UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1−SA
☒ SEMIANNUAL REPORT PURSUANT TO REGULATION A
or
☐ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A
For the fiscal semiannual period ended June 30, 2021
Landa App LLC |
(Exact name of issuer as specified in its charter) |
Delaware | 85-1099443 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
6 W. 18th Street, New York, NY 10011 |
(Full mailing address of principal executive offices) |
(646) 905-0931 |
(Issuer’s telephone number, including area code) |
THIS SEMI-ANNUAL REPORT MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED HEREIN, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.
Factors that could cause or contribute to these differences include those contained in the section of THE COMPANY’s latest offering circular (the “Offering Circular”) FILED WITH the Securities and Exchange Commission (“SEC”) entitled “Risk Factors”, which section is incorporated herein by reference.
Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Landa App LLC (the “Company”) is a Delaware series limited liability company. The Company has registered certain series with the Delaware Secretary of State and will continue to register new series from time to time (each, a “Series” and collectively, the “Series”). Each Series is or will be governed by its own Operating Agreement, each of which is included as an exhibit to the Offering Circular.
The Company was formed for the purpose of creating the Series and offering Shares in such Series. The purpose of the Series is to acquire residential and commercial rental properties (each a “Property,” and collectively, the “Properties”) and offer a unique investment opportunity for eligible investors to benefit from the performance of curated and fully managed Properties. We have offered and sold membership interests (each a “Share” and collectively, the “Shares”) of certain of the Series, at the purchase prices listed on the cover page of the Offering Circular. We expect that the Company, and each Series’, sole source of income will be rental income, except a Series may also generate income on the disposition of its Property.
Landa Holdings, Inc. (the “Manager”) will serve as the manager to the Company and each Series and will identify a residential or commercial rental Property for each Series to acquire. The Manager will also manage these Properties on behalf of the Series and will earn compensation for these services. The Manager was formed as a Delaware limited liability company on February 7, 2019, and was subsequently converted to a Delaware corporation under the name Landa Holdings, Inc. on September 12, 2019.
Impact of the COVID-19 Coronavirus Pandemic
In March 2020, the novel coronavirus (“COVID-19”) outbreak was declared a global pandemic by the World Health Organization, and since then, the virus has continued to spread throughout the world. The severe travel and social restrictions, including social distancing, “shelter-in-place” orders and restrictions on the types of businesses that may continue to operate that have been implemented in the United States and the world have adversely impacted global activity and contributed to significant volatility in financial markets. The ultimate impacts of the outbreak remain unknown and are rapidly evolving.
1
The pandemic’s duration and severity and the extent of the adverse health impact on the general population and on the local population where our Properties are and will be located are unknown. These, among other items, will likely impact the economy, the unemployment rate and our operations and could materially affect our future consolidated results of operations, financial condition, liquidity, investments and overall performance. For more information, please see the section of the Offering Circular entitled “Risk Factors”, which section is incorporated herein by reference.
Liquidity and Capital Resources
As of June 30, 2021 and December 31, 2020, the Company had not yet commenced its planned operations. Once the Company commences its planned principal operations, it will incur significant additional expenses, and will be dependent on additional capital resources. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Each Series commenced planned operations on the date of acquisition of its Property. Each Series will be dependent upon raising the full offering amount. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
For more information please see Note 1, Organization, Nature of Activities and Going Concern, in our financial statements.
The Series held the following cash and restricted cash as of June 30, 2021 and December 31, 2020:
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
Series | Cash | Restricted Cash | Total | Cash | Restricted Cash | Total | ||||||||||||||||||
Landa Series 115 Sardis Street | $ | 4,120 | $ | 0 | $ | 4,120 | $ | 624 | $ | 0 | $ | 624 | ||||||||||||
Landa Series 1394 Oakview | 3,848 | 0 | 3,848 | 3,066 | 0 | 3,066 | ||||||||||||||||||
Landa Series 1701 Summerwoods Lane | 3,516 | 950 | 4,466 | 3,852 | 950 | 4,802 | ||||||||||||||||||
Landa Series 1741 Park Lane | 3,592 | 0 | 3,592 | 2,137 | 0 | 2,137 | ||||||||||||||||||
Landa Series 209 Timber Wolf Trail | 3,978 | 775 | 4,753 | 2,962 | 775 | 3,737 | ||||||||||||||||||
Landa Series 2505 Oak Circle | 1,594 | 750 | 2,344 | 70 | 0 | 70 | ||||||||||||||||||
Landa Series 271 Timber Wolf Trail | 5,908 | 0 | 5,908 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 29 Holly Grove Road | 3,384 | 600 | 3,984 | 2,766 | 0 | 2,766 | ||||||||||||||||||
Total Combined | $ | 29,940 | $ | 3,075 | $ | 33,015 | $ | 15,477 | $ | 1,725 | $ | 17,202 |
The changes in cash and restricted cash were a result of ongoing operations, including rental income received and Property maintenance costs for each Series.
In July 2020, each Series issued a promissory note to the Manager to finance 100% of the costs associated with the acquisition, or expected acquisition, of its Property, including acquisition fees, due diligence expenses, and reserves (each an “Acquisition Note” and collectively the “Acquisition Notes”). Each Acquisition Note represents a related-party loan between each respective Series and the Manager. The Acquisition Notes issued by the Series are non-interest bearing.
In July 2021, each Series issued an interest-bearing note to the Manager (each a “Refinance Note” and collectively the “Refinance Notes”), to pay down some or all of the outstanding balance of its Acquisition Note. As a result, each Series began making monthly interest payments in July 2021, which has and will continue to impact the Company’s capital resources. The following table summarizes the expected interest expense by Series for the six-month period ending December 31, 2021:
Series | Six Months Ended December 31, 2021 | |||
Landa Series 115 Sardis Street | $ | 1,458 | ||
Landa Series 1394 Oakview | 990 | |||
Landa Series 1701 Summerwoods Lane | 1,186 | |||
Landa Series 1741 Park Lane | 1,448 | |||
Landa Series 209 Timber Wolf Trail | 1,496 | |||
Landa Series 2505 Oak Circle | 1,231 | |||
Landa Series 271 Timber Wolf Trail | 1,535 | |||
Landa Series 29 Holly Grove Road | 1,254 | |||
Total Combined | $ | 10,598 |
For more information on each note please see Note 7, Related Party Transactions, in our financial statements.
2
Results of Operations
Revenues:
Revenues are generated at the Series level. Rental revenues consist of rental amounts collected under the lease agreements related to each Series’ Property, net of any concessions and uncollectible amounts. Each Series enters into a lease agreement directly with the tenant. Each lease has a term of one year.
We generated rental revenues of $39,448 for the six months ended June 30, 2021, as compared to $0 for the period from May 19, 2020 (inception) through June 30, 2020, as no Series had acquired a Property as of June 30, 2020. The following table summarizes the rental income by Series for the period ending June 30, 2021 and June 30, 2020:
Six Months Ended June 30, 2021 | Period from May 19, 2020 (inception) through June 30, 2020 | |||||||
Series | Rental Income | Rental Income | ||||||
Landa Series 115 Sardis Street | $ | 4,840 | $ | 0 | ||||
Landa Series 1394 Oakview | 4,650 | 0 | ||||||
Landa Series 1701 Summerwoods Lane | 5,700 | 0 | ||||||
Landa Series 1741 Park Lane | 4,350 | 0 | ||||||
Landa Series 209 Timber Wolf Trail | 4,650 | 0 | ||||||
Landa Series 2505 Oak Circle | 5,338 | 0 | ||||||
Landa Series 271 Timber Wolf Trail | 5,700 | 0 | ||||||
Landa Series 29 Holly Grove Road | 4,220 | 0 | ||||||
Total Combined | $ | 39,448 | $ | 0 |
Expenses:
Expenses are incurred at the Series level. Additional information regarding the nature and description of each of these expenses can be found below.
Operating Expenses. Each Series incurs certain ongoing expenses related to such Series or the Property held by such Series, including, but not limited to, (i) any and all fees, costs and expenses incurred in connection with the management of a Property, (ii) any and all insurance premiums or expenses, including property insurance in connection with the Series’ Property, (iii) any withholding or transfer taxes imposed on the Company or a Series as a result of its or their earnings, investments or withdrawals in connection with the Property, (iv) any governmental fees imposed on the capital of the Company or a Series or incurred in connection with compliance with applicable regulatory requirements in connection with the Property, (v) any legal fees and costs (including settlement costs) arising in connection with any disputes with tenants, litigation or regulatory investigation instituted against the Series or a Manager in connection with the affairs of the Series, and (vi) any fees, costs and expenses of engaging a third-party registrar and transfer agent appointed by the Manager in connection with a Series and (vii) any indemnification obligations of a Series. For more information, please see the section of the Offering Circular entitled “Description of our Business – Operating Expenses”, which is incorporated herein by reference.
Depreciation and Amortization. The Series recognize depreciation and amortization expense associated with their Properties and other capital expenditures over the expected useful lives of their Properties.
3
We incurred expenses of $35,690 for the six months ended June 30, 2021, as compared to $0 for the period from May 19, 2020 (inception) through June 30, 2020, as no Series had acquired a Property as of June 30, 2020. The following table summarizes the expenses incurred by Series:
Six Months Ended June 30, 2021 | Period from May 19, 2020 (inception) through June 30, 2020 | |||||||||||||||||||||||
Series | Operating Expenses | Depreciation | Total Expenses | Operating Expenses | Depreciation | Total Expenses | ||||||||||||||||||
Landa Series 115 Sardis Street | $ | 5,530 | $ | 1,988 | $ | 7,519 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Landa Series 1394 Oakview | 1,567 | 1,128 | 2,694 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 1701 Summerwoods Lane | 2,895 | 1,420 | 4,315 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 1741 Park Lane | 3,196 | 1,914 | 5,110 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 209 Timber Wolf Trail | 1,703 | 1,745 | 3,449 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 2505 Oak Circle | 2,601 | 1,424 | 4,025 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 271 Timber Wolf Trail | 2,067 | 1,801 | 3,868 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 29 Holly Grove Road | 3,147 | 1,564 | 4,711 | 0 | 0 | 0 | ||||||||||||||||||
Total Combined | $ | 22,707 | $ | 12,983 | $ | 35,690 | $ | 0 | $ | 0 | $ | 0 |
Market Outlook—Real Estate Finance Markets
While the recent spread of COVID-19 has created uncertainty about the overall stability of the economic and financial market, we remain encouraged by the fundamentals of the residential housing market and believe there will be an increased demand for single-family rentals. As we look ahead the next three years, we believe improving fundamentals, transactions, and residential real estate lending activities will continue to strengthen in core United States metro markets. We also expect high foreign direct investment in United States markets and real estate assets to continue. Further, the assistance provided by governmental support programs and commitments is expected to support U.S. capital markets over the immediate future.
If markets continue to strengthen, the competition for risk-adjusted yield will become increasingly fierce. We believe that innovative funding options and quicker closing timelines from our sponsor allow for greater financing availability in a period of rising competition amongst capital providers.
However, risks related to interest rate hikes and regulatory uncertainty could adversely affect growth and the values of our investments. In the event market fundamentals deteriorate, our real estate portfolio may be impaired as a result of lower occupancy, lower rental rates, and/or declining values. Further, these circumstances may materially impact the cost and availability of credit to borrowers, hampering the ability of the Manager to acquire new investments with attractive risk-reward dynamics.
Over the short term, we remain cautiously optimistic about the opportunity to acquire investments offering attractive risk-adjusted returns in our targeted investment markets. However, we recognize disruptions in financial markets can occur at any time. By targeting modest leverage and short target investment durations, we believe we will remain well positioned, as compared to our competitors, in the event current market dynamics deteriorate.
Critical Accounting Policies
Our accounting policies have been established to conform with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates on the Company’s financial statements and the reported amounts of revenue and expenses during the reporting periods. We believe that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements.
4
We believe our critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements.
For further information regarding “Related Party Arrangements,” please see Note 2, Summary of Significant Accounting policies, in our financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021 and December 31, 2020, we had no off-balance sheet arrangements.
Related Party Arrangements
For further information regarding “Related Party Arrangements,” please see Note 7, Related Party Transactions, in our financial statements.
Subsequent Events
For further information regarding “Subsequent Events,” please see Note 10, Subsequent Events, in our financial statements.
Item 2. Other Information
None.
5
Item 3. Financial Statements
6
LANDA APP SERIES GROUP (SERIES)
COMBINED BALANCE SHEETS
AS OF JUNE 30, 2021 (UNAUDITED)
Landa App LLC | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash | $ | 0 | $ | 4120 | $ | 3848 | $ | 3516 | $ | 3592 | ||||||||||
Restricted Cash | 0 | 0 | 0 | 950 | 0 | |||||||||||||||
Investments in single-family residential properties, net | 0 | 108,762 | 75,472 | 90,401 | 108,909 | |||||||||||||||
Due from related party | 0 | -27 | 5,617 | 3,653 | 4,958 | |||||||||||||||
Other Assets | 0 | -810 | 0 | 0 | 0 | |||||||||||||||
Total Assets | 0 | 112,045 | 84,937 | 98,520 | 117,459 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Notes Payable - related party, net of unamortized discount | 0 | 117,236 | 80,067 | 95,474 | 116,527 | |||||||||||||||
Due to Related Party | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other Liabilities | 0 | 1,051 | 1,622 | 2,256 | 1,684 | |||||||||||||||
Total Liabilities | 0 | 118,288 | 81,689 | 97,730 | 118,211 | |||||||||||||||
Commitments and Contingencies (Note 10) | ||||||||||||||||||||
Members’ Equity / (Deficit) | ||||||||||||||||||||
Retained Earnings (Accumulated deficit) | 0 | -3,563 | 1,292 | -596 | 8 | |||||||||||||||
Current Year Net Income | -2,679 | 1,956 | 1,385 | -760 | ||||||||||||||||
Total Liabilities and Members’ Equity / (Deficit) | $ | 0 | $ | 112,046 | $ | 84,937 | $ | 98,518 | $ | 117,459 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-1
LANDA APP LLC (LANDA APP)
LANDA APP SERIES GROUP (SERIES)
COMBINED BALANCE SHEETS
AS OF JUNE 30, 2021 (UNAUDITED) (continued)
Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total Combined | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash | $ | 3978 | $ | 1594 | $ | 5908 | $ | 3384 | $ | 29,940 | ||||||||||
Restricted Cash | 775 | 750 | 0 | 600 | 3075 | |||||||||||||||
Investments in single-family residential properties, net | 113,668 | 101,387 | 122,193 | 95,419 | 816,212 | |||||||||||||||
Due from related party | 4,300 | -7,245 | -5,337 | 990 | 6908.69 | |||||||||||||||
Other Assets | 775 | 2,833 | -1900 | 10 | 908 | |||||||||||||||
Total Assets | 123,496 | 99,319 | 120,865 | 100,403 | 857,044 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Notes Payable - related party, net of unamortized discount | 119,799 | 98,460 | 123,369 | 100,427 | 851,360 | |||||||||||||||
Due to Related Party | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other Liabilities | 1,808 | 1,632 | 829 | 1,629 | 12,511 | |||||||||||||||
Total Liabilities | 121,607 | 100,092 | 124,199 | 102,056 | 863,871 | |||||||||||||||
Commitments and Contingencies (Note 10) | ||||||||||||||||||||
Members’ Equity / (Deficit) | ||||||||||||||||||||
Retained Earnings (Accumulated deficit) | 687 | -2,086 | -5,166 | -1,162 | -10586 | |||||||||||||||
Current Year Net Income | 1,202 | 1,313 | 1,832 | -491 | 3,757 | |||||||||||||||
Total Liabilities and Members’ Equity / (Deficit) | $ | 123,495 | $ | 99,319 | $ | 120,865 | $ | 100,403 | $ | 857,042 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-2
LANDA APP SERIES GROUP (SERIES)
COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 2020
Landa App LLC | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash | $ | 0 | $ | 624 | $ | 3,066 | $ | 3,852 | $ | 2,137 | ||||||||||
Restricted Cash | 0 | 0 | 0 | 950 | 0 | |||||||||||||||
Investments in single-family residential properties, net | 0 | 110,751 | 76,600 | 91,821 | 110,823 | |||||||||||||||
Due from related party | 0 | 1,553 | 2,321 | 0 | 3,519 | |||||||||||||||
Other Assets | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Total Assets | 0 | 112,928 | 81,987 | 96,623 | 116,479 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Notes Payable - related party, net of unamortized discount | 0 | 115,980 | 79,678 | 95,160 | 115,651 | |||||||||||||||
Due to Related Party | 0 | 0 | 0 | 474 | 0 | |||||||||||||||
Other Liabilities | 0 | 511 | 1,017 | 1,585 | 820 | |||||||||||||||
Total Liabilities | 0 | 116,491 | 80,695 | 97,219 | 116,471 | |||||||||||||||
Commitments and Contingencies (Note 10) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Members’ Equity / (Deficit) | ||||||||||||||||||||
Retained Earnings (Accumulated deficit) | 0 | -3,563 | 1,292 | -596 | 8 | |||||||||||||||
Total Liabilities and Members’ Equity / (Deficit) | $ | 0 | $ | 112,928 | $ | 81,987 | $ | 96,623 | 116,479 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-3
LANDA APP LLC (LANDA APP)
LANDA APP SERIES GROUP (SERIES)
COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 2020 (continued)
Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total Combined | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash | $ | 2,962 | $ | 70 | $ | 1,230 | $ | 2,766 | $ | 16,707 | ||||||||||
Restricted Cash | 775 | 0 | 0 | 0 | 1,725 | |||||||||||||||
Investments in single-family residential properties, net | 115,414 | 102,810 | 123,994 | 96,983 | 829,196 | |||||||||||||||
Due from related party | 2,203 | 0 | 0 | 433 | 10,029 | |||||||||||||||
Other Assets | 0 | 1,750 | 0 | 0 | 1,750 | |||||||||||||||
Total Assets | 121,354 | 104,630 | 125,224 | 100,182 | 859,407 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Notes Payable - related party, net of unamortized discount | 119,268 | 98,272 | 122,575 | 100,099 | 846,683 | |||||||||||||||
Due to Related Party | 0 | 7,265 | 7,412 | 0 | 15,151 | |||||||||||||||
Other Liabilities | 1,399 | 1,179 | 403 | 1,245 | 8,159 | |||||||||||||||
Total Liabilities | 120,667 | 106,716 | 130,390 | 101,344 | 869,993 | |||||||||||||||
Commitments and Contingencies (Note 10) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Members’ Equity / (Deficit) | ||||||||||||||||||||
Retained Earnings (Accumulated deficit) | 687 | -2,086 | -5,166 | -1,162 | -10,586 | |||||||||||||||
Total Liabilities and Members’ Equity / (Deficit) | $ | 121,354 | $ | 104,630 | $ | 125,224 | $ | 100,182 | $ | 859,407 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-4
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021 (UNAUDITED)
Landa App LLC | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | ||||||||||||||||
Rental Income | $ | 0 | $ | 4,840 | $ | 4,650 | $ | 5,700 | $ | 4,350 | ||||||||||
Expenses | ||||||||||||||||||||
Property maintenance | 0 | 3,115 | 0 | 948 | 881 | |||||||||||||||
Property management expense - related party | 0 | 387 | 372 | 456 | 348 | |||||||||||||||
Property taxes | 0 | 540 | 606 | 671 | 864 | |||||||||||||||
Property insurance | 0 | 231 | 200 | 206 | 227 | |||||||||||||||
Depreciation and amortization | 0 | 1,988 | 1,128 | 1,420 | 1,914 | |||||||||||||||
Interest expense | 0 | 1,257 | 389 | 314 | 876 | |||||||||||||||
Other Expenses | 0 | 0 | 0 | 300 | 0 | |||||||||||||||
Expenses | 0 | 7,519 | 2,694 | 4,315 | 5,110 | |||||||||||||||
Net Income (loss) before provision for income tax | 0 | -2,679 | 1,956 | 1,385 | -760 | |||||||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net Income (loss) | $ | 0 | $ | -2,679 | $ | 1,956 | $ | 1,385 | $ | -760 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-5
LANDA APP LLC (LANDA APP)
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021 (UNAUDITED) (continued)
Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total Combined | ||||||||||||||||
Rental Income | $ | 4,650 | $ | 5,338 | $ | 5,700 | $ | 4,220 | $ | 39,448 | ||||||||||
Expenses | ||||||||||||||||||||
Property maintenance | 0 | 1,314 | 0 | 1,599 | 7,858 | |||||||||||||||
Property management expense - related party | 372 | 420 | 456 | 338 | 3,149 | |||||||||||||||
Property taxes | 410 | 453 | 426 | 681 | 4,651 | |||||||||||||||
Property insurance | 224 | 227 | 224 | 200 | 1,738 | |||||||||||||||
Depreciation and amortization | 1,745 | 1,424 | 1,801 | 1,564 | 12,983 | |||||||||||||||
Interest expense | 530 | 187 | 794 | 329 | 4,677 | |||||||||||||||
Other Expenses | 168 | 0 | 168 | 0 | 635 | |||||||||||||||
Expenses | 3,449 | 4,025 | 3,868 | 4,711 | 35,690 | |||||||||||||||
Net Income (loss) before provision for income tax | 1,202 | 1,313 | 1,832 | -491 | 3,757 | |||||||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net Income (loss) | $ | 1,202 | $ | 1,313 | $ | 1,832 | $ | -491 | $ | 3,757 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-6
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF OPERATIONS
LANDA APP FOR THE PERIOD FROM JANUARY 1, 2020 TO JUNE 30, 2020 (UNAUDITED)
SERIES FOR THE PERIOD FROM MAY 19, 2020 (INCEPTION) TO JUNE 30, 2020 (UNAUDITED)
Landa App LLC | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total Combined | |||||||||||||||||||||||||||||||
Rental Income | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Property maintenance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Property management expense - related party | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Property taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Property insurance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Interest expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Other Expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Net Income (loss) before provision for income tax | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Net Income (loss) | $ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-7
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
FOR THE PERIODS FROM JANUARY 1, 2020 TO JUNE 30, 2020 (UNAUDITED)
AND JANUARY 1, 2021 TO JUNE 30, 2021 (UNAUDITED)
Landa App | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | ||||||||||||||||
January 1, 2021 | $ | 0 | $ | -3,563 | $ | 1,292 | $ | -596 | $ | 8 | ||||||||||
Net Income / (Loss) | 0 | -2,679 | 1,956 | 1,385 | -760 | |||||||||||||||
June 30, 2021 | $ | 0 | $ | -6,242 | $ | 3,248 | $ | 789 | $ | -752 | ||||||||||
January 1, 2020 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Net Income / (Loss) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
June 30, 2020 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total | ||||||||||||||||
January 1, 2021 | $ | 687 | $ | -2,086 | $ | -5,166 | $ | -1,162 | $ | -10,586 | ||||||||||
Net Income / (Loss) | 1,202 | 1,313 | 1,832 | -491 | 3,757 | |||||||||||||||
June 30, 2021 | $ | 1,889 | $ | -773 | $ | -3,334 | $ | -1,653 | $ | -6,829 | ||||||||||
January 1, 2020 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Net Income / (Loss) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
June 30, 2020 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-8
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021 (UNAUDITED)
Landa App | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | ||||||||||||||||
Operating Activities: | ||||||||||||||||||||
Net Income (loss) before provision for income tax | $ | 0 | $ | -2,679 | $ | 1,956 | $ | 1,385 | $ | -760 | ||||||||||
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and Amortization | 0 | 1,988 | 1,128 | 1,420 | 1,914 | |||||||||||||||
Amortization of debt discount | 0 | 1,257 | 389 | 314 | 876 | |||||||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Due from Related Party | 0 | 1,580 | -3,296 | -4,127 | -1,439 | |||||||||||||||
Other assets | 0 | 810 | 0 | 0 | 0 | |||||||||||||||
Other liabilities | 0 | 540 | 605 | 671 | 864 | |||||||||||||||
Net cash provided by (used in) operating activities | 0 | 3,497 | 781 | -337 | 1,455 | |||||||||||||||
Investing Activities | ||||||||||||||||||||
Improvements to single-family residential properties | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net cash provided by (used in) investing activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Financing Activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net Increase (Decrease) in Cash and Restricted Cash | 0 | 3,497 | 781 | -337 | 1,455 | |||||||||||||||
Cash and Restricted Cash at Beginning of Period | 0 | 624 | 3066 | 4802 | 2137 | |||||||||||||||
Cash and Restricted Cash at End of Period | $ | 0 | $ | 4,121 | $ | 3,847 | $ | 4,465 | $ | 3,592 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-9
LANDA APP LLC (LANDA APP)
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 2021 TO JUNE 30, 2021 (UNAUDITED) (continued)
Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total | ||||||||||||||||
Operating Activities: | ||||||||||||||||||||
Net Income (loss) before provision for income tax | $ | 1,202 | $ | 1,313 | $ | 1,832 | $ | -491 | $ | 3,757 | ||||||||||
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and Amortization | 1,745 | 1,424 | 1,801 | 1,564 | 12,983 | |||||||||||||||
Amortization of debt discount | 530 | 187 | 794 | 329 | 4,677 | |||||||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Due from Related Party | -2,097 | -20 | -2,075 | -557 | -12,031 | |||||||||||||||
Other assets | -775 | -1,083 | 1900 | -10 | 842 | |||||||||||||||
Other liabilities | 409 | 453 | 426 | 384 | 4,352 | |||||||||||||||
Net cash provided by (used in) operating activities | 1,014 | 2,274 | 4,678 | 1,219 | 14,581 | |||||||||||||||
Investing Activities | ||||||||||||||||||||
Improvements to single-family residential properties | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net cash provided by (used in) investing activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Financing Activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Net Increase (Decrease) in Cash and Restricted Cash | 1,014 | 2,274 | 4,678 | 1,219 | 14,581 | |||||||||||||||
Cash and Restricted Cash at Beginning of Period | 3737 | 70 | 1230 | 2766 | 18432 | |||||||||||||||
Cash and Restricted Cash at End of Period | $ | 4,751 | $ | 2,344 | $ | 5,908 | $ | 3,985 | $ | 33,013 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-10
LANDA APP SERIES GROUP (SERIES)
COMBINED STATEMENTS OF CASH FLOWS
LANDA APP FOR THE PERIOD FROM JANUARY 1, 2020 TO JUNE 30, 2020 (UNAUDITED)
SERIES FOR THE PERIOD FROM MAY 19, 2020 (INCEPTION) TO JUNE 30, 2020 (UNAUDITED)
Landa App | Landa Series 115 Sardis Street | Landa Series 1394 Oakview | Landa Series 1701 Summerwoods Lane | Landa Series 1741 Park Lane | Landa Series 209 Timber Wolf Trail | Landa Series 2505 Oak Circle | Landa Series 271 Timber Wolf Trail | Landa Series 29 Holly Grove Road | Total | |||||||||||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||||||||||||||||||
Net Income (loss) before provision for income tax | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Adjustments to reconcile net income / (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Investing Activities | ||||||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Financing Activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Net Increase (Decrease) in Cash and Restricted Cash | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Cash and Restricted Cash at Beginning of Period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Cash and Restricted Cash at End of Period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
The accompanying notes are an integral part of these combined unaudited financial statements
F-11
LANDA APP SERIES GROUP (SERIES)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. | ORGANIZATION, NATURE OF ACTIVITIES AND GOING CONCERN |
Landa App LLC (the “Company,” “us,” “we,”, “our”, or the “Master Series”), is currently a Delaware series limited liability company organized on November 25, 2019. On April 30, 2020, the Company changed its name from Landa Properties A LLC. The Company is a wholly owned subsidiary of Landa Holdings, Inc. and currently operates under an operating agreement with Landa Holdings, Inc. (the “Manager”). The Manager serves as the asset manager for the real estate properties owned by the Company and each underlying Series (as defined below). The Company was formed to engage in the business of acquiring, managing and renting commercial and residential properties (the “Property”, and collectively, the “Properties”). The Company has created, and it is expected that the Company will continue to create, separate series of interests registered under the Company (each a “Series”), that each Property will be owned by a separate Series and that the assets and liabilities of each Series will be separate in accordance with Delaware law. Investors acquire membership interest, or shares, in each Series and will be entitled to share in the return of that particular Series but will not be entitled to share in the return of any other Series. The Company intends to treat each Series as a separate entity for U.S. federal income tax purposes and will elect to be treated as a corporation. The Company and each Series grouped together, (the “Landa App Series Group,”) are herein, referred to as (the “Combined Group.”)
On May 19, 2020, the Company filed Certificates of Registered Series Limited Liability Company with the Secretary of State of the State of Delaware to register each of the Series.
On July 10, 2020, the initial set of properties were acquired from a related party by each of the respective Series. The acquisitions were accounted for as a commonly controlled transaction and recorded, accordingly at their carryover basis.
The Company is a business that has not commenced planned principal operations and has not generated revenues or profits since inception. Once the Company commences its planned principal operations which will occur after qualification, it will incur significant additional expenses. The Company is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and uncertainties, including failing to secure funding to commence the Company’s planned operations or failing to profitably operate the business.
Each Series has commenced its planned operations. However, each Series is dependent upon additional capital resources from its planned offering. Each Series is subject to significant risks and uncertainties, including failing to secure funding to commence the Series’ planned operations or failing to profitably operate the business
As a result, the accompanying financial statements for the Combined Group have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Going Concern
The Combined Group’s ability to continue as a going concern for the next twelve months is dependent upon, among other things, the ability to successfully implement the business model, raise sufficient capital from outside investors and deploy such to produce profitable operating results. No assurance can be given that the Combined Group will be successful in these efforts. These factors, among others, raise substantial doubt about the ability of the Combined Group to continue as a going concern for the next twelve months from the date the financial statements are issued.
The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Combined Group be unable to continue as a going concern.
F-12
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The combined financial statements of Landa App LLC and each of the Series are being presented on a combined basis, in accordance with U.S. GAAP (ASC 810, Consolidation) due to common control by Landa Holdings, Inc., in its capacity as Manager to the Company and each Series.
In the opinion of management, these financial statements reflect all adjustments consisting of normal recurring accruals, necessary for a fair statement of financial position, results of operations and cash flows for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year.
The combined financial statements include the eight (8) single-family homes located in the Atlanta metropolitan area in the state of Georgia. Each Property was acquired by each respective Series in the Master Series table below in July 2020:
Series Name | Series Inception Date | Acquisition Date | |||
1 | Series 115 Sardis Street | May 19, 2020 | July 10, 2020 | ||
2 | Series 1394 Oakview Circle | May 19, 2020 | July 10, 2020 | ||
3 | Series 1701 Summerwoods Lane | May 19, 2020 | July 10, 2020 | ||
4 | Series 1741 Park Lane | May 19, 2020 | July 10, 2020 | ||
5 | Series 209 Timber Wolf Trail | May 19, 2020 | July 10, 2020 | ||
6 | Series 2505 Oak Circle | May 19, 2020 | July 10, 2020 | ||
7 | Series 271 Timber Wolf Trail | May 19, 2020 | July 10, 2020 | ||
8 | Series 29 Holly Grove Road | May 19, 2020 | July 10, 2020 |
Significant Risks and Uncertainties
The Company is subject to customary risks and uncertainties with development of new technology including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, costs of services provided by third parties, the need to obtain additional financing, and limited operating history.
Use of Estimates
The preparation of the combined 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates inherent in the preparation of these financial statements include, but are not limited to, useful life of assets and depreciation expenses.
Cash and Restricted Cash
Each Series held the following amount of cash and restricted cash as of June 30, 2021 and December 31, 2020:
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
Series | Cash | Restricted Cash | Total | Cash | Restricted Cash | Total | ||||||||||||||||||
Landa Series 115 Sardis Street | $ | 4,120 | $ | 0 | $ | 4,120 | $ | 624 | $ | 0 | $ | 624 | ||||||||||||
Landa Series 1394 Oakview | 3,848 | 0 | 3,848 | 3,066 | 0 | 3,066 | ||||||||||||||||||
Landa Series 1701 Summerwoods Lane | 3,516 | 950 | 4,466 | 3,852 | 950 | 4,802 | ||||||||||||||||||
Landa Series 1741 Park Lane | 3,592 | 0 | 3,592 | 2,137 | 0 | 2,137 | ||||||||||||||||||
Landa Series 209 Timber Wolf Trail | 3,978 | 775 | 4,753 | 2,962 | 775 | 3,737 | ||||||||||||||||||
Landa Series 2505 Oak Circle | 1,594 | 750 | 2,344 | 70 | 0 | 70 | ||||||||||||||||||
Landa Series 271 Timber Wolf Trail | 5,908 | 0 | 5,908 | 0 | 0 | 0 | ||||||||||||||||||
Landa Series 29 Holly Grove Road | 3,384 | 600 | 3,984 | 2,766 | 0 | 2,766 | ||||||||||||||||||
Total Combined | $ | 29,940 | $ | 3,075 | $ | 33,015 | $ | 15,477 | $ | 1,725 | $ | 17,202 |
Cash includes all cash balances. Restricted cash includes tenant security deposits.
As a matter of performing its duties, the Manager at time will collect and hold cash on behalf of the Property. See Note 7: Related Party Transactions for more details.
F-13
Revenue
Revenues are generated at the Series level. Rental revenue, net of concessions, is recognized on a straight-line basis over the term of the lease. We will periodically review the collectability of the resident receivables and record an allowance for doubtful accounts for any estimated probable losses. Bad debt expenses will be recorded within property operating and maintenance expenses in the combined financial statements.
Real Estate Property Acquisitions
Upon acquisition from a third-party, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Upon adoption of ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, our purchases of homes are treated as asset acquisitions and are recorded at their purchase price, which is allocated between land, building and improvements, and in-place lease intangibles (when a resident is in place at the acquisition date) based upon their relative fair values at the date of acquisition.
Fair value is determined in accordance with ASC 820, Fair Value Measurements and Disclosures, and is primarily based on unobservable data inputs. In making estimates of fair values for purposes of allocating the purchase price of individually acquired properties subject to an existing lease, the Company utilizes its own market knowledge obtained from historical transactions, its internal construction program and published market data. In this regard, the Company also utilizes information obtained from county tax assessment records to assist in the determination of the fair value of the land and building.
The value of acquired lease-related intangibles is estimated based upon the costs we would have incurred to lease the property under similar terms. Such costs are capitalized and amortized over the remaining life of the lease. Acquired leases are generally short-term in nature (less than one year).
Upon acquisition from a related party, the Company considers this transaction between entities under common control. Under ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests, in this case, the Series, shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer.
In July 2020, the initial set of properties were acquired from a related party by each of the respective Series. The acquisitions were accounted for as a commonly controlled transaction and recorded, accordingly at their carryover basis.
Real Estate Depreciation
Real estate properties are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of buildings, improvements and other assets. Buildings are depreciated over twenty-seven and half years and improvements and other assets are depreciated over their estimated economic useful lives, generally three to thirty years.
Once a property is ready for its intended use, expenditures for ordinary maintenance and repairs are expensed to operations as incurred. We capitalize expenditures above a pre-determined threshold that improve or extend the life of a property.
F-14
Real Estate and Impairment
The Company continuously evaluates, by property, whether there are any events or changes in circumstances indicating that the carrying amount of the Series’ single-family residential properties may not be recoverable. To the extent an event or change in circumstance is identified, a residential property is considered to be impaired only if its carrying value cannot be recovered through estimated future undiscounted cash flows from the use and eventual disposition of the property. To the extent an impairment has occurred, the carrying amount of our investment in a property is adjusted to its estimated fair value. The process whereby we assess our single-family residential properties for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. We evaluate multiple information sources and perform a number of internal analyses, each of which are important components of our process with no one information source or analysis being necessarily determinative. No impairments on any property were recorded as of June 30, 2021 and December 31, 2020.
Earnings per Share
Basic earnings per share is calculated on the basis of weighted-average number of common shares outstanding during the year. Basic earnings per share is computed by dividing income available to members by the weighted-average common shares outstanding during the year.
Income Taxes
The Company intends to be taxed as a “disregarded entity” for federal income tax purposes and will not make any election or take any action that could cause it to be separately treated as an association taxable as a corporation under Subchapter C of the Internal Revenue Code of 1986. The elements of income and expense are included on the tax returns of the entity’s members.
Each individual Series has elected to be treated as a corporation for tax purposes. Each separate Series intends to be accounted for as described in ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Series recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. There were no uncertain tax positions as of June 30, 2021 and December 31, 2020.
The Series’ determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.
The Series is subject to incomes taxes for US Federal purposes and in the state of Georgia. The Series’ tax years are open for examinations for all periods since inception.
Organization and Offering Costs
The Manager will pay all costs incurred in connection with each Series’ organization, including, the Series’ registration fee and franchise tax in the states of Delaware and Georgia. In addition, the Manager will pay all costs incurred in connection with each Offering.
F-15
3. | RECENT ACCOUNTING STANDARDS |
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU was effective for annual and interim periods beginning after December 15, 2019, including interim periods within those fiscal years. In April 2020, the FASB voted to defer the effective date of ASC 842 for private companies and certain no-for-profit entities for one year. For private companies and private NFPs, the leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. For public NFPs the leasing standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
4. | FAIR VALUE MEASUREMENTS |
Fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:
Level 1 - Observable inputs, such as quoted prices for identical assets or liabilities in active markets;
Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, such as quoted prices for similar assets or liabilities, or market-corroborated inputs; and
Level 3 - Unobservable inputs for which there is little or no market data which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.
The valuation techniques that may be used to measure fair value are as follows:
Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models, and excess earnings method.
Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
As of June 30, 2021 and December 31, 2020, each of the Series’ significant financial instruments consist of cash and cash equivalents, and related party payables. The carrying amount of each of the Series’ financial instruments approximates their fair values due to their short-term nature.
F-16
5. | INVESTMENTS IN SINGLE-FAMILY RESIDENTIAL PROPERTIES |
The following table sets forth the net carrying amount associated with each Series’ property by component as of June 30, 2021 and December 31, 2020:
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||
Series | Building & Improvements | Land | Total gross investments | Less: Accumulated Depreciation | Investments in single- family residential properties, net | Building & Improvements | Land | Total gross investments | Less: Accumulated Depreciation | Investments in single- family residential properties, net | ||||||||||||||||||||||||||||||
Landa Series 115 Sardis Street | $ | 106,704 | $ | 5,928 | $ | 112,632 | $ | -3,870 | $ | 108,762 | $ | 106,704 | $ | 5,928 | $ | 112,632 | $ | -1,881 | $ | 110,751 | ||||||||||||||||||||
Landa Series 1394 Oakview | 60,514 | 17,153 | 77,667 | -2,195 | 75,472 | 60,514 | 17,153 | 77,667 | -1,067 | 76,600 | ||||||||||||||||||||||||||||||
Landa Series 1701 Summerwoods Lane | 76,208 | 16,958 | 93,165 | -2,764 | 90,401 | 76,208 | 16,958 | 93,166 | -1,344 | 91,822 | ||||||||||||||||||||||||||||||
Landa Series 1741 Park Lane | 102,709 | 9,924 | 112,634 | -3,725 | 108,909 | 102,709 | 9,924 | 112,633 | -1,811 | 110,822 | ||||||||||||||||||||||||||||||
Landa Series 209 Timber Wolf Trail | 93,667 | 23,399 | 117,065 | -3,397 | 113,668 | 93,667 | 23,399 | 117,066 | -1,652 | 115,414 | ||||||||||||||||||||||||||||||
Landa Series 2505 Oak Circle | 83,595 | 20,602 | 104,197 | -2,810 | 101,387 | 83,595 | 20,602 | 104,197 | -1,387 | 102,810 | ||||||||||||||||||||||||||||||
Landa Series 271 Timber Wolf Trail | 102,740 | 22,992 | 125,732 | -3,539 | 122,193 | 102,740 | 22,992 | 125,732 | -1,738 | 123,994 | ||||||||||||||||||||||||||||||
Landa Series 29 Holly Grove Road | 83,937 | 14,526 | 98,463 | -3,044 | 95,419 | 83,937 | 14,526 | 98,463 | -1,480 | 96,983 | ||||||||||||||||||||||||||||||
Total Combined | $ | 710,073 | $ | 131,481 | $ | 841,555 | $ | -25,343 | $ | 816,212 | $ | 710,074 | $ | 131,482 | $ | 841,556 | $ | -12,360 | $ | 829,196 |
Each Series recognized the following in depreciation expense:
Six Months Ended June 30, 2021 | Period from May 19, 2020 (inception) through June 30, 2020 | |||||||
Series | Depreciation Expense | Depreciation Expense | ||||||
Landa Series 115 Sardis Street | $ | 1,988 | $ | 0 | ||||
Landa Series 1394 Oakview Circle | 1,128 | 0 | ||||||
Landa Series 1701 Summerwoods Lane | 1,420 | 0 | ||||||
Landa Series 1741 Park Lane | 1,914 | 0 | ||||||
Landa Series 209 Timber Wolf Trail | 1,745 | 0 | ||||||
Landa Series 2505 Oak Circle | 1,424 | 0 | ||||||
Landa Series 271 Timber Wolf Trail | 1,801 | 0 | ||||||
Landa Series 29 Holly Grove Road | 1,564 | 0 | ||||||
Total Combined | $ | 12,983 | $ | 0 |
As of June 30, 2021 and December 31, 2020, the above includes cumulative acquisition fees paid to the Manager of $47,102 and $47,102, respectively.
F-17
6. | MEMBER’S EQUITY (DEFICIT) |
The Company is organized as a series limited liability company. As such, the liability of the members of the Company for the financial obligations of the Company is limited to each member’s contribution of capital.
7. | RELATED PARTY TRANSACTIONS |
Landa Holdings Inc., Manager
Notes Payable
Series | Original Outstanding Amount(1) | Annual Interest Rate | Loan Date | Outstanding | Outstanding As of | |||||||||||||
Landa Series 115 Sardis Street | $ | 117,304 | 0.0 | % | 7/10/20 | $ | 117,236 | $ | 115,980 | |||||||||
Landa Series 1394 Oakview Circle | $ | 80,088 | 0.0 | % | 7/10/20 | $ | 80,067 | $ | 79,678 | |||||||||
Landa Series 1701 Summerwoods Lane | $ | 95,491 | 0.0 | % | 7/10/20 | $ | 95,474 | $ | 95,160 | |||||||||
Landa Series 1741 Park Lane | $ | 116,574 | 0.0 | % | 7/10/20 | $ | 116,527 | $ | 115,651 | |||||||||
Landa Series 209 Timber Wolf Trail | $ | 119,827 | 0.0 | % | 7/10/20 | $ | 119,799 | $ | 119,268 | |||||||||
Landa Series 2505 Oak Circle | $ | 98,471 | 0.0 | % | 7/10/20 | $ | 98,460 | $ | 98,272 | |||||||||
Landa Series 271 Timber Wolf Trail | $ | 123,412 | 0.0 | % | 7/10/20 | $ | 123,369 | $ | 122,575 | |||||||||
Landa Series 29 Holly Grove Road | $ | 100,445 | 0.0 | % | 7/10/20 | $ | 100,427 | $ | 100,099 |
(1) | The principal amount is due and payable by the Series within 30 days after the demand by the Manager, as lender, at any time prior to the liquidation, dissolution or winding up of the Series. |
The balance in connection with the acquisition of its property, each Series issued an unsecured non-interest-bearing promissory note in principal amount to the Manager (each an “Acquisition Note”). The outstanding amount of each Acquisition Note is listed in the table below along with the respective terms of such note. Each note is an unsecured obligation of the applicable Series.
The Company imputed interest expense for the loan using an interest rate of 4.5% over a one-year period (the rate in which refinancing is expected) less any premiums paid on behalf of acquiring the asset. This resulted in discount that is recognized over the expected life the loan.
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||
Series | Carrying Amount | Unamortized Discount | Outstanding Amount | Imputed Interest Expense for the Period | Carrying Amount | Unamortized Discount | Outstanding Amount | Imputed Interest Expense for the Period (1) | ||||||||||||||||||||||||
Landa Series 115 Sardis Street | $ | 117,236 | $ | 68 | $ | 117,304 | $ | 1,257 | $ | 115,980 | $ | 1,324 | $ | 117,304 | $ | 1,189 | ||||||||||||||||
Landa Series 1394 Oakview | $ | 80,067 | $ | 21 | $ | 80,088 | $ | 389 | $ | 79,678 | $ | 410 | 80,088 | 368 | ||||||||||||||||||
Landa Series 1701 Summerwoods Lane | $ | 95,474 | $ | 17 | $ | 95,491 | $ | 314 | $ | 95,160 | $ | 331 | 95,491 | 298 | ||||||||||||||||||
Landa Series 1741 Park Lane | $ | 116,527 | $ | 47 | $ | 116,574 | $ | 876 | $ | 115,651 | $ | 923 | 116,574 | 829 | ||||||||||||||||||
Landa Series 209 Timber Wolf Trail | $ | 119,799 | $ | 28 | $ | 119,827 | $ | 530 | $ | 119,268 | $ | 559 | 119,827 | 502 | ||||||||||||||||||
Landa Series 2505 Oak Circle | $ | 98,460 | $ | 11 | $ | 98,471 | $ | 187 | $ | 98,272 | $ | 199 | 98,471 | 177 | ||||||||||||||||||
Landa Series 271 Timber Wolf Trail | $ | 123,369 | $ | 43 | $ | 123,412 | $ | 794 | $ | 122,575 | $ | 837 | 123,412 | 751 | ||||||||||||||||||
Landa Series 29 Holly Grove Road | $ | 100,427 | $ | 18 | $ | 100,445 | $ | 329 | $ | 100,099 | $ | 346 | 100,445 | 311 |
(1) | The interest expense recognized for the period from July 10, 2020 (the issue date of each Acquisition Note) to December 31, 2020. |
F-18
Property Management expense
The Manager receive fees, reimbursements, and compensation in connection with the acquisition and Property management of the Series’ real estate investments. The following shows the amounts received from each Series for property management fees:
Six Months Ended June 30, 2021 | Period from May 19, 2020 (inception) through June 30, 2020 | |||||||
Series | Property Management Fee | Property Management Fee | ||||||
Landa Series 115 Sardis Street | $ | 387 | $ | 0 | ||||
Landa Series 1394 Oakview | 372 | 0 | ||||||
Landa Series 1701 Summerwoods Lane | 456 | 0 | ||||||
Landa Series 1741 Park Lane | 348 | 0 | ||||||
Landa Series 209 Timber Wolf Trail | 372 | 0 | ||||||
Landa Series 2505 Oak Circle | 420 | 0 | ||||||
Landa Series 271 Timber Wolf Trail | 456 | 0 | ||||||
Landa Series 29 Holly Grove Road | 338 | 0 | ||||||
Total Combined | $ | 3,149 | $ | 0 |
Due from (Due to) Related Party
As part of its role as property manager, the Manager at times will collect rent on behalf of each of the Series. The Series will also reimburse the Manager for out-of-pocket expenses paid to third parties in connection with providing services to each of the series. The following table sets forth the net amount as of June 30, 2021 and December 31, 2020
June 30, 2021 | December 31, 2020 | |||||||
Series | Due From (Due to) Related Party (net) | Due From (Due to) Related Party (net) | ||||||
Landa Series 115 Sardis Street | $ | -27 | $ | 1,552 | ||||
Landa Series 1394 Oakview | 5,617 | 2,322 | ||||||
Landa Series 1701 Summerwoods Lane | 3,653 | -473 | ||||||
Landa Series 1741 Park Lane | 4,958 | 3,519 | ||||||
Landa Series 209 Timber Wolf Trail | 4,300 | 2,204 | ||||||
Landa Series 2505 Oak Circle | -7,245 | -7264 | ||||||
Landa Series 271 Timber Wolf Trail | -5,337 | -7412 | ||||||
Landa Series 29 Holly Grove Road | 990 | 433 | ||||||
Total Combined | $ | 6,909 | $ | -5,119 |
F-19
8. | OTHER ASSETS AND LIABILITIES |
Each of the Series’ balance in other assets as of June 30, 2021 and December 31, 2020 is as follows:
June 30, 2021 | December 31, 2020 | |||||||
Series | Rent Receivable | Rent Receivable | ||||||
Landa Series 115 Sardis Street | $ | 780 | $ | 0 | ||||
Landa Series 1394 Oakview | 0 | 0 | ||||||
Landa Series 1701 Summerwoods Lane | 0 | 0 | ||||||
Landa Series 1741 Park Lane | 0 | 0 | ||||||
Landa Series 209 Timber Wolf Trail | 775 | 0 | ||||||
Landa Series 2505 Oak Circle | 2,844 | 1,750 | ||||||
Landa Series 271 Timber Wolf Trail | 1950 | 0 | ||||||
Landa Series 29 Holly Grove Road | 20 | 0 | ||||||
Total Combined | $ | 6,369 | $ | 1,750 |
Each of the Series’ balance in other liabilities as of June 30, 2021 and December 31, 2020 is as follows:
June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
Series | Security Deposits | Accrued Taxes | Total Other Liabilities | Security Deposits | Accrued Taxes | Total Other Liabilities | ||||||||||||||||||
Landa Series 115 Sardis Street | $ | 0 | $ | 1051.09 | $ | 1051.09 | $ | 0 | $ | 511 | $ | 511 | ||||||||||||
Landa Series 1394 Oakview | 0 | 1,179 | 1,179 | 0 | 1,016 | 1,016 | ||||||||||||||||||
Landa Series 1701 Summerwoods Lane | 950 | 1,305 | 2,255 | 950 | 635 | 1,585 | ||||||||||||||||||
Landa Series 1741 Park Lane | 0 | 1681.43 | 1681.43 | 0 | 820 | 820 | ||||||||||||||||||
Landa Series 209 Timber Wolf Trail | 775 | 797 | 1,572 | 775 | 624 | 1,399 | ||||||||||||||||||
Landa Series 2505 Oak Circle | 750 | 882 | 1,632 | 750 | 429 | 1,179 | ||||||||||||||||||
Landa Series 271 Timber Wolf Trail | 0 | 829.22 | 829.22 | 0 | 403 | 403 | ||||||||||||||||||
Landa Series 29 Holly Grove Road | 600 | 1,029 | 1,629 | 600 | 645 | 1,245 | ||||||||||||||||||
Total Combined | $ | 3,075 | $ | 8,754 | $ | 11,829 | $ | 3,075 | $ | 5,083 | $ | 8,158 |
9. | COMMITMENTS AND CONTINGENCIES |
Legal Proceedings
As of the date of the accompanying unaudited financial statements, the Company was not a party in any active or pending litigation. However, it is possible that the Company could become involved in various litigation matters arising in the ordinary course of its business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, management is not aware of any litigation likely to occur that would have a material adverse effect on the financial condition or results of operations of the Company.
Minimum Future Rental Commitments
Future minimum rental revenues under leases existing for each of the series as of June 30, 2021 are as follows:
Series | 2021 | 2022 | ||||||
Landa Series 115 Sardis Street | $ | 4,860 | $ | 1,620 | ||||
Landa Series 1394 Oakview | 4,650 | 0 | ||||||
Landa Series 1701 Summerwoods Lane | 1,900 | 0 | ||||||
Landa Series 1741 Park Lane | 4,350 | 0 | ||||||
Landa Series 209 Timber Wolf Trail | 4,650 | 0 | ||||||
Landa Series 2505 Oak Circle | 0 | 0 | ||||||
Landa Series 271 Timber Wolf Trail | 2,850 | 0 | ||||||
Landa Series 29 Holly Grove Road | 4,260 | 2,840 | ||||||
Total Combined | $ | 27,520 | $ | 4,460 |
F-20
10. | SUBSEQUENT EVENTS |
Qualification
In July 2021, the following Series were included in an Offering Statement that received qualification from the SEC.
Series Name | ||
1 | Landa Series 115 Sardis Street | |
2 | Landa Series 1394 Oakview Circle | |
3 | Landa Series 1701 Summerwoods Lane | |
4 | Landa Series 1741 Park Lane | |
5 | Landa Series 209 Timber Wolf Trail | |
6 | Landa Series 2505 Oak Circle | |
7 | Landa Series 271 Timber Wolf Trail | |
8 | Landa Series 29 Holly Grove Road |
Refinance Note
Each of the following series of Landa App LLC (each a “Series,” and collectively the “Series”) issued a non-convertible promissory note to its manager, Landa Holdings, Inc. (the “Manager”) on the terms set forth in the table below (each a “Refinance Note” and collectively, the “Refinance Notes”) and the amounts outstanding under the Series’ existing promissory notes issued to the Manager were reduced by the respective principal amounts of the Refinance Notes. Each Refinance Note is an unsecured obligation of the applicable Series.
Series | Principal Amount of Note | Annual Interest Rate | Issuance Date | Maturity Date | ||||||||
Landa Series 115 Sardis Street | $ | 64,789 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 1394 Oakview Circle | $ | 44,015 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 1701 Summerwoods Lane | $ | 52,703 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 1741 Park Lane | $ | 64,359 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 209 Timber Wolf Trail | $ | 66,476 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 2505 Oak Circle | $ | 54,728 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 271 Timber Wolf Trail | $ | 68,227 | 4.50 | % | July 1, 2021 | July 1, 2026 | ||||||
Landa Series 29 Holly Grove Road | $ | 55,718 | 4.50 | % | July 1, 2021 | July 1, 2026 |
The Company has evaluated events that occur after the balance sheet date through the date the unaudited financial statements are available to be issued. Management has evaluated events through September 24, 2021, the date these unaudited financial statements were available to be issued. All significant events have been disclosed.
F-21
Item 4. Exhibit Index
Index to Exhibits
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SIGNATURES
Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Landa App LLC | ||
By: | Landa Holdings, Inc., its Manager | |
By: | /s/ Yishai Cohen | |
Name: | Yishai Cohen | |
Title: | Chief Executive Officer |
Date: September 27, 2021
Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.
Signature | Title | Date | ||
/s/ Yishai Cohen | Chairman, Chief Executive Officer and | September 27, 2021 | ||
Yishai Cohen | President of Landa Holdings, Inc. (Principal Executive Officer) | |||
/s/ Gregory Crimmins | Head of Finance of Landa Holdings, Inc. | September 27, 2021 | ||
Gregory Crimmins | (Principal Financial Officer and Principal Accounting Officer) |
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