September 30, 2021 and 2020, respectively. The straight-line receivable balance included in receivables on the consolidated balance sheets as of September 30, 2021 and December 31, 2020 was $3,377 and $3,012, respectively. We receive payments for expense reimbursements from substantially all our multi-tenant commercial tenants throughout the year based on estimates. |
Reclassifications | Reclassifications Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications have not changed the results of operations or equity. |
PRINCIPAL ACTIVITY AND SIGNIF_3
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | |
Summary of Estimated Useful Life | Buildings and improvements 40 years Furniture, fixtures and equipment 5 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
SEGMENT REPORTING | |
Summary of Segment Revenues and Net Operating Income | Three months ended September 30, 2021 Three months ended September 30, 2020 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 27,838 $ 5,215 $ 33,053 $ 24,858 $ 6,008 $ 30,866 Expenses from rental operations 15,352 2,321 17,673 13,506 1,796 15,302 Net operating income $ 12,486 $ 2,894 $ 15,380 $ 11,352 $ 4,212 $ 15,564 Depreciation and amortization 5,551 5,328 Interest 4,671 4,187 Administration of REIT 1,007 972 Other (income)expense (1,567) (189) Net income $ 5,718 $ 5,266 Nine months ended September 30, 2021 Nine months ended September 30, 2020 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 80,028 $ 16,708 $ 96,736 $ 73,234 $ 18,359 $ 91,593 Expenses from rental operations 42,564 5,515 48,079 39,978 5,124 45,102 Net operating income $ 37,464 $ 11,193 $ 48,657 $ 33,256 $ 13,235 $ 46,491 Depreciation and amortization 16,634 15,826 Interest 13,261 12,761 Administration of REIT 3,267 3,218 Other income (4,337) (2,204) Net income $ 19,832 $ 16,890 |
Summary of Segment Assets and Accumulated Depreciation | As of September 30, 2021 Residential Commercial Total (in thousands) Real estate investments $ 688,151 $ 203,280 $ 891,431 Accumulated depreciation (129,054) (45,034) (174,088) $ 559,097 $ 158,246 717,343 Cash and cash equivalents 22,168 Restricted deposits 10,879 Investment in unconsolidated affiliates 15,147 Notes receivable 5,456 Intangible assets, less accumulated amortization 6,519 Other assets, net 10,888 Total Assets $ 788,400 As of December 31, 2020 Residential Commercial Total (in thousands) Real estate investments $ 647,083 $ 198,205 $ 845,288 Accumulated depreciation (118,363) (42,212) (160,575) $ 528,720 $ 155,993 684,713 Cash and cash equivalents 11,716 Restricted deposits 15,919 Investment in unconsolidated affiliates 9,659 Notes receivable 2,026 Assets held for sale 831 Intangible assets, less accumulated amortization 7,367 Other assets, net 10,798 Total Assets $ 743,029 |
RESTRICTED DEPOSITS (Tables)
RESTRICTED DEPOSITS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
RESTRICTED DEPOSITS | |
Schedule of restricted deposits | As of September 30, As of December 31, 2021 2020 (in thousands) Tenant security deposits $ 5,034 $ 4,730 Real estate tax and insurance escrows 1,491 2,058 Replacement reserves 2,090 2,137 Other funded reserves 2,264 6,994 $ 10,879 $ 15,919 |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED AFFILIATES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | |
Schedule of investments in unconsolidated real estate ventures | Unconsolidated Affiliates Date Acquired Trust Ownership Interest Total Investment in Unconsolidated Affiliates Banner Building 2007 66.67% $ 60 Grand Forks INREIT, LLC 2003 50% 2,508 SE Savage, LLC 2019 60% 2,925 SE Maple Grove, LLC 2019 60% 2,886 SE Rogers, LLC 2020 60% 3,013 ST Oak Cliff, LLC 2021 70% 3,075 SE Brooklyn Park, LLC 2021 60% 680 $ 15,147 |
Schedule of financial information of unconsolidated entities | The following is a summary of the financial position of the unconsolidated affiliates at September 30, 2021 and December 31, 2020. September 30, 2021 December 31, 2020 (in thousands) ASSETS Real estate investments $ 121,916 $ 74,991 Accumulated depreciation (10,563) (9,692) 111,353 65,299 Cash and cash equivalents 878 249 Restricted deposits 493 384 Other assets, net 526 180 Total Assets $ 113,250 $ 66,112 LIABILITIES Mortgage notes payable, net $ 79,749 $ 41,405 Tenant security deposits payable 97 2 Accrued expenses and other liabilities 8,072 6,533 Total Liabilities $ 87,918 $ 47,940 SHAREHOLDERS' EQUITY Total Shareholders' Equity $ 25,332 $ 18,172 Total liabilities and shareholders' equity $ 113,250 $ 66,112 The following is a summary of results of operations of the unconsolidated affiliates for the three and nine months ended September 30, 2021 Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Income from rental operations $ 1,296 $ 812 $ 3,109 $ 2,453 Expenses from rental operations 417 182 999 614 Net operating income $ 879 $ 630 $ 2,110 $ 1,839 Depreciation and Amortization 358 172 871 515 Interest 644 236 1,524 715 Other Income (9) - (9) (25) Net (loss) income $ (114) $ 222 $ (276) $ 634 |
LEASE INTANGIBLES (Tables)
LEASE INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
LEASE INTANGIBLES | |
Schedule of Intangible Assets, Liabilities and Accumulated Amortization | Lease Accumulated Lease As of September 30, 2021 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 16,002 $ (10,693) $ 5,309 Above-market leases 2,617 (1,407) 1,210 $ 18,619 $ (12,100) $ 6,519 Lease Intangible Liabilities Below-market leases $ (2,555) $ 1,699 $ (856) Lease Accumulated Lease As of December 31, 2020 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 19,768 $ (13,727) $ 6,041 Above-market leases 2,618 (1,292) 1,326 $ 22,386 $ (15,019) $ 7,367 Lease Intangible Liabilities Below-market leases $ (2,957) $ 1,963 $ (994) |
Schedule of Estimated Aggregate Amortization Expense | Intangible Intangible Years ending December 31, Assets Liabilities (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 273 $ 45 2022 987 164 2023 849 151 2024 849 151 2025 849 151 Thereafter 2,712 194 $ 6,519 $ 856 |
MORTGAGE NOTES PAYABLE (Tables)
MORTGAGE NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
MORTGAGE NOTES PAYABLE | |
Schedule of Mortgage Notes Payable | Principal Balance At September 30, December 31, 2021 2020 (in thousands) Fixed rate mortgage notes payable (a) $ 457,071 $ 415,665 Variable rate mortgage notes payable 7,210 7,446 Mortgage notes payable 464,281 423,111 Less unamortized debt issuance costs 2,131 1,833 $ 462,150 $ 421,278 (a) Includes $69,490 and $43,613 of variable rate mortgage debt that was swapped to a fixed rate at September 30, 2021 and December 31, 2020, respectively. |
Scheduled Maturities of Mortgage Notes Payable | Years ending December 31, Amount (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 5,589 2022 27,983 2023 51,310 2024 20,840 2025 51,244 Thereafter 307,315 Total payments $ 464,281 |
DERIVATIVES AND HEDGING ACTIV_2
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
DERIVATIVES AND HEDGING ACTIVITIES | |
Schedule of interest rate swaps | The following table summarizes the Trust’s interest rate swaps as of September 30, 2021, which effectively convert one month floating rate LIBOR to a fixed rate: Fixed Effective Date Notional Interest Rate Maturity Date November 1, 2019 $ 6,830 3.15% November 1, 2029 November 1, 2019 $ 4,746 3.28% November 1, 2029 January 10, 2020 $ 3,087 3.39% January 10, 2030 June 11, 2020 $ 1,547 3.07% June 15, 2030 June 11, 2020 $ 2,997 3.07% June 15, 2030 June 15, 2020 $ 1,676 2.94% June 15, 2030 June 15, 2020 $ 4,435 2.94% June 15, 2030 July 1, 2020 $ 4,879 2.79% June 10, 2030 December 2, 2020 $ 12,800 2.91% December 2, 2027 July 1, 2021 $ 26,493 2.99% July 1, 2031 The following table summarizes the Trust’s interest rate swaps that were designated as cash flow hedges of interest rate risk: Number of Instruments Notional Interest Rate Derivatives September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 Interest rate swaps 10 9 $ 69,490 $ 43,613 |
Schedule of the estimated fair value of derivatives | Derivatives Derivatives designated as September 30, 2021 December 31, 2020 cash flow hedges: Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest rate swaps Other assets, net $ 524 Other assets, net $ — Interest rate swaps Accrued expenses and other liabilities $ 856 Accrued expenses and other liabilities $ 1,805 |
Schedule of the effect of the derivatives | Location of Gain Amount of (Gain)/Loss Reclassified from Derivatives in Recognized in Other Accumulated other Amount of (Gain)/Loss Cash Flow Hedging Comprehensive Income Comprehensive Income Reclassified from Relationships on Derivatives (AOCI) into Income AOCI into Income 2021 2021 Interest rate swaps $ 66 Interest expense $ 199 2020 2020 Interest rate swaps $ 17 Interest expense $ 89 The following table presents the effect of the Trust’s derivative financial instruments on the accompanying consolidated statements of operations and other comprehensive loss (income) for the nine months ended September 30, 2021and 2020 Location of Gain Amount of (Gain)/Loss Reclassified from Derivatives in Recognized in Other Accumulated other Amount of (Gain)/Loss Cash Flow Hedging Comprehensive Income Comprehensive Income Reclassified from Relationships on Derivatives (AOCI) into Income AOCI into Income 2021 2021 Interest rate swaps $ (1,473) Interest expense $ 433 2020 2020 Interest rate swaps $ 2,125 Interest expense $ 145 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
FAIR VALUE MEASUREMENT | |
Carrying Value and Estimated Fair Value of Company's Financial Instruments | September 30, 2021 December 31, 2020 Carrying Carrying Value Fair Value Value Fair Value (in thousands) Financial assets: Notes receivable $ 5,456 $ 6,642 $ 2,026 $ 2,117 Derivative assets $ 524 $ 524 $ — $ — Financial liabilities: Mortgage notes payable $ 464,281 $ 486,276 $ 421,278 $ 443,100 Derivative liabilities $ 856 $ 856 $ 1,805 $ 1,805 |
Schedule of Fair Value of Liabilities on Recurring Basis | Level 1 Level 2 Level 3 Total (in thousands) September 30, 2021 Derivative assets $ — $ 524 $ — $ 524 Derivative liabilities $ — $ 856 $ — $ 856 December 31, 2020 Derivative liabilities $ — $ 1,805 $ — $ 1,805 |
Fair Value of Company's Financial Assets and Liabilities | Level 1 Level 2 Level 3 Total (in thousands) September 30, 2021 Mortgage notes payable $ — $ — $ 486,276 $ 486,276 Notes receivable $ — $ — $ 6,642 $ 6,642 December 31, 2020 Mortgage notes payable $ — $ — $ 443,100 $ 443,100 Notes receivable $ — $ — $ 2,117 $ 2,117 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
Schedule of Lease Income related to the Trust's Operating Leases | Lease income related to the Company’s operating leases is comprised of the following: Three months ended September 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 26,748 $ 3,879 $ 30,627 Lease income related to variable lease payments — 1,130 1,130 Other (a) (35) 174 139 Lease Income (b) $ 26,713 $ 5,183 $ 31,896 Three months ended September 30, 2020 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 24,080 $ 4,630 $ 28,710 Lease income related to variable lease payments — 1,352 1,352 Other (a) (170) (36) (206) Lease Income (b) $ 23,910 $ 5,946 $ 29,856 (a) For the three months ended September 30, 2021 and 2020, “other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. (b) Excludes other rental income for the three months ended September 30, 2021 and 2020 of $1,157 and $1,010, respectively, which is accounted for under the revenue recognition standard. Nine months ended September 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 76,722 $ 12,531 $ 89,253 Lease income related to variable lease payments — 3,424 3,424 Other (a) (212) 432 220 Lease Income (b) $ 76,510 $ 16,387 $ 92,897 Nine months ended September 30, 2020 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 70,896 $ 14,378 $ 85,274 Lease income related to variable lease payments — 4,064 4,064 Other (a) (512) (202) (714) Lease Income (b) $ 70,384 $ 18,240 $ 88,624 (a) For the nine months ended September 30, 2021 and 2020, “other” is comprised of revenue adjustments related to changes in collectability and amortization of above and below market lease intangibles and lease inducements. (b) Excludes other rental income for the nine months ended September 30, 2021 and 2020 of $3,839 and $2,969, respectively, which is accounted for under the revenue recognition standard. |
Schedule of Future Minimum Rental Income | Years ending December 31, Amount (in thousands) 2021 (October 1, 2021 - December 31, 2021) $ 3,782 2022 15,061 2023 14,474 2024 13,856 2025 13,688 Thereafter 64,381 $ 125,242 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |
Schedule of fees incurred and payable to Advisor | Nine months ended Due and Payable at September 30, 2021 September 30, 2020 September 30, 2021 December 31, 2020 Fee Fee Payable Payable (in thousands) Fee: Advisory $ 2,474 $ 2,321 $ 285 $ 278 Acquisition $ 375 $ 500 $ - $ - Disposition $ 146 $ 143 $ - $ 175 Financing $ 146 $ 82 $ 5 $ - Development $ - $ - $ 79 $ 79 Project Management $ 409 $ 226 $ 11 $ 51 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
ACQUISITIONS | |
Schedule of acquisitions | Date Property Name Location Property Type Units/ Square Footage/ Acres Purchase Price 6/1/21 Flagstone Fargo, ND Apartment Complex 120 units $ 7,789 6/1/21 Brownstone Fargo, ND Apartment Complex 72 units 4,392 6/1/21 Briar Pointe Fargo, ND Apartment Complex 30 units 1,936 7/1/21 Oxford Fargo, ND Apartment Complex 144 units 10,227 7/1/21 Pinehurst Fargo, ND Apartment Complex 210 units 15,001 $ 39,345 |
Schedule of acquisition date fair values, before prorations recorded in conjunction with acquisitions | Nine Months Ended September 30, 2021 2020 Land, building, tenant improvements and FF&E $ 39,345 $ 21,191 Other liabilities (569) (538) Net assets acquired 38,776 20,653 Equity/limited partnership unit consideration (2,883) (9,031) New loans (26,250) (3,225) Net cash consideration $ 9,643 $ 8,397 |
Organization - Additional Infor
Organization - Additional Information (Details) | Sep. 30, 2021 | Dec. 31, 2020 |
ORGANIZATION | ||
Ownership in operating partnership (as a percent) | 35.89% | 35.03% |
Principal Activity and Signif_4
Principal Activity and Significant Accounting Policies - Principles of Consolidation (Details) | Sep. 30, 2021 | Dec. 31, 2020 |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | ||
Ownership in operating partnership (as a percent) | 35.89% | 35.03% |
Principal Activity and Signif_5
Principal Activity and Significant Accounting Policies - Real Estate Investments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Real Estate Investments | ||
Loss on impairment of property | $ 0 | $ 0 |
Building and improvements | ||
Real Estate Investments | ||
Estimated useful life | 40 years | |
Furniture and fixtures | Minimum | ||
Real Estate Investments | ||
Estimated useful life | 5 years | |
Furniture and fixtures | Maximum | ||
Real Estate Investments | ||
Estimated useful life | 9 years |
Principal Activity and Signif_6
Principal Activity and Significant Accounting Policies - Federal Income Taxes (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | |
Taxable income to be distributed | 90.00% |
Retainable taxable income | 10.00% |
Provisions or liabilities for income taxes | $ 0 |
Principal Activity and Signif_7
Principal Activity and Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Revenue Recognition | |||||
Decrease/(Increase) in revenue due to straight - line adjustment | $ 167 | $ (31) | $ 359 | $ (169) | |
Straight - line receivable | $ 3,377 | $ 3,377 | $ 3,012 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2021segment | |
SEGMENT REPORTING | |
Number of reportable segments | 2 |
Segment Reporting - Summary of
Segment Reporting - Summary of Segment Revenues and Net Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
SEGMENT REPORTING | ||||||||
Income from rental operations | $ 33,053 | $ 30,866 | $ 96,736 | $ 91,593 | ||||
Expenses from rental operations | 17,673 | 15,302 | 48,079 | 45,102 | ||||
Net operating income | 15,380 | 15,564 | 48,657 | 46,491 | ||||
Depreciation and amortization | 5,551 | 5,328 | 16,634 | 15,826 | ||||
Interest | 4,671 | 4,187 | 13,261 | 12,761 | ||||
Administration of REIT | 1,007 | 972 | 3,267 | 3,218 | ||||
Other (income)/expense | (1,567) | (189) | (4,337) | (2,204) | ||||
Net income | 5,718 | $ 8,278 | $ 5,836 | 5,266 | $ 6,397 | $ 5,227 | 19,832 | 16,890 |
Residential | ||||||||
SEGMENT REPORTING | ||||||||
Income from rental operations | 27,838 | 24,858 | 80,028 | 73,234 | ||||
Expenses from rental operations | 15,352 | 13,506 | 42,564 | 39,978 | ||||
Net operating income | 12,486 | 11,352 | 37,464 | 33,256 | ||||
Commercial | ||||||||
SEGMENT REPORTING | ||||||||
Income from rental operations | 5,215 | 6,008 | 16,708 | 18,359 | ||||
Expenses from rental operations | 2,321 | 1,796 | 5,515 | 5,124 | ||||
Net operating income | $ 2,894 | $ 4,212 | $ 11,193 | $ 13,235 |
Segment Reporting - Summary o_2
Segment Reporting - Summary of Segment Assets and Accumulated Depreciation (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 |
SEGMENT REPORTING | |||
Real estate investments | $ 891,431 | $ 845,288 | |
Accumulated depreciation | (174,088) | (160,575) | |
Real estate investments, net | 717,343 | 684,713 | |
Cash and cash equivalents | 22,168 | 11,716 | $ 6,499 |
Restricted deposits | 10,879 | 15,919 | $ 8,451 |
Investment in unconsolidated affiliates | 15,147 | 9,659 | |
Notes receivable | 5,456 | 2,026 | |
Assets held for sale | 831 | ||
Intangible assets, less accumulated amortization | 6,519 | 7,367 | |
Other assets, net | 10,888 | 10,798 | |
Total Assets | 788,400 | 743,029 | |
Residential | |||
SEGMENT REPORTING | |||
Real estate investments | 688,151 | 647,083 | |
Accumulated depreciation | (129,054) | (118,363) | |
Real estate investments, net | 559,097 | 528,720 | |
Commercial | |||
SEGMENT REPORTING | |||
Real estate investments | 203,280 | 198,205 | |
Accumulated depreciation | (45,034) | (42,212) | |
Real estate investments, net | $ 158,246 | $ 155,993 |
Restricted Deposits - Summary o
Restricted Deposits - Summary of Restricted Deposits and Funded Reserves (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 |
RESTRICTED DEPOSITS | |||
Tenant security deposits | $ 5,034 | $ 4,730 | |
Real estate tax and insurance escrows | 1,491 | 2,058 | |
Replacement reserves | 2,090 | 2,137 | |
Other funded reserves | 2,264 | 6,994 | |
Restricted deposits , Total | $ 10,879 | $ 15,919 | $ 8,451 |
Restricted Deposits - Additiona
Restricted Deposits - Additional Information (Details) $ in Thousands | Sep. 30, 2021USD ($) |
RESTRICTED DEPOSITS | |
Insurance proceeds held in escrow | $ 2,264 |
Investment in Unconsolidated _3
Investment in Unconsolidated Affiliates - Total investments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Sep. 17, 2021 | Aug. 25, 2021 | Dec. 31, 2020 |
Schedule of Equity Method Investments [Line Items] | ||||
Investment in unconsolidated affiliates | $ 15,147 | $ 9,659 | ||
ST Oak Cliff, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 70.00% | 70.00% | ||
Investment in unconsolidated affiliates | $ 3,075 | |||
SE Brooklyn Park, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | 60.00% | ||
Investment in unconsolidated affiliates | $ 680 | |||
Operating Partnership | Banner Building | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 66.67% | |||
Investment in unconsolidated affiliates | $ 60 | |||
Operating Partnership | Grand Forks Market Place Retail Center | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 50.00% | |||
Investment in unconsolidated affiliates | $ 2,508 | |||
Operating Partnership | SE Savage, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Investment in unconsolidated affiliates | $ 2,925 | |||
Operating Partnership | SE Maple Grove, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Investment in unconsolidated affiliates | $ 2,886 | |||
Operating Partnership | SE Rogers | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Investment in unconsolidated affiliates | $ 3,013 |
Investment in Unconsolidated _4
Investment in Unconsolidated Affiliates - Additional Information (Details) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021USD ($)ft²property | Sep. 17, 2021 | Aug. 25, 2021item | Dec. 31, 2020USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Assets | $ 788,400 | $ 743,029 | ||
SE Savage, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Assets | 37,256 | 27,015 | ||
SE Maple Grove, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Assets | 29,424 | 13,106 | ||
SE Rogers | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Assets | $ 17,818 | 4,161 | ||
ST Oak Cliff, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 70.00% | 70.00% | ||
Number of units | 318 | 318 | ||
Cash contribution | $ 3,075 | |||
Assets | 4,653 | |||
Development project budget | 53,138 | |||
Development project cost incurred | 4,342 | |||
Mortgage balance | $ 0 | |||
SE Brooklyn Park, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | 60.00% | ||
Number of units | property | 146 | |||
Cash contribution | $ 680 | |||
Assets | 2,371 | |||
Development project budget | 32,789 | |||
Development project cost incurred | $ 2,370 | |||
Operating Partnership | Banner Building | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 66.67% | |||
Area of commercial property | ft² | 75,000 | |||
Mortgage carrying amount | $ 6,076 | 6,232 | ||
Operating Partnership | Grand Forks Market Place Retail Center | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 50.00% | |||
Percentage of interest | 100.00% | |||
Area of commercial property | ft² | 183,000 | |||
Mortgage carrying amount | $ 9,856 | 10,036 | ||
Operating Partnership | SE Savage, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Number of units | property | 190 | |||
Cash contribution | $ 2,077 | |||
Mortgage balance | $ 26,210 | 19,436 | ||
Operating Partnership | SE Maple Grove, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Number of units | ft² | 160 | |||
Cash contribution | $ 2,975 | |||
Development project budget | 33,029 | |||
Development project cost incurred | 27,907 | |||
Mortgage balance | $ 23,107 | 5,710 | ||
Operating Partnership | SE Rogers | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percent) | 60.00% | |||
Number of units | ft² | 165 | |||
Cash contribution | $ 3,089 | |||
Development project budget | 35,042 | |||
Development project cost incurred | 16,530 | |||
Mortgage balance | 10,993 | $ 0 | ||
Operating Partnership | Sterling Properties LLLP | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Mortgage balance | $ 4,835 |
Investment in Unconsolidated _5
Investment in Unconsolidated Affiliates - Summary of financial position (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||||||||
Real estate investments | $ 891,431 | $ 845,288 | ||||||
Accumulated depreciation | (174,088) | (160,575) | ||||||
Real estate investments, net | 717,343 | 684,713 | ||||||
Cash and cash equivalents | 22,168 | 11,716 | $ 6,499 | |||||
Restricted deposits | 10,879 | 15,919 | 8,451 | |||||
Other assets, net | 10,888 | 10,798 | ||||||
Total Assets | 788,400 | 743,029 | ||||||
LIABILITIES | ||||||||
Mortgage notes payable, net | 462,150 | 421,278 | ||||||
Tenant security deposits payable | 5,174 | 4,908 | ||||||
Accrued expenses and other liabilities | 15,761 | 16,869 | ||||||
Total Liabilities | 491,484 | 451,501 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Total Shareholders' Equity | 296,916 | $ 295,043 | $ 293,859 | 291,528 | $ 285,404 | $ 285,385 | $ 286,011 | $ 279,047 |
Total liabilities and shareholders' equity | 788,400 | 743,029 | ||||||
Unconsolidated Affiliates | ||||||||
ASSETS | ||||||||
Real estate investments | 121,916 | 74,991 | ||||||
Accumulated depreciation | (10,563) | (9,692) | ||||||
Real estate investments, net | 111,353 | 65,299 | ||||||
Cash and cash equivalents | 878 | 249 | ||||||
Restricted deposits | 493 | 384 | ||||||
Other assets, net | 526 | 180 | ||||||
Total Assets | 113,250 | 66,112 | ||||||
LIABILITIES | ||||||||
Mortgage notes payable, net | 79,749 | 41,405 | ||||||
Tenant security deposits payable | 97 | 2 | ||||||
Accrued expenses and other liabilities | 8,072 | 6,533 | ||||||
Total Liabilities | 87,918 | 47,940 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Total Shareholders' Equity | 25,332 | 18,172 | ||||||
Total liabilities and shareholders' equity | $ 113,250 | $ 66,112 |
Investment in Unconsolidated _6
Investment in Unconsolidated Affiliates - Summary of results of operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Income from rental operations | $ 33,053 | $ 30,866 | $ 96,736 | $ 91,593 | ||||
Expenses from rental operations | 27,895 | 24,817 | 77,974 | 73,689 | ||||
Income from operations | 4,151 | 5,077 | 15,495 | 14,686 | ||||
Depreciation and amortization | 5,551 | 5,328 | 16,634 | 15,826 | ||||
Interest | 4,671 | 4,187 | 13,261 | 12,761 | ||||
Other Income | 1,085 | 64 | 1,574 | 333 | ||||
Net income | 5,718 | $ 8,278 | $ 5,836 | 5,266 | $ 6,397 | $ 5,227 | 19,832 | 16,890 |
Unconsolidated Affiliates | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Income from rental operations | 1,296 | 812 | 3,109 | 2,453 | ||||
Expenses from rental operations | 417 | 182 | 999 | 614 | ||||
Income from operations | 879 | 630 | 2,110 | 1,839 | ||||
Depreciation and amortization | 358 | 172 | 871 | 515 | ||||
Interest | 644 | 236 | 1,524 | 715 | ||||
Other Income | (9) | (9) | (25) | |||||
Net income | $ (114) | $ 222 | $ (276) | $ 634 |
Lease Intangibles - Schedule of
Lease Intangibles - Schedule of Intangible Assets and Liabilities and Accumulated Amortization (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Intangible Assets | |||
Lease Intangibles | $ 18,619 | $ 22,386 | |
Accumulated Amortization | (12,100) | (15,019) | |
Total | 6,519 | 7,367 | |
Amortization of Intangible Assets | 971 | $ 1,095 | |
Intangible Liabilities | |||
Below-market lease | (2,555) | (2,957) | |
Below-market lease, accumulated amortization | 1,699 | 1,963 | |
Below-market lease, net | (856) | (994) | |
In-place leases | |||
Intangible Assets | |||
Lease Intangibles | 16,002 | 19,768 | |
Accumulated Amortization | (10,693) | (13,727) | |
Total | 5,309 | 6,041 | |
Above-market leases | |||
Intangible Assets | |||
Lease Intangibles | 2,617 | 2,618 | |
Accumulated Amortization | (1,407) | (1,292) | |
Total | $ 1,210 | $ 1,326 |
Lease Intangibles - Schedule _2
Lease Intangibles - Schedule of Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Intangible Assets | ||
2021 (October 1, 2021 - December 31, 2021) | $ 273 | |
2022 | 987 | |
2023 | 849 | |
2024 | 849 | |
2025 | 849 | |
Thereafter | 2,712 | |
Total | 6,519 | $ 7,367 |
Intangible Liabilities | ||
2021 (October 1, 2021 - December 31, 2021) | 45 | |
2022 | 164 | |
2023 | 151 | |
2024 | 151 | |
2025 | 151 | |
Thereafter | 194 | |
Total | $ 856 | $ 994 |
Lines of Credit - Additional In
Lines of Credit - Additional Information (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021USD ($)item | Dec. 31, 2020USD ($) | |
Bremer Bank | ||
Lines of Credit | ||
Number of letters of credit secured | item | 2 | |
Letters of credit total | $ 67 | |
Unused line of credit | 9,848 | |
Line of credit outstanding | 0 | $ 0 |
Bremer Bank Agreement One | ||
Lines of Credit | ||
Agreed line of credit | $ 4,915 | |
Expiration date | Jun. 1, 2022 | |
Bremer Bank Agreement One | Floating LIBOR | ||
Lines of Credit | ||
Variable interest rate of line of credit | 2.00% | |
Bremer Bank Agreement Two | ||
Lines of Credit | ||
Agreed line of credit | $ 5,000 | |
Expiration date | Dec. 1, 2022 | |
Bremer Bank Agreement Two | Floating LIBOR | ||
Lines of Credit | ||
Variable interest rate of line of credit | 2.00% |
Mortgage Notes Payable - Summar
Mortgage Notes Payable - Summary (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | $ 464,281 | |
Mortgage Notes Payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | 464,281 | $ 423,111 |
Less unamortized debt issuance costs | 2,131 | 1,833 |
Long-term debt, net | 462,150 | 421,278 |
Fixed rate mortgage notes payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | 457,071 | 415,665 |
Fixed rate mortgage notes payable | Mortgage Notes Payable | ||
MORTGAGE NOTES PAYABLE | ||
Debt swapped from variable to fixed rate | 69,490 | 43,613 |
Variable rate mortgage notes payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | $ 7,210 | $ 7,446 |
Mortgage Notes Payable - Schedu
Mortgage Notes Payable - Scheduled Maturities of Mortgage Notes Payable (Details) $ in Thousands | Sep. 30, 2021USD ($) |
MORTGAGE NOTES PAYABLE | |
2021 (October 1, 2021 - December 31, 2021) | $ 5,589 |
2022 | 27,983 |
2023 | 51,310 |
2024 | 20,840 |
2025 | 51,244 |
Thereafter | 307,315 |
Total payments | $ 464,281 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Other (Details) - Interest rate swap $ in Thousands | Sep. 30, 2021USD ($)instrument | Dec. 31, 2020instrument |
Derivatives and Hedging Activities | ||
Estimated amount to be reclassified over the next 12 months, as a increase to interest expense | $ | $ 869 | |
Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivatives and Hedging Activities | ||
Number of instruments | instrument | 10 | 9 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Summary (Details) - Designated as Hedging Instrument - Cash Flow Hedging $ in Thousands | 9 Months Ended | |
Sep. 30, 2021USD ($)instrument | Dec. 31, 2020USD ($)instrument | |
Interest rate swap | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 69,490 | $ 43,613 |
Number of instruments | instrument | 10 | 9 |
Interest Rate Swap, one, November 2029 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 6,830 | |
Fixed interest rate (as a percent) | 3.15% | |
Derivative maturity date | Nov. 1, 2029 | |
Interest Rate Swap, two, November 2029 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 4,746 | |
Fixed interest rate (as a percent) | 3.28% | |
Derivative maturity date | Nov. 1, 2029 | |
Interest Rate Swap, January 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 3,087 | |
Fixed interest rate (as a percent) | 3.39% | |
Derivative maturity date | Jan. 10, 2030 | |
Interest Rate Swap, one, June 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 1,547 | |
Fixed interest rate (as a percent) | 3.07% | |
Derivative maturity date | Jun. 15, 2030 | |
Interest Rate Swap, two, June 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 2,997 | |
Fixed interest rate (as a percent) | 3.07% | |
Derivative maturity date | Jun. 15, 2030 | |
Interest Rate Swap, three, June 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 1,676 | |
Fixed interest rate (as a percent) | 2.94% | |
Derivative maturity date | Jun. 15, 2030 | |
Interest Rate Swap, four, June 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 4,435 | |
Fixed interest rate (as a percent) | 2.94% | |
Derivative maturity date | Jun. 15, 2030 | |
Interest Rate Swap, five, June 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 4,879 | |
Fixed interest rate (as a percent) | 2.79% | |
Derivative maturity date | Jun. 10, 2030 | |
Interest Rate Swap, December 2027 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 12,800 | |
Fixed interest rate (as a percent) | 2.91% | |
Derivative maturity date | Dec. 2, 2027 | |
Interest Rate Swap, July 2031 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 26,493 | |
Fixed interest rate (as a percent) | 2.99% | |
Derivative maturity date | Jul. 1, 2031 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other assets, net | ||
Derivatives and Hedging Activities | ||
Fair value, derivative assets | $ 524 | |
Accrued expenses and other liabilities | ||
Derivatives and Hedging Activities | ||
Fair value, derivative liabilities | $ 856 | $ 1,805 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities - Gain/Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Derivatives and Hedging Activities | ||||||||
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives | $ 66 | $ 845 | $ (2,384) | $ 17 | $ 622 | $ 1,486 | $ (1,473) | $ 2,125 |
Interest expense | ||||||||
Derivatives and Hedging Activities | ||||||||
Amount of (Gain)/Loss Reclassified from AOCI into income | 199 | 89 | 433 | 145 | ||||
Interest rate swap | ||||||||
Derivatives and Hedging Activities | ||||||||
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives | $ 66 | $ 17 | $ (1,473) | $ 2,125 |
Derivatives and Hedging Activ_7
Derivatives and Hedging Activities - Credit-Risk Related Contingent Features (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Credit-risk-related Contingent Features | |
Termination value of interest rate derivatives in liability position | $ 856 |
Termination value of interest rate derivatives in asset position | $ 524 |
Fair Value Measurement - Carryi
Fair Value Measurement - Carrying Value and Estimated Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Financial assets: | ||
Note receivable | $ 5,456 | $ 2,026 |
Derivative assets | 524 | |
Financial liabilities: | ||
Mortgage notes payable | 464,281 | 421,278 |
Derivative liabilities | 856 | 1,805 |
Fair Value | ||
Financial assets: | ||
Note receivable | 6,642 | 2,117 |
Derivative assets | 524 | |
Financial liabilities: | ||
Mortgage notes payable | 486,276 | 443,100 |
Derivative liabilities | $ 856 | $ 1,805 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Fair Value of Assets on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value Measurements | ||
Derivative assets | $ 524 | |
Derivative liabilities | 856 | $ 1,805 |
Level 2 | ||
Fair Value Measurements | ||
Derivative assets | 524 | |
Derivative liabilities | $ 856 | $ 1,805 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value of Company's Financial Assets and Liabilities (Details) - Fair Value - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value Measurements | ||
Mortgage notes payable, net | $ 486,276 | $ 443,100 |
Note receivable | 6,642 | 2,117 |
Level 3 | ||
Fair Value Measurements | ||
Mortgage notes payable, net | 486,276 | 443,100 |
Note receivable | $ 6,642 | $ 2,117 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) - Measurement Input, Discount Rate | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Minimum | ||
Fair Value Disclosures | ||
Discount rates used to estimate fair value of mortgages and notes payable | 0.0300 | 0.0325 |
Receivables, measurement input | 0.0300 | 0.0325 |
Maximum | ||
Fair Value Disclosures | ||
Discount rates used to estimate fair value of mortgages and notes payable | 0.0310 | 0.0335 |
Receivables, measurement input | 0.0350 | 0.0335 |
Leases - Other (Details)
Leases - Other (Details) | Sep. 30, 2021 |
Residential | |
Revenue from leases | |
Percentage of revenue from leases that are generally for terms of one year or less | 83.00% |
Commercial | |
Revenue from leases | |
Percentage of revenue from leases primarily under long-term lease agreements | 17.00% |
Leases - Lease Income (Details)
Leases - Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Lease income: | ||||
Lease income related to fixed lease payments | $ 30,627 | $ 28,710 | $ 89,253 | $ 85,274 |
Lease income related to variable lease payments | 1,130 | 1,352 | 3,424 | 4,064 |
Other | 139 | (206) | 220 | (714) |
Lease income | 31,896 | 29,856 | 92,897 | 88,624 |
Rental income accounted for under revenue recognition standard: | ||||
Other rental income | 1,157 | 1,010 | 3,839 | 2,969 |
Residential | ||||
Lease income: | ||||
Lease income related to fixed lease payments | 26,748 | 24,080 | 76,722 | 70,896 |
Other | (35) | (170) | (212) | (512) |
Lease income | 26,713 | 23,910 | 76,510 | 70,384 |
Commercial | ||||
Lease income: | ||||
Lease income related to fixed lease payments | 3,879 | 4,630 | 12,531 | 14,378 |
Lease income related to variable lease payments | 1,130 | 1,352 | 3,424 | 4,064 |
Other | 174 | (36) | 432 | (202) |
Lease income | $ 5,183 | $ 5,946 | $ 16,387 | $ 18,240 |
Leases - Future minimum rental
Leases - Future minimum rental income (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Future minimum rental income: | |
2021 (October 1, 2021 - December 31, 2021) | $ 3,782 |
2022 | 15,061 |
2023 | 14,474 |
2024 | 13,856 |
2025 | 13,688 |
Thereafter | 64,381 |
Total | $ 125,242 |
Related Party Transactions - Pr
Related Party Transactions - Property Management and Board of Trustee Fees (Details) - GOLDMARK Property Management - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transactions | ||
Management fee, amount paid | $ 9,634 | $ 9,518 |
Management fees paid expressed as a percentage of net collected rents | 5.00% | 5.00% |
Management fees as percent of net collected rents | $ 3,862 | $ 3,692 |
Repair and maintenance related payroll and payroll related expenses | $ 5,012 | $ 4,849 |
Related Party Transactions - Ad
Related Party Transactions - Advisory Agreement and Other (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)employeepropertyshares | Sep. 30, 2020USD ($)shares | Aug. 25, 2021item | Dec. 31, 2020USD ($) | |
Related Party Transactions | ||||||
Number of paid employees | employee | 0 | |||||
Received reimbursement for expenses paid | $ 1,000,000 | $ 0 | ||||
Number of operating partnership (OP) units issued in connection with the acquisition of various properties | shares | 0 | |||||
Rental income | $ 30,627,000 | $ 28,710,000 | $ 89,253,000 | 85,274,000 | ||
Costs and expenditures incurred due to construction in progress | 187,000 | 1,575,000 | ||||
Operational liabilities outstanding | 62,000 | $ 62,000 | $ 191,000 | |||
Advisory Agreement | ||||||
Related Party Transactions | ||||||
Development fee cap (as a percent) | 2.50% | |||||
Development fee cap amount | $ 20,000,000 | |||||
Development fee cap amount if Advisor shares responsibility | $ 500,000 | |||||
Advisory Agreement | Minimum | ||||||
Related Party Transactions | ||||||
Advisor's development fee, after adjustment of charges (as a percent) | 2.50% | |||||
Sterling Management, LLC | ||||||
Related Party Transactions | ||||||
Advisory management fees | $ 2,474,000 | 2,321,000 | ||||
Advisory management fees outstanding | 285,000 | 285,000 | 278,000 | |||
Acquisition fees | 375,000 | 500,000 | ||||
Disposition fees | 146,000 | 143,000 | ||||
Disposition fees outstanding | 175,000 | |||||
Financing fees | 146,000 | 82,000 | ||||
Financing fees outstanding | 5,000 | 5,000 | ||||
Development fees outstanding | 79,000 | 79,000 | 79,000 | |||
Project management fee | 409,000 | 226,000 | ||||
Project management fee outstanding | 11,000 | 11,000 | 51,000 | |||
Rental income | 77,000 | 63,000 | ||||
GOLDMARK Property Management | ||||||
Related Party Transactions | ||||||
Property management fees | 87,000 | 0 | ||||
Real estate commissions | 217,000 | 308,000 | ||||
Real estate commissions outstanding | 0 | 0 | 0 | |||
Rental income | 224,000 | 202,000 | ||||
GOLDMARK SCHLOSSMAN Commercial Real Estate Services | ||||||
Related Party Transactions | ||||||
Real estate commissions | 297,000 | 583,000 | ||||
Real estate commissions outstanding | 0 | 0 | 0 | |||
Rental income | 19,000 | $ 43,000 | ||||
Entity Affiliated With Messrs Regan and Wieland | ||||||
Related Party Transactions | ||||||
Number of operating partnership (OP) units issued in connection with the acquisition of various properties | shares | 176,000 | |||||
Value of operating partnership (OP) units issued in connection with the acquisition of various properties | $ 3,373,000 | |||||
SE Savage, LLC | ||||||
Related Party Transactions | ||||||
Interest income | 103,000 | 0 | ||||
SE Savage, LLC | Mezzanine Financing | ||||||
Related Party Transactions | ||||||
Loan to related party | 4,835,000 | |||||
Outstanding receivable from related party | 0 | |||||
Trumont Group, LLC | ||||||
Related Party Transactions | ||||||
Development fee | 51,000 | 0 | ||||
Development fees outstanding | 51,000 | 51,000 | 0 | |||
Trumont Construction, LLC | ||||||
Related Party Transactions | ||||||
Construction fees | 12,000 | 0 | ||||
Construction fees payable | 6,000 | 6,000 | 0 | |||
General construction costs | 41,000 | 0 | ||||
General construction costs payable | 0 | 0 | ||||
Bell Bank | ||||||
Related Party Transactions | ||||||
Rental income | 278,000 | 362,000 | ||||
Outstanding on principal loans | 66,915,000 | 66,915,000 | $ 51,915,000 | |||
Interest expense incurred | 1,511,000 | 1,571,000 | ||||
Accrued interest | $ 142,000 | $ 121,000 | 142,000 | $ 121,000 | ||
Number of policies obtained | 0 | |||||
Total premiums paid | $ 118,000 | |||||
ST Oak Cliff, LLC | ||||||
Related Party Transactions | ||||||
Ownership interest (as a percent) | 70.00% | 70.00% | 70.00% | |||
Number of units | 318 | 318 | 318 | |||
TG Oak Cliff Dallas, LLC | ||||||
Related Party Transactions | ||||||
Ownership interest (as a percent) | 30.00% |
Dispositions (Details)
Dispositions (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Jun. 30, 2021USD ($) | Apr. 30, 2021USD ($) | May 31, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($)property | |
Dispositions | ||||||
Gain on sale of real estate | $ 1,710 | $ 1,456 | ||||
Disposed of by Sale | ||||||
Dispositions | ||||||
Number of dispositions | property | 2 | 2 | ||||
Retail Property, Apple Valley, MN | Disposed of by Sale | ||||||
Dispositions | ||||||
Sale price | $ 3,670 | |||||
Gain on sale of real estate | $ 1,455 | |||||
Retail Property, St, Cloud, Minnesota | Disposed of by Sale | ||||||
Dispositions | ||||||
Sale price | $ 2,050 | |||||
Gain on sale of real estate | $ 1 | |||||
Retail Property, Waite Park, Minnesota | Disposed of by Sale | ||||||
Dispositions | ||||||
Sale price | $ 900 | |||||
Proceeds from sale of real estate investments | 853 | |||||
Gain on sale of real estate | $ 2 | |||||
Residential Property, Moorhead, Minnesota | Disposed of by Sale | ||||||
Dispositions | ||||||
Sale price | $ 4,950 | |||||
Proceeds from sale of real estate investments | 4,757 | |||||
Gain on sale of real estate | $ 1,708 |
Acquisitions - Purchases, Curre
Acquisitions - Purchases, Current Year (Details) $ / shares in Units, $ in Thousands | Jul. 01, 2021USD ($)item | Jun. 01, 2021USD ($)item | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) |
Acquisitions | ||||
Acquisition price | $ 39,345 | |||
Real Estate Property Acquisitions 2021 | ||||
Acquisitions | ||||
Aggregate number of limited partnership units issued for acquisition | shares | 144,000 | |||
Price per limited partnership unit issued for acquisition, price one | $ / shares | $ 20 | |||
Aggregate value of limited partnership units issued for acquisition | $ 2,883 | |||
Assumed liabilities | 569 | |||
New debt | 26,250 | |||
Consideration in cash to pay for acquisitions | $ 9,643 | |||
Real Estate Property Acquisitions 2020 | ||||
Acquisitions | ||||
Aggregate value of limited partnership units issued for acquisition | $ 9,031 | |||
New debt | 3,225 | |||
Consideration in cash to pay for acquisitions | $ 8,397 | |||
Flagstone, Fargo, ND | ||||
Acquisitions | ||||
Units acquired | item | 120 | |||
Acquisition price | $ 7,789 | |||
Brownstone, Fargo, ND | ||||
Acquisitions | ||||
Units acquired | item | 72 | |||
Acquisition price | $ 4,392 | |||
Briar Pointe, Fargo, ND | ||||
Acquisitions | ||||
Units acquired | item | 30 | |||
Acquisition price | $ 1,936 | |||
Oxford Fargo, ND | ||||
Acquisitions | ||||
Units acquired | item | 144 | |||
Acquisition price | $ 10,227 | |||
Pinehurst Fargo, ND | ||||
Acquisitions | ||||
Units acquired | item | 210 | |||
Acquisition price | $ 15,001 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisition Date Fair Values (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Acquisition date fair values | |||
Land, building, tenant improvements and FF&E | $ 891,431 | $ 845,288 | |
Real Estate Property Acquisitions 2021 | |||
Acquisition date fair values | |||
Land, building, tenant improvements and FF&E | 39,345 | ||
Other liabilities | (569) | ||
Net assets acquired | 38,776 | ||
Equity/limited partnership unit consideration | (2,883) | ||
New loans | (26,250) | ||
Net cash consideration | $ 9,643 | ||
Real Estate Property Acquisitions 2020 | |||
Acquisition date fair values | |||
Land, building, tenant improvements and FF&E | $ 21,191 | ||
Other liabilities | (538) | ||
Net assets acquired | 20,653 | ||
Equity/limited partnership unit consideration | (9,031) | ||
New loans | (3,225) | ||
Net cash consideration | $ 8,397 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 15, 2021 | Oct. 13, 2021 | Oct. 08, 2021 | Oct. 01, 2021 | Sep. 30, 2021 | Sep. 17, 2021 | Aug. 25, 2021 |
SE Brooklyn Park, LLC | |||||||
Subsequent Events | |||||||
Ownership interest (as a percent) | 60.00% | 60.00% | |||||
ST Oak Cliff, LLC | |||||||
Subsequent Events | |||||||
Ownership interest (as a percent) | 70.00% | 70.00% | |||||
SE Savage, LLC | Mezzanine Financing | |||||||
Subsequent Events | |||||||
Loan to related party | $ 4,835 | ||||||
Subsequent Event | |||||||
Subsequent Events | |||||||
Dividend or distribution paid | $ 0.2650 | ||||||
Loans paid | $ 1,923 | ||||||
Subsequent Event | Bell Plaza | |||||||
Subsequent Events | |||||||
Additional equity contributed | $ 1,050 | ||||||
Ownership interest (as a percent) | 70.00% | ||||||
Subsequent Event | SE Brooklyn Park, LLC | |||||||
Subsequent Events | |||||||
Additional equity contributed | $ 742 | ||||||
Subsequent Event | ST Oak Cliff, LLC | |||||||
Subsequent Events | |||||||
Additional equity contributed | $ 385 | ||||||
Subsequent Event | SE Savage, LLC | Mezzanine Financing | |||||||
Subsequent Events | |||||||
Loan to related party | $ 649 |