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RIT Rodin Income Trust

Filed: 17 May 21, 12:40pm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                   to                   

Commission file number: 333-221814

 

Rodin Income Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

81-1144197

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

110 E. 59th Street, New York, NY

 

10022

(Address of principal executive offices)

 

(Zip Code)

(Registrant’s telephone number, including area code): (212) 938-5000

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

N/A

N/A

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No   

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

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

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

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

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

As of May 14, 2021, the registrant had 421,840 Class A shares, 175,771 Class I shares, and 211,394 Class T shares of $0.01 par value common stock outstanding.

 

 

 


 

RODIN INCOME TRUST, INC.

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I - FINANCIAL INFORMATION

 

3

 

 

 

Item 1. Financial Statements (Unaudited)

 

3

 

 

 

Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

 

3

 

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and March 31, 2020

 

4

 

 

 

Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2021 and March 31, 2020

 

5

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and March 31, 2020

 

7

 

 

 

Notes to Consolidated Financial Statements

 

8

 

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

31

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

46

 

 

 

Item 4. Controls and Procedures.

 

46

 

 

 

PART II - OTHER INFORMATION

 

47

 

 

 

Item 1. Legal Proceedings.

 

47

 

 

 

Item 1A. Risk Factors.

 

47

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

48

 

 

 

Item 3. Defaults Upon Senior Securities.

 

48

 

 

 

Item 4. Mine Safety Disclosures.

 

48

 

 

 

Item 5. Other Information.

 

49

 

 

 

Item 6. Exhibits.

 

49

 

 

 

Signatures

 

51

 

 


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RODIN INCOME TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

March 31, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,230,836

 

 

$

4,804,926

 

Commercial mortgage loans, held for investment

 

16,747,553

 

 

 

16,624,680

 

Investment in real estate-related assets

 

8,100,000

 

 

 

8,100,000

 

Accrued interest receivable

 

130,757

 

 

 

184,937

 

Accrued preferred return receivable

 

47,250

 

 

 

 

Due from related party

 

40,263

 

 

 

41,463

 

Receivables for commercial mortgage loans

 

 

 

 

1,800,000

 

Total assets

$

27,296,659

 

 

$

31,556,006

 

Liabilities and Equity

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Loan participations sold

$

8,019,000

 

 

$

8,019,000

 

Due to related party

 

439,764

 

 

 

4,761,089

 

Distributions payable

 

114,374

 

 

 

110,004

 

Accounts payable and accrued expenses

 

82,045

 

 

 

80,546

 

Accrued interest payable

 

10,947

 

 

 

68,788

 

Total liabilities

 

8,666,130

 

 

 

13,039,427

 

Stockholders' equity

 

 

 

 

 

 

 

Controlling interest

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 50,000,000 shares authorized,

  and 0 issued and outstanding at each March 31, 2021 and December 31, 2020

 

 

 

 

 

Class A common stock, $0.01 par value per share, 160,000,000 shares authorized,

   and 418,146 and 416,559 issued and outstanding at March 31, 2021 and

   December 31, 2020, respectively

 

4,181

 

 

 

4,166

 

Class T common stock, $0.01 par value per share, 200,000,000 shares

  authorized, and 211,202 and 210,033 issued and outstanding at March 31, 2021  and December 31, 2020, respectively

 

2,112

 

 

 

2,100

 

Class I common stock, $0.01 par value per share, 50,000,000 shares

  authorized, and 175,633 and 175,241 issued and outstanding at March 31, 2021 and December 31, 2020, respectively

 

1,756

 

 

 

1,752

 

Additional paid-in capital

 

18,359,803

 

 

 

18,296,613

 

Retained earnings and cumulative distributions

 

154,302

 

 

 

99,823

 

Total controlling interest

 

18,522,154

 

 

 

18,404,454

 

Non-controlling interests in subsidiaries

 

108,375

 

 

 

112,125

 

Total stockholders' equity

 

18,630,529

 

 

 

18,516,579

 

Total liabilities and stockholders' equity

$

27,296,659

 

 

$

31,556,006

 

See accompanying notes to consolidated financial statements

3


RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

For the Three Months

 

 

 

Ended March 31,

 

 

 

2021

 

 

2020

 

 

Revenues:

 

 

 

 

 

 

 

 

Interest income

$

429,010

 

 

$

644,823

 

 

Less: Interest income related to loan participations sold

 

(179,961

)

 

 

(324,812

)

 

Total interest income, net

 

249,049

 

 

 

320,011

 

 

Preferred return income

 

202,500

 

 

 

 

 

Total revenues

 

451,549

 

 

 

320,011

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses

 

26,247

 

 

 

27,407

 

 

Management fees

 

49,493

 

 

 

33,192

 

 

Total operating expenses

 

75,740

 

 

 

60,599

 

 

Net income (loss)

$

375,809

 

 

$

259,412

 

 

Weighted average shares outstanding

 

805,048

 

 

 

531,738

 

 

Net income (loss) per common share - basic and diluted

$

0.47

 

 

$

0.49

 

 

See accompanying notes to consolidated financial statements

4


RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

Controlling Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Earnings and

 

 

Non-

 

 

Total

 

 

Class A

 

 

Class T

 

 

Class I

 

 

Paid-In

 

 

Cumulative

 

 

controlling

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Distributions

 

 

interest

 

 

Equity

 

Balance as of January 1, 2020

 

337,229

 

 

$

3,372

 

 

 

56,413

 

 

$

564

 

 

 

99,575

 

 

$

996

 

 

$

11,468,863

 

 

$

(47,674

)

 

$

1,000

 

 

$

11,427,121

 

Common stock

 

38,465

 

 

 

385

 

 

 

7,957

 

 

 

79

 

 

 

66,070

 

 

 

661

 

 

 

2,673,206

 

 

 

 

 

 

 

 

 

2,674,331

 

Common stock repurchased

 

(273

)

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,145

)

 

 

 

 

 

 

 

 

(6,148

)

Distribution reinvestment

 

982

 

 

 

10

 

 

 

451

 

 

 

5

 

 

 

232

 

 

 

2

 

 

 

38,986

 

 

 

 

 

 

 

 

 

39,003

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(92,896

)

 

 

 

 

 

 

 

 

(92,896

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

259,412

 

 

 

 

 

 

259,412

 

Distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(218,274

)

 

 

(2,582

)

 

 

(220,856

)

Acquired non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125,000

 

 

 

125,000

 

Balance as of March 31, 2020

 

376,403

 

 

$

3,764

 

 

 

64,821

 

 

$

648

 

 

 

165,877

 

 

$

1,659

 

 

$

14,082,014

 

 

$

(6,536

)

 

$

123,418

 

 

$

14,204,967

 

See accompanying notes to consolidated financial statements

5


RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

Controlling Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Earnings and

 

 

Non-

 

 

Total

 

 

Class A

 

 

Class T

 

 

Class I

 

 

Paid-In

 

 

Cumulative

 

 

controlling

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Distributions

 

 

interest

 

 

Equity

 

Balance as of January 1, 2021

 

416,559

 

 

$

4,166

 

 

 

210,033

 

 

$

2,100

 

 

 

175,241

 

 

$

1,752

 

 

$

18,296,613

 

 

$

99,823

 

 

$

112,125

 

 

$

18,516,579

 

Common stock

 

2,908

 

 

 

29

 

 

 

636

 

 

 

7

 

 

 

 

 

 

 

 

 

84,964

 

 

 

 

 

 

 

 

 

85,000

 

Common stock repurchased

 

(2,758

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(61,745

)

 

 

 

 

 

 

 

 

(61,773

)

Distribution reinvestment

 

1,437

 

 

 

14

 

 

 

533

 

 

 

5

 

 

 

392

 

 

 

4

 

 

 

54,146

 

 

 

 

 

 

 

 

 

54,169

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,175

)

 

 

 

 

 

 

 

 

(14,175

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

375,809

 

 

 

 

 

 

375,809

 

Distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(321,330

)

 

 

(3,750

)

 

 

(325,080

)

Acquired non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2021

 

418,146

 

 

$

4,181

 

 

 

211,202

 

 

$

2,112

 

 

 

175,633

 

 

$

1,756

 

 

$

18,359,803

 

 

$

154,302

 

 

$

108,375

 

 

$

18,630,529

 

See accompanying notes to consolidated financial statements

6


 

 

RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Three Months

 

 

Ended March 31,

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

375,809

 

 

$

259,412

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Decrease/(increase) in accrued interest receivable

 

54,180

 

 

 

(2,280

)

(Increase) in accrued preferred return  receivable

 

(47,250

)

 

 

 

Decrease in accounts receivable

 

1,800,000

 

 

 

 

(Decrease) in accrued interest payable

 

(57,841

)

 

 

(14,459

)

Increase in accounts payable and accrued expenses

 

1,499

 

 

 

5,823

 

(Decrease) in due to related party

 

(4,290,564

)

 

 

(9,218

)

Net cash (used in)/provided by operating activities

 

(2,164,167

)

 

 

239,278

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Repurchases of loan participation interest

 

 

 

 

(2,600,000

)

Fundings of commercial mortgage loans, held for investment

 

(122,873

)

 

 

(228,493

)

Cash used in investing activities

 

(122,873

)

 

 

(2,828,493

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

41,264

 

 

 

2,634,929

 

Distributions

 

(266,541

)

 

 

(167,242

)

Payments from redemptions of common stock

 

(61,773

)

 

 

 

Acquired non-controlling interests

 

 

 

 

104,100

 

Net cash (used in)/provided by financing activities

 

(287,050

)

 

 

2,571,787

 

Net decrease in cash and cash equivalents

 

(2,574,090

)

 

 

(17,428

)

Cash and cash equivalents, at beginning of period

$

4,804,926

 

 

$

905,358

 

Cash and cash equivalents, at end of period

$

2,230,836

 

 

$

887,930

 

 

 

 

 

 

 

 

 

Non-cash financing activities:

 

 

 

 

 

 

 

Distribution reinvestment

$

54,169

 

 

$

39,003

 

Distributions payable

$

4,370

 

 

$

14,611

 

See accompanying notes to consolidated financial statements

7


 

 

RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and Business Purpose

Rodin Income Trust, Inc. (the “Company”) was formed on January 19, 2016 as a Maryland corporation that has elected to qualify as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes, commencing with its 2019 tax year. The Company’s consolidated financial statements include Rodin Income Trust Operating Partnership, L.P. (the “Operating Partnership”), RIT REIT Sub I, Inc. (“RIT REIT Sub I”), and RIT Lending, Inc. (“RIT Lending”). Both RIT REIT Sub I and RIT Lending are indirect wholly owned subsidiaries of the Company. Substantially all of the Company’s business is expected to be conducted through the Operating Partnership, a Delaware partnership formed on January 19, 2016. The Company is the sole general and limited partner of the Operating Partnership. Unless the context otherwise requires, the “Company” refers to the Company and the Operating Partnership. The Company currently operates its business in one reportable segment, which intends to focus on originating mortgage or mezzanine loans, secured mainly by commercial real estate, investing in participations of such loans, and other real estate related assets.

On January 22, 2016, the Company was capitalized with a $200,001 investment by its sponsor, Cantor Fitzgerald Investors, LLC (“CFI”), through the purchase of 8,180 Class A shares of common stock. In addition, an indirect wholly owned subsidiary of CFI, Rodin Income Trust OP Holdings, LLC (the “Special Unit Holder”), has invested $1,000 in the Operating Partnership and has been issued a special class of limited partnership units, which is recorded as a non-controlling interest on the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively. The Company has registered with the Securities and Exchange Commission (“SEC”) an offering of up to $1.25 billion in shares of common stock, consisting of up to $1.0 billion in shares in the Company’s primary offering (the “Primary Offering”) and up to $250 million in shares pursuant to its distribution reinvestment plan (the “DRP”, and together with the Primary Offering, the “Offering”). On June 28, 2018, the Company satisfied the minimum offering requirement for the Offering (the “Minimum Offering Requirement”) as a result of CFI’s purchase of $2.0 million in Class I shares at $25.00 per share. On April 20, 2020, the Company’s board of directors authorized the extension of the term of the Offering until May 2, 2021, upon which date the Offering expires, pursuant to its terms. The Company ceased accepting subscription agreements dated after April 28, 2021, to allow for the orderly close of the Offering prior to its expiration on May 2, 2021. The Company’s board of directors has determined to terminate the DRP effective with the next distribution date of May 5, 2021. Accordingly, all distributions beginning with the distributions payable on May 5, 2021, will be paid in cash.

Following the expiration of the Offering, the Company will continue to actively manage its portfolio. In addition, the Company’s board of directors and the Advisor are evaluating potential strategic opportunities focused on maximizing stockholder value. The Company’s share repurchase program will continue under its current terms.

The Company intends to focus on originating mortgage, mezzanine and preferred equity loans secured mainly by commercial real estate located primarily in the U.S., United Kingdom, and other European Countries. The Company may also invest in commercial real estate securities and properties. Commercial real estate investments may include mortgage loans, subordinated mortgage and non-mortgage interests, including preferred equity investments and mezzanine loans, and participations in such instruments. Commercial real estate securities may include commercial mortgage-backed securities (“CMBS”), unsecured debt of publicly traded REITs, debt or equity securities of publicly traded real estate companies and structured notes.

As of March 31, 2021, the Company had made the following investments (collectively, the “Investments”):

 

The Company originated, through RIT Lending, an $18 million fixed rate mezzanine loan (the “Delshah Loan”) to DS Brooklyn Portfolio Mezz LLC (the “Mezzanine Borrower”), an affiliate of Delshah Capital Limited (“Delshah”), for the acquisition of a 28-property multifamily portfolio by Delshah located in Brooklyn and Manhattan, NY (each a “Property” and collectively the “Portfolio”). Subsequent to the initial origination, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to a preferred equity interest (the “Delshah Preferred Equity Interest”) in DS Brooklyn Portfolio Holdings LLC. (See Notes 3 and 5)

 

The Company also originated, through RIT lending, an $8.99 million floating-rate mezzanine loan (the “East 12th Street Loan”), to DS 531 E. 12th Mezz LLC (the “East 12th Street Mezzanine Borrower”), an affiliate of Delshah, for the acquisition of a multifamily property by Delshah located in Manhattan, NY (the “East 12th Street Property”). Approximately $6.83 million of the East 12th Street Loan was funded at closing. As of March 31, 2021, approximately $8.65 million of the East 12th Street Loan has been funded. (See Note 3)

8


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Company is externally managed by Rodin Income Advisors, LLC (the “Advisor”), a Delaware limited liability company and a wholly owned subsidiary of CFI. CFI is a wholly owned subsidiary of CFIM Holdings, LLC, which is a wholly owned subsidiary of Cantor Fitzgerald, L.P. (“CFLP”).

Note 2 Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with U.S. GAAP.  

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet. Management believes that the estimates utilized in preparing the consolidated financial statements are reasonable. As such, actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the Operating Partnership and any single member limited liability companies or other entities which are consolidated in accordance with U.S. GAAP. The Company consolidates variable interest entities (“VIEs”) where it is the primary beneficiary and voting interest entities which are generally majority owned or otherwise controlled by the Company. All intercompany balances are eliminated in consolidation.

Variable Interest Entities

The Company determines if an entity is a variable interest entity (“VIE”) in accordance with guidance in Accounting Standards Codification (“ASC”) Topic 810, Consolidation. For an entity in which the Company has acquired an interest, the entity will be considered a VIE if both of the following characteristics are not met: 1) the equity investors in the entity have the characteristics of a controlling financial interest and 2) the equity investors’ total investment at risk is sufficient to finance the entity’s activities without additional subordinated financial support. The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. A qualitative analysis is generally based on a review of the design of the entity, including its control structure and decision-making abilities, and also its financial structure. In a quantitative analysis, the Company would incorporate various estimates, including estimated future cash flows, assumed hold periods and capitalization or discount rates.

If an entity is determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity.

The Company evaluates all of its investments to determine if they are VIEs utilizing judgments and estimates that are inherently subjective. If different judgments or estimates were used for these evaluations, it could result in differing conclusions as to whether or not an entity is a VIE and whether or not to consolidate such entity. As of March 31, 2021 and December 31, 2020, the Company concluded that it did not have any investments in VIEs.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company will not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party. The Company performs ongoing reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and vice versa.

9


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less.

Commercial Mortgage Loans, Held for Investment

Commercial mortgage loans are generally intended to be held for investment and, accordingly, are carried at cost, net of unamortized loan fees, premiums, discounts and unfunded commitments. Commercial mortgage loans, held for investment that are deemed to be impaired are carried at amortized cost less a loan loss reserve, if deemed appropriate. Commercial mortgage loans where the Company does not have the intent to hold the loan for the foreseeable future or until its expected payoff are classified as held for sale and recorded at the lower of cost or estimated value. As of March 31, 2021 and December 31, 2020, the Company has originated two mezzanine loans and classified them as held for investment.

Mezzanine Loans

The Company has originated mezzanine loans to entities that are members of commercial real estate property owners. The mezzanine loans are secured by a pledge against the borrower’s equity in the property owner and are subordinate to senior debt. The mezzanine loans are senior to any preferred equity or common equity in the property (see Note 3 – Commercial Mortgage Loans, Held for Investment for further information).

Loan Participations Sold

The Company has partially financed its Commercial mortgage loans, held for investment, through the sale of participating mezzanine loan interests to CFI. To the extent that U.S. GAAP does not recognize a sale resulting from the loan participation interests sold, the Company does not derecognize the participation in the loan that it sold. Instead, the Company recognizes a loan participation sold liability in an amount equal to the principal of the loan participation sold. The Company continues to recognize interest income on the entire loan, including the interest attributable to the Loan participations sold (see Note 4 – Loan Participations Sold for further information).

Investment in Real Estate-Related Assets

Preferred Equity Investment

The Company has made a preferred equity investment in the Delshah Preferred Equity Interest. Preferred equity investments are generally intended to be held to maturity and, accordingly, are carried at cost, net of unamortized fees, premium, discount and unfunded commitments. Preferred Equity investments that are deemed to be impaired are carried at amortized cost less a loss reserve, if deemed appropriate. Preferred equity investments where the Company does not have the intent to hold the investment for the foreseeable future or until its expected payoff are classified as held for sale and recorded at the lower of cost or estimated value.

Preferred equity investments are considered impaired when, based on current information and events, it is probable that the Company will not be able to collect principal and preferred return income amounts due according to the contractual terms. The Company assesses the credit quality of the portfolio and adequacy of loss reserves on a periodic basis. Significant judgment of management is required in this analysis. The Company considers the estimated net recoverable value of the preferred equity investment as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the quality and financial condition of the borrower and the competitive situation of the area where the underlying collateral is located. Because this determination is based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheet date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the preferred equity investment, a loss reserve is recorded with a corresponding charge to provision for losses. The loss reserve for each preferred equity investment is maintained at a level that is determined to be adequate by management to absorb probable losses.

Income recognition is suspended for a preferred equity investment at the earlier of the date at which payments become 90-days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal of an impaired preferred equity investment is in doubt, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the principal of an impaired preferred equity investment is not in doubt, contractual preferred return income is recorded as preferred return income when received, under the cash basis method until an accrual is resumed when the preferred return investment becomes contractually current and performance is demonstrated to be resumed. A preferred return investment is written off when it is no longer realizable and/or legally discharged. No impairment losses were recorded during three months ended March 31, 2021 after the Company assessed the recoverability of its assets. As of March 31, 2021, no impairment losses have been identified.

10


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Revenue Recognition

Interest income from the Company’s Commercial mortgage loans, held for investment is recognized when earned and accrued based on the outstanding accrual balance and any related premium, discount, origination costs and fees are amortized over the term of the loan on a straight-line basis. The amortization is reflected as an adjustment to Interest income in earnings. The amortization of a premium or accretion of a discount is discontinued if such loan is reclassified to held for sale.

Preferred return income from the Company’s preferred equity investment is recognized when earned and accrued based on the outstanding investment balance.

Credit Losses and Impairment on Commercial Mortgage Loans, Held for Investment

Loans are considered impaired when, based on current information and events, it is probable that the Company will not be able to collect principal and interest amounts due according to the contractual terms. The Company assesses the credit quality of the portfolio and adequacy of loan loss reserves on a periodic basis. Significant judgment of management is required in this analysis. The Company considers the estimated net recoverable value of the loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the credit quality and financial condition of the borrower, and the competitive situation of the area where the underlying collateral is located. Because this determination is based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheet date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the loan, a loan loss reserve is recorded with a corresponding charge to provision for loan losses. The loan loss reserve for each loan is maintained at a level that is determined to be adequate by management to absorb probable losses.

Income recognition is suspended for a loan at the earlier of the date at which payments become 90-days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal of an impaired loan is in doubt, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the principal of an impaired loan is not in doubt, contractual interest is recorded as interest income when received, under the cash basis method until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. A loan is written off when it is no longer realizable and/or legally discharged. As of March 31, 2021, and December 31, 2020, no impairment has been identified for loans that are held for investment. There are no loans that have been classified as past due or in non-accrual status as of March 31, 2021 and December 31, 2020.

Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk include Cash and cash equivalents. At times, balances with any one financial institution may exceed the Federal Deposit Insurance Corporation insurance limits. The Company believes it mitigates this risk by investing its cash with high-credit quality financial institutions.

Receivables for commercial mortgage loans

Principal collections of commercial mortgage loans, held for investment receivable is comprised solely of amounts due from Delshah for a paydown of principal for the Delshah Loan. As of March 31, 2021 and December 31, 2020, the balance of Principal collections of commercial mortgage loans, held for investment receivable was $0, and $1,800,000, respectively. The full amount of Receivables for commercial mortgage loans outstanding was collected by the Company in January 2021.

Due from Related Party

Due from related party includes amounts owed to the Company by CFI pursuant to the terms of the Sponsor Support Agreement for the reimbursement of selling commissions and dealer manager fees, as well as other amounts due from the Advisor. As of March 31, 2021 and December 31, 2020, the balance of Due from related party was $40,263 and $41,463, respectively. The full amounts of Sponsor Support outstanding at March 31, 2021 and December 31, 2020 were received by the Company during April 2021 and January 2021, respectively.

11


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Due to Related Party

Due to related party is comprised of amounts contractually owed by the Company for various services provided to the Company from a related party, as well as amounts due to CFI for repurchases of loan participations sold pursuant to the Delshah Loan modification, which at March 31, 2021 and December 31, 2020 was $439,764 and $4,761,089, respectively. The full amounts due to CFI for repurchases of loan participations sold were reimbursed by the Company in January 2021.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses is comprised of amounts owed by the Company for compensation to the Company’s independent board of directors relating to pro-rated annual compensation as well as attendance at meetings of the board of directors. As of March 31, 2021 and December 31, 2020, accounts payable and accrued expenses was $82,045 and $80,546, respectively.

Organization and Offering Costs

The Advisor has agreed to pay, on behalf of the Company, all organizational and offering costs (including legal, accounting, and other costs attributable to the Company’s organization and offering, but excluding upfront selling commissions, dealer manager fees and distribution fees) (“O&O Costs”) through the first anniversary of the date on which the Company satisfied the Minimum Offering Requirement, which was June 28, 2019 (the “Escrow Break Anniversary”). After the Escrow Break Anniversary, the Advisor, in its sole discretion, may pay some or all of the additional O&O Costs incurred, but it is not required to do so. Following the Escrow Break Anniversary, the Company began reimbursing the Advisor for payment of the O&O Costs ratably over a 36-month period; provided, however, that the Company will not be obligated to pay any amounts that as a result of such payment would cause the aggregate payments for O&O Costs (less selling commissions, dealer manager fees and distribution fees) paid to the Advisor to exceed 1% of gross proceeds of the Offering (the “1% Cap”), as of such payment date. To the extent the Advisor pays any additional O&O Costs, the Company will be obligated to reimburse the Advisor subject to the 1% Cap. Any amounts not reimbursed in any period shall be included in determining any reimbursement liability for a subsequent period. As of March 31, 2021, the Advisor has continued to pay all O&O Costs on behalf of the Company.

As of March 31, 2021 and December 31, 2020, the Advisor has incurred $5,955,124 and $5,897,934, respectively, of O&O Costs on behalf of the Company. The Company’s obligation is limited to the 1% Cap, less any reimbursement payments made by the Company to the Advisor for O&O costs incurred, which at March 31, 2021 and December 31, 2020 was $95,626 and $115,277, respectively, and is included within Due to related party in the accompanying consolidated balance sheets. As of March 31, 2021, in prior periods organizational costs of $449 had been recorded since inception in General and administrative expenses. As of March 31, 2021 and December 31, 2020, offering costs of $189,484 and $188,710, respectively, were charged to stockholders’ equity. As of March 31, 2021 and December 31, 2020, the Company has made reimbursement payments of $94,307 and $73,882, respectively, to the Advisor for O&O Costs incurred.

Income Taxes

The Company has elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its 2019 tax year. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income, share ownership, minimum distribution and other requirements are met. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company may also be subject to certain state, local and franchise taxes. If the Company fails to meet these requirements, it will be subject to U.S. federal income tax, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders.

The Company provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Because assumptions are used in determining whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from the Company’s estimates under different assumptions or conditions.

12


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Earnings Per Share

Basic net income (loss) per share of common stock is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period, including common stock equivalents. As of March 31, 2021 and December 31, 2020, there were no material common stock equivalents that would have a dilutive effect on net income (loss) per share for common stockholders. All classes of common stock are allocated net income (loss) at the same rate per share.

For the three months ended March 31, 2021 and March 31, 2020, basic and diluted net income per common share was $0.47 and $0.49, respectively.   

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The guidance is part of the FASB’s disclosure framework project, whose objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements. The ASU eliminates, amends and adds certain disclosure requirements for fair value measurements. The FASB concluded that these changes improve the overall usefulness of the footnote disclosures for financial statement users and reduce costs for preparers. The new standard became effective for the Company beginning January 1, 2020 and early adoption is permitted for eliminated and modified fair value measurement disclosures. Certain disclosures are required to be applied prospectively and other disclosures need to be adopted retrospectively in the period of adoption. As permitted by the transition guidance in the ASU, the Company early adopted, eliminated and modified disclosure requirements as of September 30, 2018. The early adoption of this guidance did not have an impact on the Company’s unaudited consolidated financial statements. The additional disclosure requirements were adopted by the Company beginning January 1, 2020, and the adoption of these fair value measurement disclosures did not have an impact on the Company’s unaudited consolidated financial statements. See Note 10 — Fair Value Measurements for additional information.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The guidance was issued in response to stakeholders’ observations that Topic 810, Consolidation, could be improved in the areas of applying the VIE guidance to private companies under common control and in considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. The Company adopted the standard on its effective date beginning January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s unaudited consolidated financial statements.

13


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

New Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires financial assets that are measured at amortized cost to be presented, net of an allowance for credit losses, at the amount expected to be collected over their estimated life. Expected credit losses for newly recognized financial assets, as well as changes to credit losses during the period, are recognized in earnings. For certain purchased financial assets with deterioration in credit quality since origination (“PCD assets”), the initial allowance for expected credit losses will be recorded as an increase to the purchase price. Expected credit losses, including losses on off-balance-sheet exposures such as lending commitments, will be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, to clarify that operating lease receivables accounted for under ASC 842, Leases, are not in the scope of the new credit losses guidance, and, instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The ASU makes changes to the guidance introduced or amended by ASU No. 2016-13 to clarify the scope of the credit losses standard and address guidance related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other issues. In addition, in May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU allow entities, upon adoption of ASU No. 2016-13, to irrevocably elect the fair value option for financial instruments that were previously carried at amortized cost and are eligible for the fair value option under ASC 825-10, Financial Instruments: Overall. In November 2019, the FASB issued ASU No. 2019-10, Financial instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates. Pursuant to this ASU, the effective date of the new credit losses standard was deferred, and the new credit impairment guidance will become effective for the Company on January 1, 2023 under a modified retrospective approach, and early adoption is permitted. In addition, in November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial InstrumentsCredit Losses. The amendments in this ASU require entities to include certain expected recoveries of the amortized cost basis previously written off, or expected to be written off, in the allowance for credit losses for PCD assets; provide transition relief related to troubled debt restructurings; allow entities to exclude accrued interest amounts from certain required disclosures; and clarify the requirements for applying the collateral maintenance practical expedient. The amendments in ASUs No. 2018-19, 2019-04, 2019-05, 2019-10 and 2019-11 are required to be adopted concurrently with the guidance in ASU No. 2016-13. The Company plans to adopt the standards on January 1, 2023. Management is continuing to implement the new credit losses guidance, including the assessment of the impact of the new guidance on the Company’s unaudited consolidated financial statements. Given the objective of the new standard, it is generally expected allowances for credit losses for the financial instruments within its scope would increase, however, the amount of any change will be dependent on the composition and quality of the Company’s portfolios at the adoption date as well as economic conditions and forecasts at that time.

In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint  Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force). These amendments improve current guidance by reducing diversity in practice and increasing comparability of the accounting for the interactions between these codification topics as they pertain to certain equity securities, investments under the equity method of accounting and forward contracts or purchased options to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option. The new standard will become effective for the Company beginning January 1, 2022 and will be applied prospectively. Early adoption is permitted. Management is currently evaluating the impact of the new guidance on the Company’s unaudited consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU makes narrow-scope amendments related to various aspects pertaining to financial instruments and related disclosures by clarifying or improving the Codification. Certain guidance became effective for the Company for annual periods beginning January 1, 2020, and the adoption of this guidance did not have a material impact on the Company’s consolidated unaudited financial statements. The guidance related to credit losses will be effective for the Company on January 1, 2023. Early adoption is permitted. Management is currently evaluating the impact of the new credit losses guidance on the Company’s unaudited consolidated financial statements.

14


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, and borrowings) necessitated by reference rate reform as entities transition away from LIBOR and other interbank offered rates to alternative reference rates. This ASU also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional and only available in certain situations. The ASU is effective upon issuance and generally can be applied through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this standard are elective and principally apply to entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform (referred to as the “discounting transition”). The standard expands the scope of ASC 848, Reference Rate Reform, and allows entities to elect optional expedients to derivative contracts impacted by the discounting transition. Similar to ASU No. 2020-04, provisions of this ASU are effective upon issuance and generally can be applied through December 31, 2022. Management is evaluating and planning for adoption of the new guidance, including forming a cross-functional LIBOR transition team to determine the Company’s transition plan and facilitate an orderly transition to alternative reference rates, and continuing its assessment on the Company’s unaudited consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The standard is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The ASU also enhances information transparency by making targeted improvements to the related disclosures guidance. Additionally, the amendments affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The new standard will become effective for the Company beginning January 1, 2024, can be applied using either a modified retrospective or a fully retrospective method of transition and early adoption is permitted. Management is currently evaluating the impact of the new guidance on the Company’s unaudited consolidated financial statements.

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. The standard amends the Codification by moving existing disclosure requirements to (or adding appropriate references in) the relevant disclosure sections. The ASU also clarifies various provisions of the Codification by amending and adding new headings, cross-referencing, and refining or correcting terminology. The new standard will become effective for the Company beginning January 1, 2022 and can be applied using either a modified retrospective or a fully retrospective method of transition. Management is currently evaluating the impact of the new guidance on the Company’s unaudited consolidated financial statements.

Note 3 – Commercial Mortgage Loans, Held for Investment

NYC Multi-family Portfolio Mezzanine Loan

On September 21, 2018, the Company originated, through RIT Lending, the Delshah Loan to the Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the Portfolio. The fee simple interest in the Portfolio is held by DS Brooklyn Portfolio Owner LLC, a single purpose limited liability company (the “Senior Borrower”) of which the Mezzanine Borrower owns 100% of the membership interests.

The Portfolio is comprised of 207 residential units and 19 commercial units that encompass 167,499 square feet.

The interest rate for the Delshah Loan for years one through five is 9.10%. Beginning on September 22, 2023, the interest rate for the Delshah Loan will change to the greater of (i) 9.10% or (ii) 275 basis points over the then existing five year U.S. Treasury Note Yield (the “Mortgage Loan Interest Rate”). However, in the event certain conditions described in the Delshah Loan mezzanine loan agreement are not satisfied at the end of year five, the interest rate for the Delshah Loan will increase to the greater of (i) 10.10% or (ii) 565 basis points over the Mortgage Loan Interest Rate in effect at the end of year five.

The Delshah Loan is secured by a pledge of 100% of the equity interests in the Senior Borrower. The Delshah Loan may be prepaid in its entirety, but not in part, subject to RIT Lending’s receipt of eighteen months of minimum interest. The term of the Delshah Loan is ten years, with no option to extend. The Portfolio is managed by an affiliate of the Borrower.

In connection with the origination of the Delshah Loan, RIT Lending entered into a participation agreement (the “Delshah Loan Participation Agreement”) with CFI. RIT Lending originated the Delshah Loan with (i) cash from the Offering equivalent to a 5% participation interest in the amount of $900,000 in the Delshah Loan and (ii) proceeds from the sale to CFI of a 95% participation interest in the amount of $17,100,000 in the Delshah Loan. 

15


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

As December 31, 2020, the Company had repurchased participation interests in the Delshah Loan from CFI in the amount of $9,081,000.  

During the three months ended March 31, 2021 and March 31, 2020, the Company earned Interest income, net of $1,818 and $89,238, respectively, on the Delshah Loan, consisting of $181,779 and $414,050, respectively, of total Interest less $179,961 and $324,812, respectively, of Interest income related to Loan participations sold.

Summary of the modification

At Delshah’s request, the Company agreed to the following modification of the Delshah Loan, effective December 31, 2020. On December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest in DS Brooklyn Portfolio Holdings LLC, the sole owner of the Mezzanine Borrower, on the terms described below, to be held by RIT Lending. The other member of DS Brooklyn Portfolio Holdings LLC is DS Property Acquisitions LLC, an affiliate of Delshah.

 

The remaining $8.1 million balance of the Delshah Loan remained outstanding as a mezzanine loan on the same terms as those in effect prior to the conversion. Following the conversion, CFI has 99% interest in the Delshah Loan and the Company has a 1% interest in the Delshah Loan and 100% of the Delshah Preferred Equity Interest.

The following table provides certain information about the Delshah Loan:

Loan Type

 

Loan Amount

 

 

Loan Term

 

Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

8,100,000

 

 

10 years

 

9.10% subject to a potential increase in year six

 

Interest only

 

83.14%

 

Note:(1) Loan-to-Value is calculated as of the date the Delshah Loan was originated.

533 East 12th Street, New York, NY

On November 1, 2018, the Company, through RIT Lending, originated the East 12th Street Loan to the East 12th Street Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the East 12th Street Property. The fee simple interest in the East 12th Street Property is held by DS 531 E. 12th Owner LLC, a single purpose limited liability company (the “East 12th Street Senior Borrower”) of which the East 12th Street Mezzanine Borrower owns 100% of the membership interests.

The following table provides certain information about the East 12th Street Loan:

Loan Type

 

Loan Amount

 

 

Initial Funding

 

 

Loan Term

 

Floating Rate Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

8,990,000

 

 

$

6,830,000

 

 

3 years with two, 1-year extension options

 

LIBOR +9.25%

 

Interest only

 

84.28%

 

Note:(1) Loan-to-Value is calculated as of the date the East 12th Street Loan was originated and only includes amounts funded on the date of origination.

The East 12th Street Loan is secured by a pledge of 100% of the equity interests in the East 12th Street Senior Borrower. The East 12th Street Loan may be prepaid in its entirety or in part in connection with sales of condominium units, subject in each case to RIT Lending’s receipt of eighteen months of minimum interest. The term of the East 12th Street Loan is three years, with two 1-year options to extend.

$6,830,000 of the East 12th Street Loan was funded at closing. $1,660,000 of the East 12th Street Loan was withheld and will be advanced to the extent the East 12th Street Property generates insufficient cash flow to fully cover payment of interest on the East 12th Street Loan. The remaining portion of the East 12th Street Loan, $500,000, was also withheld and will be advanced to pay for capital expenditure, broker commissions and tenant improvements associated with the East 12th Street Property as approved by RIT Lending. No interest will accrue on the unfunded amounts.

In connection with originating the East 12th Street Loan, RIT Lending entered into a participation agreement (the “East 12th Street Loan Participation Agreement”) with CFI. RIT Lending originated the East 12th Street Loan with (i) cash from the Offering equivalent to a 20.42% participation interest in the East 12th Street Loan and (ii) proceeds from the sale to CFI of a 79.58% participation interest in the East 12th Street Loan. As of July 16, 2019, the Company had repurchased participation interests in the East 12th Street Loan from CFI in the amount of $5,609,044, increasing the Company’s total interest in the East 12th Street Loan to 100%

16


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

As of September 30, 2020, the New York State Attorney General has approved the final condominium plan for the East 12th Street Property, and certain previously effective NYC work stoppage rules, originally enacted due to the COVID-19 pandemic, have been lifted. Such actions have resulted in renovations of the East 12th Street Property commencing, and the sale process of the condominium units that comprise the East 12th Street Property being engaged.

The delay in completion of the renovation and the anticipated extended duration of unit sales has resulted in a substantial draw-down by the East 12th Street Senior Borrower of the debt service/carry cost reserve under each of the East 12th Street senior and mezzanine loans. In order to replenish the East 12th Street senior loan interest/carry reserve and ensure sufficient funding to complete the project, Delshah requested an increase in the size of the East 12th Street senior loan, along with RIT Lending consent for such increase.

On December 11, 2020, RIT Lending executed the consent to the proposed upsizing and modification of the East 12th Street senior loan as well as the modification of the East 12th Street Loan as further described below. The changes to the East 12th Street senior loan include increases to the debt and equity amounts, increases to the required contingency and capital expenditure reserve amounts, as well as modifications to the cash waterfall. The cash waterfall was modified as follows: all net sales proceeds from the sales of condominiums are applied against the outstanding East 12th Street senior loan balance until the senior loan is fully paid off, then the remainder to Delshah. Prior to the modification, the East 12th Street senior loan provided for the following cash waterfall: all net sales proceeds applied against outstanding the senior loan balance until the senior loan is 50% paid off, then split 60/40% between the senior and the East 12th Street Loan until the senior loan is paid off in full, then to the East 12th Street Loan until paid off in full, and then the remainder to Delshah.

As of March 31, 2021, the Company and CFI had advanced $1,459,417 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $200,583. As of March 31, 2021, the Company had advanced $358,136 for capital expenditure, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $141,864. As of March 31, 2021, the total funded amount for the East 12th Street Loan was $8,647,553.

As of December 31, 2020, the Company and CFI had advanced $1,459,417 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $200,583. As of December 31, 2020, the Company had advanced $235,263 for capital expenditure, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $264,737. As of December 31, 2020, the total funded amount for the East 12th Street Loan was $8,524,680.

During the three months ended March 31, 2021 and March 31, 2020, the Company earned Interest income of $247,231 and $230,773, respectively, on the East 12th Street Loan.   

17


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table summarizes the activity on the loans at March 31, 2021:

Activity

 

Delshah Loan

 

 

RIT Participation Interest %

 

 

Total Delshah

Loan

 

 

East 12th Street

Loan

 

 

RIT Participation Interest %

 

 

Total East 12th

Street Loan

 

 

Total Loans

 

Total Loan Amount

 

$

18,000,000

 

 

 

 

 

 

$

18,000,000

 

 

$

8,990,000

 

 

 

 

 

 

$

8,990,000

 

 

$

26,990,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Funding

 

 

18,000,000

 

 

 

100.00

%

 

 

18,000,000

 

 

 

6,830,000

 

 

 

100.00

%

 

 

6,830,000

 

 

 

24,830,000

 

Interest Participation

   Sale

 

 

(17,100,000

)

 

 

-95.00

%

 

 

 

 

 

(5,435,000

)

 

 

-79.58

%

 

 

 

 

 

 

Ownership

 

 

900,000

 

 

 

5.00

%

 

 

18,000,000

 

 

 

1,395,000

 

 

 

20.42

%

 

 

6,830,000

 

 

 

24,830,000

 

Advance for Interest

   Shortfall

 

 

 

 

 

 

 

 

 

 

 

1,459,417

 

 

 

 

 

 

1,459,417

 

 

 

1,459,417

 

Interest Participation

   Sale - Interest

   Shortfall

 

 

 

 

 

 

 

 

 

 

 

(174,044

)

 

 

 

 

 

 

 

 

 

Advance for Capital

   Expenditures

 

 

 

 

 

 

 

 

 

 

 

358,136

 

 

 

 

 

 

358,136

 

 

 

358,136

 

RIT Interest

   Participation

   Purchase

 

 

9,081,000

 

 

 

50.45

%

 

 

 

 

 

5,609,044

 

 

 

79.58

%

 

 

 

 

 

 

Principal Paydown

 

 

(1,800,000

)

 

 

-10.00

%

 

 

(1,800,000

)

 

 

 

 

 

 

 

 

 

 

 

 

(1,800,000

)

Conversion to Preferred Equity

 

 

(8,100,000

)

 

 

-44.45

%

 

 

(8,100,000

)

 

 

 

 

 

 

 

 

 

 

 

 

(8,100,000

)

Ownership

 

$

81,000

 

 

 

1.00

%

 

$

8,100,000

 

 

$

8,647,553

 

 

 

100.00

%

 

$

8,647,553

 

 

$

16,747,553

 

 

During the three months ended March 31, 2021 and March 31, 2020, the Company earned total Interest income, net of $249,049 and $320,011, respectively, which was comprised of total Interest income of $429,010 and $644,823, respectively, less Interest income related to Loan participations sold of $179,961 and $324,812, respectively.

 

18


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Concentration of Credit Risk

The following table presents the geography and property type of collateral underlying the Company’s Commercial mortgage loans, held for investment as a percentage of the loan’s carrying value as of March 31, 2021 and December 31, 2020:

Geography

Collateral Property Type

Percentage

 

  New York

Multifamily

100%

 

 

Note 4 – Loan Participations Sold

Delshah Loan Participation Agreement

In connection with the origination of the Delshah Loan, RIT Lending entered into the Delshah Loan Participation Agreement with CFI. The Company originated, through RIT Lending, the Delshah Loan with (i) cash from the Offering equivalent to a 5% participation interest in the amount of $900,000 in the Delshah Loan and (ii) proceeds from the sale to CFI of a 95% participation interest in the amount of $17,100,000 in the Delshah Loan. The Company intended, but was not obligated, to repurchase the remaining 95% of the participation interest in the Delshah Loan from CFI at a purchase price equivalent to the amount paid for the participation interest by CFI. The Delshah Loan Participation Agreement provides that participation certificates sold to CFI represent an undivided beneficial ownership interest in the Delshah Loan. The Delshah Loan Participation Agreement also specifies the parties’ respective rights with respect to the Delshah Loan. The transactions with CFI were approved by the Company’s board of directors, including by the majority of its independent directors.

As of December 31, 2020, the Company had repurchased participation interests in the Delshah Loan from CFI totaling $9,081,000, respectively. On December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest in DS Brooklyn Portfolio Holdings LLC, the sole owner of the Delshah Borrower, to be held by RIT Lending. As a result, as of March 31, 2021 and December 31, 2020, the Company’s total interest was reduced to $81,000, which represents a 1.00% ownership interest in the Delshah Loan.

East 12th Street Loan Participation Agreement

In connection with the origination of the East 12th Street Loan, RIT Lending entered into the East 12th Street Loan Participation Agreement with CFI. The Company originated, through RIT Lending, the East 12th Street Loan with (i) cash from the Offering equivalent to a 20.42% participation interest in the amount of $1,395,000 in the East 12th Street Loan and (ii) proceeds from the sale to CFI of a 79.58% participation interest in the amount of $5,435,000 in the East 12th Street Loan, at closing. The Company intended, but was not obligated, to purchase the remaining 79.58 of the participation interest in the East 12th Street Loan from CFI at a purchase price equivalent to the amount paid for the participation interest by CFI. The East 12th Street Loan Participation Agreement provides that participation certificates sold to CFI represent an undivided beneficial ownership interest in the East 12th Street Loan. The East 12th Street Loan Participation Agreement also specifies the parties’ respective rights with respect to the East 12th Street Loan. The transactions with CFI were approved by the Company’s board of directors, including by the majority of its independent directors.

In accordance with ASC Topic 860, Transfers and Servicing, the sales of participation interests in the Investments do not qualify as sales. Therefore, the Company presents the gross amount of the Investments as an asset and the Loan participations sold as a liability on the consolidated balance sheet. The gross presentation of Loan participations sold does not impact stockholders’ equity or net income.

As of July 16, 2019, the Company had repurchased remaining participation interests in the East 12th Street Loan from CFI in the amount of $5,609,044. As a result, as of March 31, 2021 and December 31, 2020, the Company’s ownership interest in the East 12th Street Loan was 100%. As of March 31, 2021 and December 31, 2020 the Company had made interest shortfall fundings of $1,285,373 and $1,285,373, respectively, and capital expenditure advances of $358,136 and $235,263, respectively, increasing the Company’s total interest to $8,647,553 and $8,524,680, respectively.

Note 5 – Investment in real estate-related assets

As described above in Note 3, pursuant to Delshah’s request to modify the Delshah Loan, on December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest in DS Brooklyn Portfolio Holdings LLC.

19


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The $8.1 million Delshah Preferred Equity Interest has the mandatory redemption date of the earlier of September 21, 2028 or the maturity date of either Delshah senior loan or Delshah Loan. In addition, the DS Property Acquisitions LLC (the “Operating Member”), an affiliate of Delshah, may redeem the Delshah Preferred Equity Interest in whole or in part on any business day upon at least 5 business days prior written notice.

The preferred return for the Delshah Preferred Equity Interest until September 21, 2023 is 10.00%. At such date, the preferred return for the Delshah Preferred Equity Interest will change to the greater of (i) 10.25% or (ii) 740 basis points over the then existing five-year U.S. Treasury Note Yield, such interest rate then in effect for Delshah Preferred Equity Interest is referred to as the Mortgage Loan Interest Rate. However, in the event certain conditions described in the next sentence are not satisfied by September 21, 2023, the interest rate for the Delshah Loan will increase to the greater of (i) 11.25% or (ii) 840 basis points over the Mortgage Loan Interest Rate in effect. The interest rate modification conditions to be satisfied by September 21, 2023 are: (a) a minimum financing yield on the combined Delshah Loan, Delshah senior loan and Delshah Preferred Equity Interest amount of 7.0%; (b) a financing service coverage ratio of at least 1.10x, on the combined Delshah Loan, Delshah senior loan and Delshah Preferred Equity Interest amount; and (c) the then outstanding balance of the combined Delshah Loan, Delshah senior loan and Delshah Preferred Equity Interest is not greater than 75.0% of the value of the Delshah portfolio. The Operating Member has the right to cause any portion of the preferred return in excess of 9.1% to be paid as a payment-in-kind (including as an increase in the capital balance of the Delshah Preferred Equity Interest).

On the 10th day of each month, available cash flow will be distributed as follows: (i) to any reserves required under the operating agreement of DS Brooklyn Portfolio Holdings LLC for taxes or insurance premiums, (ii) to the accrued and unpaid return on any special contributions made by RIT Lending, (iii) to repayment of any special contributions made by RIT Lending until paid in full, (iv) to the accrued and unpaid return on the Delshah Preferred Equity Interest, (v) provided no trigger event is continuing, to the payment of a cumulative return on the capital contribution made by RIT Lending at a rate equal to 15% (the “Operating Member Return”), (vi) to repayment of the capital balance of the Delshah Preferred Equity Interest, (vii) during the continuance of a trigger event, to the payment of the Operating Member Return, and (viii) any remaining amounts to be distributed on a pari passu basis 20% to RIT Lending and 80% to Operating Member. In addition, any excess proceeds will be used to pay down Delshah Preferred Equity Interest.

In connection with the Delshah Preferred Equity Interest, Delshah paid the Advisor a fee totaling $60,750 (75 basis points on the $8.1 million amount of the Delshah Preferred Equity Interest).

The following table provides certain information about the Delshah Preferred Equity Interest:

Portfolio

 

Original Investment Amount

 

 

Preferred Return

Preferred Equity Investment

 

$

8,100,000

 

 

Ranging from 10.00% in 2020 to 10.25% in 2023

During the three months ended March 31, 2021 and March 31, 2020, the Company earned Preferred return income of $202,500 and $0, respectively, on the Delshah Preferred Equity Interest.

Note 6 – Stockholders’ Equity

Initial Public Offering

On November 30, 2017, the Company filed a registration statement with the SEC on Form S-11 in connection with the Offering. The registration statement was subsequently declared effective by the SEC on May 2, 2018. In addition, on June 28, 2018, the Company satisfied the Minimum Offering Requirement for the Offering as a result of CFI’s purchase of $2.0 million in Class I shares at $25.00 per share.

The Company’s shares of common stock consist of Class A shares, Class T shares and Class I shares, all of which are collectively referred to herein as shares of common stock. As of March 31, 2021, the Company’s total number of authorized shares of common stock was 410,000,000 consisting of 160,000,000 of Class A authorized common shares, 200,000,000 of Class T authorized common shares and 50,000,000 of Class I authorized common shares. The Company has the right to reallocate the shares of common stock offered between the Primary Offering and the DRP. The Class A shares, Class T shares and Class I shares have identical rights and privileges, including identical voting rights, but have different upfront selling commissions and dealer manager fees and the Class T shares have an ongoing distribution fee. The per share amount of distributions on Class T shares will be lower than the per share amount of distributions on Class A shares and Class I shares because of the on-going distribution fee that is payable with respect to Class T shares sold in the Primary Offering.

20


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

CFI pays a portion of selling commissions and all of the dealer manager fees (“Sponsor Support”), up to a total of 4.0% of gross offering proceeds from the sale of Class A shares and Class T shares, and up to a total of 1.5% of gross offering proceeds from the sale of Class I shares, incurred in connection with the Offering. Selling commissions and dealer manager fees are presented net of Sponsor Support on the Company’s consolidated statements of stockholders’ equity. The Company will reimburse Sponsor Support (i) immediately prior to or upon the occurrence of a liquidity event, including (A) the listing of the Company’s common stock on a national securities exchange or (B) a merger, consolidation or a sale of substantially all of the Company’s assets or any similar transaction or any transaction pursuant to which a majority of the Company’s board of directors then in office are replaced or removed, or (ii) upon the termination of the Advisory Agreement (as defined below) by the Company or by the Advisor. In each such case, the Company will only reimburse CFI after the Company has fully invested the proceeds from the Offering and the Company’s stockholders have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.5% cumulative, non-compounded annual pre-tax return on such invested capital.

Pursuant to the terms of the dealer manager agreement between the Company and Cantor Fitzgerald & Co. (the “Dealer Manager”), a related party, the Dealer Manager provides dealer manager services in connection with the Offering. The Offering is a best efforts offering, which means that the Dealer Manager will not be required to sell any specific number or dollar amount of shares of common stock in the Offering, but will use its best efforts to sell the shares of common stock. The Offering is a continuous offering that will end May 2, 2021 pursuant to its terms. The Company’s board of directors has determined to terminate the DRP effective with the next distribution date of May 5, 2021. Accordingly, all distributions beginning with the distributions payable on May 5, 2021, will be paid in cash.

The Company also has 50 million shares of preferred stock, $0.01 par value, authorized. No shares of preferred stock are issued or outstanding.

As of March 31, 2021, the Company had sold 796,801 shares of its common stock (consisting of 409,966 Class A shares, 175,633 Class I shares and 211,202 Class T shares) in the Offering for aggregate net proceeds of $18,387,236.          

Distributions

The Company’s board of directors authorized, and the Company declared, distributions through August 14, 2019 in an amount equal to $0.004357260, for the period August 15, 2019 through November 14, 2019 in an amount equal to $0.004493151, and for the period November 15, 2019 through May 14, 2021 in an amount equal to $0.004602739, per day (or approximately $1.68 on an annual basis) per share of Class A common stock, Class I common stock and Class T common stock, less, for holders of the shares of Class T common stock, the distribution fees that are payable with respect to shares of Class T common stock. The distributions are payable by the 5th business day following each month end to stockholders of record at the close of business each day during the prior month.

To ensure that the Company has sufficient funds to cover cash distributions authorized and declared during the Offering, the Company and CFI entered into a distribution support agreement. The terms of the agreement provide that in the event that cash distributions exceed the Company’s defined modified funds from operations (“MFFO”), defined as a supplemental measure to reflect the operating performance of a non-traded REIT, for any calendar quarter through the termination of the Primary Offering, CFI shall purchase Class I shares from the Company in an amount equal to the distribution shortfall, up to $5 million (less the amount from any shares purchased by CFI in order to satisfy the Minimum Offering Requirement).

As of March 31, 2021 and December 31, 2020, the Company has declared common share distributions of $2,005,255 and $1,683,923, respectively, of which $110,624 and $110,004, respectively, was unpaid as of the respective reporting dates and has been recorded as a component of Distributions payable on the accompanying consolidated balance sheets. All of the unpaid distributions as of March 31, 2021 were paid during April 2021. As of March 31, 2021 and December 31, 2020, distributions reinvested pursuant to the Company’s DRP are $305,725 and $251,548, respectively.

Redemptions

Stockholders are eligible to have their shares repurchased by the Company pursuant to the Amended and Restated Share Repurchase Program. The Company will repurchase shares at a price equal to, or at a discount from, NAV per share of the share class being repurchased subject to certain holding period requirements which effect the repurchase price as a percentage of NAV.

21


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Amended and Restated Share Repurchase Program includes numerous restrictions that limit stockholders’ ability to have their shares repurchased. The Company limits the number of shares repurchased pursuant to the Amended and Restated Share Repurchase Program as follows: (i) during any calendar month, the Company may repurchase no more than 2% of the combined NAV of all classes of shares as of the last calendar day of the previous month (based on the most recently determined NAV per share) and (ii) during any calendar year, the Company may repurchase no more than 10% of the combined NAV of all classes of shares as of the last calendar day of the previous calendar year. Further, the Company also has no obligation to repurchase shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. The Company may amend, suspend or terminate the program for any reason upon 10 business days’ notice.

During the three months ended March 31, 2021, the Company repurchased 2,758 shares, in the amount of $61,773. The Company repurchased 273 shares, in the amount of $6,148 during the three months year ended March 31, 2020.

Non-controlling Interest

The Special Unit Holder has invested $1,000 in the Operating Partnership and has been issued a special class of limited partnership units as part of the overall consideration for the services to be provided by the Advisor.

In January 2020, in order to comply with certain REIT qualification requirements, RIT REIT Sub I issued in a private placement 125 shares of preferred stock to accredited investors for gross offering proceeds of $125,000. Pursuant to the private placement offering, RIT REIT Sub I incurred $20,900 of offering costs, which have been included within Additional paid-in capital on the accompanying consolidated balance sheet. The shares of preferred stock entitle the holders to an annual 12% preferred return, which, as of March 31, 2021, was $17,625, $3,750 of which was payable as of March 31, 2021 and included as a component of Distributions payable in the accompanying consolidated balance sheet.

The above-mentioned Special Unit Holder interest and RIT REIT Sub I private placement offering have been recorded as components of non-controlling interest on the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

Note 7 – Related Party Transactions

Modification related to the Delshah Loan

Effective as of December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest to be held by RIT Lending. As a result, as of December 31, 2021, the Company’s total interest was reduced to $81,000, which represents a 1.00% ownership interest in the Delshah Loan. Pursuant to the loan modification transaction, at December 31, 2020, the Company owed $4,351,000 to CFI for repurchases of loan participations sold, which has been included as a component of Due to related party in the accompanying unaudited consolidated balance sheet as of December 31, 2020. The amount owed to CFI for repurchases of loan participations sold at December 31, 2020 was paid by the Company in January 2021.

Fees and Expenses

The Company and the Advisor entered into an amended and restated advisory agreement, dated as of September 28, 2018, as amended by amendment no. 1 to the amended and restated advisory agreement (the “Advisory Agreement”), dated and effective as of September 28, 2019. The amendment to the Advisory Agreement (i) amends the monthly asset management fee from one-twelfth of 1.25% of the cost of the Company’s investments at the end of each month, to one-twelfth of 1.20% of the Company’s most recently disclosed NAV and (ii) renews the term of the Advisory Agreement for an additional one-year term commencing on September 28, 2019. On September 28, 2020, the Advisory Agreement was renewed for an additional one-year term. Pursuant to the Advisory Agreement, and subject to certain restrictions and limitations, the Advisor is responsible for managing the Company’s affairs on a day-to-day basis and for identifying, originating, acquiring, and managing investments on behalf of the Company. For providing such services, the Advisor receives fees and reimbursements from the Company. The following summarizes these fees and reimbursements.

22


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Organization and Offering Expenses. The Company will reimburse the Advisor and its affiliates for O&O Costs it incurs on the Company’s behalf but only to the extent that the reimbursement will not cause the selling commissions, the dealer manager fee and the other organization and offering expenses to be borne by the Company to exceed 15% of gross offering proceeds of the Offering as of the date of the reimbursement. If the Company raises the maximum offering amount in the Primary Offering and under the DRP, the Company estimates organization and offering expenses (other than upfront selling commissions, dealer manager fees and distribution fees), in the aggregate, to be 1% of gross offering proceeds of the Offering. These O&O Costs include all costs (other than upfront selling commissions, dealer manager fees and distribution fees) to be paid by the Company in connection with the initial set up of the organization of the Company as well as the Offering, including legal, accounting, printing, mailing and filing fees, charges of the transfer agent, charges of the Advisor for administrative services related to the issuance of shares in the Offering, reimbursement of bona fide due diligence expenses of broker-dealers, and reimbursement of the Advisor for costs in connection with preparing supplemental sales materials.

The Advisor has agreed to pay for all O&O Costs on the Company’s behalf through the Escrow Break Anniversary. After the Escrow Break Anniversary, the Advisor, in its sole discretion, may pay some or all of the additional O&O Costs incurred, but is not required to do so. To the extent the Advisor pays such additional O&O Costs, the Company will be obligated to reimburse the Advisor subject to the 1% Cap. The Company began reimbursing the Advisor for such costs ratably over the 36 months following the Escrow Break Anniversary; provided that the Company will not be obligated to reimburse any amounts that as a result of such payment would cause the aggregate payments for O&O Costs to be paid to the Advisor to exceed the 1% Cap as of such reimbursement date. As of March 31, 2021 and December 31, 2020, the Advisor had incurred $5,955,124 and $5,897,934, respectively, of O&O Costs on behalf of the Company. The Company’s obligation is limited to the 1% Cap, less any reimbursement payments made by the Company to the Advisor for O&O Costs incurred, which at March 31, 2021 and December 31, 2020 was $95,626 and $115,277, respectively, and is included within Due to related party in the accompanying consolidated balance sheets. At March 31, 2021, in prior periods organizational costs of $449 had been recorded since inception in General and administrative expenses. As of March 31, 2021 and December 31, 2020, offering costs of $189,484 and $188,710, respectively, were charged to stockholders’ equity. As of March 31, 2021 and December 31, 2020, the Company has made reimbursement payments of $94,307 and $73,882, respectively, to the Advisor for O&O Costs incurred. As of March 31, 2021, the Advisor has continued to pay all O&O Costs on behalf of the Company.

Acquisition Expenses. The Company does not intend to pay the Advisor any acquisition fees in connection with making investments. The Company will, however, provide reimbursement of customary acquisition expenses (including expenses relating to potential investments that the Company does not close), such as legal fees and expenses (including fees of in-house counsel of affiliates and other affiliated service providers that provide resources to the Company), costs of due diligence (including, as necessary, updated appraisals, surveys and environmental site assessments), travel and communication expenses, accounting fees and expenses and other closing costs and miscellaneous expenses relating to the acquisition or origination of the Company’s investments. While most of the acquisition expenses are expected to be paid to third parties, a portion of the out-of-pocket acquisition expenses may be paid or reimbursed to the Advisor or its affiliates. The Advisor has not incurred any reimbursable acquisition expenses on behalf of the Company as of March 31, 2021 or December 31, 2020.

Origination Fees. The Company will pay the Advisor up to 1.0% of the amount funded by the Company to originate commercial real estate-related loans, but only if and to the extent there is a corresponding fee paid by the borrower to the Company. During the three months ended March 31, 2021 and March 31, 2020, no origination fees were paid or incurred.

Asset Management Fees. Asset management fees are due to the Advisor. Prior to September 2019, asset management fees consisted of monthly fees equal to one-twelfth of 1.20% of the cost of the Company’s investments at the end of each month. Effective as of September 2019, asset management fees payable to the Advisor consist of monthly fees equal to one-twelfth of 1.20% of the Company’s most recently disclosed NAV.

For the three months ended March 31, 2021, the Company incurred asset management fees of $49,493. The asset management fee related to the month of March 2021 of $18,513 is unpaid as of March 31, 2021, and has been included within Due to related party on the consolidated balance sheet. For the three months ended March 31, 2020, the Company incurred asset management fees of $33,192. The amount of asset management fees incurred by the Company during the applicable period is included in the calculation of the limitation of operating expenses pursuant to the 2%/25% Guidelines (as defined and described below).

Other Operating Expenses. Effective beginning in the third quarter of 2018, the Advisory Agreement (i) includes limitations with regards to the incurrence of and additional limitations on reimbursements of operating expenses and (ii) clarifies the reimbursement and expense timing and procedures, including potential reimbursement of Unreimbursed Operating Expenses (as defined below).

23


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Pursuant to the terms of the Advisory Agreement between the Company and the Advisor, the Company is obligated to reimburse the Advisor for certain operating expenses. Beginning on October 1, 2019, the Company was subject to the limitation that it generally may not reimburse the Advisor for any amounts by which the total operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (i) 2.0% of average invested assets (as defined in the Advisory Agreement) and (ii) 25.0% of net income other than any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of investments for that period (the “2%/25% Guidelines”). If the Company’s independent directors determine that all or a portion of such amounts in excess of the limitation are justified based on certain factors, the Company may reimburse amounts in excess of the limitation to the Advisor. In addition, beginning on October 1, 2019, the Company may request any operating expenses that were previously reimbursed to the Advisor in prior periods in excess of the limitation to be remitted back to the Company. As of March 31, 2021 and December 31, 2020, the Company has accrued but not reimbursed any of the $108,485 in operating expenses pursuant to the Advisory Agreement, which represents the current operating expense reimbursement obligation to the Advisor.

The Advisory Agreement provides that, subject to other limitations on the incurrence and reimbursement of operating expenses contained in the Advisory Agreement, operating expenses which have been incurred and paid by the Advisor will not become an obligation of the Company unless the Advisor has invoiced the Company for reimbursement, which will occur in a quarterly statement and accrued for in the respective period. The Advisor will not invoice the Company for any reimbursement if the impact of such would result in the Company’s incurrence of an obligation in an amount that would result in the Company’s net asset value per share for any class of shares to be less than $25.00. The Company may, however, incur and record an obligation to reimburse the Advisor, even if it would result in the Company’s net asset value per share for any class of shares for such quarter to be less than $25.00, if the Company’s board of directors determines that the reasons for the decrease of the Company’s net asset value per share below $25.00 were unrelated to the Company’s obligation to reimburse the Advisor for operating expenses.

In addition, the Advisory Agreement provides that all or a portion of the operating expenses, which have not been previously paid by the Company or invoiced by the Advisor may be in the sole discretion of the Advisor: (i) waived by the Advisor, (ii) reimbursed to the Advisor in any subsequent quarter or (iii) reimbursed to the Advisor in connection with a liquidity event or termination of the Advisory Agreement, provided that the Company has fully invested the proceeds from its initial public offering and the stockholders have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.5% cumulative, non-compounded annual pre-tax return on their invested capital. Any reimbursement of operating expenses remains subject to the limitations described above and the limitations and the approval requirements relating to the 2%/25% Guidelines.

During the three months ended March 31, 2021 and March 31, 2020, the Company did not incur any operating expenses reimbursable to the Advisor, in accordance with the terms of the Advisory Agreement.

Reimbursable operating expenses include personnel and related employment costs incurred by the Advisor or its affiliates in performing the services described in the Advisory Agreement, including but not limited to reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services. The Company is not obligated to reimburse the Advisor for costs of such employees of the Advisor or its affiliates to the extent that such employees (A) perform services for which the Advisor receives acquisition fees or disposition fees or (B) serve as executive officers of the Company. At March 31, 2021, any unpaid reimbursable operating expenses are included within Due to related party on the accompanying consolidated balance sheet.

As of March 31, 2021, the total amount of Unreimbursed Operating Expenses (as defined below) was $4,224,671. This includes operating expenses incurred by the Advisor on the Company’s behalf which have not been invoiced to the Company and amounts invoiced to the Company by the Advisor but not yet reimbursed (“Unreimbursed Operating Expenses”). The amount of operating expenses incurred by the Advisor during the three months ended March 31, 2021 which were not invoiced to the Company amounted to $174,501.

Disposition Fees. For substantial assistance in connection with the sale of investments and based on the services provided, as determined by the independent directors, the Company will pay a disposition fee in an amount equal to 1.0% of the contract sales price of each commercial real estate loan or other investment sold, including mortgage-backed securities or collateralized debt obligations issued by a Company’s subsidiary as part of a securitization transaction; provided, however, in no event may the disposition fee paid to the Advisor or its affiliates, when added to the real estate commissions paid to unaffiliated third parties, exceed the lesser of a competitive real estate commission or an amount equal to 6.0% of the contract sales price. If the Company takes ownership of a property as a result of a workout or foreclosure of a debt investment, the Company will pay a disposition fee upon the sale of such property.

24


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Company will not pay a disposition fee upon the maturity, prepayment, workout, modification or extension of a debt investment unless there is a corresponding fee paid by the borrower, in which case the disposition fee will be the lesser of: (i) 1.0% of the principal amount of the debt prior to such transaction; or (ii) the amount of the fee paid by the borrower in connection with such transaction. As of March 31, 2021 and December 31, 2020, no disposition fees have been incurred by the Company.

Selling Commissions, Dealer Manager Fees and Distribution Fees

The Dealer Manager is a registered broker-dealer affiliated with CFI. The Company entered into the dealer manager agreement with the Dealer Manager and is obligated to pay various commissions and fees with respect to the Class A, Class T and Class I shares distributed in the Offering. For providing such services, the Dealer Manager receives fees. CFI is required to pay a portion of selling commissions and all of the dealer manager fees, up to a total of 4.0% of gross offering proceeds from the sale of Class A shares, Class T shares, and Class I shares, incurred in connection with the Offering. The Company will reimburse CFI for these costs (i) immediately prior to or upon the occurrence of a liquidity event, including (A) the listing of the Company’s common stock on a national securities exchange or (B) a merger, consolidation or a sale of substantially all of the Company’s assets or any similar transaction or any transaction pursuant to which a majority of the Company’s board of directors then in office are replaced or removed, or (ii) upon the termination of the Advisory Agreement by the Company or by the Advisor. In each such case, the Company only will reimburse CFI after the Company has fully invested the proceeds from the Offering and the Company’s stockholders have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.5% cumulative, non-compounded annual pre-tax return on such invested capital.

As of March 31, 2021, the likelihood, probability and timing of each of the possible occurrences or events listed in the preceding sentences (i) and (ii) in this paragraph are individually and collectively uncertain. Additionally, whether or not the Company will have fully invested the proceeds from the Offering and also whether the Company’s stockholders will have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.5% cumulative, non-compounded annual pre-tax return on such invested capital at the time of any such occurrence or event is also uncertain. As of March 31, 2021 and December 31, 2020, CFI has paid Sponsor Support totaling $591,481 and $586,881, respectively, which will be subject to reimbursement by the Company to CFI in the event of these highly conditional circumstances. The following summarizes fees payable to the Dealer Manager:

Selling Commissions. Selling commissions payable to the Dealer Manager consist of (i) up to 1.0% of gross offering proceeds paid by CFI for Class A shares and Class T shares and (ii) up to 5.0% and 2.0% of gross offering proceeds from the sale of Class A shares and Class T shares, respectively, in the Primary Offering. All or a portion of such selling commissions may be re-allowed to participating broker-dealers. No selling commissions are payable with respect to Class I shares. As of March 31, 2021 and December 31, 2020, the Company has incurred $413,452 and $409,652 of selling commissions, respectively, which is included within Additional paid-in capital on the consolidated balance sheets. As of March 31, 2021 and December 31, 2020, $117,702 and $116,852 of Sponsor Support, respectively, has been recorded and $117,552 and $116,102, respectively, has been reimbursed by CFI. During April 2021, the Company received the remaining Sponsor Support for selling commissions of $150 related to the month ended March 31, 2021.

Dealer Manager Fees. Dealer manager fees payable to the Dealer Manager consist of up to 3.0% of gross offering proceeds from the sale of Class A shares and Class T shares sold in the Primary Offering and up to 1.5% of gross offering proceeds from the sale of Class I shares sold in the Primary Offering, all of which will be paid by CFI. A portion of such dealer manager fees may be re-allowed to participating broker-dealers as a marketing fee. As of March 31, 2021 and December 31, 2020, the Company has recorded $474,080 and $471,530 of dealer manager fees, respectively, which is included within Additional paid-in capital on the consolidated balance sheets. As of March 31, 2021 and December 31, 2020, all of the Sponsor Support related to dealer manager fees has been recorded and $473,930 and $470,780, respectively, has been reimbursed by CFI. During April 2021, the Company received the remaining Sponsor Support for dealer manager fees of $150 related to the month ended March 31, 2021.

Distribution Fees. Distribution fees are payable to the Dealer Manager, subject to the terms set forth in the dealer manager agreement between the Company and the Dealer Manager. Distributions fees are paid with respect to the Company’s Class T shares only, all or a portion of which may be re-allowed by the Dealer Manager to participating broker-dealers. The distribution fees accrue daily and are calculated on outstanding Class T shares issued in the Primary Offering in an amount equal to 1.0% per annum of (i) the gross offering price per Class T share in the Primary Offering, or (ii) if the Company is no longer offering shares in a public offering, the most recently published per share NAV of Class T shares. The distribution fee is payable monthly in arrears and is paid on a continuous basis from year to year. During the three months ended March 31, 2021 and March 31, 2020, the Company paid distribution fees of $11,710 and $3,465, respectively. As of March 31, 2021 and December 31, 2020, the Company has incurred a liability of $160,383 and $171,493, respectively, which is included within Due to related party on the consolidated balance sheets, $4,069 and $4,014, respectively, of which was payable as of March 31, 2021 and December 31, 2020 and paid during April 2021 and January 2021, respectively.

25


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Company will cease paying distribution fees with respect to each Class T share on the earliest to occur of the following: (i) a listing of shares of common stock on a national securities exchange; (ii) such Class T share is no longer outstanding; (iii) the Dealer Manager’s determination that total underwriting compensation from all sources, including dealer manager fees, sales commissions, distribution fees and any other underwriting compensation to be paid with respect to all Class A shares, Class T shares and Class I shares would be in excess of 10.0% of the gross proceeds of the Primary Offering; or (iv) the end of the month in which the transfer agent, on the Company’s behalf, determines that total underwriting compensation with respect to the Class T shares held by a stockholder within his or her particular account, including dealer manager fees, sales commissions and distribution fees, would be in excess of 10.0% of the total gross offering price at the time of the investment in the Class T shares held in such account

The Company will not pay any distribution fees on shares sold pursuant to the Company’s DRP. The amount available for distributions on all Class T shares will be reduced by the amount of distribution fees payable with respect to the Class T shares issued in the Primary Offering such that all Class T shares will receive the same per share distributions. 

The following table summarizes the above mentioned fees, and expenses incurred by the Company and Preferred Equity Interest payment as of March 31, 2021:

 

 

Due to related

party as of

 

Three Months ended

March 31, 2021

 

Due to related

party as of

 

Type of Fee or Reimbursement

Financial Statement Location

December 31, 2020

 

Incurred

 

Paid

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management fees

Management fees

$

14,834

 

$

49,493

 

$

45,814

 

$

18,513

 

Organization, Offering and Operating

   Expense Reimbursements

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses(1)

General and administrative expenses

 

108,485

 

 

 

 

 

 

108,485

 

Organization expenses(2)

General and administrative expenses

 

187

 

 

 

 

33

 

 

154

 

Offering costs(2)

Additional paid-in capital

 

115,090

 

 

774

 

 

20,392

 

 

95,472

 

Commissions and Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling commissions and dealer manager fees, net

Additional paid-in capital

 

 

 

3,800

 

 

3,800

 

 

 

Distribution fees

Additional paid-in capital

 

171,493

 

 

601

 

 

11,710

 

 

160,384

 

Repurchase of loan participations sold

 

 

 

 

 

 

 

 

 

 

 

 

 

Delshah Preferred Equity Interest

Investment in real estate-related assets

 

4,351,000

 

 

 

 

4,351,000

 

 

 

Interest Income Related to Loan Participations Sold

 

 

 

 

 

 

 

 

 

 

 

 

 

Delshah Loan Participation Interest Income

Commercial mortgage loans, held for investment

 

 

 

56,756

 

 

 

 

56,756

 

Total

 

$

4,761,089

 

$

111,424

 

$

4,432,749

 

$

439,764

 

Note:(1) As of March 31, 2021, the Advisor has incurred, on behalf of the Company, a total of $4,224,671 in Unreimbursed Operating Expenses, including a total of $174,501 during the three months ended March 31, 2021 for which the Advisor has not invoiced the Company for reimbursement. The total amount of Unreimbursed Operating Expenses may, in future periods, be subject to reimbursement by the Company pursuant to the terms of the Advisory Agreement.

(2) As of March 31, 2021, the Advisor has incurred, on behalf of the Company, a total of $5,955,124 of O&O Costs, of which the Company’s obligation is limited to $95,626, pursuant to the 1% Cap.

26


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table summarizes the above mentioned fees, and expenses incurred by the Company and Preferred Equity Interest payment due as of December 31, 2020:

 

 

 

 

Due to related

party as of

 

 

Year ended

December 31, 2020

 

 

Due to related

party as of

 

Type of Fee or Reimbursement

 

Financial Statement Location

 

December 31,

2019

 

 

Incurred

 

 

Paid

 

 

December 31,

2020

 

Management Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management fees

 

Management fees

 

$

10,521

 

 

$

156,107

 

 

$

151,794

 

 

$

14,834

 

Organization, Offering and Operating

   Expense Reimbursements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses(1)

 

General and administrative expenses

 

 

108,485

 

 

 

 

 

 

 

 

 

108,485

 

Organization expenses(2)

 

General and administrative expenses

 

 

319

 

 

 

 

 

 

132

 

 

 

187

 

Offering costs(2)

 

Additional paid-in capital

 

 

97,735

 

 

 

75,257

 

 

 

57,902

 

 

 

115,090

 

Commissions and Fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling commissions and dealer manager fees, net

 

Additional paid-in capital

 

 

 

 

 

123,732

 

 

 

123,732

 

 

 

 

Distribution fees

 

Additional paid-in capital

 

 

49,739

 

 

 

138,596

 

 

 

16,842

 

 

 

171,493

 

Repurchase of loan participations sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delshah Preferred Equity Interest

 

Investment in real estate-related assets

 

 

 

 

 

 

 

 

 

 

 

4,351,000

 

Total

 

 

 

$

266,799

 

 

$

493,692

 

 

$

350,402

 

 

$

4,761,089

 

Note:

(1) As of December 31, 2020, the Advisor has incurred, on behalf of the Company, a total of $4,050,170 in Unreimbursed Operating Expenses, including a total of $1,011,270 during the year ended December 31, 2020 for which the Advisor has not invoiced the Company for reimbursement. The total amount of Unreimbursed Operating Expenses may, in future periods, be subject to reimbursement by the Company pursuant to the terms of the Advisory Agreement.

(2) As of December 31, 2020, the Advisor has incurred, on behalf of the Company, a total of $5,897,934 of O&O Costs, of which the Company’s obligation is limited to $115,277, pursuant to the 1% Cap.

 

Investment by CFI

CFI initially invested $200,001 in the Company through the purchase of 8,180 Class A shares at $24.45 per share. CFI may not sell any of these shares during the period it serves as our sponsor. Neither the Advisor nor CFI currently has any options or warrants to acquire additional shares of the Company.

As of March 31, 2021, CFI has invested $2,200,001 in the Company through the purchase of 88,180 shares (8,180 Class A shares for an aggregate purchase price of $200,001 and 80,000 Class I shares for an aggregate purchase price of $2,000,000).

Sponsor Support

The Company’s sponsor, CFI, is a Delaware limited liability company and an affiliate of CFLP. CFI will pay a portion of selling commissions and all of the dealer manager fees, up to a total of 4.0% of gross offering proceeds from the sale of Class A shares and Class T shares, as well as 1.5% of gross offering proceeds from the sale of Class I shares, incurred in connection with the Offering. The Company will reimburse such expenses (i) immediately prior to or upon the occurrence of a liquidity event, including (A) the listing of the Company’s common stock on a national securities exchange or (B) a merger, consolidation or a sale of substantially all of the Company’s assets or any similar transaction or any transaction pursuant to which a majority of the Company’s board of directors then in office are replaced or removed, or (ii) upon the termination of the Advisory Agreement by the Company or by the Advisor. In each such case, the Company will only reimburse CFI after the Company has fully invested the proceeds from the Offering and the Company’s stockholders have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.5% cumulative, non-compounded annual pre-tax return on such invested capital. As of March 31, 2020, CFI has paid Sponsor Support totaling $591,481.

27


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 8 – Economic Dependency

The Company is dependent on the Advisor and its affiliates for certain services that are essential to the Company, including the sale of the Company’s shares of capital stock, acquisition and disposition decisions and certain other responsibilities. In the event that the Advisor is unable or unwilling to provide such services, the Company would be required to find alternative service providers.

Note 9 – Commitments and Contingencies

As of March 31, 2021 and December 31, 2020, the Company was not subject to litigation nor was the Company aware of any material litigation pending against it.

Unfunded Portion of the East 12th Street Loan

$6,830,000 of the East 12th Street Loan was funded at closing. $1,660,000 of the East 12th Street Loan was withheld to be advanced to the extent the East 12th Street Property generates insufficient cash flow to fully cover payment of interest on the East 12th Street Loan. The remaining portion of the East 12th Street Loan, $500,000, was withheld to be advanced to pay for capital expenditure, broker commissions and tenant improvements associated with the East 12th Street Property as approved by RIT Lending. No interest will accrue on the unfunded amounts. Subsequent to the date the East 12th Street Loan was originated, as of March 31, 2021, the Company and CFI have advanced $1,459,417 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $200,583. As of March 31, 2021, the Company had advanced $358,136 for capital expenditures, reducing the amount withheld for capital expenditures, broker commissions and tenant improvements to $141,864. As of March 31, 2021, the total funded amount for the East 12th Street Loan was $8,647,553. See Note 3 for additional information.

Risks and Uncertainties

The rapid development and fluidity of the situation surrounding the COVID-19 pandemic precludes any prediction as to the ultimate impact on the Company. The full extent of the impact and effects of COVID-19 on the future financial performance of the Company, as a whole, and, specifically, on its loan investments and underlying borrowers and their real estate property holdings are uncertain at this time. The impact will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories and restrictions, the recovery time of the disrupted supply chains, the consequential staff shortages, and production delays, and the uncertainty with respect to the accessibility of additional liquidity or to the capital markets. COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to the Company’s performance, financial condition, results of operations and cash flows.

Note 10 – Fair Value Measurements

Under normal market conditions, the fair value of an investment is the amount that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Additionally, there is a hierarchal framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and the state of the market place, including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair value hierarchy:

Level 1 measurement — quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.

Level 2 measurement — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.

Level 3 measurement — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.

28


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following describes the methods the Company uses to estimate the fair value of the Company’s financial assets and liabilities:

Commercial mortgage loans, held for investment and Loan participations sold The fair value is estimated by discounting the expected cash flows based on the market interest rates for similar loans to the Company’s Commercial mortgage loans, held for investment and Loan participations sold. The Company determined that the market interest rates as of March 31, 2021 for both the Delshah Loan and the East 12th Street Loan were greater than their contractual interest rates. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Company’s Commercial mortgage loans, held for investment was $16,718,743 and $16,660,002 respectively. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Company’s Loan participations sold was $8,019,000 and $8,208,784, respectively. The Company has not elected the fair value option to account for its Commercial mortgage loans, held for investment or Loan participations sold. 

Investment in real estate-related assets - The fair value is estimated by discounting the expected cash flows outflows based on the market preferred return rates for similar preferred equity investments to the Company’s investment in the Delshah Preferred Equity Interest. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Company’s Investment in real estate-related assets was $8,100,000 and $8,100,000, respectively. The Company has not elected the fair value option to account for its Investment in real estate-related assets.  

Other financial instruments — The Company considers the carrying value of its Cash and cash equivalents to approximate its fair value because of the short period of time between its origination and its expected realization as well as its highly-liquid nature. Due to the short-term maturity of this instrument, Level 1 inputs are utilized to estimate the fair value of Cash and cash equivalents.

The following table details the principal balance, carrying value, and fair value of the Company’s financial assets and liabilities as of March 31, 2021:

 

 

 

 

 

 

 

 

 

Fair Value

 

 

Principal Balance

 

 

Carrying Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,230,836

 

 

$

2,230,836

 

 

$

2,230,836

 

 

$

 

 

$

 

 

$

2,230,836

 

Commercial mortgage loans, held for investment

$

16,747,553

 

 

$

16,747,553

 

 

$

 

 

$

 

 

$

16,718,743

 

 

$

16,718,743

 

Investment in real estate-related assets

$

8,100,000

 

 

$

8,100,000

 

 

 

 

 

 

 

 

 

 

 

8,100,000

 

 

$

8,100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan participations sold

$

8,019,000

 

 

$

8,019,000

 

 

$

 

 

$

 

 

$

8,019,000

 

 

$

8,019,000

 

The following table details the principal balance, carrying value, and fair value of the Company’s financial assets and liabilities as of December 31, 2020:

 

 

 

 

 

 

 

 

 

Fair Value

 

 

Principal Balance

 

 

Carrying Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

4,804,926

 

 

$

4,804,926

 

 

$

4,804,926

 

 

$

 

 

$

 

 

$

4,804,926

 

Commercial mortgage loans, held for investment

$

16,624,680

 

 

$

16,624,680

 

 

$

 

 

$

 

 

$

16,660,002

 

 

$

16,660,002

 

Investment in real estate-related assets

$

8,100,000

 

 

$

8,100,000

 

 

 

 

 

 

 

 

 

 

$

8,100,000

 

 

$

8,100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan participations sold

$

8,019,000

 

 

$

8,019,000

 

 

$

 

 

$

 

 

$

8,208,784

 

 

$

8,208,784

 

 

29


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 11 – Subsequent Events

Status of the Offering

The Offering, including the DRP, expired pursuant to its terms on May 2, 2021. In connection with the expiration of the Offering, on April 26, 2021, the Company’s board of directors has determined to terminate the DRP effective with the May 5, 2021 distribution date. Accordingly, all distributions beginning with the distributions declared for the month of April 2021, which were paid on May 5, 2021, will be paid in cash.

From inception through the termination of the Offering, the Company raised total gross proceeds of $19,090,154 pursuant to the Offering, including gross proceeds of $323,580 pursuant to the DRP.

Distributions

On May 14, 2021, the board of directors authorized, and the Company declared, distributions for the period from May 17, 2021 to August 13, 2021, in an amount equal to $0.004602739 per day per share (or approximately $1.68 on an annual basis). Distributions will be payable by the 5th business day following each month end to stockholders of record at the close of business each day during the prior month.

Capital Expenditure Advance

On May 10, 2021, the Company advanced an additional $141,864 for capital expenditures on the East 12th Street Loan, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $0. As of May 10, 2021 the total funded amount for the East 12th Street Loan was $8,789,417.

 

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about Rodin Income Trust, Inc.’s (the “Company”) business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. The Company’s actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed under “Risk Factors” in the Company’s Registration Statement on Form S-11 (File No. 333-221814) (the “Registration Statement”), under Part, I. Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and elsewhere in this Quarterly Report on Form 10-Q. The Company does not undertake to revise or update any forward-looking statements.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements about the Company’s business, including, in particular, statements about the Company’s plans, strategies and objectives. You can generally identify forward-looking statements by the Company’s use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include the Company’s plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond the Company’s control. Although the Company believes the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and the Company’s actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by the Company or any other person that the Company’s objectives and plans, which the Company considers to be reasonable, will be achieved.

Factors that could cause the Company’s results to be materially different include, but are not limited to the following:

 

 

the Company’s dependence on the resources and personnel of Rodin Income Advisors, LLC (the “Advisor”), Cantor Fitzgerald Investors, LLC (“CFI”), and their affiliates, including the Advisor’s ability to source and close on attractive investment opportunities on the Company’s behalf;  

 

 

the performance of the Advisor and CFI;  

 

 

the Company’s ability to deploy remaining capital quickly and successfully and achieve a diversified portfolio consistent with target asset classes;  

 

 

the Company’s ability to access financing for its investments;  

 

 

the Company’s liquidity;  

 

 

the Company’s ability to make distributions to its stockholders, including from sources other than cash flow from operations;  

 

 

the effect of paying distributions to the Company’s stockholders from sources other than cash flow provided by operations;  

 

 

the lack of a public trading market for the Company’s shares;  

 

 

the impact of economic conditions on the Company’s borrowers, tenants and others who the Company depends on to make payments to the Company;  

 

 

the Advisor’s ability to attract and retain sufficient personnel to support the Company’s growth and operations;  

 

 

the Company’s limited operating history;  

 

 

difficulties in economic conditions generally and the real estate, debt, and securities markets specifically;  

 

 

changes in the Company’s business or investment strategy;  

 

 

environmental compliance costs and liabilities;  

 

 

any failure in the Advisor’s due diligence to identify all relevant facts in the Company’s underwriting process or otherwise;  

 

 

the impact of market and other conditions influencing the availability of equity versus debt investments and performance of the Company’s investments relative to the Company’s expectations and the impact on the Company’s actual return on invested equity, as well as the cash provided by these investments;  

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rates of default or decreased recovery rates on the Company’s target investments;

 

 

borrower, tenant and other third party defaults and bankruptcy;

 

 

the degree and nature of the Company’s competition;  

 

 

illiquidity of investments in the Company’s portfolio;  

 

 

the Company’s ability to finance transactions;  

 

 

the effectiveness of the Company’s risk management systems;  

 

 

information technology risks, including capacity constraints, failures, or disruptions in the Company’s systems or those of parties with which we interact, including cybersecurity risks and incidents, privacy risk and exposure to potential liability and regulatory focus;

 

 

availability of opportunities, including the Advisor’s ability to source and close on debt, select equity and securities investments;

 

 

the Company’s ability to realize current and expected returns over the life of its investments;  

 

 

the Company’s ability to maintain effective internal controls;  

 

 

regulatory requirements with respect to the Company’s business, as well as the related cost of compliance;  

 

 

the Company’s ability to qualify and maintain its qualification as a REIT (as defined below) for federal income tax purposes and limitations imposed on the Company’s business by its status as a REIT;  

 

 

changes in laws or regulations governing various aspects of the Company’s business and non-traded REITs generally, including, but not limited to, changes implemented by the Department of Labor, the Securities & Exchange Commission (the “SEC”), or the Financial Industry and Regulatory Authority and changes to laws governing the taxation of REITs;  

 

 

the Company’s ability to maintain the Company’s exemption from registration under the Investment Company Act;  

 

 

general volatility in domestic and international capital markets and economies;  

 

 

effect of regulatory actions, litigation and contractual claims against the Company and its affiliates, including the potential settlement and litigation of such claims;  

 

 

the impact of any conflicts arising among the Company and CFI and its affiliates;  

 

 

the adequacy of the Company’s cash reserves and working capital;  

 

 

increases in interest rates;

 

 

the full extent of the impact and effects of the outbreak of coronavirus (COVID-19) on the future financial performance of the Company;  

 

 

the timing of cash flows, if any, from the Company’s investments; and  

 

 

other risks associated with investing in the Company’s targeted investments.  

The foregoing list of factors is not exhaustive. Factors that could have a material adverse effect on the Company’s operations and future prospects are set forth under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The factors set forth in the Risk Factors section could cause the Company’s actual results to differ significantly from those contained in any forward-looking statement contained in this Quarterly Report on Form 10-Q.

Overview

The Company is a Maryland corporation that has elected and qualified as a real estate investment trust (“REIT”), commencing with its 2019 tax year. The Company is externally managed by the Advisor, a Delaware limited liability company and wholly-owned subsidiary of the Company’s sponsor, CFI.

The Company was incorporated in the State of Maryland on January 19, 2016.

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The Company’s consolidated financial statements include Rodin Income Trust Operating Partnership, L.P. (the “Operating Partnership”), RIT REIT Sub I, Inc. (“RIT REIT Sub I”), and RIT Lending, Inc. (“RIT Lending”). Both RIT REIT Sub I and RIT Lending are indirect wholly owned subsidiaries of the Company. The Company plans to own substantially all of its assets and conduct its operations through the Operating Partnership. The Company is the sole general partner and limited partner of the Operating Partnership and CFI’s wholly owned subsidiary, Rodin Income Trust OP Holdings, LLC (the “Special Unit Holder”), is the sole special unit holder of the Operating Partnership.

The Company has registered with the Securities and Exchange Commission (“SEC”) an offering of up to $1.25 billion in shares of common stock, consisting of up to $1.0 billion in shares in the Company’s primary offering (the “Primary Offering”) and up to $250 million in shares pursuant to its distribution reinvestment plan (the “DRP”, and together with the Primary Offering, the “Offering”). 

On January 22, 2016, the Company was capitalized with a $200,001 investment by CFI. The Company’s Registration Statement for the Offering was declared effective by the SEC on May 2, 2018. As of June 28, 2018, the Company satisfied the Minimum Offering Requirement as a result of CFI’s purchase of $2.0 million in Class I shares at $25.00 per share.

The Offering, including the DRP, expired pursuant to its terms on May 2, 2021. In connection with the expiration of the Offering, on April 26, 2021, the Company’s board of directors has determined to terminate the DRP effective with the May 5, 2021 distribution date. From inception through the termination of the Offering, the Company raised total gross proceeds of $19,090,154 million pursuant to the Offering, including gross proceeds of $323,580 pursuant to the DRP.

The Company determines its NAV as of the end of each quarter. NAV, as defined, is calculated consistent with the procedures set forth in the Company’s prospectus and excludes any O&O Costs (as defined below), with such costs to be reflected in the Company’s NAV to the extent the Company reimburses the Advisor for these costs. Prior to the expiration of the Offering, the board of directors adjusted the offering prices of each class of shares such that the purchase price per share for each class equals the NAV per share as of the most recent valuation date, as determined on a quarterly basis, plus applicable upfront selling commissions and dealer manager fees, less Sponsor Support (as defined below), up to a total of 4.0% of gross offering proceeds from the sale of Class A shares and Class T shares, and up to a total of 1.5% of gross offering proceeds from the sale of Class I shares, incurred in connection with the Offering. As of March 31, 2021, the Company’s NAV was $23.16 per Class A share, $23.14 per Class T share and $23.16 per Class I share. For further discussion of the Company’s NAV calculation, please see “Net Asset Value”.

Because the Company raised substantially less than the maximum offering amount in the Offering, the Company may not be able to implement its current investment strategy and build a diverse portfolio of mortgage, mezzanine and preferred equity loans secured mainly by commercial real estate located primarily in the U.S, United Kingdom, and other European Countries. The Company is currently exploring strategic alternatives in order to maximize value for its stockholders in the context of the scale achieved during the term of the Offering. This may include, among other things, a change in the investment strategy or the number or type of assets which the Company pursues for investment. In the interim, the Company will continue to actively manage its small, but high-quality portfolio of investments in an effort to preserve, protect and return stockholders’ capital and to pay current income through cash distributions.

As of March 31, 2021, the Company had made the following investments (collectively, the “Investments”):

 

The Company originated, through RIT Lending, an $18 million fixed rate mezzanine loan (the “Delshah Loan”) to DS Brooklyn Portfolio Mezz LLC (the “Mezzanine Borrower”), an affiliate of Delshah Capital Limited (“Delshah”), for the acquisition of a 28-property multifamily portfolio by Delshah located in Brooklyn and Manhattan, NY (each a “Property” and collectively the “Portfolio”). Subsequent to the initial origination, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to a preferred equity interest (the “Delshah Preferred Equity Interest”) in DS Brooklyn Portfolio Holdings LLC.

 

The Company also originated, also originated, through RIT lending, an $8.99 million floating-rate mezzanine loan (the “East 12th Street Loan”), to DS 531 E. 12th Mezz LLC (the “East 12th Street Mezzanine Borrower”), an affiliate of Delshah, for the acquisition of a multifamily property by Delshah located in Manhattan, NY (the “East 12th Street Property”). Approximately $6.83 million of the East 12th Street Loan was funded at closing. As of March 31, 2021, approximately $8.65 million of the East 12th Street Loan has been funded.

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The Company has no direct employees and has retained the Advisor to manage its affairs on a day-to-day basis. The Advisor’s responsibilities include, but are not be limited to, providing real estate-related services, including services related to originating investments, negotiating financing, and providing property-level asset management services, property management services, leasing and construction oversight services and disposition services, as needed. The Advisor is a wholly owned subsidiary of CFI and therefore, the Advisor and CFI are related parties. The Advisor and its affiliates receive, as applicable, compensation, fees and expense reimbursements for services related to the investment and management of the Company’s assets. Such affiliated entities receive fees, expense reimbursements, and distributions (related to ownership of the Company’s common stock) as well as other compensation during the offering, acquisition, operational and liquidation stages.

The Company is not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from acquiring properties or real estate-related securities, other than those referred to in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q.

Portfolio Information

Delshah Loan

On September 21, 2018, the Company originated, through RIT Lending, the Delshah Loan to the Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the Portfolio. The acquisition by Delshah of the Portfolio was further financed by a $70 million mortgage loan provided by Signature Bank (the “Delshah Senior Loan”). The fee simple interest in the Portfolio is held by DS Brooklyn Portfolio Owner LLC, a single purpose limited liability company of which the Mezzanine Borrower owns 100% of the membership interests.

In connection with the origination of the Delshah Loan, RIT Lending entered into a participation agreement with CFI. RIT Lending originated the Delshah Mezzanine Loan with (i) cash from the Offering equivalent to a 5% participation interest in the amount of $900,000 in the Delshah Mezzanine Loan and (ii) proceeds from the sale to CFI of a 95% participation interest in the amount of $17.1 million in the Delshah Mezzanine Loan. Prior to the modification of the Delshah Loan, the Company had repurchased participation interests in the Delshah Mezzanine Loan from CFI in the amount of $4.73 million, increasing the Company’s total interest in the Delshah Mezzanine Loan to 31.28%

At Delshah’s request, the Company agreed to the following modification of the Delshah Loan, effective December 31, 2020. On December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest in DS Brooklyn Portfolio Holdings LLC, the sole owner of the Mezzanine Borrower, on the terms described below, to be held by RIT Lending (in such capacity, the “PE Member”). The other member of DS Brooklyn Portfolio Holdings LLC is DS Property Acquisitions LLC, an affiliate of Delshah (the “Operating Member”).

The remaining $8.1 million balance of the Delshah Loan remained outstanding as a mezzanine loan on the same terms as those in effect prior to the conversion. Following the conversion on December 31, 2020, CFI has 99% interest in the Delshah Loan and the Company has a 1% interest in the Delshah Loan and 100% of the Delshah Preferred Equity Interest.

The following table provides certain information about the Delshah Loan:

Loan Type

 

Loan Amount

 

 

Loan Term

 

Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

8,100,000

 

 

10 years

 

9.10% subject to a potential increase in year six

 

Interest only

 

83.14%

 

Note:(1) Loan-to-Value is calculated as of the date the Delshah Loan was originated.

Delshah Preferred Equity Interest

The $8.1 million Delshah Preferred Equity Interest has the mandatory redemption date of the earlier of September 21, 2028 or the maturity date of either Delshah Senior Loan or Delshah Loan. In addition, the Operating Member may redeem the Delshah Preferred Equity Interest in whole or in part on any business day upon at least 5 business days prior written notice.

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The preferred return rate for the Delshah Preferred Equity Interest until September 21, 2023 is 10.00%. At such date, the preferred return rate for the Delshah Preferred Equity Interest will change to the greater of (i) 10.25% or (ii) 740 basis points over the then existing five-year U.S. Treasury Note Yield, such interest rate then in effect for Delshah Preferred Equity Interest is referred to as the Mortgage Loan Interest Rate. However, in the event certain conditions described in the next sentence are not satisfied by September 21, 2023, the interest rate for the Delshah Loan will increase to the greater of (i) 11.25% or (ii) 840 basis points over the Mortgage Loan Interest Rate in effect. The interest rate modification conditions to be satisfied by September 21, 2023 are: (a) a minimum financing yield on the combined Delshah Loan, Delshah Senior Loan and Delshah Preferred Equity Interest amount of 7.0%; (b) a financing service coverage ratio of at least 1.10x, on the combined Delshah Loan, Delshah Senior Loan and Delshah Preferred Equity Interest amount; and (c) the then outstanding balance of the combined Delshah Loan, Delshah Senior Loan and Delshah Preferred Equity Interest is not greater than 75.0% of the value of the Portfolio. The Operating Member has the right to cause any portion of the preferred return in excess of 9.1% to be paid as a payment-in-kind (including as an increase in the capital balance of the Delshah Preferred Equity Interest).

On the 10th day of each month, available cash flow will be distributed as follows: (i) to any reserves required under the operating agreement of DS Brooklyn Portfolio Holdings LLC (the “Operating Agreement”) for taxes or insurance premiums, (ii) to the accrued and unpaid return on any special contributions made by the PE Member pursuant to the Operating Agreement, (iii) to repayment of any special contributions made by the PE Member until paid in full, (iv) to the accrued and unpaid return on the Delshah Preferred Equity Interest, (v) provided no trigger event (as defined in the Operating Agreement) is continuing, to the payment of a cumulative return on the capital contribution made by the Operating Member at a rate equal to 15% (the “Operating Member Return”), (vi) to repayment of the capital balance of the Delshah Preferred Equity Interest, (vii) during the continuance of a trigger event, to the payment of the Operating Member Return, and (viii) any remaining amounts to be distributed on a pari passu basis 20% to PE Member and 80% to Operating Member. In addition, any excess proceeds will be used to pay down Delshah Preferred Equity Interest.

The following table provides certain information about the Delshah Preferred Equity Interest:

Portfolio

 

Original Investment Amount

 

 

Preferred Return

Preferred Equity Investment

 

$

8,100,000

 

 

Ranging from 10.00% in 2020 to 10.25% in 2023

533 East 12th Street, New York, NY Mezzanine Loan

On November 1, 2018, the Company, through RIT Lending, originated the East 12th Street Loan to the East 12th Street Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the East 12th Street Property. The fee simple interest in the East 12th Street Property is held by DS 531 E. 12th Owner LLC, a single purpose limited liability company (the “East 12th Street Senior Borrower”) of which the East 12th Street Mezzanine Borrower owns 100% of the membership interests.

The following table provides certain information about the East 12th Street Loan: 

Loan Type

 

Loan Amount

 

 

Initial Funding

 

 

Loan Term

 

Floating Rate Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

8,990,000

 

 

$

6,830,000

 

 

3 years with two, 1-year extension options

 

LIBOR +9.25%

 

Interest only

 

84.28%

 

Note:

(1) Loan-to-Value is calculated as of the date the East 12th Street Loan was originated and only includes amounts funded on the date of origination.

The East 12th Street Loan is secured by a pledge of 100% of the equity interests in the East 12th Street Senior Borrower. The East 12th Street Loan may be prepaid in its entirety or in part in connection with sales of condominium units, subject in each case to RIT Lending’s receipt of eighteen months of minimum interest. The term of the East 12th Street Loan is three years, with two 1-year options to extend.

$6,830,000 of the East 12th Street Loan was funded at closing, and $1,660,000 of the East 12th Street Loan was withheld and will be advanced to the extent the East 12th Street Property generates insufficient cash flow to fully cover payment of interest on the East 12th Street Loan. The remaining portion of the East 12th Street Loan, $500,000, was also withheld and will be advanced to pay for capital expenditure, broker commissions and tenant improvements associated with the East 12th Street Property as approved by RIT Lending. No interest will accrue on the unfunded amounts.

As of September 30, 2020, the New York State Attorney General has approved the final condominium plan for the East 12th Street Property, and certain previously effective NYC work stoppage rules, originally enacted due to the COVID-19 pandemic, have been lifted. Such actions have resulted in renovations of the East 12th Street Property commencing, and the sale process of the condominium units that comprise the East 12th Street Property being engaged.

The delay in completion of the renovation and the anticipated extended duration of unit sales has resulted in a substantial draw-down by the East 12th Street Senior Borrower of the debt service/carry cost reserve under each of the East 12th Street

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senior and mezzanine loans. In order to replenish the East 12th Street senior loan interest/carry reserve and ensure sufficient funding to complete the project, Delshah has requested an increase in the size of the East 12th Street senior loan, along with RIT Lending consent for such increase.

On December 11, 2020, RIT Lending executed the consent to the proposed upsizing and modification of the East 12th Street senior loan as well as the modification of the East 12th Street Loan as further described below. The changes to the East 12th Street senior loan include increases to the debt and equity amounts, increases to the required contingency and capital expenditure reserve amounts, as well as modifications to the cash waterfall. The cash waterfall was modified as follows: all net sales proceeds from the sales of condominiums are applied against the outstanding East 12th Street senior loan balance until the senior loan is fully paid off, then the remainder to Delshah. Prior to the modification, the East 12th Street senior loan provided for the following cash waterfall: all net sales proceeds applied against outstanding the senior loan balance until the senior loan is 50% paid off, then split 60/40% between the senior and the East 12th Street Loan until the senior loan is paid off in full, then to the East 12th Street Loan until paid off in full, and then the remainder to Delshah.

As of March 31, 2021, the Company and CFI had advanced $1,459,417 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $200,583. As of March 31, 2021, the Company had advanced $358,136 for capital expenditures, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $141,864. As of March 31, 2021, the total funded amount for the East 12th Street Loan was $8,647,553.

As of December 31, 2020, the Company and CFI had advanced $1,459,417 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $200,583. As of December 31, 2020, the Company had advanced $235,263 for capital expenditure, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $264,737. As of December 31, 2020, the total funded amount for the East 12th Street Loan was $8,524,680.

Loan Participations Sold

Delshah Loan Participation Agreement

In connection with the origination of the Delshah Loan, RIT Lending entered into the Delshah Loan Participation Agreement with CFI. The Company originated, through RIT Lending, the Delshah Loan with (i) cash from the Offering equivalent to a 5% participation interest in the amount of $900,000 in the Delshah Loan and (ii) proceeds from the sale to CFI of a 95% participation interest in the amount of $17,100,000 in the Delshah Loan. The Company intended, but was not obligated, to purchase the remaining 95% of the participation interest in the Delshah Loan from CFI at a purchase price equivalent to the amount paid for the participation interest by CFI.

As of March 31, 2021, the Company had repurchased participation interests in the Delshah Loan from CFI in the amount of $9,081,000. On December 31, 2020, an affiliate of Delshah paid down the original balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the Delshah Loan) converted from the mezzanine loan to the Delshah Preferred Equity Interest in DS Brooklyn Portfolio Holdings LLC, the sole owner of the Delshah Borrower, on the terms described above, to be held by RIT Lending. As a result, as of March 31, 2021 and December 31, 2020, the Company’s total interest was reduced to $81,000, which represents a 1.00% ownership interest in the Delshah Loan.

East 12th Street Loan Participation Agreement

In connection with the origination of the East 12th Street Loan, RIT Lending entered into the East 12th Street Loan Participation Agreement with CFI. The Company originated, through RIT Lending, the East 12th Street Loan with (i) cash from the Offering equivalent to a 20.42% participation interest in the amount of $1,395,000 in the East 12th Street Loan and (ii) proceeds from the sale to CFI of a 79.58% participation interest in the amount of $5,435,000 in the East 12th Street Loan, at closing.

As of July 16, 2019, in accordance with the East 12th Street Loan Participation Agreement, the Company had repurchased participation interests in the East 12th Street Loan from CFI in the amount of $5,609,044, at a purchase price equivalent to the amount paid for the participation interests by CFI, increasing the Company’s total interest in the East 12th Street Loan to 100%.

In accordance with ASC 860, the sales of participation interests in the Investments do not qualify as sales under GAAP. As such, the Company presents the gross amount of the Investments as an asset and the loan participations sold as a liability on the consolidated balance sheet. The gross presentation of loan participations sold does not impact stockholders’ equity or net income.

Related Party Transactions

The Company has entered into agreements with the Advisor, the Dealer Manager and CFI and its affiliates, whereby the Company pays certain fees and reimbursements to these entities during the various phases of its organization and operation. During the organization and offering stage, these include payments to the Dealer Manager for selling commissions, the dealer manager fee,

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distribution fees, and payments to the Advisor for reimbursement of organization and offering costs. During the acquisition and operational stages, these include payments for certain services related to the management and performance of the Company’s investments and operations provided to the Company by the Advisor and its affiliates pursuant to various agreements the Company has entered into with these entities. In addition, CFI has provided Sponsor Support in connection with the Offering, which is subject to reimbursement under certain circumstances. See Note 7 — Related Party Transactions in the Notes to the consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q for additional information concerning the Company’s related party transactions and agreements.

Results of Operations

The Company commenced its principal operations upon successfully meeting its Minimum Offering Requirement on June 28, 2018. The Company is dependent upon the proceeds from the Offering in order to conduct its investment activities and intends to make investments with the capital received from the Offering. The Offering expired pursuant to its terms on May 2, 2021.

Revenues

The Company’s revenues consist of net interest income earned on the Commercial mortgage loans, held for investment and the preferred return income accrued on its investment in Delshah Preferred Equity Interest.

Interest Income, net

For the three months ended March 31, 2021, the Company earned net interest income of $249,049. For the three months ended March 31, 2020, the Company earned net interest income of $320,011.

The decrease of $70,962 for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was due to the pay down and the modification of the Delshah Loan.

Preferred Return Income

For the three months ended March 31, 2021, the Company earned preferred return income of $202,500. For the three months ended March 31, 2020, the Company earned preferred return income of $0.

The increase of $202,500 for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was due to the partial conversion of the Delshah Loan into Delshah Preferred Equity Interest.

General and Administrative Expenses

The Company’s general and administrative expenses consist primarily of operating expense reimbursements to the Advisor, as well as compensation to the Company’s independent board of directors relating to pro-rated annual compensation as well as attendance at board of directors’ meetings.

For the three months ended March 31, 2021, the Company incurred general and administrative expenses of $26,247. For the three months ended March 31 2020, the Company incurred general and administrative expenses of $27,407.

The decrease of $1,160 for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was due to a decrease in the amount of operating expenses incurred by the Company during such periods. As of March 31, 2021, the Advisor has incurred, on behalf of the Company, a total of $4,224,671 in Unreimbursed Operating Expenses, including a total of $174,501 for the three months ended March 31, 2021, for which the Advisor has not invoiced the Company for reimbursement.

Management Fees

Pursuant to the Advisory Agreement with the Advisor, and based upon the Company’s NAV, the Company is required to pay the Advisor a monthly asset management fee, and may pay a monthly property management fee for providing real estate-related services, including services related to originating investments and negotiating financing, as needed.

Asset management fees payable to the Advisor prior to September 2019 consisted of monthly fees equal to one-twelfth of 1.25% of the cost of the Company’s investments at the end of each month. Asset management fees payable to the Advisor as of September 2019 consist of monthly fees equal to one twelfth of 1.20% of the Company’s most recently disclosed NAV.

For the three months ended March 31, 2021, the Company incurred asset management fees of $49,493. For the three months ended March 31, 2020, the Company incurred asset management fees of $33,192.

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The increase of $16,301 for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was due to the increase in NAV during such periods.

Funds from Operations and Modified Funds from Operations

The Company defines modified funds from operations (“MFFO”) in accordance with the definition established by the Institute for Portfolio Alternatives, or IPA. The Company’s computation of MFFO may not be comparable to other REITs that do not calculate MFFO using the current IPA definition. MFFO is calculated using funds from operations (“FFO”). FFO and MFFO should not be considered as an alternative to net income (determined in accordance with accepted accounting principles in the United States of America (“U.S. GAAP”)) as an indication of performance. In addition, FFO and MFFO do not represent cash generated from operating activities determined in accordance with U.S. GAAP and are not a measure of liquidity. FFO and MFFO should be considered in conjunction with reported net income and cash flows from operations computed in accordance with U.S. GAAP, as presented in the financial statements.

The Company computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (computed in accordance with U.S. GAAP), excluding gains or losses from sales of depreciable properties, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, impairment charges on depreciable property owned directly or indirectly and after adjustments for unconsolidated/uncombined partnerships and joint ventures. FFO, as defined by NAREIT, is a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. The Company’s computation of FFO may not be comparable to other REITs that do not calculate FFO in accordance with the current NAREIT definition. MFFO excludes from FFO the following items, as applicable:

 

 

acquisition fees and expenses;

 

straight-line rent and amortization of above or below intangible lease assets and liabilities;

 

 

amortization of discounts, premiums and fees on debt investments;

 

non-recurring impairment of real estate-related investments;

 

realized gains (losses) from early extinguishment of debt;

 

realized gains (losses) on the extinguishment or sales of hedges, foreign exchange, securities and other derivative holdings except where the trading of such instruments is a fundamental attribute of our business;

 

unrealized gains (losses) from fair value adjustments on real estate securities, including CMBS and other securities, interest rate swaps and other derivatives not deemed hedges and foreign exchange holdings;

 

unrealized gains (losses) from the consolidation from, or deconsolidation to, equity accounting;

 

adjustments related to contingent purchase price obligations; and

 

adjustments for consolidated and unconsolidated partnerships and joint ventures calculated to reflect MFFO on the same basis as above.

The following table presents a reconciliation of FFO to net income:

 

 

Three Months Ended March 31, 2021

 

Net Income

 

$

375,809

 

Adjustments:

 

 

 

 

     None

 

 

 

Funds from Operations

 

$

375,809

 

The following table presents a reconciliation of FFO to MFFO:

 

Three Months Ended March 31, 2021

 

Funds from Operations

$

375,809

 

Adjustments:

 

 

 

     None

 

 

Modified Funds from Operations

$

375,809

 

 

 

 

 

38


 

 

Net Asset Value

On May 14, 2021, the Company’s board of directors approved an estimated net asset value (“NAV”) as of March 31, 2021 of $23.16 per share for Class A and I, and $23.14 for Class T shares of common stock. The calculation of the Company’s estimated NAV was performed by Robert A. Stanger & Co., Inc. (“Stanger”), its independent valuation firm, in accordance with the procedures described in the “Net Asset Value Calculation and Valuation Procedures” section of the Company’s prospectus. Although the Stanger performs the calculation of the Company’s estimated NAV, the Company’s board of directors is solely responsible for the determination of the Company’s estimated NAV.

In performing the calculation of the Company’s estimated NAV per share, Stanger observed that the Company had originated and held two loans and a preferred equity interest as of March 31, 2021, and that the Company’s NAV was comprised of cash and equivalents plus its interests in the Delshah Loan, the East 12th Street Loan and the Delshah Preferred Equity Interest, amounts due from related party, less accrued expenses, distributions payable, the liquidation value of the Company’s preferred stock and due to related party (excluding amounts owed to the Advisor for reimbursement of O&O Costs) less the current accrued O&O Costs liability due, as identified on the Company’s balance sheet. Stanger also considered any other amounts due to the Advisor or affiliates for repayment of Sponsor Support or amounts due to the Special Unit Holder in certain circumstances, including liquidation of the Company, for which no amounts were due as of March 31, 2021. There can be no assurance that a stockholder would realize $23.16 per share of Class A and I common stock or $23.14 per share of Class T common stock if the Company were to liquidate or engage in another type of liquidity event today. In particular, the Company’s March 31, 2021 NAV does not consider fees or expenses that may be incurred in connection with a liquidity event, including reimbursement of amounts to the Advisor for O&O Costs, and any operating expenses that have not been invoiced by the Advisor in accordance with the terms of the Advisory Agreement, and, as discussed in “Note 9 – Commitments and Contingencies” above, the full extent of the impact and effects of COVID-19 on the future financial performance of the Company, as a whole, and, specifically, on its investments and underlying borrowers and their real estate property holdings are uncertain at this time. Due to COVID-19, as of March 31, 2021, there was a limited market, relative to pre-COVID-19 levels, for loan investments like those held by the Company. Therefore, there can be no assurance that the estimated market value of the investments included in the NAV would materially equal the gross amount realized if such loan or preferred equity investments were sold by the Company at March 31, 2021. The Company believes that the methodology of determining the Company’s NAV conforms to the Institute for Portfolio Alternatives Practice Guideline for Valuations of Publicly Registered Non-Listed REITs (April 2013) and is prepared in accordance with the procedure described in the “Net Asset Value Calculation and Valuation Procedures” section of the Company’s prospectus. In addition, the Company’s board of directors periodically reviews the Company’s NAV policies and procedures.

The purchase price per share for each class of the Company’s common stock will generally equal the prior quarter’s NAV per share, as determined quarterly, plus applicable selling commissions and dealer manager fees. The NAV for each class of shares is based on the value of the Company’s assets and the deduction of any liabilities, and any distribution fees applicable to such class of shares.

Delshah Investments

As previously disclosed on the 8-K dated January 7, 2021, an affiliate of Delshah paid down the original principal balance of the Delshah Loan by $1.8 million, resulting in a principal loan balance of $16.2 million. Concurrently with the pay down, $8.1 million (50% of the remaining Delshah Loan) converted from a mezzanine loan to the Delshah Preferred Equity Interest. The Delshah Preferred Equity Interest is junior to both the senior loan on the underlying collateral and the Delshah Loan. The preferred return is 10.0% until September 21, 2023 and is redeemable at any time with no penalty. The Company also has a promoted interest equal to 20% of the proceeds, on a pari passu basis, after the Company receives a 10% preferred return and the DS Property Acquisitions LLC, an affiliate of Delshah receives a 15% return on their capital basis. No value was attributable to this promoted interest in the Company’s current NAV.  

The remaining $8.1 million principal balance of the Delshah Loan remained outstanding as a mezzanine loan with the same terms as those in effect prior to the conversion. As of March 31, 2021, CFI held a 99% interest in the Delshah Loan through a participation agreement between the Company and CFI, and the Company retained a 1% interest in the Delshah Loan. As of March 31, 2021, the Company held 100% of the Delshah Preferred Equity Interest.

39


 

In accordance with the Company’s valuation procedures, the Delshah Loan, the East 12th Street Loan and the Delshah Preferred Equity Interest, (each individually an “Investment” and collectively the “Delshah Investments”) were included in the determination of NAV at their estimated fair market value as of March 31, 2021, as determined by Stanger, as adjusted to reflect the Company’s retained interests in each of the Delshah Investments, respectively. The estimated fair market value of the each of the Delshah Investments was based upon taking, for each the anticipated payments over the remaining loan and investment term and discounting such payments to a present value at a discount rate range equal to the current estimated market interest rate or yield on similar investments. To provide their opinion of value of the Delshah Investments, Stanger first reviewed the terms of each of the Delshah Investments as contained in the loan and investment agreements. Stanger then reviewed mezzanine loan and preferred equity market terms at or around March 31, 2021 to ascertain current market interest rates for investments similar to the Delshah Investments. This review was conducted by (i) interviews of participants in the mezzanine / preferred equity market, (ii) reviewing recent mezzanine loan and preferred equity transactions, as available, and (iii) reviewing published surveys available at or around March 31, 2021. Based on Stanger’s reviews above and taking into consideration each of the Delshah Investments’ unique factors, including, but not limited to, loan-to-value (based primarily on the most-recent appraised value of the underlying real estate collateral properties, subsequent capital investment into the real estate collateral properties and current asking and contract prices for the for sale condominium units for the East 12th Street Loan collateral property), debt service and preferred equity yield coverage and reserve levels and funding requirements of the underlying collateral properties, as well as property specific attributes such as property type and location, financial information pertaining to the borrower and/or guarantor, prepayment terms, and investment and loan origination dates, maturity dates and extension terms, a market interest rates was determined for each Delshah Investment to utilize in the determination of the fair market value of the Delshah Investments.  

The following table provides a breakdown of the major components of the Company’s NAV:

Components of NAV

 

March 31, 2021

 

Cash and cash equivalents

 

$

2,230,836

 

Commercial mortgage loans, held for investment(1)

 

 

8,618,743

 

Investment in real estate-related assets

 

 

8,100,000

 

Due from related party

 

 

40,263

 

Accrued interest receivable

 

 

130,757

 

Accrued Preferred Return Receivable

 

 

47,250

 

Accounts payable and accrued expenses

 

 

(82,045

)

Distributions payable

 

 

(114,374

)

Due to related party(2)

 

 

(190,586

)

Distribution fee payable the following month(3)

 

 

(4,069

)

Accrued interest payable

 

 

(10,947

)

Non-controlling interests in subsidiaries

 

 

(125,000

)

Sponsor promote / Support repayment

 

 

 

Net Asset Value

 

$

18,640,828

 

Number of outstanding shares

 

 

804,981

 

Note:

(1) Reflects the Company’s interest in the Delshah Loan and the East 12th Street Loan.

(2) Reflects the Company’s interest in the Delshah Preferred Equity Interest.

(3) Excluding $88,796 due to the Advisor for reimbursement of O&O Costs ($95,626 less the current liability due of $6,830) pursuant to the procedures described in the “Net Asset Value Calculations and Valuation Procedures” section of the Company’s prospectus.

(4) Distribution fee only relates to Class T Shares.

NAV Per Share

 

Class A

Shares

 

 

Class T

Shares

 

 

Class I

Shares

 

 

Total

 

Total Gross Assets at Fair Value

 

$

9,956,706

 

 

$

5,029,048

 

 

$

4,182,095

 

 

$

19,167,849

 

Due to related party

 

 

(98,999

)

 

 

(50,004

)

 

 

(41,583

)

 

$

(190,586

)

Other liabilities

 

 

(107,716

)

 

 

(58,475

)

 

 

(45,244

)

 

$

(211,435

)

Non-controlling interests in subsidiaries

 

 

(64,931

)

 

 

(32,796

)

 

 

(27,273

)

 

$

(125,000

)

Quarterly NAV

 

$

9,685,060

 

 

$

4,887,773

 

 

$

4,067,995

 

 

$

18,640,828

 

Number of outstanding shares

 

 

418,146

 

 

 

211,202

 

 

 

175,633

 

 

 

804,981

 

NAV per share

 

$

23.16

 

 

$

23.14

 

 

$

23.16

 

 

 

 

 

40


 

 

The following table reconciles stockholders’ equity per the Company’s consolidated balance sheet to the Company’s NAV:

Reconciliation of Stockholders' Equity to NAV

 

March 31, 2021

 

Stockholders' equity under U.S. GAAP

 

$

18,630,529

 

Adjustments:

 

 

 

 

Fair value adjustment of commercial mortgage loans, held for investment

 

 

(109,810

)

Organization and offering costs

 

 

88,795

 

Accrued distribution fee

 

 

156,314

 

Non-controlling interests in subsidiaries

 

 

(125,000

)

NAV

 

$

18,640,828

 

The following details the adjustments to reconcile U.S. GAAP stockholder’s equity to the Company’s NAV:

Fair value adjustment of commercial mortgage loans, held for investment and investment in real estate-related assets

The Company’s Investments are, held for investment are presented at historical cost in our U.S. GAAP consolidated financial statements. As such, any changes in the fair market value of our Investments, held for investment are not included in our U.S. GAAP results. For purposes of determining our NAV, our Investments are presented at fair value.

Organization and offering costs

The Advisor has agreed to pay, on behalf of the Company, all O&O Costs through the first anniversary of the date on which the Company satisfied the Minimum Offering Requirement, which was June 28, 2019 (the “Escrow Break Anniversary”). Such costs are being reimbursed to the Advisor, ratably, by the Company, over 36 months beginning on June 29, 2019, subject to the 1% Cap. After the Escrow Break Anniversary, the Advisor, in its sole discretion, may pay some or all of the additional O&O Costs incurred, but it is not required to do so. Following the Escrow Break Anniversary, the Company began reimbursing the Advisor for payment of the O&O Costs ratably over a 36-month period; provided, however, that the Company will not be obligated to pay any amounts that as a result of such payment would cause the aggregate payments for O&O Costs (less selling commissions, dealer manager fees and distribution fees) paid to the Advisor to exceed the 1% Cap, as of such payment date. To the extent the Advisor pays such additional O&O Costs, the Company will be obligated to reimburse the Advisor subject to the 1% Cap. Any amounts not reimbursed in any period shall be included in determining any reimbursement liability for a subsequent period. As of March 31, 2021, the Advisor has continued to pay all O&O Costs on behalf of the Company. Under U.S. GAAP, the Company's reimbursement liability pertaining to the O&O costs is included with due to related party in the Company's consolidated balance sheet. For NAV, such costs will be recognized as a reduction in NAV as they are reimbursed.

Accrued distribution fee

Accrued distribution fee represents the accrual for the full cost of the distribution fee for Class T shares. Under U.S. GAAP the Company accrued the full cost of the distribution fee as an offering cost at the time it sells the Class T shares. For purposes of NAV the Company recognizes the distribution fee as a reduction of NAV on a quarterly basis as such fee is due.

Non-controlling interests in subsidiaries

Non-controlling interests in subsidiaries represents the equity ownership in a consolidated subsidiary which is not attributable to the Company. The interests are presented at fair value for purposes of determining our NAV.

Sensitivity Analysis

Assuming all other factors remain unchanged, the table below presents the estimated increase or decrease to the Company’s March 31, 2021 NAV for the changes in the effective contractual interest rates or preferred return rates for the Investments, respectively:

Sensitivity Analysis

 

Range of NAV (Class A & I)

 

 

Range of NAV (Class T)

 

 

 

Low

 

 

Concluded

 

 

High

 

 

Low

 

 

Concluded

 

 

High

 

Estimated Per Share NAV

 

$

23.01

 

 

$

23.16

 

 

$

23.20

 

 

$

22.99

 

 

$

23.14

 

 

$

23.18

 

Estimated Market Interest Rate - Delshah Loan(a)

 

 

9.70

%

 

 

9.24

%

 

 

9.24

%

 

 

9.70

%

 

 

9.24

%

 

 

9.24

%

Estimated Market Interest Rate - Delshah Preferred Equity Interest(a)

 

 

10.66

%

 

 

10.15

%

 

 

10.15

%

 

 

10.66

%

 

 

10.15

%

 

 

10.15

%

Estimated Market Interest Rate - East 12th Street Loan(a)

 

 

14.75

%

 

 

14.05

%

 

 

13.35

%

 

 

14.75

%

 

 

14.05

%

 

 

13.35

%

41


 

 

(a) Limited by the loans prepayment provisions, where applicable.

Liquidity and Capital Resources

The Company is dependent upon the net proceeds from the Offering to conduct its principal operations. The Company will obtain the capital required to originate mortgage loans and conduct its operations from the proceeds of the Offering, any future offerings, from secured or unsecured financings from banks and other lenders and from any undistributed funds from its operations.

The Company raised substantially less than the maximum offering amount in the Offering. Because the Company raised substantially less than the maximum offering amount, the Company made fewer investments resulting in less diversification in terms of the type, number and size of investments it makes and the value of an investment in the Company will fluctuate with the performance of the limited assets it acquires. Further, the Company has certain fixed operating expenses, including certain expenses as a REIT and as a public company, regardless of whether it was able to raise substantial funds in the Offering. The Company’s inability to raise substantial funds would increase its fixed operating expenses as a percentage of gross income, reducing its net income and limiting its ability to make distributions. As of March 31, 2021, the Company has raised net proceeds of $18,387,236 in the Offering and have only made two investment. The Offering expired pursuant to its terms on May 2, 2021.

As of March 31, 2021, the Company has no outstanding borrowings and no commitments from any lender to provide it with financing. The Company’s charter limits the Company from incurring debt if the Company’s borrowings exceed 300% of the cost of the Company’s net assets, which is estimated to approximate 75% of the cost of its tangible assets (before deducting depreciation or other non-cash reserves), though the Company may exceed this limit under certain circumstances.

In addition to making investments in accordance with its investment objectives, the Company expects to use its capital resources to make certain payments to the Advisor and the Dealer Manager. During the organization and offering stage, the payments will include payments to the Dealer Manager for selling commissions, dealer manager fees, and distribution fee payments and to the Advisor for reimbursement of certain O&O Costs. With regards to the total O&O Costs, including selling commissions, dealer manager fees, distribution fees and reimbursement of other O&O Costs, will not exceed 15% of the gross proceeds of the Offering, including proceeds from sales of shares under the Company’s DRP. Additionally, the Company expects to make payments to the Advisor in connection with the selection and origination or purchase of investments, the management of its assets and costs incurred by the Advisor in providing services to the Company.

Cash Flows

The following table provides a breakdown of the net change in the Company’s cash and cash equivalents:

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

Cash flows from operating activities

 

$

(2,164,167

)

Cash flows from investing activities

 

 

(122,873

)

Cash flows from financing activities

 

 

(287,050

)

Decrease in cash and cash equivalents

 

$

(2,574,090

)

Operating Activities

During the three months ended March 31, 2021, net cash used by operating activities was $2,164,167, compared to net cash provided by operating activities of $239,278 during the three months ended March 31, 2020. The change was primarily due to an increase in net income of $116,397 offset by a decrease in working capital accounts of $2,519,842.

Investing Activities

During the three months ended March 31, 2021, cash used in investing activities was $122,873, compared to $2,828,493 during the three months ended March 31, 2020. The change was due to a decrease in repurchases of loan participation interest, as well as a decrease in fundings of the Investments.

Financing Activities

During the three months ended March 31, 2021, net cash used by financing activities was $287,050, compared to $2,571,787 during the three months ended March 31, 2020. The change was primarily due to a decrease in proceeds received from the Offering, an increase in distributions made, an increase in payments from redemptions of common stock, offset by decrease in acquired non-controlling interests.

42


 

Distributions

The Company’s board of directors authorized, and the Company declared, distributions through August 14, 2019 in an amount equal to $0.004357260, for the period August 15, 2019 through November 14, 2019 in an amount equal to $0.004493151, and for the period November 15, 2019 through May 14, 2021 in an amount equal to $0.004602739, per day (or approximately $1,68 on an annual basis) per share of Class A common stock, Class I common stock and Class T common stock, less, for holders of the shares of Class T common stock, the distribution fees that are payable with respect to shares of Class T common stock. The distributions are payable by the 5th business day following each month end to stockholders of record at the close of business each day during the prior month.

The amount of distributions payable to the Company’s stockholders will be determined by the board of directors and is dependent on a number of factors, including funds available for distribution, the Company’s financial condition, capital expenditure requirements, requirements of Maryland law and annual distribution requirements needed to qualify and maintain its status as a REIT. The Company’s board of directors may reduce the amount of distributions paid or suspend distribution payments at any time, and therefore distribution payments are not assured.

The Company’s ability to generate working capital is dependent on its ability to make investments that generate cash flow. In general, the Company policy is to pay distributions from cash flow from operations, but should operations not be sufficient to fund cash distributions, the Company has entered into a distribution support agreement with CFI to purchase up to $5 million in Class I shares from the Company (less the $2.0 million of shares purchased by CFI in order to satisfy the Minimum Offering Requirement), to provide additional cash support for distributions (the “Distribution Support Agreement”). However, if the Company has not generated sufficient cash flow from its operations and other sources, such as from the Distribution Support Agreement, or the Advisor's deferral, suspension and/or waiver of its fees and expense reimbursements, to fund distributions, the Company may use the proceeds from the Offering for such purposes.

Under the terms of the Distribution Support Agreement, if the cash distributions the Company pays for any calendar quarter exceed the Company’s MFFO for such quarter, CFI will purchase Class I shares in the Offering following the end of such calendar quarter for a purchase price equal to the amount by which the distributions paid on such shares exceed the MFFO for such quarter up to $5 million (including the $2.0 million of shares purchased by CFI in order to satisfy the Minimum Offering Requirement). In such instance, the Company may be paying distributions from proceeds of the shares purchased by CFI or its affiliates, not from cash flow from operations. Class I shares purchased by CFI pursuant to the Distribution Support Agreement will be eligible to receive all distributions payable by the Company with respect to Class I shares. Other than the shares purchased to satisfy the Minimum Offering Requirement, as of March 31, 2021, CFI has not purchased any Class I shares pursuant to the Distribution Support Agreement.

The following tables summarize our distributions declared during the three months ended March 31, 2021 and March 31, 2020:

 

 

Three Months Ended March 31, 2020

 

 

Three Months Ended March 31, 2021

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid in cash

 

$

111,937

 

 

 

51

%

 

$

175,031

 

 

 

55

%

Payable

 

 

79,759

 

 

 

37

%

 

 

110,624

 

 

 

34

%

Reinvested in shares

 

 

26,578

 

 

 

12

%

 

 

35,675

 

 

 

11

%

Total distributions

 

$

218,274

 

 

 

100

%

 

$

321,330

 

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sources of Distributions:

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

Operating cash flows

 

$

218,274

 

 

 

100

%

 

$

321,330

 

 

 

100

%

Offering proceeds pursuant to Distribution Support

   Agreement

 

 

 

 

 

0

%

 

 

 

 

 

0

%

Offering proceeds

 

 

 

 

 

0

%

 

 

 

 

 

0

%

Total sources of distributions

 

$

218,274

 

 

 

100

%

 

$

321,330

 

 

 

100

%

During the three months ended March 31, 2021, the Company declared $321,330 of distributions to its shareholders, $110,624 of which was unpaid at March 31, 2021, compared to the Company’s total aggregate MFFO of $375,809, and the Company’s total aggregate net income of $375,809 for such periods.

During the three months ended March 31, 2020, the Company declared $218,274 of distributions to its shareholders, $79,759 of which was unpaid at March 31, 2020, compared to the Company’s total aggregate MFFO of $259,412, and the Company’s total aggregate net income of $259,412 for such periods.

43


 

Election as a REIT

The Company has elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its 2019 tax year. The Company intends to operate in such a manner as to qualify for taxation as a REIT under the Code, but no assurance can be given that the Company will operate in a manner so as to qualify or remain qualified for taxation as a REIT. In order to qualify and continue to qualify for taxation as a REIT, the Company must distribute annually at least 90% of the Company’s REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, as well as federal income and excise taxes on its undistributed income.

Critical Accounting Policies

The preparation of the financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect the Company’s reported amounts of assets and liabilities and the Company’s disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in the Company’s consolidated financial statements. The Company considers its accounting policies over accounting for investments, revenue recognition, credit losses and impairment on investments, and income taxes to be critical accounting policies. See Note 2 – Summary of Significant Accounting Policies to the Company’s unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further descriptions of such accounting policies.

Recent Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies to the Company’s unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements.

Emerging Growth Company

The Company is and will remain an “Emerging Growth Company,” as defined in the JOBS Act, until the earliest to occur of (i) the last day of the fiscal year during which the Company’s total annual gross revenues equal or exceed $1 billion (subject to adjustment for inflation); (ii) the last day of the fiscal year following the fifth anniversary of the Primary Offering; (iii) the date on which the Company has, during the previous three-year period, issued more than $1 billion in non-convertible debt; or (iv) the date on which the Company is deemed a large accelerated filer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Additionally, the Company is eligible to take advantage of certain other exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Company has chosen to “opt out” of that extended transition period and as a result the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that the Company’s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. Otherwise, the Company has not yet made a decision whether to take advantage of any or all of the exemptions available to it under the JOBS Act.

Off-Balance Sheet Arrangements

As of March 31, 2021, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company’s financial condition, revenue and expenses, results of operations, liquidity, capital expenditure, or capital resources.

Contractual Obligations

As of March 31, 2021, the Company does not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.

44


 

Subsequent Events

Status of the Offering

The Offering, including the DRP, expired pursuant to its terms on May 2, 2021. In connection with the expiration of the Offering, on April 26, 2021, the Company’s board of directors has determined to terminate the DRP effective with the May 5, 2021 distribution date. Accordingly, all distributions beginning with the distributions declared for the month of April 2021, which were paid on May 5, 2021, will be paid in cash.

From inception through the termination of the Offering, the Company raised total gross proceeds of $19,090,154 million pursuant to the Offering, including gross proceeds of $323,580 pursuant to the DRP.

Distributions

On May 14, 2021, the board of directors authorized, and the Company declared, distributions for the period from May 17, 2021 to August 13, 2021, in an amount equal to $0.004602739 per day per share (or approximately $1.68 on an annual basis). Distributions will be payable by the 5th business day following each month end to stockholders of record at the close of business each day during the prior month.

Capital Expenditure Advance

On May 10, 2021, the Company advanced an additional $141,864 for capital expenditures on the East 12th Street Loan, reducing the amount withheld for capital expenditure, broker commissions and tenant improvements to $0. As of May 10, 2021 the total funded amount for the East 12th Street Loan was $8,789,417.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company’s primary market risk exposure will be interest rate risk with respect to its indebtedness, credit risk and market risk with respect to use of derivative financial instruments for hedging purposes and foreign currency risk relating to investments made outside of the United States. As of March 31, 2021, the Company had no borrowings and has not used any derivative financial instruments.

Interest Rate Risk

As of March 31, 2021, the Company had originated a floating rate commercial mortgage loan, held for investment in the amount of $8,990,000, the East 12th Street Loan, which is exposed to interest rate changes in LIBOR. The loan is subject to an interest rate floor to mitigate some of the negative impact interest rates would have on the Company’s consolidated financial statements. As LIBOR is currently below the interest rate floor associated with the Company’s loan, the changes in LIBOR during the three months ended March 31, 2021 have not exposed the Company to any interest rate risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, the CEO and CFO have concluded that the disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company’s “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

 

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

 

 

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2021, the Company was not involved in any material legal proceedings.

Item 1A. Risk Factors.

The Company has disclosed in Part 1. Item 1A. “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 333-221814), filed with the SEC, risk factors which materially affect its business, financial condition or results of operations. There have been no material changes from the risk factors previously disclosed, except as noted below. You should carefully consider the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2020 and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing the Company. Additional risks and uncertainties not currently known to the Company or that management currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

If we pay cash distributions from sources other than our cash flow from operations, we will have less funds available for investments and your overall return may be reduced.

Our organizational documents do not restrict us from paying distributions from any source and do not restrict the amount of distributions we may pay from any source, including proceeds from the Offering or the proceeds from the issuance of securities in the future, other third party borrowings, advances from the Advisor or sponsor or from the Advisor’s deferral or waiver of its fees under the Advisory Agreement. Distributions paid from sources other than current or accumulated earnings and profits, particularly during the period before we have substantially invested the net proceeds from this offering may constitute a return of capital for tax purposes. From time to time, particularly during the period before we have substantially invested the net proceeds from this offering, we may generate taxable income greater than our taxable income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders. In these situations we may make distributions in excess of our cash flow from operations, investment activities and strategic financings to satisfy the REIT distribution requirement. If we fund distributions from financings, the net proceeds from this offering or sources other than our cash flow from operations, we will have less funds available for investment in real estate-related loans, real estate-related debt securities and other real estate-related investments and your overall return may be reduced. In addition, if the aggregate amount of cash we distribute to stockholders in any given year exceeds the amount of our taxable income generated during the year, the excess amount will either be (1) a return of capital or (2) a gain from the sale or exchange of property to the extent that a stockholder’s basis in our common stock equals or is reduced to zero as the result of our current or prior year distributions. Such distributions may effectively dilute or reduce the value of the stockholders remaining interest in our company’s net asset value.

Pursuant to the Distribution Support Agreement, in certain circumstances where our cash distributions exceed MFFO, our sponsor will purchase up to $5.0 million of Class I shares (including the $2.0 million of shares purchased by CFI to satisfy the Minimum Offering Requirement) at the then current offering price per Class I share net of dealer manager fees to provide additional cash to support distributions to you. The sale of these shares will result in the dilution of the ownership interests of our public stockholders. Other than the shares purchased to satisfy our Minimum Offering Requirement, as of March 31, 2021, our sponsor has not purchased any Class I shares pursuant to our Distribution Support Agreement. Upon termination or expiration of the Distribution Support Agreement, we may not have sufficient cash available to pay distributions at the rate we had paid during preceding periods or at all. If we pay distributions from sources other than our cash flow from operations, we will have less cash available for investments, we may have to reduce our distribution rate, our net asset value may be negatively impacted and your overall return may be reduced. As of March 31, 2021, we have declared distributions of $2,005,255, of which 3% were paid using proceeds from the Offering.

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Our NAV per share may materially change from quarter to quarter if the valuations of our assets materially change from prior valuation or the actual operating results materially differ from what we originally budgeted, including as a result of the Advisor invoicing us for previously unbilled operating expenses.

It is possible that the valuation of our assets may not be spread evenly throughout the year and may differ from the most recent quarterly valuation. As such, when these valuations are reflected in our Independent Valuation Firm’s valuation of our investment portfolio, there may be a material change in our NAV per share for each class of our common stock. Investment valuation changes can occur for a variety reasons, such as real estate market conditions, as well as credit and rates markets. For example, investments may prepay earlier than their stated maturity or in the event of adverse credit events, after the stated maturity. These circumstances may result in a material change in our NAV per share. We are at the greatest risk of these valuation changes during periods where we experience significant loan prepayments, delayed maturity payments, or significant changes in credit markets, including as a result of the current outbreak of COVID-19.

In addition, actual operating results may differ from what we originally budgeted, which may cause a material increase or decrease in the NAV per share amounts. We accrue estimated income and expenses on a quarterly basis based on annual budgets as adjusted from time to time to reflect changes in the business throughout the year. On a periodic basis, we adjust the income and expense accruals we estimated to reflect the income and expenses actually earned and incurred. We will not retroactively adjust the NAV per share of each class for any adjustments. Therefore, because actual results from operations may be better or worse than what we previously budgeted, the adjustment to reflect actual operating results may cause the NAV per share for each class of our common stock to increase or decrease.

The Advisory Agreement provides that any operating expenses which have not been invoiced by the Advisor will not become our obligations. Without these provisions in the Advisory Agreement, such operating expenses, if invoiced, would likely be recorded as liabilities of ours, which, in turn, would likely have a negative effect on our NAV per share. The Advisory Agreement also provides that the Advisor may be reimbursed for previously unbilled operating expenses for prior periods in any subsequent quarter, subject to certain limitations, including the limitation related to the NAV per share of $25.00 referenced above and the 2%/25% limitation. The incurrence of previously unbilled operating expenses will likely have a negative effect on our NAV per share. As of March 31, 2021, the Advisor has incurred, on our behalf, a total of $4,224,671 in Unreimbursed Operating Expenses, including a total of $174,501 for which the Advisor has not invoiced us for reimbursement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.

Unregistered Sales of Equity Securities

During the three months ended March 31, 2021, the Company did not complete any sales of unregistered securities.

Use of Proceeds

On May 2, 2018, the Company’s Registration Statement on Form S-11 (Form No. 333-221814), was declared effective by the SEC. On June 28, 2018, the Company satisfied the Minimum Offering Requirement as a result of CFI’s purchase of $2.0 million in Class I shares. As of March 31, 2021, the Company’s NAV was $23.16 per Class A share, $23.14 per Class T share and $23.16 per class I share, plus applicable selling commissions and dealer manager fees.

For the period from the commencement of the Offering through March 31, 2021, the Company issued 796,801 shares of common stock generating total gross proceeds of $18,993,298 in the Offering.

During the period from the commencement of the Offering through March 31, 2021, the Company also incurred $413,452 in selling commissions net of Sponsor Support, and incurred $192,610 of distribution fees, in connection with the issuance and distribution of its registered securities.

The net proceeds received from the Offering, after deducting the total expenses incurred as described above, were $18,387,236. For the period from the commencement of the Offering through March 31, 2021, the Company used proceeds of $16,828,554 to originate commercial mortgage loans, held for an investment and purchase interests in real estate-related assets.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed below are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

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EXHIBITS INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit

Number

 

Description

 

 

  3.1

 

Second Articles of Amendment and Restatement of Rodin Income Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Post-Effective Amendment No. 1 to Form S-11 (File No. 333-221814), filed on December 19, 2018)

 

 

 

  3.2

 

Amended and Restated Bylaws of Rodin Income Trust, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Pre-Effective Amendment No. 1 to Form S-11 (File No. 333-221814), filed on April 13, 2018)

 

 

 

  4.1

 

Form of Subscription Agreement (included as Appendix A to the Prospectus dated April 29, 2019, filed with the SEC on April 30, 2019)

 

 

 

  4.2

 

Form of Distribution Reinvestment Plan (included as Appendix B to the Prospectus dated April 29, 2019, filed with the SEC on April 30, 2019)

 

 

 

  10.1

 

Amended and Restated Advisory Agreement, by and among Rodin Income Trust, Inc., Rodin Income Trust Operating Partnership. L.P., Rodin Income Advisors, LLC, and Cantor Fitzgerald Investors, LLC and Rodin Income Trust OP Holdings, LLC, dated September 28, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 3, 2018) 

 

 

 

  10.2

 

Amendment No.1 to Amended and Restated Advisory Agreement, dated as of September 28, 2019, by and among Rodin Income Advisors, LLC, Rodin Income Trust, Inc., Rodin Income Trust Operating Partnership, L.P., Cantor Fitzgerald Investors, LLC and Rodin Income Trust OP Holdings LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 14, 2019)

 

 

 

   10.3

 

Agreement of Limited Partnership of Rodin Income Trust Operating Partnership, L.P. dated May 2, 2018 (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on June 14, 2018)

 

 

 

  10.4

 

Rodin Income Trust, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q filed on June 14, 2018)

 

 

 

  10.5

 

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Form S-11 (File No. 333-221814), filed with the SEC on November 30, 2017)

 

 

 

  10.6

 

Reimbursement Agreement among Rodin Income Trust, Inc., Cantor Fitzgerald Investors, LLC and Rodin Income Trust OP Holdings, LLC dated May 2, 2018 (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended June 30, 2018 filed on August 14, 2018)

 

 

 

  10.7

 

Dealer Manager Agreement among Rodin Income Trust, Inc., Cantor Fitzgerald Investors, LLC and Cantor Fitzgerald & Co. dated May 2, 2018 (incorporated by reference to Exhibit 1.1 to the Company’s Form 10-Q filed on June 14, 2018)

 

 

 

  10.8

 

Distribution Support Agreement between Cantor Fitzgerald Investors, LLC and Rodin Income Trust, Inc. dated May 2, 2018 (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed on June 14, 2018)

 

 

 

  31.1*

 

Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

  31.2*

 

Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

  32*

 

Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

  101*

 

The following materials from Rodin Income Trust, Inc.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2021 are formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Changes in Equity; (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

 

*

Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

RODIN INCOME TRUST, INC.

 

 

 

 

 

 

By:

/s/ Howard W. Lutnick

 

 

Howard W. Lutnick

 

 

Chief Executive Officer and Chairman of the Board of Directors

 

 

(Principal Executive Officer)

 

 

By:

/s/ John C. Griffin

 

 

John C. Griffin

 

 

Chief Financial Officer

 

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

Dated: May 17, 2021

 

 

 

 

 

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