Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 08, 2022 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Sterling Real Estate Trust | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
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 $0.01 per share | |
No Trading Symbol Flag | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,688,070 | |
Entity Central Index Key | 0001412502 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Land and land improvements | $ 127,946 | $ 125,338 |
Building and improvements | 794,059 | 763,003 |
Construction in progress | 7,404 | 8,361 |
Real estate investments | 929,409 | 896,702 |
Less accumulated depreciation | (188,266) | (179,155) |
Real estate investments, net | 741,143 | 717,547 |
Cash and cash equivalents | 40,072 | 51,507 |
Restricted deposits | 8,825 | 9,149 |
Investment in unconsolidated affiliates | 24,494 | 18,658 |
Notes receivable | 5,423 | 7,457 |
Lease intangible assets, less accumulated amortization | 5,922 | 6,246 |
Other assets, net | 21,274 | 10,302 |
Total Assets | 847,153 | 820,866 |
LIABILITIES | ||
Mortgage notes payable, net | 504,979 | 493,142 |
Dividends payable | 8,394 | 7,567 |
Tenant security deposits payable | 6,167 | 5,225 |
Lease intangible liabilities, less accumulated amortization | 724 | 811 |
Accrued expenses and other liabilities | 12,665 | 18,604 |
Total Liabilities | 532,929 | 525,349 |
COMMITMENTS and CONTINGENCIES - Note 13 | ||
SHAREHOLDERS' EQUITY | ||
Beneficial interest | 119,519 | 116,856 |
Operating partnership | 182,621 | 176,954 |
Partially owned properties | 2,695 | 2,657 |
Accumulated other comprehensive income (loss) | 9,389 | (950) |
Total Shareholders' Equity | 314,224 | 295,517 |
Total liabilities and shareholders' equity | $ 847,153 | $ 820,866 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income from rental operations | ||||
Real estate rental income | $ 33,817 | $ 31,923 | $ 66,734 | $ 63,683 |
Expenses from rental operations | ||||
Operating expenses | 13,157 | 11,664 | 27,846 | 23,772 |
Real estate taxes | 3,638 | 3,390 | 7,135 | 6,634 |
Depreciation and amortization | 5,963 | 5,756 | 11,745 | 11,083 |
Interest | 4,954 | 4,302 | 9,800 | 8,589 |
Total expenses from rental operations | 27,712 | 25,112 | 56,526 | 50,078 |
Administration of REIT | ||||
Administration of REIT | 1,400 | 1,059 | 2,617 | 2,260 |
Total expenses | 29,112 | 26,171 | 59,143 | 52,338 |
Income from operations | 4,705 | 5,752 | 7,591 | 11,345 |
Other income | ||||
Equity in losses of unconsolidated affiliates | (284) | (89) | (1,424) | (116) |
Other income | 152 | 218 | 442 | 488 |
Gain on sale or conversion of real estate investments | 2,012 | 1,710 | 3,340 | 1,710 |
Gain on involuntary conversion | 522 | 687 | 547 | 687 |
Total other income | 2,402 | 2,526 | 2,905 | 2,769 |
Net income | 7,107 | 8,278 | 10,496 | 14,114 |
Net income attributable to noncontrolling interest in operating partnership | 4,531 | 5,355 | 6,676 | 9,108 |
Net income attributable to noncontrolling interest in partially owned properties | 8 | (40) | 38 | (9) |
Net income attributable to Sterling Real Estate Trust | $ 2,568 | $ 2,963 | $ 3,782 | $ 5,015 |
Net income attributable to Sterling Real Estate Trust per common share, basic | $ 0.24 | $ 0.29 | $ 0.36 | $ 0.50 |
Net income attributable to Sterling Real Estate Trust per common share, diluted | $ 0.24 | $ 0.29 | $ 0.36 | $ 0.50 |
Comprehensive income: | ||||
Net income | $ 7,107 | $ 8,278 | $ 10,496 | $ 14,114 |
Other comprehensive gain - change in fair value of interest rate swaps | 3,815 | (845) | 10,339 | 1,539 |
Comprehensive income | 10,922 | 7,433 | 20,835 | 15,653 |
Comprehensive income attributable to noncontrolling interest | 6,974 | 4,772 | 13,315 | 10,092 |
Comprehensive income attributable to Sterling Real Estate Trust | $ 3,948 | $ 2,661 | $ 7,520 | $ 5,561 |
Weighted average Common Shares outstanding, basic | 10,564,000 | 10,085,000 | 10,515,000 | 10,034,000 |
Weighted average Common Shares outstanding, diluted | 10,564,000 | 10,085,000 | 10,515,000 | 10,034,000 |
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, 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 | 1,539 | |||||||
Net income (loss) | 14,114 | |||||||
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 | |||||||
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 | |||||||
Beginning Balance at Dec. 31, 2021 | 148,562 | (31,706) | 116,856 | 176,954 | 2,657 | (950) | 295,517 | |
Beginning Balance (in shares) at Dec. 31, 2021 | 10,342 | |||||||
Contribution of assets in exchange for the issuance of noncontrolling interest shares | 10,180 | 10,180 | ||||||
Shares/units redeemed | (401) | (401) | (335) | (736) | ||||
Shares/units redeemed (in shares) | (18) | |||||||
Dividends and distributions declared | (3,007) | (3,007) | (5,359) | (8,366) | ||||
Dividends reinvested - stock dividend | 1,716 | 1,716 | 1,716 | |||||
Dividends reinvested - stock dividend (in shares) | 79 | |||||||
Issuance of shares under optional purchase plan | 1,313 | 1,313 | 1,313 | |||||
Issuance of shares under optional purchase plan (in shares) | 57 | |||||||
Change in fair value of interest rate swaps | 6,524 | 6,524 | ||||||
Net income (loss) | 1,214 | 1,214 | 2,145 | 30 | 3,389 | |||
Ending balance at Mar. 31, 2022 | 151,190 | (33,499) | 117,691 | 183,585 | 2,687 | 5,574 | 309,537 | |
Ending balance (in shares) at Mar. 31, 2022 | 10,460 | |||||||
Beginning Balance at Dec. 31, 2021 | 148,562 | (31,706) | 116,856 | 176,954 | 2,657 | (950) | 295,517 | |
Beginning Balance (in shares) at Dec. 31, 2021 | 10,342 | |||||||
Change in fair value of interest rate swaps | 10,339 | |||||||
Net income (loss) | 10,496 | |||||||
Ending balance at Jun. 30, 2022 | 153,487 | (33,968) | 119,519 | 182,621 | 2,695 | 9,389 | 314,224 | |
Ending balance (in shares) at Jun. 30, 2022 | 10,563 | |||||||
Beginning Balance at Mar. 31, 2022 | 151,190 | (33,499) | 117,691 | 183,585 | 2,687 | 5,574 | 309,537 | |
Beginning Balance (in shares) at Mar. 31, 2022 | 10,460 | |||||||
Shares/units redeemed | (386) | (386) | (138) | (524) | ||||
Shares/units redeemed (in shares) | (18) | |||||||
Dividends and distributions declared | (3,037) | (3,037) | (5,357) | (8,394) | ||||
Dividends reinvested - stock dividend | 1,877 | 1,877 | 1,877 | |||||
Dividends reinvested - stock dividend (in shares) | 86 | |||||||
Issuance of shares under optional purchase plan | 806 | 806 | 806 | |||||
Issuance of shares under optional purchase plan (in shares) | 35 | |||||||
Change in fair value of interest rate swaps | 3,815 | 3,815 | ||||||
Net income (loss) | 2,568 | 2,568 | 4,531 | 8 | 7,107 | |||
Ending balance at Jun. 30, 2022 | $ 153,487 | $ (33,968) | $ 119,519 | $ 182,621 | $ 2,695 | $ 9,389 | $ 314,224 | |
Ending balance (in shares) at Jun. 30, 2022 | 10,563 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING ACTIVITIES | ||
Net income | $ 10,496 | $ 14,114 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Gain on sale of real estate investments | (3,340) | (1,710) |
Gain on involuntary conversion | (547) | (687) |
Equity in loss of unconsolidated affiliates | 1,424 | 116 |
Distributions of earnings of unconsolidated affiliates | 177 | 116 |
Allowance for uncollectible accounts receivable | (380) | 377 |
Depreciation | 10,858 | 10,439 |
Amortization | 887 | 629 |
Amortization of debt issuance costs | 337 | 262 |
Effects on operating cash flows due to changes in | ||
Other assets | (1,422) | (4,574) |
Tenant security deposits payable | 942 | 278 |
Accrued expenses and other liabilities | (3,935) | (2,705) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 15,497 | 16,655 |
INVESTING ACTIVITIES | ||
Purchase of real estate investment properties | (26,131) | (13,102) |
Capital expenditures and tenant improvements | (5,423) | (8,705) |
Proceeds from sale of real estate investments and non-real estate investments | 6,266 | 5,590 |
Proceeds from involuntary conversion | 733 | 3,109 |
Investment in unconsolidated affiliates | (7,749) | (2,090) |
Distributions in excess of earnings received from unconsolidated affiliates | 312 | |
Notes receivable issued net of payments received | 2,034 | 1,386 |
NET CASH USED IN INVESTING ACTIVITIES | (29,958) | (13,812) |
FINANCING ACTIVITIES | ||
Payments for financing, debt issuance | (201) | (358) |
Payments on investment certificates and subordinated debt | (25) | |
Proceeds from issuance of mortgage notes payable and subordinated debt | 23,305 | 31,162 |
Principal payments on mortgage notes payable | (8,921) | (22,408) |
Proceeds from issuance of shares under optional purchase plan | 2,119 | 2,127 |
Shares/units redeemed | (1,260) | (3,550) |
Dividends/distributions paid | (12,340) | (11,559) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,702 | (4,611) |
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS | (11,759) | (1,768) |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF PERIOD | 60,656 | 27,635 |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD | $ 48,897 | $ 25,867 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Disclosures - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF PERIOD | ||
Cash and cash equivalents | $ 40,072 | $ 11,529 |
Restricted deposits | 8,825 | 14,338 |
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED DEPOSITS, END OF PERIOD | 48,897 | 25,867 |
SCHEDULE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest, net of capitalized interest | 9,526 | 8,380 |
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Dividends reinvested | 3,593 | 3,365 |
Dividends declared and not paid | 3,037 | 2,672 |
UPREIT distributions declared and not paid | 5,357 | 4,821 |
Acquisition of assets in exchange for the issuance of noncontrolling interest units in UPREIT | 10,180 | 890 |
Increase in land improvements due to increase in special assessments payable | 195 | 26 |
Unrealized gain on interest rate swaps | 10,339 | $ 1,539 |
Acquisition of assets through assumption of debt and liabilities | 36,311 | |
Capitalized interest and real estate taxes related to construction in progress | $ 46 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 and December 31, 2021, Sterling owned approximately 36.18% and 36.22%, respectively, of the Operating Partnership. |
PRINCIPAL ACTIVITY AND SIGNIFIC
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
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, 2021, 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 six months ended June 30, 2022. These adjustments are of a normal recurring nature. 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 June 30, 2022 the Trust owned approximately 36.18% 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 (losses) of unconsolidated affiliates 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. Sterling may also acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) is in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Sterling retains essentially all of the legal and economic benefits and obligations related to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange. As such, a Parked Property is included in Sterling’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Operating Partnership upon completion of the Reverse 1031 Like-Kind Exchange. Concentration of Credit Risk Our cash balances are maintained in various bank deposit accounts. The bank deposit amounts in these accounts may exceed federally insured limits at various times throughout the year. 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 and 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 relative fair value at acquisition date of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease 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 a cost of the property. For tangible assets acquired, including land, building and other improvements, the Trust considers available comparable market and industry information in estimating acquisition date fair value. 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. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are expensed 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 at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property. Based on evaluation, there were no impairment losses during the three and six months ended June 30, 2022 and 2021. 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, financial statements. We are no longer subject to Federal and State tax examinations by tax authorities for years before 2018. Revenue Recognition The Trust is the lessor for its residential and commercial leases. Leases are analyzed on an individual basis to determine lease classification. As of June 30, 2022 all leases analyzed under the Trust’s lease classification process were determined to be operating leases. Earnings per Common Share Basic earnings per common share is computed by dividing net income available to common shareholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the period. Sterling had no dilutive potential common shares during the six months ended June 30, 2022 and therefore, basic earnings per common share was equal to diluted earnings per common share for both periods. For the six months ended June 30, 2022 and 2021, Sterling’s denominators for the basic and diluted earnings per common share were approximately 10,515,000 and 10,034,000 , respectively. |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2022 | |
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 real estate segment revenues less real estate expenses (which consist of real estate taxes, property management fees, utilities, repairs and maintenance, insurance, and property administrative and management fees). 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, legal and professional fees, and certain general and administrative expenses. The accounting policies of each segment are consistent with those described in Note 2 of this report. 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 six months ended June 30, 2022 and 2021, 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 June 30, 2022 Three months ended June 30, 2021 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 28,502 $ 5,315 $ 33,817 $ 26,230 $ 5,693 $ 31,923 Expenses from rental operations 15,246 1,549 16,795 13,363 1,691 15,054 Net operating income $ 13,256 $ 3,766 $ 17,022 $ 12,867 $ 4,002 $ 16,869 Depreciation and amortization 5,963 5,756 Interest 4,954 4,302 Administration of REIT 1,400 1,059 Other income (2,402) (2,526) Net income $ 7,107 $ 8,278 Six months ended June 30, 2022 Six months ended June 30, 2021 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 55,997 $ 10,737 $ 66,734 $ 52,190 $ 11,493 $ 63,683 Expenses from rental operations 31,753 3,228 34,981 27,211 3,195 30,406 Net operating income $ 24,244 $ 7,509 $ 31,753 $ 24,979 $ 8,298 $ 33,277 Depreciation and amortization 11,745 11,083 Interest 9,800 8,589 Administration of REIT 2,617 2,260 Other income (2,905) (2,769) Net income $ 10,496 $ 14,114 Segment Assets and Accumulated Depreciation As of June 30, 2022 Residential Commercial Total (in thousands) Real estate investments $ 725,030 $ 204,379 $ 929,409 Accumulated depreciation (140,008) (48,258) (188,266) Total real estate investments, net $ 585,022 $ 156,121 $ 741,143 Lease intangible assets, less accumulated amortization 340 5,582 5,922 Cash and cash equivalents 40,072 Restricted deposits 8,825 Investment in unconsolidated affiliates 24,494 Notes receivable 5,423 Other assets, net 21,274 Total Assets $ 847,153 As of December 31, 2021 Residential Commercial Total (in thousands) Real estate investments $ 692,722 $ 203,980 $ 896,702 Accumulated depreciation (133,100) (46,055) (179,155) Total real estate investments, net $ 559,622 $ 157,925 $ 717,547 Lease intangible assets, less accumulated amortization — 6,246 6,246 Cash and cash equivalents 51,507 Restricted deposits 9,149 Investment in unconsolidated affiliates 18,658 Notes receivable 7,457 Other assets, net 10,302 Total Assets $ 820,866 |
RESTRICTED DEPOSITS AND FUNDED
RESTRICTED DEPOSITS AND FUNDED RESERVES | 6 Months Ended |
Jun. 30, 2022 | |
RESTRICTED DEPOSITS AND FUNDED RESERVES | |
RESTRICTED DEPOSITS AND FUNDED RESERVES | NOTE 4 – Restricted deposits and FUNDED reserves The following table summarizes the Trust’s restricted deposits and funded reserves. As of June 30, As of December 31, 2022 2021 (in thousands) Tenant security deposits $ 6,077 $ 5,165 Real estate tax and insurance escrows 892 1,355 Replacement reserves 1,856 1,791 Other funded reserves — 838 $ 8,825 $ 9,149 |
INVESTMENT IN UNCONSOLIDATED AF
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | NOTE 5 – Investment in unconsolidated affiliates The Company’s investments in unconsolidated real estate ventures, are summarized as follows (in thousands): Total Investment in Unconsolidated Affiliates at Unconsolidated Affiliates Date Acquired Trust Ownership Interest June 30, 2022 December 31, 2021 Banner Building 2007 66.67% $ (602) $ 60 Grand Forks INREIT, LLC 2003 50% 2,713 2,493 SE Savage, LLC 2019 60% 2,059 2,946 SE Maple Grove, LLC 2019 60% 1,955 2,823 SE Rogers, LLC 2020 60% 2,921 2,986 ST Oak Cliff, LLC 2021 70% 9,230 4,324 SE Brooklyn Park, LLC 2021 60% 3,005 3,026 SE Fossil Creek, LLC 2022 70% 3,213 - $ 24,494 $ 18,658 The Operating Partnership owns a 66.67% interest as tenant in common in an office building in Fargo, North Dakota. The property is encumbered by a first mortgage with a balance at June 30, 2022 and December 31, 2021 of $6,994 and $6,329, 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 is located in Grand Forks, North Dakota. The property is encumbered by a non-recourse first mortgage with a balance at June 30, 2022 and December 31, 2021 of $9,669 and $9,794, 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 multifamily property. The property is encumbered by a first mortgage with a balance of $30,932 at June 30, 2022. The Trust is jointly and severally liable for the full mortgage balance. At December 31, 2021, the property was encumbered by a first mortgage $26,210, and a second mortgage to Sterling Properties, LLLP of $6,129. Additionally, at June 30, 2022, SE Savage, LLC has an outstanding Promissory Note with Sterling Properties, LLLP, for $1,397, and is an unsecured obligation of SE Savage, LLC. The note is considered to be additional at-risk funds to the Operating Partnership, in SE Savage, LLC, and is included in Notes Receivable on the Consolidated Balance Sheet at June 30, 2022. The Operating Partnership owns a 60% interest in a limited liability company that holds a multifamily property. The entity is encumbered by a first mortgage with a balance at both June 30, 2022 and December 31, 2021 of $24,788. The property is also encumbered by a second mortgage to Sterling Properties, LLLP with a balance at June 30, 2022 and December 31, 2021 of $3,514 and $727, respectively. The Operating Partnership owns a 60% interest in a limited liability company that is currently developing a multifamily property. The LLC holds land located in Rogers, Minnesota, with total assets of $31,415 and $22,847 at June 30, 2022 and December 31, 2021, respectively. The entity encumbered by a first mortgage has a balance of $24,744 and $15,688 at June 30, 2022 and December 31, 2021, respectively. The Company is jointly and severally liable for the full mortgage balance. The Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of June 30, 2022 and December 31, 2021, the Operating Partnership has contributed $9,299 and $4,361, respectively, in cash to the entity. The entity holds land located in Dallas, Texas with total assets of $23,634 and $7,394 at June 30, 2022 and December 31, 2021, respectively. The entity is encumbered by a construction mortgage with a balance of $5,798 at June 30, 2022. There was no balance outstanding related to the construction mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance. The Operating Partnership owns a 60% interest in a limited liability company, with an unrelated third party. The entity is currently developing a multifamily property. As of both June 30, 2022 and December 31, 2021, the Operating Partnership has contributed $3,042 in cash to the LLC. The entity is located in Brooklyn Park, Minnesota, with total assets of $21,116 and $5,478 at June 30, 2022 and December 31, 2021, respectively. The entity is encumbered by a first mortgage that has a balance of $13,763 at June 30, 2022. There was no balance outstanding related to the first mortgage at December 31, 2021. The Company is jointly and severally liable for the full mortgage balance. During the second quarter of 2022, the Operating Partnership entered into a joint venture arrangement. Through the joint venture, the Operating Partnership owns a 70% interest in a limited liability company, with a related party. The entity is currently developing a multifamily property. As of June 30, 2022, the Operating Partnership has contributed $3,221 in cash to the entity. The entity holds land located in Fort Worth, Texas with total assets of $5,012 at June 30, 2022. The following is a summary of the financial position of the unconsolidated affiliates at June 30, 2022 and December 31, 2021. June 30, 2022 December 31, 2021 (in thousands) ASSETS Real estate investments $ 181,093 $ 134,839 Accumulated depreciation (13,847) (10,940) 167,246 123,899 Cash and cash equivalents 1,255 1,131 Restricted deposits 626 650 Intangible assets, less accumulated amortization 295 41 Other assets, net 715 909 Total Assets $ 170,137 $ 126,630 LIABILITIES Mortgage notes payable, net $ 119,994 $ 87,996 Tenant security deposits payable 167 108 Accrued expenses and other liabilities 11,111 8,029 Total Liabilities $ 131,272 $ 96,133 SHAREHOLDERS' EQUITY Total Shareholders' Equity $ 38,865 $ 30,497 Total liabilities and shareholders' equity $ 170,137 $ 126,630 The following is a summary of results of operations of the unconsolidated affiliates for the three and six months ended June 30, 2022 and 2021. Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Income from rental operations $ 2,076 $ 933 $ 3,806 $ 1,813 Expenses from rental operations 682 348 1,494 582 Net operating income $ 1,394 $ 585 $ 2,312 $ 1,231 Depreciation and Amortization 1,187 266 3,014 513 Interest 665 464 1,677 881 Other expense - - 11 — Net loss $ (458) $ (145) $ (2,390) $ (163) |
LEASE INTANGIBLES
LEASE INTANGIBLES | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 15,393 $ (10,517) $ 4,876 Above-market leases 2,466 (1,420) 1,046 $ 17,859 $ (11,937) $ 5,922 Lease Intangible Liabilities Below-market leases $ (2,417) $ 1,693 $ (724) Lease Accumulated Lease As of December 31, 2021 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 15,455 $ (10,381) $ 5,074 Above-market leases 2,617 (1,445) 1,172 $ 18,072 $ (11,826) $ 6,246 Lease Intangible Liabilities Below-market leases $ (2,525) $ 1,714 $ (811) 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) 2022 (July 1, 2022 - December 31, 2022) $ 785 $ 77 2023 827 151 2024 827 151 2025 827 151 2026 676 80 Thereafter 1,980 114 $ 5,922 $ 724 |
LINES OF CREDIT
LINES OF CREDIT | 6 Months Ended |
Jun. 30, 2022 | |
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 September 2022; and a $5,000 variable rate (floating LIBOR plus 2.00%) line of credit agreement with Bremer Bank, which expires December 2022 Certain lines of credit agreements include covenants that, in part, impose maintenance of certain debt service coverage and debt to net worth ratios. |
MORTGAGE NOTES PAYABLE
MORTGAGE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2022 | |
MORTGAGE NOTES PAYABLE | |
MORTGAGE NOTES PAYABLE | NOTE 8 - MORTGAGE NOTES PAYABLE The following table summarizes the Trust’s mortgage notes payable. Principal Balance At June 30, December 31, 2022 2021 (in thousands) Fixed rate mortgage notes payable (a) $ 502,214 $ 490,413 Variable rate mortgage notes payable 5,137 5,237 Mortgage notes payable 507,351 495,650 Less unamortized debt issuance costs 2,372 2,508 $ 504,979 $ 493,142 (a) Includes $107,392 and $108,734 of variable rate mortgage debt that was swapped to a fixed rate at June 30, 2022 and December 31, 2021, 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) 2022 (July 1, 2022 - December 31, 2022) $ 13,297 2023 52,783 2024 22,359 2025 52,818 2026 45,220 Thereafter 320,874 Total payments $ 507,351 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022, the Trust used 12 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 income (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 $1,137 will be reclassified as an increase to interest expense. The following table summarizes the Trust’s interest rate swaps as of June 30, 2022, which effectively convert one month floating rate LIBOR to a fixed rate: Fixed Effective Date Notional Interest Rate Maturity Date November 1, 2019 $ 6,678 3.15% November 1, 2029 November 1, 2019 $ 4,642 3.28% November 1, 2029 January 10, 2020 $ 3,022 3.39% January 10, 2030 June 11, 2020 $ 1,513 3.07% June 15, 2030 June 11, 2020 $ 2,932 3.07% June 15, 2030 June 15, 2020 $ 1,639 2.94% June 15, 2030 June 15, 2020 $ 4,337 2.94% June 15, 2030 July 1, 2020 $ 4,798 2.79% June 10, 2030 December 2, 2020 $ 12,539 2.91% December 2, 2027 July 1, 2021 $ 26,010 2.99% July 1, 2031 November 10, 2021 $ 28,326 3.54% August 1, 2029 December 1, 2021 $ 10,956 3.32% December 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 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 Interest rate swaps 12 12 $ 107,392 $ 108,734 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 designated as June 30, 2022 December 31, 2021 cash flow hedges: Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest rate swaps Other assets, net $ 9,389 Other assets, net $ 698 Interest rate swaps Accrued expenses and other liabilities $ — Accrued expenses and other liabilities $ 1,648 The carrying amounts of the swaps have been adjusted to their fair value at the end of the quarter, which because of changes in forecasted levels of LIBOR, resulted in reporting an asset and liability for the fair value of the future net payments forecasted under the swap. Accounting for interest rate swaps is considered an effective hedge 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 June 30, 2022 and 2021: 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 2022 2022 Interest rate swaps $ (3,814) Interest expense $ 257 2021 2021 Interest rate swaps $ 845 Interest expense $ 119 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 six months ended June 30, 2022 and 2021: 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 2022 2022 Interest rate swaps $ (10,339) Interest expense $ 618 2021 2021 Interest rate swaps $ (1,539) Interest expense $ 234 Credit-risk-related Contingent Features 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. . |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 10 - FAIR VALUE MEASUREMENT The following table presents the carrying value and estimated fair value of the Company’s financial instruments: June 30, 2022 December 31, 2021 Carrying Carrying Value Fair Value Value Fair Value (in thousands) Financial assets: Notes receivable $ 5,423 $ 6,388 $ 7,457 $ 9,840 Derivative assets $ 9,389 $ 9,389 $ 698 $ 698 Financial liabilities: Mortgage notes payable $ 507,351 $ 505,128 $ 495,650 $ 508,285 Derivative liabilities $ — $ — $ 1,648 $ 1,648 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 Company’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) June 30, 2022 Derivative assets $ — $ 9,389 $ — $ 9,389 December 31, 2021 Derivative assets $ — $ 698 $ — $ 698 Derivative liabilities $ — $ 1,648 $ — $ 1,648 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) June 30, 2022 Mortgage notes payable $ — $ — $ 505,128 $ 505,128 Notes receivable $ — $ — $ 6,388 $ 6,388 December 31, 2021 Mortgage notes payable $ — $ — $ 508,285 $ 508,285 Notes receivable $ — $ — $ 9,840 $ 9,840 Mortgage notes payable: Notes receivable: |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2022 | |
LEASES | |
LEASES | NOTE 11 – LEASES As of June 30, 2022, we derived 83.9% 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 June 30, 2022, we derived 16.1% 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. We recognize variable income from pass-through expenses on an accrual basis over the periods in which the expenses were incurred. Pass-through expenses are comprised of real estate taxes, operating expenses and common area maintenance costs which are reimbursed by tenants in accordance with specific allowable costs per tenant lease agreements. When we pay pass-through expenses, subject to reimbursement by the tenant, they are included within operating expenses, excluding real estate taxes, and reimbursements are included within “real estate rental income” along with the associated base rent in the accompanying consolidated financial statements. Lease income related to the Company’s operating leases is comprised of the following: Three months ended June 30, 2022 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 27,436 $ 4,115 $ 31,551 Lease income related to variable lease payments — 1,111 1,111 Other (a) (192) 68 (124) Lease Income (b) $ 27,244 $ 5,294 $ 32,538 Three months ended June 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 25,141 $ 4,270 $ 29,411 Lease income related to variable lease payments — 1,200 1,200 Other (a) (214) (43) (257) Lease Income (b) $ 24,927 $ 5,427 $ 30,354 (a) For the three months ended June 30, 2022 and 2021, “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 June 30, 2022 and 2021 of $1,279 and $1,570 , respectively, which is accounted for under the revenue recognition standard. Six months ended June 30, 2022 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 53,934 $ 8,182 $ 62,116 Lease income related to variable lease payments — 2,288 2,288 Other (a) (361) 163 (198) Lease Income (b) $ 53,573 $ 10,633 $ 64,206 Six months ended June 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 49,975 $ 8,652 $ 58,627 Lease income related to variable lease payments — 2,294 2,294 Other (c) (350) 251 (99) Lease Income (d) $ 49,625 $ 11,197 $ 60,822 (a) For the six months ended June 30, 2022 and 2021, “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 six months ended June 30, 2022 and 2021 of $2,528 and $2,861 , respectively, which is accounted for under the revenue recognition standard. As of June 30, 2022, 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) 2022 (July 1, 2022- December 31, 2022) $ 8,908 2023 15,698 2024 15,040 2025 14,774 2026 13,528 Thereafter 57,273 $ 125,221 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
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, and by President Joel S. Thomsen. In addition, Mr. Regan serves as the Executive Chairman of the Advisor, and Messrs. Wieland, and Thomsen serve on the Board of Governors of both the Advisor and 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. Mr. Wieland could have an indirect material interest in any such engagement and related transactions. The Trust has a historical and ongoing relationship with Trumont Group and Trumont Construction. Trumont Group provides development services for current joint venture projects in which the Operating Partnership is an investor. Trumont Construction has been engaged to construct the properties associated with these joint ventures. Mr. Regan, Chief Executive Officer and trustee, is a partner in both Trumont Group and Trumont Construction and has a direct material interest in any engagement or related transaction, the Trust enters into, with these entities. Property Management Fees During the six months ended June 30, 2022 and 2021, we paid property management and administrative fees to GOLDMARK Property Management, Inc. of $6,879, and $6,226, respectively. Management fees which approximate 5% of net collected rents, account for $2,714 and $2,645 of these fees during the six months ended June 30, 2022 and 2021. In addition, during the six months ended June 30, 2022 and 2021, we paid repair and maintenance expenses, and payroll related expenses to GOLDMARK Property Management, Inc. totaling $3,523 and $2,973, respectively. 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, 2022, and is effective until March 31, 2023. The below table summarizes the fees incurred to our Advisor. Six Months ended June 30, 2022 2021 (in thousands) Fee: Advisory $ 1,807 $ 1,623 Acquisition $ 876 $ 135 Disposition $ 226 $ 146 Financing $ 47 $ 69 Project Management $ 253 $ 283 The below table summarizes the fees payable to our Advisor. Payable at June 30, December 31, 2022 2021 (in thousands) Fee: Advisory $ 608 $ 296 Acquisition $ 265 $ - Financing $ 17 $ 38 Development $ - $ 79 Project Management $ - $ 98 Operating Partnership Units Issued in Connection with Acquisitions During the six months ended June 30, 2022, 443,000 Operating Partnership units were issued 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 $10,180. During the six months ended June 30, 2021, there were no Operating Partnership units issued directly or indirectly, to affiliated entities. Commissions During the six months ended June 30, 2022 and 2021, we incurred real estate commissions of $342 and $278, respectively, to GOLDMARK Commercial Real Estate, Inc., in which Messrs. Regan and Wieland jointly own a controlling interest. As of June 30, 2022 total commissions payable to Goldmark Commercial Real Estate was $53. As of December 30, 2021, there were no unpaid commissions to GOLDMARK Commercial Real Estate. During the six months ended June 30, 2022 and 2021, we incurred real estate commissions of $260 and $-, respectively, to GOLDMARK Property Management. As of June 30, 2022 total commissions payable to Goldmark Property Management was $53. As of December 30, 2021, there were no unpaid commissions to GOLDMARK Property Management. Rental Income During the six months ended June 30, 2022 and 2021, we received rental income of $64 and $47, respectively, under an operating lease agreement with our Advisor. During the six months ended June 30, 2022 and 2021, we received rental income of $- and $19, respectively, under an operating lease agreement with GOLDMARK Commercial Real Estate, Inc. During the six months ended June 30, 2022 and 2021, we received rental income of $132 and $154, respectively, under operating lease agreements with GOLDMARK Property Management, Inc. During the six months ended June 30, 2022 and 2021, we received rental income of $422 and $240, respectively, under operating lease agreements with Bell Bank. Other operational costs During the six months ended June 30, 2022 and 2021, the Trust incurred $253 and $273, 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 June 30, 2022 and December 31, 2021, operational outstanding liabilities were $84 and $99, respectively. Other operational receipts At June 30, 2022 and December 31, 2021, operational outstanding receivables from related parties were $29 and $128, respectively. Debt Financing At June 30, 2022 and December 31, 2021, the Trust had $65,248 and $66,365, respectively, of outstanding principal on loans entered into with Bell Bank. During the six months ended June 30, 2022 and 2021, the Trust incurred interest expense on debt held with Bell Bank of $1,238 and $1,224, respectively. Accrued interest as of June 30, 2022 and December 31, 2021, related to this debt was $138 and $148, respectively. Development Arrangements During the six months ended June 30, 2022, the Trust incurred $409 in development fees to Trumont Group. No such fees were paid during the six months ended June 30, 2021. At June 30, 2022 and December 31, 2021, the Trust owed $103 and $51 , respectively, for development fees to Trumont Group. During the six months ended June 30, 2022, the Trust incurred $429 in construction fees to Trumont Construction. No such fees were paid during the six months ended June 30, 2021. At June 30, 2022 and December 31, 2021, the Trust owed $103 and $29 , respectively for construction fees to Trumont Construction. During the six months ended June 30, 2022, the Trust incurred $204 in general construction costs to Trumont Construction. No such fees were paid during the six months ended June 30, 2022. At June 30, 2022 and December 31, 2021, the Trust owed $56 and $14 , respectively, for general construction costs. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
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. |
DISPOSITIONS
DISPOSITIONS | 6 Months Ended |
Jun. 30, 2022 | |
DISPOSITIONS | |
DISPOSITIONS | NOTE 14 – DISPOSITIONS During the six months ended June 30, 2022, the Operating Partnership disposed of two properties. One property located in Savage, Minnesota was disposed of for $2,700 with a recognized gain of $1,328 . The other property located in Moorhead, Minnesota was disposed of for $6,400 with a recognized gain of $2,012 . During the six months ended June 30, 2021, the Operating Partnership disposed of two properties for a total of $5,850 and recognized gain of $1,710 . |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 15 – ACQUISITIONS The Trust had five acquisitions during the six months ended June 30, 2022. Date Property Name Location Property Type Units/ Square Footage/ Acres Total Acquisition Cost 2/28/22 Deer Park Hutchinson, MN Apartment Complex 138 units $ 15,073 5/31/22 Desoto Estates Grand Forks, ND Apartment Complex 68 units 5,863 5/31/22 Desoto Townhomes Grand Forks, ND Townhomes 24 units 3,226 5/31/22 Desoto Apartments East Grand Forks, MN Apartment Complex 24 units 1,230 6/10/22 Diamond Bend Mandan, ND Apartment Complex 78 units 10,919 $ 36,311 Total consideration given for acquisitions through June 30, 2022 was completed through issuing approximately 443,000 limited partnership units of the Operating Partnership valued at $23.00 per unit for an aggregate consideration of approximately $10,180. 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. In 2022, cash flows were reclassified to updated presentation resulting prior period to be updated to align with reclassification. The following table summarizes the acquisition date fair values, before pro-rations, the Company recorded in conjunction with the acquisitions discussed above: Six months ended June 30, 2022 2021 Real estate investment acquired $ 35,953 $ 39,344 Acquired lease intangible assets 619 - Assumed Assets 3 23 Total Assets Acquired $ 36,575 $ 39,367 Other liabilities (264) (569) Net assets acquired 36,311 38,798 Equity/limited partnership unit consideration (10,180) (2,883) Net cash consideration $ 26,131 $ 35,915 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | NOTE 16 - SUBSEQUENT EVENTS On July 15, 2022, we paid a dividend or distribution of $0.2875 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 June 30, 2022. As of June 30, 2022, we had certain acquisitions and dispositions in process. Pending acquisitions and dispositions are subject to numerous conditions and contingencies and there are no assurances that the transactions will be completed. 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) | 6 Months Ended |
Jun. 30, 2022 | |
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, 2021, 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 six months ended June 30, 2022. These adjustments are of a normal recurring nature. |
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 June 30, 2022 the Trust owned approximately 36.18% 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 (losses) of unconsolidated affiliates 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. Sterling may also acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) is in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Sterling retains essentially all of the legal and economic benefits and obligations related to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange. As such, a Parked Property is included in Sterling’s consolidated financial statements as a consolidated VIE until legal title is transferred to the Operating Partnership upon completion of the Reverse 1031 Like-Kind Exchange. |
Concentration of Credit Risk | Concentration of Credit Risk Our cash balances are maintained in various bank deposit accounts. The bank deposit amounts in these accounts may exceed federally insured limits at various times throughout the year. |
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 and 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 relative fair value at acquisition date of the individual assets acquired and liabilities assumed, which generally include (i) land, (ii) building and other improvements, (iii) in-place lease 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 a cost of the property. For tangible assets acquired, including land, building and other improvements, the Trust considers available comparable market and industry information in estimating acquisition date fair value. 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. Expenditures for routine maintenance and repairs, which do not add to the value or extend useful lives, are expensed 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 at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At the end of each reporting period, the Trust separately determines whether impairment indicators exist for each property. Based on evaluation, there were no impairment losses during the three and six months ended June 30, 2022 and 2021. |
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, financial statements. We are no longer subject to Federal and State tax examinations by tax authorities for years before 2018. |
Revenue Recognition | Revenue Recognition The Trust is the lessor for its residential and commercial leases. Leases are analyzed on an individual basis to determine lease classification. As of June 30, 2022 all leases analyzed under the Trust’s lease classification process were determined to be operating leases. |
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is computed by dividing net income available to common shareholders (the “numerator”) by the weighted average number of common shares outstanding (the “denominator”) during the period. Sterling had no dilutive potential common shares during the six months ended June 30, 2022 and therefore, basic earnings per common share was equal to diluted earnings per common share for both periods. For the six months ended June 30, 2022 and 2021, Sterling’s denominators for the basic and diluted earnings per common share were approximately 10,515,000 and 10,034,000 , respectively. |
PRINCIPAL ACTIVITY AND SIGNIF_3
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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) | 6 Months Ended |
Jun. 30, 2022 | |
SEGMENT REPORTING | |
Summary of Segment Revenues and Net Operating Income | Three months ended June 30, 2022 Three months ended June 30, 2021 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 28,502 $ 5,315 $ 33,817 $ 26,230 $ 5,693 $ 31,923 Expenses from rental operations 15,246 1,549 16,795 13,363 1,691 15,054 Net operating income $ 13,256 $ 3,766 $ 17,022 $ 12,867 $ 4,002 $ 16,869 Depreciation and amortization 5,963 5,756 Interest 4,954 4,302 Administration of REIT 1,400 1,059 Other income (2,402) (2,526) Net income $ 7,107 $ 8,278 Six months ended June 30, 2022 Six months ended June 30, 2021 Residential Commercial Total Residential Commercial Total (in thousands) (in thousands) Income from rental operations $ 55,997 $ 10,737 $ 66,734 $ 52,190 $ 11,493 $ 63,683 Expenses from rental operations 31,753 3,228 34,981 27,211 3,195 30,406 Net operating income $ 24,244 $ 7,509 $ 31,753 $ 24,979 $ 8,298 $ 33,277 Depreciation and amortization 11,745 11,083 Interest 9,800 8,589 Administration of REIT 2,617 2,260 Other income (2,905) (2,769) Net income $ 10,496 $ 14,114 |
Summary of Segment Assets and Accumulated Depreciation | As of June 30, 2022 Residential Commercial Total (in thousands) Real estate investments $ 725,030 $ 204,379 $ 929,409 Accumulated depreciation (140,008) (48,258) (188,266) Total real estate investments, net $ 585,022 $ 156,121 $ 741,143 Lease intangible assets, less accumulated amortization 340 5,582 5,922 Cash and cash equivalents 40,072 Restricted deposits 8,825 Investment in unconsolidated affiliates 24,494 Notes receivable 5,423 Other assets, net 21,274 Total Assets $ 847,153 As of December 31, 2021 Residential Commercial Total (in thousands) Real estate investments $ 692,722 $ 203,980 $ 896,702 Accumulated depreciation (133,100) (46,055) (179,155) Total real estate investments, net $ 559,622 $ 157,925 $ 717,547 Lease intangible assets, less accumulated amortization — 6,246 6,246 Cash and cash equivalents 51,507 Restricted deposits 9,149 Investment in unconsolidated affiliates 18,658 Notes receivable 7,457 Other assets, net 10,302 Total Assets $ 820,866 |
RESTRICTED DEPOSITS AND FUNDE_2
RESTRICTED DEPOSITS AND FUNDED RESERVES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
RESTRICTED DEPOSITS AND FUNDED RESERVES | |
Schedule of restricted deposits | As of June 30, As of December 31, 2022 2021 (in thousands) Tenant security deposits $ 6,077 $ 5,165 Real estate tax and insurance escrows 892 1,355 Replacement reserves 1,856 1,791 Other funded reserves — 838 $ 8,825 $ 9,149 |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED AFFILIATES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT IN UNCONSOLIDATED AFFILIATES | |
Schedule of investments in unconsolidated real estate ventures | Total Investment in Unconsolidated Affiliates at Unconsolidated Affiliates Date Acquired Trust Ownership Interest June 30, 2022 December 31, 2021 Banner Building 2007 66.67% $ (602) $ 60 Grand Forks INREIT, LLC 2003 50% 2,713 2,493 SE Savage, LLC 2019 60% 2,059 2,946 SE Maple Grove, LLC 2019 60% 1,955 2,823 SE Rogers, LLC 2020 60% 2,921 2,986 ST Oak Cliff, LLC 2021 70% 9,230 4,324 SE Brooklyn Park, LLC 2021 60% 3,005 3,026 SE Fossil Creek, LLC 2022 70% 3,213 - $ 24,494 $ 18,658 |
Schedule of financial information of unconsolidated entities | The following is a summary of the financial position of the unconsolidated affiliates at June 30, 2022 and December 31, 2021. June 30, 2022 December 31, 2021 (in thousands) ASSETS Real estate investments $ 181,093 $ 134,839 Accumulated depreciation (13,847) (10,940) 167,246 123,899 Cash and cash equivalents 1,255 1,131 Restricted deposits 626 650 Intangible assets, less accumulated amortization 295 41 Other assets, net 715 909 Total Assets $ 170,137 $ 126,630 LIABILITIES Mortgage notes payable, net $ 119,994 $ 87,996 Tenant security deposits payable 167 108 Accrued expenses and other liabilities 11,111 8,029 Total Liabilities $ 131,272 $ 96,133 SHAREHOLDERS' EQUITY Total Shareholders' Equity $ 38,865 $ 30,497 Total liabilities and shareholders' equity $ 170,137 $ 126,630 The following is a summary of results of operations of the unconsolidated affiliates for the three and six months ended June 30, 2022 and 2021. Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 (in thousands) (in thousands) Income from rental operations $ 2,076 $ 933 $ 3,806 $ 1,813 Expenses from rental operations 682 348 1,494 582 Net operating income $ 1,394 $ 585 $ 2,312 $ 1,231 Depreciation and Amortization 1,187 266 3,014 513 Interest 665 464 1,677 881 Other expense - - 11 — Net loss $ (458) $ (145) $ (2,390) $ (163) |
LEASE INTANGIBLES (Tables)
LEASE INTANGIBLES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
LEASE INTANGIBLES | |
Schedule of Intangible Assets, Liabilities and Accumulated Amortization | Lease Accumulated Lease As of June 30, 2022 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 15,393 $ (10,517) $ 4,876 Above-market leases 2,466 (1,420) 1,046 $ 17,859 $ (11,937) $ 5,922 Lease Intangible Liabilities Below-market leases $ (2,417) $ 1,693 $ (724) Lease Accumulated Lease As of December 31, 2021 Intangibles Amortization Intangibles, net Lease Intangible Assets (in thousands) In-place leases $ 15,455 $ (10,381) $ 5,074 Above-market leases 2,617 (1,445) 1,172 $ 18,072 $ (11,826) $ 6,246 Lease Intangible Liabilities Below-market leases $ (2,525) $ 1,714 $ (811) |
Schedule of Estimated Aggregate Amortization Expense | Intangible Intangible Years ending December 31, Assets Liabilities (in thousands) 2022 (July 1, 2022 - December 31, 2022) $ 785 $ 77 2023 827 151 2024 827 151 2025 827 151 2026 676 80 Thereafter 1,980 114 $ 5,922 $ 724 |
MORTGAGE NOTES PAYABLE (Tables)
MORTGAGE NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
MORTGAGE NOTES PAYABLE | |
Schedule of Mortgage Notes Payable | Principal Balance At June 30, December 31, 2022 2021 (in thousands) Fixed rate mortgage notes payable (a) $ 502,214 $ 490,413 Variable rate mortgage notes payable 5,137 5,237 Mortgage notes payable 507,351 495,650 Less unamortized debt issuance costs 2,372 2,508 $ 504,979 $ 493,142 (a) Includes $107,392 and $108,734 of variable rate mortgage debt that was swapped to a fixed rate at June 30, 2022 and December 31, 2021, respectively. |
Scheduled Maturities of Mortgage Notes Payable | Years ending December 31, Amount (in thousands) 2022 (July 1, 2022 - December 31, 2022) $ 13,297 2023 52,783 2024 22,359 2025 52,818 2026 45,220 Thereafter 320,874 Total payments $ 507,351 |
DERIVATIVES AND HEDGING ACTIV_2
DERIVATIVES AND HEDGING ACTIVITIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
DERIVATIVES AND HEDGING ACTIVITIES | |
Schedule of interest rate swaps | The following table summarizes the Trust’s interest rate swaps as of June 30, 2022, which effectively convert one month floating rate LIBOR to a fixed rate: Fixed Effective Date Notional Interest Rate Maturity Date November 1, 2019 $ 6,678 3.15% November 1, 2029 November 1, 2019 $ 4,642 3.28% November 1, 2029 January 10, 2020 $ 3,022 3.39% January 10, 2030 June 11, 2020 $ 1,513 3.07% June 15, 2030 June 11, 2020 $ 2,932 3.07% June 15, 2030 June 15, 2020 $ 1,639 2.94% June 15, 2030 June 15, 2020 $ 4,337 2.94% June 15, 2030 July 1, 2020 $ 4,798 2.79% June 10, 2030 December 2, 2020 $ 12,539 2.91% December 2, 2027 July 1, 2021 $ 26,010 2.99% July 1, 2031 November 10, 2021 $ 28,326 3.54% August 1, 2029 December 1, 2021 $ 10,956 3.32% December 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 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 Interest rate swaps 12 12 $ 107,392 $ 108,734 |
Schedule of the estimated fair value of derivatives | Derivatives designated as June 30, 2022 December 31, 2021 cash flow hedges: Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest rate swaps Other assets, net $ 9,389 Other assets, net $ 698 Interest rate swaps Accrued expenses and other liabilities $ — Accrued expenses and other liabilities $ 1,648 |
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 2022 2022 Interest rate swaps $ (3,814) Interest expense $ 257 2021 2021 Interest rate swaps $ 845 Interest expense $ 119 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 six months ended June 30, 2022 and 2021: 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 2022 2022 Interest rate swaps $ (10,339) Interest expense $ 618 2021 2021 Interest rate swaps $ (1,539) Interest expense $ 234 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE MEASUREMENT | |
Carrying Value and Estimated Fair Value of Company's Financial Instruments | June 30, 2022 December 31, 2021 Carrying Carrying Value Fair Value Value Fair Value (in thousands) Financial assets: Notes receivable $ 5,423 $ 6,388 $ 7,457 $ 9,840 Derivative assets $ 9,389 $ 9,389 $ 698 $ 698 Financial liabilities: Mortgage notes payable $ 507,351 $ 505,128 $ 495,650 $ 508,285 Derivative liabilities $ — $ — $ 1,648 $ 1,648 |
Schedule of Fair Value of Liabilities on Recurring Basis | Level 1 Level 2 Level 3 Total (in thousands) June 30, 2022 Derivative assets $ — $ 9,389 $ — $ 9,389 December 31, 2021 Derivative assets $ — $ 698 $ — $ 698 Derivative liabilities $ — $ 1,648 $ — $ 1,648 |
Fair Value of Company's Financial Assets and Liabilities | Level 1 Level 2 Level 3 Total (in thousands) June 30, 2022 Mortgage notes payable $ — $ — $ 505,128 $ 505,128 Notes receivable $ — $ — $ 6,388 $ 6,388 December 31, 2021 Mortgage notes payable $ — $ — $ 508,285 $ 508,285 Notes receivable $ — $ — $ 9,840 $ 9,840 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
LEASES | |
Schedule of lease Income related to the Company's operating leases | Lease income related to the Company’s operating leases is comprised of the following: Three months ended June 30, 2022 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 27,436 $ 4,115 $ 31,551 Lease income related to variable lease payments — 1,111 1,111 Other (a) (192) 68 (124) Lease Income (b) $ 27,244 $ 5,294 $ 32,538 Three months ended June 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 25,141 $ 4,270 $ 29,411 Lease income related to variable lease payments — 1,200 1,200 Other (a) (214) (43) (257) Lease Income (b) $ 24,927 $ 5,427 $ 30,354 (a) For the three months ended June 30, 2022 and 2021, “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 June 30, 2022 and 2021 of $1,279 and $1,570 , respectively, which is accounted for under the revenue recognition standard. Six months ended June 30, 2022 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 53,934 $ 8,182 $ 62,116 Lease income related to variable lease payments — 2,288 2,288 Other (a) (361) 163 (198) Lease Income (b) $ 53,573 $ 10,633 $ 64,206 Six months ended June 30, 2021 Residential Commercial Total (in thousands) Lease income related to fixed lease payments $ 49,975 $ 8,652 $ 58,627 Lease income related to variable lease payments — 2,294 2,294 Other (c) (350) 251 (99) Lease Income (d) $ 49,625 $ 11,197 $ 60,822 (a) For the six months ended June 30, 2022 and 2021, “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 six months ended June 30, 2022 and 2021 of $2,528 and $2,861 , respectively, which is accounted for under the revenue recognition standard. |
Schedule of future minimum rental income | Years ending December 31, Amount (in thousands) 2022 (July 1, 2022- December 31, 2022) $ 8,908 2023 15,698 2024 15,040 2025 14,774 2026 13,528 Thereafter 57,273 $ 125,221 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
Schedule of fees incurred and payable to Advisor | Six Months ended June 30, 2022 2021 (in thousands) Fee: Advisory $ 1,807 $ 1,623 Acquisition $ 876 $ 135 Disposition $ 226 $ 146 Financing $ 47 $ 69 Project Management $ 253 $ 283 Payable at June 30, December 31, 2022 2021 (in thousands) Fee: Advisory $ 608 $ 296 Acquisition $ 265 $ - Financing $ 17 $ 38 Development $ - $ 79 Project Management $ - $ 98 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
ACQUISITIONS | |
Schedule of acquisitions | Date Property Name Location Property Type Units/ Square Footage/ Acres Total Acquisition Cost 2/28/22 Deer Park Hutchinson, MN Apartment Complex 138 units $ 15,073 5/31/22 Desoto Estates Grand Forks, ND Apartment Complex 68 units 5,863 5/31/22 Desoto Townhomes Grand Forks, ND Townhomes 24 units 3,226 5/31/22 Desoto Apartments East Grand Forks, MN Apartment Complex 24 units 1,230 6/10/22 Diamond Bend Mandan, ND Apartment Complex 78 units 10,919 $ 36,311 |
Schedule of acquisition date fair values, before prorations recorded in conjunction with acquisitions | Six months ended June 30, 2022 2021 Real estate investment acquired $ 35,953 $ 39,344 Acquired lease intangible assets 619 - Assumed Assets 3 23 Total Assets Acquired $ 36,575 $ 39,367 Other liabilities (264) (569) Net assets acquired 36,311 38,798 Equity/limited partnership unit consideration (10,180) (2,883) Net cash consideration $ 26,131 $ 35,915 |
Organization - Additional Infor
Organization - Additional Information (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
ORGANIZATION | ||
Ownership in operating partnership (as a percent) | 36.18% | 36.22% |
Principal Activity and Signif_4
Principal Activity and Significant Accounting Policies - Principles of Consolidation (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | ||
Ownership in operating partnership (as a percent) | 36.18% | 36.22% |
Principal Activity and Signif_5
Principal Activity and Significant Accounting Policies - Real Estate Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Real Estate Investments | ||||
Loss on impairment of property | $ 0 | $ 0 | $ 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) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | ||||
Taxable income to be distributed | 90% | 90% | ||
Retainable taxable income | 10% | 10% | ||
Provisions or liabilities for income taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Principal Activity and Signif_7
Principal Activity and Significant Accounting Policies - Earnings Per Common Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings per Common Share | ||||
Dilutive potential common shares | 0 | |||
Weighted average common shares outstanding, basic | 10,564,000 | 10,085,000 | 10,515,000 | 10,034,000 |
Weighted average common shares outstanding, diluted | 10,564,000 | 10,085,000 | 10,515,000 | 10,034,000 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
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 | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
SEGMENT REPORTING | ||||||
Income from rental operations | $ 33,817 | $ 31,923 | $ 66,734 | $ 63,683 | ||
Expenses from rental operations | 16,795 | 15,054 | 34,981 | 30,406 | ||
Net operating income | 17,022 | 16,869 | 31,753 | 33,277 | ||
Depreciation and amortization | 5,963 | 5,756 | 11,745 | 11,083 | ||
Interest | 4,954 | 4,302 | 9,800 | 8,589 | ||
Administration of REIT | 1,400 | 1,059 | 2,617 | 2,260 | ||
Other income | (2,402) | (2,526) | (2,905) | (2,769) | ||
Net income | 7,107 | $ 3,389 | 8,278 | $ 5,836 | 10,496 | 14,114 |
Residential | ||||||
SEGMENT REPORTING | ||||||
Income from rental operations | 28,502 | 26,230 | 55,997 | 52,190 | ||
Expenses from rental operations | 15,246 | 13,363 | 31,753 | 27,211 | ||
Net operating income | 13,256 | 12,867 | 24,244 | 24,979 | ||
Commercial | ||||||
SEGMENT REPORTING | ||||||
Income from rental operations | 5,315 | 5,693 | 10,737 | 11,493 | ||
Expenses from rental operations | 1,549 | 1,691 | 3,228 | 3,195 | ||
Net operating income | $ 3,766 | $ 4,002 | $ 7,509 | $ 8,298 |
Segment Reporting - Summary o_2
Segment Reporting - Summary of Segment Assets and Accumulated Depreciation (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
SEGMENT REPORTING | |||
Real estate investments | $ 929,409 | $ 896,702 | |
Accumulated depreciation | (188,266) | (179,155) | |
Total real estate investments, net | 741,143 | 717,547 | |
Lease intangible assets, less accumulated amortization | 5,922 | 6,246 | |
Cash and cash equivalents | 40,072 | 51,507 | $ 11,529 |
Restricted deposits | 8,825 | 9,149 | $ 14,338 |
Investment in unconsolidated affiliates | 24,494 | 18,658 | |
Notes receivable | 5,423 | 7,457 | |
Other assets, net | 21,274 | 10,302 | |
Total Assets | 847,153 | 820,866 | |
Residential | |||
SEGMENT REPORTING | |||
Real estate investments | 725,030 | 692,722 | |
Accumulated depreciation | (140,008) | (133,100) | |
Total real estate investments, net | 585,022 | 559,622 | |
Lease intangible assets, less accumulated amortization | 340 | ||
Commercial | |||
SEGMENT REPORTING | |||
Real estate investments | 204,379 | 203,980 | |
Accumulated depreciation | (48,258) | (46,055) | |
Total real estate investments, net | 156,121 | 157,925 | |
Lease intangible assets, less accumulated amortization | $ 5,582 | $ 6,246 |
Restricted Deposits And Funde_3
Restricted Deposits And Funded Reserves - Summary of Restricted Deposits and Funded Reserves (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
RESTRICTED DEPOSITS AND FUNDED RESERVES | |||
Tenant security deposits | $ 6,077 | $ 5,165 | |
Real estate tax and insurance escrows | 892 | 1,355 | |
Replacement reserves | 1,856 | 1,791 | |
Other funded reserves | 838 | ||
Restricted deposits , Total | $ 8,825 | $ 9,149 | $ 14,338 |
Investment in Unconsolidated _3
Investment in Unconsolidated Affiliates - Total investments (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Investment in Unconsolidated Affiliates | ||
Investment in unconsolidated affiliates | $ 24,494 | $ 18,658 |
ST Oak Cliff, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
SE Brooklyn Park, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
SE Fossil Creek, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Operating Partnership | ||
Investment in Unconsolidated Affiliates | ||
Investment in unconsolidated affiliates | $ 24,494 | 18,658 |
Operating Partnership | Banner Building | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 66.67% | |
Investment in unconsolidated affiliates | 60 | |
Investment in unconsolidated affiliates | $ (602) | |
Operating Partnership | Grand Forks Market Place Retail Center | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 50% | |
Investment in unconsolidated affiliates | $ 2,713 | 2,493 |
Operating Partnership | SE Savage, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Investment in unconsolidated affiliates | $ 2,059 | 2,946 |
Operating Partnership | SE Maple Grove, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Investment in unconsolidated affiliates | $ 1,955 | 2,823 |
Operating Partnership | SE Rogers | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Investment in unconsolidated affiliates | $ 2,921 | 2,986 |
Operating Partnership | ST Oak Cliff, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Investment in unconsolidated affiliates | $ 9,230 | 4,324 |
Operating Partnership | SE Brooklyn Park, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Investment in unconsolidated affiliates | $ 3,005 | $ 3,026 |
Operating Partnership | SE Fossil Creek, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Investment in unconsolidated affiliates | $ 3,213 |
Investment in Unconsolidated _4
Investment in Unconsolidated Affiliates - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
SE Savage, LLC | First Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | $ 30,932 | $ 26,210 |
SE Savage, LLC | Second Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | 6,129 | |
SE Savage, LLC | Promissory Note | ||
Investment in Unconsolidated Affiliates | ||
Face amount of debt | 1,397 | |
SE Maple Grove, LLC | First Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | 24,788 | 24,788 |
SE Maple Grove, LLC | Second Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | 3,514 | 727 |
SE Rogers | ||
Investment in Unconsolidated Affiliates | ||
Assets of unconsolidated investee | 31,415 | 22,847 |
SE Rogers | First Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | $ 24,744 | 15,688 |
ST Oak Cliff, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Assets of unconsolidated investee | $ 23,634 | 7,394 |
Mortgage balance | $ 5,798 | 0 |
SE Brooklyn Park, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Assets of unconsolidated investee | $ 21,116 | 5,478 |
SE Brooklyn Park, LLC | First Mortgage | ||
Investment in Unconsolidated Affiliates | ||
Mortgage balance | $ 13,763 | 0 |
SE Fossil Creek, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Assets of unconsolidated investee | $ 5,012 | |
Operating Partnership | Banner Building | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 66.67% | |
Mortgage balance | $ 6,994 | 6,329 |
Operating Partnership | Grand Forks Market Place Retail Center | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 50% | |
Percentage of interest | 100% | |
Mortgage balance | $ 9,669 | 9,794 |
Operating Partnership | SE Savage, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Operating Partnership | SE Maple Grove, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Operating Partnership | SE Rogers | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Operating Partnership | ST Oak Cliff, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Cash contribution | $ 9,299 | 4,361 |
Operating Partnership | SE Brooklyn Park, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 60% | |
Cash contribution | $ 3,042 | $ 3,042 |
Operating Partnership | SE Fossil Creek, LLC | ||
Investment in Unconsolidated Affiliates | ||
Ownership interest (as a percent) | 70% | |
Cash contribution | $ 3,221 |
Investment in Unconsolidated _5
Investment in Unconsolidated Affiliates - Summary of financial position (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
ASSETS | ||||||
Real estate investments | $ 929,409 | $ 896,702 | ||||
Accumulated depreciation | (188,266) | (179,155) | ||||
Total real estate investments, net | 741,143 | 717,547 | ||||
Cash and cash equivalents | 40,072 | 51,507 | $ 11,529 | |||
Restricted deposits | 8,825 | 9,149 | 14,338 | |||
Lease intangible assets, less accumulated amortization | 5,922 | 6,246 | ||||
Other assets, net | 21,274 | 10,302 | ||||
Total Assets | 847,153 | 820,866 | ||||
LIABILITIES | ||||||
Mortgage notes payable, net | 504,979 | 493,142 | ||||
Tenant security deposits payable | 6,167 | 5,225 | ||||
Accrued expenses and other liabilities | 12,665 | 18,604 | ||||
Total Liabilities | 532,929 | 525,349 | ||||
SHAREHOLDERS' EQUITY | ||||||
Total Shareholders' Equity | 314,224 | $ 309,537 | 295,517 | $ 295,043 | $ 293,859 | $ 291,528 |
Total liabilities and shareholders' equity | 847,153 | 820,866 | ||||
Unconsolidated Affiliates | ||||||
ASSETS | ||||||
Real estate investments | 181,093 | 134,839 | ||||
Accumulated depreciation | (13,847) | (10,940) | ||||
Total real estate investments, net | 167,246 | 123,899 | ||||
Cash and cash equivalents | 1,255 | 1,131 | ||||
Restricted deposits | 626 | 650 | ||||
Lease intangible assets, less accumulated amortization | 295 | 41 | ||||
Other assets, net | 715 | 909 | ||||
Total Assets | 170,137 | 126,630 | ||||
LIABILITIES | ||||||
Mortgage notes payable, net | 119,994 | 87,996 | ||||
Tenant security deposits payable | 167 | 108 | ||||
Accrued expenses and other liabilities | 11,111 | 8,029 | ||||
Total Liabilities | 131,272 | 96,133 | ||||
SHAREHOLDERS' EQUITY | ||||||
Total Shareholders' Equity | 38,865 | 30,497 | ||||
Total liabilities and shareholders' equity | $ 170,137 | $ 126,630 |
Investment in Unconsolidated _6
Investment in Unconsolidated Affiliates - Summary of results of operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Investment in Unconsolidated Affiliates | ||||||
Income from rental operations | $ 33,817 | $ 31,923 | $ 66,734 | $ 63,683 | ||
Expenses from rental operations | 27,712 | 25,112 | 56,526 | 50,078 | ||
Income from operations | 4,705 | 5,752 | 7,591 | 11,345 | ||
Depreciation and amortization | 5,963 | 5,756 | 11,745 | 11,083 | ||
Interest | 4,954 | 4,302 | 9,800 | 8,589 | ||
Net income | 7,107 | $ 3,389 | 8,278 | $ 5,836 | 10,496 | 14,114 |
Unconsolidated Affiliates | ||||||
Investment in Unconsolidated Affiliates | ||||||
Income from rental operations | 2,076 | 933 | 3,806 | 1,813 | ||
Expenses from rental operations | 682 | 348 | 1,494 | 582 | ||
Income from operations | 1,394 | 585 | 2,312 | 1,231 | ||
Depreciation and amortization | 1,187 | 266 | 3,014 | 513 | ||
Interest | 665 | 464 | 1,677 | 881 | ||
Other expense | 11 | |||||
Net income | $ (458) | $ (145) | $ (2,390) | $ (163) |
Lease Intangibles - Schedule of
Lease Intangibles - Schedule of Intangible Assets and Liabilities and Accumulated Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Intangible Assets | ||
Lease Intangibles | $ 17,859 | $ 18,072 |
Accumulated Amortization | (11,937) | (11,826) |
Total | 5,922 | 6,246 |
Intangible Liabilities | ||
Below-market lease | (2,417) | (2,525) |
Below-market lease, accumulated amortization | 1,693 | 1,714 |
Below-market lease, net | (724) | (811) |
In-place leases | ||
Intangible Assets | ||
Lease Intangibles | 15,393 | 15,455 |
Accumulated Amortization | (10,517) | (10,381) |
Total | 4,876 | 5,074 |
Above-market leases | ||
Intangible Assets | ||
Lease Intangibles | 2,466 | 2,617 |
Accumulated Amortization | (1,420) | (1,445) |
Total | $ 1,046 | $ 1,172 |
Lease Intangibles - Schedule _2
Lease Intangibles - Schedule of Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Intangible Assets | ||
2022 (July 1, 2022 - December 31, 2022) | $ 785 | |
2023 | 827 | |
2024 | 827 | |
2025 | 827 | |
2026 | 676 | |
Thereafter | 1,980 | |
Total | 5,922 | $ 6,246 |
Intangible Liabilities | ||
2022 (July 1, 2022 - December 31, 2022) | 77 | |
2023 | 151 | |
2024 | 151 | |
2025 | 151 | |
2026 | 80 | |
Thereafter | 114 | |
Total | $ 724 | $ 811 |
Lines of Credit - Additional In
Lines of Credit - Additional Information (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
Bremer Bank | ||
Lines of Credit | ||
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 | |
Number of letters of credit secured | item | 2 | |
Letters of credit total | $ 67 | |
Bremer Bank Agreement One | Floating LIBOR | ||
Lines of Credit | ||
Variable interest rate of line of credit | 2% | |
Bremer Bank Agreement Two | ||
Lines of Credit | ||
Agreed line of credit | $ 5,000 | |
Expiration date | Dec. 01, 2022 | |
Bremer Bank Agreement Two | Floating LIBOR | ||
Lines of Credit | ||
Variable interest rate of line of credit | 2% |
Mortgage Notes Payable - Summar
Mortgage Notes Payable - Summary (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | $ 507,351 | |
Mortgage Notes Payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | 507,351 | $ 495,650 |
Less unamortized debt issuance costs | 2,372 | 2,508 |
Long-term debt, net | 504,979 | 493,142 |
Fixed rate mortgage notes payable | Mortgage Notes Payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | 502,214 | 490,413 |
Debt swapped from variable to fixed rate | 107,392 | 108,734 |
Variable rate mortgage notes payable | Mortgage Notes Payable | ||
MORTGAGE NOTES PAYABLE | ||
Long-term debt, gross | $ 5,137 | $ 5,237 |
Mortgage Notes Payable - Schedu
Mortgage Notes Payable - Scheduled Maturities of Mortgage Notes Payable (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
MORTGAGE NOTES PAYABLE | |
2022 (July 1, 2022 - December 31, 2022) | $ 13,297 |
2023 | 52,783 |
2024 | 22,359 |
2025 | 52,818 |
2026 | 45,220 |
Thereafter | 320,874 |
Total payments | $ 507,351 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Other (Details) - Interest rate swap $ in Thousands | Jun. 30, 2022 USD ($) instrument | Dec. 31, 2021 instrument |
Derivatives and Hedging Activities | ||
Estimated amount to be reclassified over the next 12 months, as a increase to interest expense | $ | $ 1,137 | |
Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivatives and Hedging Activities | ||
Number of instruments | instrument | 12 | 12 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Summary (Details) - Designated as Hedging Instrument - Cash Flow Hedging $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) instrument | Dec. 31, 2021 USD ($) instrument | |
Interest rate swap | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 107,392 | $ 108,734 |
Number of instruments | instrument | 12 | 12 |
Interest Rate Swap, one, November 2029 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 6,678 | |
Fixed interest rate (as a percent) | 3.15% | |
Derivative maturity date | Nov. 01, 2029 | |
Interest Rate Swap, two, November 2029 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 4,642 | |
Fixed interest rate (as a percent) | 3.28% | |
Derivative maturity date | Nov. 01, 2029 | |
Interest Rate Swap, January 2030 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 3,022 | |
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 | $ 1,513 | |
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 | $ 2,932 | |
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 | $ 1,639 | |
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 | $ 4,337 | |
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 | $ 4,798 | |
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 | $ 12,539 | |
Fixed interest rate (as a percent) | 2.91% | |
Derivative maturity date | Dec. 02, 2027 | |
Interest Rate Swap, July 2031 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 26,010 | |
Fixed interest rate (as a percent) | 2.99% | |
Derivative maturity date | Jul. 01, 2031 | |
Interest Rate Swap, Dec 2031 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 10,956 | |
Fixed interest rate (as a percent) | 3.32% | |
Derivative maturity date | Dec. 01, 2031 | |
Interest Rate Swap, August 2029 | ||
Derivatives and Hedging Activities | ||
Notional amount | $ 28,326 | |
Fixed interest rate (as a percent) | 3.54% | |
Derivative maturity date | Aug. 01, 2029 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Other assets, net | ||
Derivatives and Hedging Activities | ||
Fair value, derivative assets | $ 9,389 | $ 698 |
Accrued expenses and other liabilities | ||
Derivatives and Hedging Activities | ||
Fair value, derivative liabilities | $ 1,648 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities - Gain-Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Derivatives and Hedging Activities | ||||||
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives | $ (3,815) | $ (6,524) | $ 845 | $ (2,384) | $ (10,339) | $ (1,539) |
Interest expense | ||||||
Derivatives and Hedging Activities | ||||||
Amount of (Gain)/Loss Reclassified from AOCI into Income | 257 | 119 | 618 | 234 | ||
Interest rate swap | ||||||
Derivatives and Hedging Activities | ||||||
Amount of (Gain)/Loss Recognized in Other Comprehensive Income on Derivatives | $ (3,814) | $ 845 | $ (10,339) | $ (1,539) |
Derivatives and Hedging Activ_7
Derivatives and Hedging Activities - Credit-Risk Related Contingent Features (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Credit-risk-related Contingent Features | |
Termination value of interest rate derivatives in asset position | $ 9,839 |
Fair Value Measurement - Carryi
Fair Value Measurement - Carrying Value and Estimated Fair Value of Company's Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Carrying Value | ||
Financial assets: | ||
Notes receivable | $ 5,423 | $ 7,457 |
Derivative assets | 9,389 | 698 |
Financial liabilities: | ||
Mortgage notes payable | 507,351 | 495,650 |
Derivative liabilities | 1,648 | |
Fair Value | ||
Financial assets: | ||
Notes receivable | 6,388 | 9,840 |
Derivative assets | 9,389 | 698 |
Financial liabilities: | ||
Mortgage notes payable | $ 505,128 | 508,285 |
Derivative liabilities | $ 1,648 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Fair Value of Assets on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Derivative assets | $ 9,389 | $ 698 |
Derivative liabilities | 1,648 | |
Level 2 | ||
Fair Value Measurements | ||
Derivative assets | $ 9,389 | 698 |
Derivative liabilities | $ 1,648 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value of Company's Financial Assets and Liabilities (Details) - Fair Value - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Mortgage notes payable | $ 505,128 | $ 508,285 |
Notes receivable | 6,388 | 9,840 |
Level 3 | ||
Fair Value Measurements | ||
Mortgage notes payable | 505,128 | 508,285 |
Notes receivable | $ 6,388 | $ 9,840 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) - Measurement Input, Discount Rate | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Minimum | ||
Fair Value Disclosures | ||
Discount rates used to estimate fair value of mortgages and notes payable | 0.0410 | 0.0325 |
Receivables, measurement input | 0.0325 | |
Maximum | ||
Fair Value Disclosures | ||
Discount rates used to estimate fair value of mortgages and notes payable | 0.0435 | 0.0335 |
Receivables, measurement input | 0.0725 | 0.0335 |
Leases - Other (Details)
Leases - Other (Details) | Jun. 30, 2022 |
Residential | |
Revenue from leases | |
Percentage of revenue from leases that are generally for terms of one year or less | 83.90% |
Commercial | |
Revenue from leases | |
Percentage of revenue from leases primarily under long-term lease agreements | 16.10% |
Leases - Lease Income (Details)
Leases - Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Lease income: | ||||
Lease income related to fixed lease payments | $ 31,551 | $ 29,411 | $ 62,116 | $ 58,627 |
Lease income related to variable lease payments | 1,111 | 1,200 | 2,288 | 2,294 |
Other | (124) | (257) | (198) | (99) |
Lease income | 32,538 | 30,354 | 64,206 | 60,822 |
Rental income accounted for under revenue recognition standard: | ||||
Other rental income | 1,279 | 1,570 | 2,528 | 2,861 |
Residential | ||||
Lease income: | ||||
Lease income related to fixed lease payments | 27,436 | 25,141 | 53,934 | 49,975 |
Other | (192) | (214) | (361) | (350) |
Lease income | 27,244 | 24,927 | 53,573 | 49,625 |
Commercial | ||||
Lease income: | ||||
Lease income related to fixed lease payments | 4,115 | 4,270 | 8,182 | 8,652 |
Lease income related to variable lease payments | 1,111 | 1,200 | 2,288 | 2,294 |
Other | 68 | (43) | 163 | 251 |
Lease income | $ 5,294 | $ 5,427 | $ 10,633 | $ 11,197 |
Leases - Future minimum rental
Leases - Future minimum rental income (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Future minimum rental income: | |
2022 (July 1, 2022- December 31, 2022) | $ 8,908 |
2023 | 15,698 |
2024 | 15,040 |
2025 | 14,774 |
2026 | 13,528 |
Thereafter | 57,273 |
Total | $ 125,221 |
Related Party Transactions - Pr
Related Party Transactions - Property Management and Board of Trustee Fees (Details) - GOLDMARK Property Management - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Related Party Transactions | ||
Management fee, amount paid | $ 6,879 | $ 6,226 |
Management fees paid expressed as a percentage of net collected rents | 5% | 5% |
Management fees as percent of net collected rents | $ 2,714 | $ 2,645 |
Repair and maintenance related payroll and payroll related expenses | $ 3,523 | $ 2,973 |
Related Party Transactions - Ad
Related Party Transactions - Advisory Agreement and Other (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) employee shares | Jun. 30, 2021 USD ($) shares | Dec. 31, 2021 USD ($) | |
Related Party Transactions | |||||
Number of paid employees | employee | 0 | ||||
Operation receivables outstanding | $ 29 | $ 29 | $ 128 | ||
Rental income | 31,551 | $ 29,411 | 62,116 | $ 58,627 | |
Costs and expenditures incurred due to construction in progress | 253 | 273 | |||
Operational liabilities outstanding | 84 | 84 | 99 | ||
Sterling Management, LLC | |||||
Related Party Transactions | |||||
Advisory management fees | 1,807 | 1,623 | |||
Advisory management fees outstanding | 608 | 608 | 296 | ||
Acquisition fees | 876 | 135 | |||
Acquisition fees outstanding | 265 | 265 | |||
Disposition fees | 226 | 146 | |||
Financing fees | 47 | 69 | |||
Financing fees outstanding | 17 | 17 | 38 | ||
Development fees outstanding | 79 | ||||
Project management fee | 253 | 283 | |||
Project management fee outstanding | 98 | ||||
Rental income | 64 | 47 | |||
GOLDMARK Property Management | |||||
Related Party Transactions | |||||
Real estate commissions | 260 | ||||
Real estate commissions outstanding | 53 | 53 | 0 | ||
Rental income | 132 | 154 | |||
GOLDMARK SCHLOSSMAN Commercial Real Estate Services | |||||
Related Party Transactions | |||||
Real estate commissions | 342 | 278 | |||
Real estate commissions outstanding | 53 | $ 53 | 0 | ||
Rental income | 19 | ||||
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 | 443,000 | ||||
Value of operating partnership (OP) units issued in connection with the acquisition of various properties | $ 10,180 | ||||
Trumont Group, LLC | |||||
Related Party Transactions | |||||
Development fee | 409 | 0 | |||
Development fees outstanding | 103 | 103 | 51 | ||
Trumont Construction, LLC | |||||
Related Party Transactions | |||||
Construction fees | 429 | 0 | |||
Construction fees payable | 103 | 103 | 29 | ||
General construction costs | 204 | 0 | |||
General construction costs payable | 56 | 56 | 14 | ||
Bell Bank | |||||
Related Party Transactions | |||||
Rental income | 422 | 240 | |||
Outstanding on principal loans | 65,248 | 65,248 | 66,365 | ||
Interest expense incurred | 1,238 | $ 1,224 | |||
Accrued interest | $ 138 | $ 138 | $ 148 | ||
Affiliated Entities | |||||
Related Party Transactions | |||||
Number of operating partnership (OP) units issued in connection with the acquisition of various properties | shares | 0 | ||||
ST Oak Cliff, LLC | |||||
Related Party Transactions | |||||
Ownership interest (as a percent) | 70% | 70% |
Dispositions (Details)
Dispositions (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) property | Jun. 30, 2021 USD ($) property | |
Dispositions | ||
Gain on sale of real estate | $ 3,340 | $ 1,710 |
Disposed of by Sale | ||
Dispositions | ||
Number of dispositions | property | 2 | 2 |
Sale price | $ 5,850 | |
Gain on sale of real estate | $ 1,710 | |
Property, Savage, MN | Disposed of by Sale | ||
Dispositions | ||
Sale price | $ 2,700 | |
Gain on sale of real estate | 1,328 | |
Property, Moorhead, MN | Disposed of by Sale | ||
Dispositions | ||
Sale price | 6,400 | |
Gain on sale of real estate | $ 2,012 |
Acquisitions - Purchases, Curre
Acquisitions - Purchases, Current Year (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | |||
Aug. 10, 2022 USD ($) item | May 31, 2022 USD ($) item | Feb. 28, 2022 USD ($) item | Jun. 30, 2022 USD ($) item $ / shares shares | |
Acquisitions | ||||
Acquisition price | $ 36,311 | |||
Number of acquisitions | item | 5 | |||
Aggregate number of limited partnership units issued for acquisition | shares | 443,000 | |||
Price per limited partnership unit issued for acquisition, price one | $ / shares | $ 23 | |||
Aggregate value of limited partnership units issued for acquisition | $ 10,180 | |||
Deer Park, Hutchinson, MN | ||||
Acquisitions | ||||
Units acquired | item | 138 | |||
Acquisition price | $ 15,073 | |||
Desota Estates, Grand Forks, ND | ||||
Acquisitions | ||||
Units acquired | item | 68 | |||
Acquisition price | $ 5,863 | |||
Desota Townhomes, Grand Forks, ND | ||||
Acquisitions | ||||
Units acquired | item | 24 | |||
Acquisition price | $ 3,226 | |||
Desota Apartments, East Grand Forks, MN | ||||
Acquisitions | ||||
Units acquired | item | 24 | |||
Acquisition price | $ 1,230 | |||
Diamond Bend, Mandan, ND | ||||
Acquisitions | ||||
Units acquired | item | 78 | |||
Acquisition price | $ 10,919 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisition Date Fair Values (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Acquisition date fair values | |||
Real estate investment acquired | $ 741,143 | $ 717,547 | |
Acquired lease intangible assets | 5,922 | 6,246 | |
Total Assets | 847,153 | $ 820,866 | |
Equity/limited partnership unit consideration | (10,180) | ||
Asset Acquisitions | |||
Acquisition date fair values | |||
Real estate investment acquired | 35,953 | $ 39,344 | |
Acquired lease intangible assets | 619 | ||
Assumed assets | 3 | 23 | |
Total Assets | 36,575 | 39,367 | |
Other liabilities | (264) | (569) | |
Net assets acquired | 36,311 | 38,798 | |
Equity/limited partnership unit consideration | (10,180) | (2,883) | |
Net cash consideration | $ 26,131 | $ 35,915 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Jul. 15, 2022 $ / shares |
Subsequent Event | |
Subsequent Events | |
Dividend or distribution paid | $ 0.2875 |