ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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90-0413866
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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66 Bovet Road, Suite 100
San Mateo, California, 94402
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(650) 343-9300
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(Address of Principal Executive Offices; Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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ý
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Smaller reporting company
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ý
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Emerging growth company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
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December 31,
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||||
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2018
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|
2017
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||||
ASSETS
|
|
|
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||||
Investments in real estate
|
|
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||||
Land
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$
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15,217
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$
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14,020
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Building and improvements
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32,013
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30,825
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Tenant improvements
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1,466
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1,188
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48,696
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46,033
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Accumulated depreciation
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(3,619
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)
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(2,579
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)
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Investments in real estate, net
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45,077
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43,454
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Properties under development and development costs
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Land
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25,851
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25,851
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Buildings
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574
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|
585
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Development costs
|
12,928
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|
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9,609
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||
Properties under development and development costs
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39,353
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36,045
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||
Cash, cash equivalents and restricted cash
|
3,148
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3,902
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Prepaid expenses and other assets, net
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272
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200
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|
||
Tenant receivables, net of $62 and $0 bad debt reserve
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791
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1,007
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Investments in unconsolidated joint ventures
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3,030
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2,705
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Lease intangibles, net
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1,910
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|
2,061
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Assets held for sale
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12,683
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20,646
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Deferred financing costs, net
|
894
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1,258
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TOTAL ASSETS
(1)
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$
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107,158
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$
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111,278
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LIABILITIES AND EQUITY
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LIABILITIES
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Notes payable, net
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$
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43,979
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$
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42,223
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Accounts payable and accrued expenses
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1,775
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|
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2,006
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Amounts due to affiliates
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24
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21
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Other liabilities
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300
|
|
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387
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||
Liabilities related to assets held for sale
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5,963
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13,017
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Below-market lease liabilities, net
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386
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438
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|
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Deferred gain on sale of properties to unconsolidated joint venture
|
—
|
|
|
668
|
|
||
TOTAL LIABILITIES
(1)
|
52,427
|
|
|
58,760
|
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||
Commitments and contingencies (Note 13)
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EQUITY
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Stockholders’ equity
|
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||||
Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding
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—
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—
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Common stock, $0.01 par value; 400,000,000 shares authorized; 10,926,513 and 10,988,438 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
|
111
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111
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Additional paid-in capital
|
95,717
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96,097
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Accumulated deficit
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(42,189
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)
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(44,741
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)
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Total stockholders’ equity
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53,639
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51,467
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Non-controlling interests
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1,092
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1,051
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TOTAL EQUITY
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54,731
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|
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52,518
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TOTAL LIABILITIES AND EQUITY
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$
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107,158
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$
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111,278
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(1)
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As of
September 30, 2018
and
December 31, 2017
, includes approximately
$39.9 million
and
$37.2 million
, respectively, of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and approximately
$18.5 million
and
$19.6 million
, respectively, of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. Refer to Note 5. “Variable Interest Entities”.
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2018
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2017
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2018
|
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2017
|
||||||||
Revenue:
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||||||||
Rental and reimbursements
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$
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1,516
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$
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2,219
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$
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5,103
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$
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7,084
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||||||||
Expense:
|
|
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||||||||
Operating and maintenance
|
660
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|
|
848
|
|
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1,925
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2,554
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||||
General and administrative
|
421
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|
|
483
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1,317
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1,478
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Depreciation and amortization
|
483
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|
653
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1,182
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2,439
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Transaction expense
|
7
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—
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39
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|
|
85
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|
||||
Interest expense
|
147
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|
449
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|
667
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1,505
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1,718
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2,433
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5,130
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8,061
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Operating loss
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(202
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)
|
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(214
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)
|
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(27
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)
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(977
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)
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||||
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Other income (loss):
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Equity in income (loss) of unconsolidated joint ventures
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290
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(19
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)
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245
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(24
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)
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Net gain on disposal of real estate
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1,293
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—
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3,741
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9,131
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Loss on extinguishment of debt
|
—
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—
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—
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(80
|
)
|
||||
Income (loss) before income taxes
|
1,381
|
|
|
(233
|
)
|
|
3,959
|
|
|
8,050
|
|
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Income taxes
|
5
|
|
|
3
|
|
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(19
|
)
|
|
(99
|
)
|
||||
Net income (loss)
|
1,386
|
|
|
(230
|
)
|
|
3,940
|
|
|
7,951
|
|
||||
Net income (loss) attributable to non-controlling interests
|
29
|
|
|
(13
|
)
|
|
83
|
|
|
293
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
1,357
|
|
|
$
|
(217
|
)
|
|
$
|
3,857
|
|
|
$
|
7,658
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share - basic and diluted
|
$
|
0.12
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.35
|
|
|
$
|
0.70
|
|
|
|
|
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|
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||||||||
Weighted average shares outstanding used to calculate earnings (loss) per common share - basic and diluted
|
10,962,529
|
|
|
10,885,095
|
|
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10,976,030
|
|
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10,909,141
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
3,940
|
|
|
$
|
7,951
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Net gain on disposal of real estate
|
(3,741
|
)
|
|
(9,131
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
80
|
|
||
Equity in (income) loss of unconsolidated joint ventures
|
(245
|
)
|
|
24
|
|
||
Straight-line rent
|
(109
|
)
|
|
(179
|
)
|
||
Amortization of deferred costs
|
443
|
|
|
404
|
|
||
Depreciation and amortization
|
1,182
|
|
|
2,439
|
|
||
Amortization of above and below-market leases
|
(15
|
)
|
|
(129
|
)
|
||
Bad debt expense
|
75
|
|
|
20
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Prepaid expenses and other assets
|
(72
|
)
|
|
803
|
|
||
Tenant receivables
|
231
|
|
|
288
|
|
||
Accounts payable and accrued expenses
|
52
|
|
|
(118
|
)
|
||
Amounts due to affiliates
|
3
|
|
|
(73
|
)
|
||
Other liabilities
|
(87
|
)
|
|
87
|
|
||
Net cash provided by operating activities
|
1,657
|
|
|
2,466
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Net proceeds from the sale of real estate
|
9,314
|
|
|
32,398
|
|
||
Acquisition of real estate
|
—
|
|
|
(17,812
|
)
|
||
Investment in properties under development and development costs
|
(3,147
|
)
|
|
(3,810
|
)
|
||
Improvements, capital expenditures, and leasing costs
|
(643
|
)
|
|
(1,110
|
)
|
||
Investments in unconsolidated joint ventures
|
(191
|
)
|
|
—
|
|
||
Distributions from unconsolidated joint ventures
|
111
|
|
|
1,998
|
|
||
Net cash provided by investing activities
|
5,444
|
|
|
11,664
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Redemption of common shares
|
(380
|
)
|
|
(558
|
)
|
||
Quarterly distributions
|
(2,018
|
)
|
|
(2,038
|
)
|
||
Proceeds from notes payable
|
15,950
|
|
|
29,700
|
|
||
Repayment of notes payable
|
(20,769
|
)
|
|
(41,999
|
)
|
||
Loan proceeds from an affiliate
|
—
|
|
|
2,500
|
|
||
Payment of penalties associated with early repayment of notes payable
|
—
|
|
|
(1
|
)
|
||
Payment of loan fees from investments in consolidated variable interest entities
|
(559
|
)
|
|
(453
|
)
|
||
Payment of loan fees and financing costs
|
(79
|
)
|
|
(1,314
|
)
|
||
Net cash used in financing activities
|
(7,855
|
)
|
|
(14,163
|
)
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(754
|
)
|
|
(33
|
)
|
||
Cash, cash equivalents and restricted cash – beginning of period
|
3,902
|
|
|
7,858
|
|
||
Cash, cash equivalents and restricted cash – end of period
|
$
|
3,148
|
|
|
$
|
7,825
|
|
|
|
|
|
||||
Supplemental disclosure of non-cash investing and financing activities and other cash flow information:
|
|
|
|
||||
Distributions declared but not paid
|
$
|
670
|
|
|
$
|
676
|
|
Change in accrued liabilities capitalized to investment in development
|
(194
|
)
|
|
(225
|
)
|
||
Change to accrued mortgage note payable interest capitalized to investment in development
|
(85
|
)
|
|
5
|
|
||
Amortization of deferred loan fees capitalized to investment in development
|
441
|
|
|
367
|
|
||
Cumulative effect from change in accounting principle
|
668
|
|
|
—
|
|
||
Cash paid for interest, net of amounts capitalized
|
326
|
|
|
1,110
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
2,835
|
|
|
$
|
3,086
|
|
Restricted cash
|
313
|
|
|
816
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
3,148
|
|
|
$
|
3,902
|
|
•
|
whether the lease stipulates how a tenant improvement allowance may be spent;
|
•
|
whether the amount of a tenant improvement allowance is in excess of market rates;
|
•
|
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
|
•
|
whether the tenant improvements are unique to the tenant or general-purpose in nature; and
|
•
|
whether the tenant improvements are expected to have any residual value at the end of the lease.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating income (loss)
|
$
|
(17
|
)
|
|
$
|
56
|
|
|
$
|
288
|
|
|
$
|
140
|
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Investments in real estate
|
|
|
|
||||
Land
|
$
|
2,817
|
|
|
$
|
5,248
|
|
Building and improvements
|
11,671
|
|
|
17,522
|
|
||
Tenant improvements
|
596
|
|
|
1,189
|
|
||
|
15,084
|
|
|
23,959
|
|
||
Accumulated depreciation
|
(3,596
|
)
|
|
(5,178
|
)
|
||
Investments in real estate, net
|
11,488
|
|
|
18,781
|
|
||
Tenant receivables, net
|
187
|
|
|
248
|
|
||
Lease intangibles, net
|
1,008
|
|
|
1,617
|
|
||
Assets held for sale
|
$
|
12,683
|
|
|
$
|
20,646
|
|
LIABILITIES
|
|
|
|
||||
Notes payable
|
$
|
4,056
|
|
|
$
|
10,749
|
|
Below-market lease intangibles, net
|
1,907
|
|
|
2,268
|
|
||
Liabilities related to assets held for sale
|
$
|
5,963
|
|
|
$
|
13,017
|
|
|
|
|
|
Ownership Interest
|
|
Investment
|
||||||||||
Joint Venture
|
|
Date of Investment
|
|
September 30,
2018 |
|
December 31,
2017 |
|
September 30,
2018 |
|
December 31,
2017 |
||||||
SGO Retail Acquisitions Venture, LLC
|
|
3/11/2015
|
|
19
|
%
|
|
19
|
%
|
|
$
|
1,084
|
|
|
$
|
978
|
|
SGO MN Retail Acquisitions Venture, LLC
|
|
9/30/2015
|
|
10
|
%
|
|
10
|
%
|
|
1,946
|
|
|
1,727
|
|
||
Total
|
|
|
|
|
|
|
|
$
|
3,030
|
|
|
$
|
2,705
|
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Properties under development and development costs:
|
|
|
|
||||
Land
|
$
|
25,851
|
|
|
$
|
25,851
|
|
Buildings
|
574
|
|
|
585
|
|
||
Development costs
|
12,928
|
|
|
9,609
|
|
||
Properties under development and development costs
|
39,353
|
|
|
36,045
|
|
||
Cash, cash equivalents and restricted cash
|
526
|
|
|
1,099
|
|
||
Prepaid expenses and other assets, net
|
12
|
|
|
9
|
|
||
Lease intangibles, net
|
4
|
|
|
—
|
|
||
TOTAL ASSETS
(1)
|
$
|
39,895
|
|
|
$
|
37,153
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Notes payable, net
(2)
|
$
|
18,248
|
|
|
$
|
19,116
|
|
Accounts payable and accrued expenses
|
199
|
|
|
478
|
|
||
Amounts due to affiliates
|
8
|
|
|
9
|
|
||
Other liabilities
|
9
|
|
|
9
|
|
||
TOTAL LIABILITIES
|
$
|
18,464
|
|
|
$
|
19,612
|
|
(1)
|
The assets of the Sunset & Gardner Joint Venture and Wilshire Joint Venture can be used only to settle obligations of the respective consolidated joint ventures.
|
(2)
|
As of
September 30, 2018
and
December 31, 2017
, includes reclassification of approximately
$0.2 million
and
$0.1 million
, respectively, of deferred financing costs, net, as a contra-liability. The creditors of the consolidated joint ventures do not have recourse to the general credit of the Company. The notes payable of the consolidated joint ventures are not guaranteed by the Company.
|
|
Lease Intangibles
|
|
Below-Market Lease Liabilities
|
||||||||||||
|
September 30,
2018 |
|
December 31,
2017 |
|
September 30,
2018 |
|
December 31,
2017 |
||||||||
Cost
|
$
|
2,973
|
|
|
$
|
2,783
|
|
|
$
|
(526
|
)
|
|
$
|
(571
|
)
|
Accumulated amortization
|
(1,063
|
)
|
|
(722
|
)
|
|
140
|
|
|
133
|
|
||||
Total
|
$
|
1,910
|
|
|
$
|
2,061
|
|
|
$
|
(386
|
)
|
|
$
|
(438
|
)
|
Remainder of 2018
|
$
|
9,700
|
|
2019
|
8,750
|
|
|
2020
|
29,787
|
|
|
Total
(1)
|
$
|
48,237
|
|
(1)
|
Total future principal payments reflect actual amounts due to creditors, and excludes reclassification of
$0.2 million
deferred financing costs, net.
|
•
|
Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
|
•
|
Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3: prices or valuation techniques where little or no market data is available for inputs that are significant to the fair value measurement.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Shares of common stock redeemed
|
36,903
|
|
|
18,233
|
|
|
61,925
|
|
|
87,928
|
|
||||
Purchase price
|
$
|
223
|
|
|
$
|
115
|
|
|
$
|
380
|
|
|
$
|
558
|
|
|
Distribution Record
Date
|
|
Distribution
Payable
Date
|
|
Distribution Per Share of Common Stock /
Common Unit
|
|
Total Common
Stockholders
Distribution
|
|
Total Common
Unit Holders
Distribution
|
|
Total
Distribution
|
||||||||
First Quarter 2018
|
3/31/2018
|
|
4/30/2018
|
|
$
|
0.06
|
|
|
$
|
659
|
|
|
$
|
14
|
|
|
$
|
673
|
|
Second Quarter 2018
|
6/30/2018
|
|
7/31/2018
|
|
0.06
|
|
|
658
|
|
|
14
|
|
|
672
|
|
||||
Third Quarter 2018
|
9/30/2018
|
|
10/31/2018
|
|
0.06
|
|
|
656
|
|
|
14
|
|
|
670
|
|
||||
Total
|
|
|
|
|
|
|
$
|
1,973
|
|
|
$
|
42
|
|
|
$
|
2,015
|
|
|
Distribution Record
Date
|
|
Distribution
Payable
Date
|
|
Distribution Per Share of Common Stock /
Common Unit
|
|
Total Common
Stockholders
Distribution
|
|
Total Common
Unit Holders
Distribution
|
|
Total
Distribution
|
||||||||
First Quarter 2017
|
3/31/2017
|
|
4/28/2017
|
|
$
|
0.06
|
|
|
$
|
655
|
|
|
$
|
25
|
|
|
$
|
680
|
|
Second Quarter 2017
|
6/30/2017
|
|
7/31/2017
|
|
0.06
|
|
|
652
|
|
|
25
|
|
|
677
|
|
||||
Third Quarter 2017
|
9/30/2017
|
|
10/31/2017
|
|
0.06
|
|
|
660
|
|
|
16
|
|
|
676
|
|
||||
Fourth Quarter 2017
|
12/31/2017
|
|
1/31/2018
|
|
0.06
|
|
|
659
|
|
|
14
|
|
|
673
|
|
||||
Total
|
|
|
|
|
|
|
$
|
2,626
|
|
|
$
|
80
|
|
|
$
|
2,706
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator - basic and diluted
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
1,386
|
|
|
$
|
(230
|
)
|
|
$
|
3,940
|
|
|
$
|
7,951
|
|
Net income attributable to non-controlling interests
|
29
|
|
|
(13
|
)
|
|
83
|
|
|
293
|
|
||||
Net income attributable to common shares
|
$
|
1,357
|
|
|
$
|
(217
|
)
|
|
$
|
3,857
|
|
|
$
|
7,658
|
|
Denominator - basic and diluted
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares
|
10,962,529
|
|
|
10,885,095
|
|
|
10,976,030
|
|
|
10,909,141
|
|
||||
Common Units
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted average common shares
|
10,962,529
|
|
|
10,885,095
|
|
|
10,976,030
|
|
|
10,909,141
|
|
||||
Earnings per common share - basic and diluted
|
|
|
|
|
|
|
|
||||||||
Net earnings attributable to common shares
|
$
|
0.12
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.35
|
|
|
$
|
0.70
|
|
(1)
|
The effect of
235,194
convertible Common Units pursuant to the redemption rights outlined in the Company’s registration statement on Form S-11 have not been included as they would not be dilutive.
|
|
|
Incurred
|
|
Payable as of
|
||||||||||||||||||||
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
September 30,
|
|
December 31,
|
||||||||||||||||
Expensed
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Financing coordination fees
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Asset management fees
|
|
187
|
|
|
232
|
|
|
566
|
|
|
667
|
|
|
—
|
|
|
—
|
|
||||||
Reimbursement of operating expenses
|
|
35
|
|
|
73
|
|
|
116
|
|
|
173
|
|
|
—
|
|
|
—
|
|
||||||
Property management fees
|
|
56
|
|
|
81
|
|
|
203
|
|
|
280
|
|
|
24
|
|
|
21
|
|
||||||
Disposition fees
|
|
79
|
|
|
—
|
|
|
133
|
|
|
430
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
357
|
|
|
$
|
386
|
|
|
$
|
1,048
|
|
|
$
|
1,550
|
|
|
$
|
24
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capitalized
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquisition fees
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
194
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Leasing fees
|
|
—
|
|
|
80
|
|
|
4
|
|
|
145
|
|
|
—
|
|
|
—
|
|
||||||
Legal leasing fees
|
|
—
|
|
|
35
|
|
|
8
|
|
|
86
|
|
|
—
|
|
|
—
|
|
||||||
Construction management fees
|
|
12
|
|
|
19
|
|
|
17
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||||
Financing coordination fees
|
|
44
|
|
|
107
|
|
|
226
|
|
|
814
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
56
|
|
|
$
|
241
|
|
|
$
|
301
|
|
|
$
|
1,258
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Our executive officers and certain other key real estate professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor. As a result, they face conflicts of interest, including conflicts created by our advisor’s compensation arrangements with us and conflicts in allocating time among us and other programs and business activities.
|
•
|
We are uncertain of our sources for funding our future capital needs. If we cannot obtain debt or equity financing on acceptable terms, our ability to continue to acquire real properties or other real estate-related assets, fund or expand our operations and pay distributions to our stockholders will be adversely affected.
|
•
|
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our financial obligations, including debt service and our ability to pay distributions to our stockholders.
|
•
|
Our current and future investments in real estate and other real estate-related investments may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to our stockholders. Revenues from our properties could decrease. Such events would make it more difficult for us to meet our debt service obligations and limit our ability to pay distributions to our stockholders.
|
•
|
Certain of our debt obligations have variable interest rates with interest and related payments that vary with the movement of LIBOR or other indices. Increases in these indices could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.
|
(dollars in thousands)
|
|
|
|
Rentable Square
Feet
(1)
|
|
Percent Leased
(2)
|
|
Effective
Rent
(3)
(per Sq. Foot)
|
|
Date
Acquired
|
|
Original
Purchase
Price
(4) (5)
|
||||||
Property Name
|
|
Location
|
|
|
|
|
|
|||||||||||
Topaz Marketplace
|
|
Hesperia, CA
|
|
43,199
|
|
|
80
|
%
|
|
$
|
20.34
|
|
|
9/23/2011
|
|
$
|
11,880
|
|
Shops at Turkey Creek
|
|
Knoxville, TN
|
|
16,324
|
|
|
61
|
%
|
|
44.76
|
|
|
3/12/2012
|
|
4,300
|
|
||
400 Grove Street
|
|
San Francisco, CA
|
|
2,000
|
|
|
100
|
%
|
|
60.00
|
|
|
6/14/2016
|
|
2,890
|
|
||
8 Octavia Street
|
|
San Francisco, CA
|
|
3,640
|
|
|
47
|
%
|
|
43.95
|
|
|
6/14/2016
|
|
2,740
|
|
||
Fulton Shops
|
|
San Francisco, CA
|
|
3,758
|
|
|
100
|
%
|
|
56.78
|
|
|
7/27/2016
|
|
4,595
|
|
||
450 Hayes
|
|
San Francisco, CA
|
|
3,724
|
|
|
100
|
%
|
|
89.82
|
|
|
12/22/2016
|
|
7,567
|
|
||
388 Fulton
|
|
San Fancisco, CA
|
|
3,110
|
|
|
100
|
%
|
|
64.22
|
|
|
1/4/2017
|
|
4,195
|
|
||
Silver Lake
|
|
Los Angeles, CA
|
|
10,497
|
|
|
100
|
%
|
|
64.85
|
|
|
1/11/2017
|
|
13,300
|
|
||
|
|
|
|
86,252
|
|
|
|
|
|
|
|
|
51,467
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Property Held for Sale
|
|
|
|
|
|
|
|
|
|
|
||||||||
Florissant Marketplace
|
|
Florissant, MO
|
|
146,257
|
|
|
95
|
%
|
|
10.26
|
|
|
5/16/2012
|
|
15,250
|
|
||
|
|
|
|
232,509
|
|
|
|
|
|
|
|
|
$
|
66,717
|
|
(1)
|
Square feet includes improvements made on ground leases at the property.
|
(2)
|
Percentage is based on leased rentable square feet of each property as of
September 30, 2018
.
|
(3)
|
Effective rent per square foot is calculated by dividing the annualized
September 2018
contractual base rent by the total square feet occupied at the property. The contractual base rent does not include other items such as tenant concessions (e.g., free rent), percentage rent, and expense recoveries.
|
(4)
|
The purchase price for Shops at Turkey Creek includes the issuance of common units in our operating partnership to the sellers.
|
(5)
|
The original purchase price for Topaz Marketplace was reduced to reflect a pad sale during the second quarter of 2018.
|
Properties Under Development
|
|
Location
|
|
Estimated
Completion Date
|
|
Estimated
Expected
Square Feet
|
|
Debt
|
|||
Wilshire Property
|
|
Santa Monica, CA
|
|
June, 2019
|
|
12,500
|
|
|
$
|
8,750
|
|
Sunset & Gardner Property
|
|
Hollywood, CA
|
|
January, 2021
|
|
37,000
|
|
|
9,700
|
|
|
Total
|
|
|
|
|
|
49,500
|
|
|
$
|
18,450
|
|
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Rental revenue and reimbursements
|
$
|
1,516
|
|
|
$
|
2,219
|
|
|
$
|
(703
|
)
|
|
(31.7
|
)%
|
Operating and maintenance expenses
|
660
|
|
|
848
|
|
|
(188
|
)
|
|
(22.2
|
)%
|
|||
General and administrative expenses
|
421
|
|
|
483
|
|
|
(62
|
)
|
|
(12.8
|
)%
|
|||
Depreciation and amortization expenses
|
483
|
|
|
653
|
|
|
(170
|
)
|
|
(26.0
|
)%
|
|||
Transaction expense
|
7
|
|
|
—
|
|
|
7
|
|
|
100.0
|
%
|
|||
Interest expense
|
147
|
|
|
449
|
|
|
(302
|
)
|
|
(67.3
|
)%
|
|||
Operating loss
|
(202
|
)
|
|
(214
|
)
|
|
12
|
|
|
(5.6
|
)%
|
|||
Other income, net
|
1,583
|
|
|
(19
|
)
|
|
1,602
|
|
|
(8,431.6
|
)%
|
|||
Income taxes
|
5
|
|
|
3
|
|
|
2
|
|
|
66.7
|
%
|
|||
Net income (loss)
|
$
|
1,386
|
|
|
$
|
(230
|
)
|
|
$
|
1,616
|
|
|
(702.6
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Rental revenue and reimbursements
|
$
|
5,103
|
|
|
$
|
7,084
|
|
|
$
|
(1,981
|
)
|
|
(28.0
|
)%
|
Operating and maintenance expenses
|
1,925
|
|
|
2,554
|
|
|
(629
|
)
|
|
(24.6
|
)%
|
|||
General and administrative expenses
|
1,317
|
|
|
1,478
|
|
|
(161
|
)
|
|
(10.9
|
)%
|
|||
Depreciation and amortization expenses
|
1,182
|
|
|
2,439
|
|
|
(1,257
|
)
|
|
(51.5
|
)%
|
|||
Transaction expense
|
39
|
|
|
85
|
|
|
(46
|
)
|
|
(54.1
|
)%
|
|||
Interest expense
|
667
|
|
|
1,505
|
|
|
(838
|
)
|
|
(55.7
|
)%
|
|||
Operating loss
|
(27
|
)
|
|
(977
|
)
|
|
950
|
|
|
(97.2
|
)%
|
|||
Other income, net
|
3,986
|
|
|
9,027
|
|
|
(5,041
|
)
|
|
(55.8
|
)%
|
|||
Income taxes
|
(19
|
)
|
|
(99
|
)
|
|
80
|
|
|
(80.8
|
)%
|
|||
Net income
|
$
|
3,940
|
|
|
$
|
7,951
|
|
|
$
|
(4,011
|
)
|
|
(50.4
|
)%
|
|
Nine Months Ended
September 30, |
|
|
||||||||
|
2018
|
|
2017
|
|
$ Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
1,657
|
|
|
$
|
2,466
|
|
|
$
|
(809
|
)
|
Investing activities
|
5,444
|
|
|
11,664
|
|
|
(6,220
|
)
|
|||
Financing activities
|
(7,855
|
)
|
|
(14,163
|
)
|
|
6,308
|
|
|||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(754
|
)
|
|
$
|
(33
|
)
|
|
|
|
Distribution Record
Date
|
|
Distribution
Payable
Date
|
|
Distribution Per Share of Common Stock /
Common Unit
|
|
Total Common
Stockholders
Distribution
|
|
Total Common
Unit Holders
Distribution
|
|
Total
Distribution
|
||||||||
First Quarter 2018
|
3/31/2018
|
|
4/30/2018
|
|
$
|
0.06
|
|
|
$
|
659
|
|
|
$
|
14
|
|
|
$
|
673
|
|
Second Quarter 2018
|
6/30/2018
|
|
7/31/2018
|
|
0.06
|
|
|
658
|
|
|
14
|
|
|
672
|
|
||||
Third Quarter 2018
|
9/30/2018
|
|
10/31/2018
|
|
0.06
|
|
|
656
|
|
|
14
|
|
|
670
|
|
||||
Total
|
|
|
|
|
|
|
$
|
1,973
|
|
|
$
|
42
|
|
|
$
|
2,015
|
|
|
Distribution Record
Date
|
|
Distribution
Payable
Date
|
|
Distribution Per Share of Common Stock /
Common Unit
|
|
Total Common
Stockholders
Distribution
|
|
Total Common
Unit Holders
Distribution
|
|
Total
Distribution
|
||||||||
First Quarter 2017
|
3/31/2017
|
|
4/28/2017
|
|
$
|
0.06
|
|
|
$
|
655
|
|
|
$
|
25
|
|
|
$
|
680
|
|
Second Quarter 2017
|
6/30/2017
|
|
7/31/2017
|
|
0.06
|
|
|
652
|
|
|
25
|
|
|
677
|
|
||||
Third Quarter 2017
|
9/30/2017
|
|
10/31/2017
|
|
0.06
|
|
|
660
|
|
|
16
|
|
|
676
|
|
||||
Fourth Quarter 2017
|
12/31/2017
|
|
1/31/2018
|
|
0.06
|
|
|
659
|
|
|
14
|
|
|
673
|
|
||||
Total
|
|
|
|
|
|
|
$
|
2,626
|
|
|
$
|
80
|
|
|
$
|
2,706
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
FFO
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
|
$
|
1,386
|
|
|
$
|
(230
|
)
|
|
$
|
3,940
|
|
|
$
|
7,951
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Gain on disposal of assets
|
|
(1,293
|
)
|
|
—
|
|
|
(3,741
|
)
|
|
(9,131
|
)
|
||||
Adjustment to reflect FFO of unconsolidated joint ventures
|
|
(207
|
)
|
|
97
|
|
|
(24
|
)
|
|
309
|
|
||||
Depreciation of real estate
|
|
360
|
|
|
503
|
|
|
905
|
|
|
1,725
|
|
||||
Amortization of in-place leases and leasing costs
|
|
123
|
|
|
150
|
|
|
277
|
|
|
714
|
|
||||
FFO attributable to common shares and Common Units
(1)
|
|
$
|
369
|
|
|
$
|
520
|
|
|
$
|
1,357
|
|
|
$
|
1,568
|
|
|
|
|
|
|
|
|
|
|
||||||||
FFO per share and Common Unit
(1)
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares and units outstanding
(1)
|
|
11,197,723
|
|
|
11,290,377
|
|
|
11,211,224
|
|
|
11,325,712
|
|
(1)
|
Our common units have the right to convert a unit into common stock for a one-to-one conversion. Therefore, we are including the related non-controlling interest income/loss attributable to common units in the computation of FFO and including the common units together with weighted average shares outstanding for the computation of FFO per share and common unit.
|
•
|
whether the lease stipulates how a tenant improvement allowance may be spent;
|
•
|
whether the amount of a tenant improvement allowance is in excess of market rates;
|
•
|
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
|
•
|
whether the tenant improvements are unique to the tenant or general-purpose in nature; and
|
•
|
whether the tenant improvements are expected to have any residual value at the end of the lease term.
|
Period
|
|
Total Number of
Shares Redeemed
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of a
Publicly Announced Plan
or Program
|
|
Approximate Dollar Value of
Shares That May Yet be
Redeemed Under the Program
(2)
|
||||||
July 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
893,504
|
|
August 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
893,504
|
|
||
September 2018
|
|
36,903
|
|
|
6.04
|
|
|
36,903
|
|
|
670,608
|
|
||
Total
|
|
36,903
|
|
|
|
|
|
36,903
|
|
|
|
(1)
|
All of our purchases of equity securities during the quarter ended
September 30, 2018
, were made pursuant to the SRP.
|
(2)
|
We currently limit the dollar value and number of shares that may yet be repurchased under the SRP as described above.
|
|
Strategic Realty Trust, Inc.
|
|
|
|
|
|
By:
|
/s/ Andrew Batinovich
|
|
|
Andrew Batinovich
|
|
|
Chief Executive Officer, Corporate Secretary and Director
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Terri Garnick
|
|
|
Terri Garnick
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
Incorporated by Reference
|
||
Exhibit No.
|
|
Description
|
|
Filed
Herewith
|
|
Form/File No.
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
Articles of Amendment and Restatement of TNP Strategic Retail Trust, Inc.
|
|
|
|
S-11/
No. 333-154975
|
|
7/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
Articles of Amendment, dated August 22, 2013
|
|
|
|
8-K
|
|
8/26/2013
|
|
|
|
|
|
|
|
|
|
|
|
Articles Supplementary, dated November 1, 2013
|
|
|
|
8-K
|
|
11/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
Articles Supplementary, dated January 22, 2014
|
|
|
|
8-K
|
|
1/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
Third Amended and Restated Bylaws of Strategic Realty Trust, Inc.
|
|
|
|
8-K
|
|
1/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
Promissory Note with Lone Oak Fund, LLC, dated August 31, 2018
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Purchase and Sale Agreement by and between TNP SRT Portfolio II, LLC and ORDA CORP, dated May 3, 2018
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Purchase and Sale Agreement by and between TNP SRT Portfolio II, LLC, and Polimeni International LLC, dated September 20, 2018
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amendment to the Second Amended and Restated Revolving Credit Agreement among Strategic Realty Operating Partnership, L.P., SRT Secured Holdings, LLC, KeyBank National Association, as administrative agent, and KeyBanc Capital Markets, LLC, as sole lead bookrunner and sole lead arranger, dated September 30, 2018
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifth Amendment to the Advisory Agreement, dated July 19, 2018
|
|
|
|
8-K
|
|
7/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
Sixth Amendment to the Advisory Agreement, dated August 2, 2018
|
|
|
|
8-K
|
|
8/3/2018
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Realty Trust, Inc. Amended and Restated Share Redemption Program Adopted August 26, 2016
|
|
|
|
8-K
|
|
8/30/2016
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
If to Buyer:
|
If to Seller:
|
|
|
O.R.D.A. Corporation
15400 Knoll Trail, Suite 350
Dallas, Texas 75248
Attention: David Salomon
Fax No. 972- 960-0627
Email: ordacorp@yahoo.com
|
TNP SRT PORTFOLIO II, LLC
c/o Glenborough, LLC
66 Bovet Road, Suite 100
San Mateo, CA 94402
Attention: Alan Shapiro
Fax No. 650-343-9690
Email: alan.shapiro@glenborough.com
|
|
|
With a copy to:
|
with a copy to:
|
Colven, Tran & Meredith, PC
1401 Burnham Drive
Plano, Texas 75093
Attention: Thomas J. Colven, III
Fax No. (469) 533-0337
Email: tom@colvenandtran.com
|
TNP SRT PORTFOLIO II, LLC
c/o Glenborough LLC
66 Bovet Road, Suite 100
San Mateo, CA 94402
Attention: G. Lee Burns, Jr.
Fax No. 650-343-9690
Email: chip.burns@glenborough.com
|
Signed, sealed and delivered
in the presence of:
|
TNP SRT PORTFOLIO II, LLC,
a Delaware limited liability company
By:________________________________________
Name:
Title:
|
1.
|
Taxes and special assessments, for the year 201_ and thereafter, none now due and payable. Parcel No. _____________________.
|
2.
|
[ALL MATTERS DISCLOSED IN THE PRELIMINARY REPORT, AND ANY NEW EXCEPTIONS, WHETHER OR NOT ENDORSED OVER OR AFFIRMATIVELY INSURED BY THE TITLE COMPANY, EXCEPT FOR THOSE MATTERS SELLER IS OBLIGATED TO REMOVE].
|
3.
|
The following matters disclosed by a survey of the Property made by _______________. dated ____________________, designated Job No. ______________:
|
A)
|
[TO COME]
|
4.
|
[MATTERS DESCRIBED IN THE PRECEDING SPECIAL WARRANTY DEEDS UNDER WHICH SELLER AND ITS PREDECESSOR IN INTEREST OBTAINED TITLE].
|
4.
|
Transferor’s office address is: c/o Glenborough, LLC
|
Lease:
|
The lease of the Leased Premises, dated _____________, 20___, between Landlord and Tenant, as amended to date (the “
Lease
”).
|
Lease:
|
The lease of the Leased Premises, dated _____________, 20___, between Landlord and Tenant, as amended to date (the “
Lease
”).
|
|
1.
|
To the best knowledge and belief of Affiant:
|
2.
|
Affiant has no knowledge of a notice of change of use nor has Owner received written notice of change of use by the appraisal district with jurisdiction over the Property.
|
3.
|
The Property is currently being used for the operation of a retail shopping center, and Owner has received no written notice that the improvements upon the Property and/or such use violates any restrictive covenants affecting the Property of which Affiant has knowledge.
|
4.
|
There are no proceedings involving Owner, or notice to Owner of any proceedings, by any agency or authority, public or private, that levies taxes or assessments, which, to the best knowledge of Affiant, are reasonably likely to result in an increase in taxes or assessments affecting the Property and which are not shown by the referenced title commitment.
|
5.
|
There are no Judgments, Federal Tax Liens, or State Tax Liens against Owner and/or the Property; Owner is not indebted to the State of Texas for any penalties or wages pursuant to a final order of the Texas Workforce Commission; and neither Owner nor the Property is subject to a claim under the Medicaid Estate Recovery Program.
|
6.
|
(a) All ad valorem and personal property taxes (if any), all “use” type business taxes (if any), including but not limited to hotel use and occupancy taxes, and all association/ maintenance type taxes or assessments (if any) that are applicable to the Property and that are currently due and payable have been paid or will be paid at closing and are shown on the Owner-approved settlement statement. (b) Any of the above referenced taxes which are the obligation of Owner and which have been prorated on the Owner-approved settlement statement are based on information approved by Owner.
|
7.
|
Owner is the only occupant of the Property, except the leases shown on the rent roll attached hereto as
Exhibit A
, which the undersigned certifies is a true and correct copy of Owner’s rent roll for the Property.
|
8.
|
There are no unrecorded contracts; deeds; mortgages; mechanic’s liens; options of any kind, including but not limited to options to purchase or lease (except the leases shown on the rent roll attached hereto as
Exhibit A
); rights of first refusal or requirements of prior approval of a future purchaser or occupant; rights of reentry; rights of reverter; or rights of forfeiture affecting the Property or improvements thereon, which are not shown on the referenced title commitment.
|
10.
|
No proceedings in bankruptcy or receivership have ever been instituted by or against Owner, and Owner has never made an assignment for the benefit of creditors.
|
11.
|
The Property has curb cut(s) and driveway(s) providing actual vehicular and pedestrian access which are open and in use.
|
|
|
___________________________________
|
|
Notary Public, State of
|
1.
|
2018 Stub Reconciliation
. As defined in
Section 7(d)(v)
.
|
2.
|
Actual Knowledge of Buyer (or Buyer’s Actual Knowledge.)
The knowledge of any Responsible Individual of Buyer, without duty of inquiry; provided that so qualifying Buyer’s knowledge shall in no event give rise to any personal liability on the part of the Responsible Individual, on account of any breach of any representation and warranty of Buyer herein. Actual Knowledge shall not include constructive knowledge, imputed knowledge, or knowledge Buyer or such Responsible Individual do not have but could have obtained through further investigation or inquiry, but shall include information provided by Seller to Buyer in writing (including the Due Diligence Materials).
|
3.
|
Actual Knowledge of Seller (or Seller’s Actual Knowledge.)
The knowledge of any Responsible Individual of Seller, without duty of inquiry; provided that so qualifying Seller’s knowledge shall in no event give rise to any personal liability on the part of the Responsible Individual, on account of any breach of any representation and warranty of Seller herein. Actual Knowledge shall not include constructive knowledge, imputed knowledge, or knowledge Seller or such Responsible Individual do not have but could have obtained through further investigation or inquiry.
|
4.
|
Additional Rents
. All amounts, other than Fixed Rents, due from any Tenant under any Lease, including without limitation, percentage rents, escalation charges for real estate taxes, parking charges, marketing fund charges, reimbursement of Expenses, maintenance escalation rents or charges, cost of living increases or other charges of a similar nature, if any, and any additional charges and expenses payable under any Lease.
|
5.
|
Affiliate
. Any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with another Person. An affiliate of a Person includes any officer, director, managing member, member or general partner, and any record or beneficial owner of more than 10% of any class of ownership interests in such Person.
|
6.
|
Agreement
. This Agreement between Seller and Buyer, including all Addenda, Schedules and Exhibits attached hereto and incorporated herein by reference.
|
7.
|
Approval Date.
The day on or prior to the end of the Due Diligence Period on which Buyer delivers its Approval Notice to Seller.
|
8.
|
Approval Notice
. Buyer’s notice delivered to Seller (if at all) under
Section 4(l)
of the Agreement.
|
9.
|
Assignment of Contracts
. An Assignment and Assumption of Guaranties and Warranties and Other General Intangibles in the form attached to this Agreement as
Exhibit D
.
|
10.
|
Assignment of Leases
. An Assignment and Assumption of Leases in the form attached to this Agreement as
Exhibit B
.
|
11.
|
Bill of Sale
. A Bill of Sale in the form attached to this Agreement as
Exhibit C
.
|
12.
|
Business Day
. Any day other than a Saturday, Sunday or holiday on which national banks located in the State in which the Property is located or in the State of California, are authorized or required by law to close for business.
|
13.
|
Buyer
. The “Buyer” in the preamble to this Agreement.
|
14.
|
Buyer’s Agents
. The employees, agents, contractors, consultants, officers, directors, representatives, managers and members of Buyer or its Affiliates, and such other Persons as are acting under the direction of, or on behalf of, Buyer or any Affiliate of Buyer.
|
15.
|
Buyer’s Broker
. None.
|
16.
|
Buyer Closing Conditions
. Conditions precedent to Buyer’s obligation to consummate this transaction, as set forth in
Section 5(a)
.
|
17.
|
Cash
. Immediately available funds to be paid by Buyer at the Closing, as provided in the Section entitled “Consideration”.
|
18.
|
Closing
. The delivery of the Deed and the other documents required to be delivered hereunder and the payment of the Consideration.
|
19.
|
Closing Date
. Thirty (30) days after the delivery by Buyer of the Approval Notice.
|
20.
|
Consideration
. The purchase price for the Property payable by Buyer to Seller as described in the Section entitled “Consideration.”
|
21.
|
Contracts
. The service contracts, construction contracts for work in progress, any warranties thereunder, management contracts, unrecorded reciprocal easement agreements, operating agreements, maintenance agreements, franchise agreements and other similar agreements relating to the Property.
|
22.
|
Creditors’ Rights Laws
. All bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, as well as general equitable principles whether or not the enforcement thereof is considered to be a proceeding at law or in equity.
|
23.
|
Day
. The term “day” used herein and not capitalized means a calendar day.
|
24.
|
Deed
. A deed in the form attached to this Agreement as
Exhibit A
(with vendor’s lien assigned, if requested by Buyer).
|
25.
|
Due Diligence Materials
. The materials described in
Schedule 1
to this Agreement.
|
26.
|
Due Diligence Period.
A period of time commencing on the Effective Date and ending at 5:00 p.m., Pacific Time, on the date that is twenty (20) days from Effective Date.
|
27.
|
Earnest Money
. The aggregate of the Initial Earnest Money Deposit and the Remaining Earnest Money Deposit.
|
28.
|
Effective Date.
The date set forth in the preamble to this Agreement.
|
29.
|
Environmental Laws
. All federal, state, local or administrative agency ordinances, laws, rules, regulations, orders or requirements relating to Hazardous Materials.
|
30.
|
Environmental Reports
. All environmental reports and investigations relating to the Property which are available to Seller, which are listed on
Schedule 4
to this Agreement.
|
31.
|
Existing Lender
. Keybank, N.A., as lead agent.
|
32.
|
Expenses
. All operating expenses normal to the operation and maintenance of the Property, including without limitation: Property Taxes; current installments of any improvement bonds or assessments which are a lien on the Property or which are pending and may become a lien on the Property; water, sewer and utility charges; amounts payable under any Contract for any period in which the Closing occurs; and permits, licenses and inspection fees. Expenses shall not include expenses which are of a capital nature.
|
33.
|
Expense Reimbursement.
That amount necessary to reimburse Buyer for all of its out-of-pocket, third-party costs and expenses related to the transactions contemplated by this Agreement, including, without limitation, to consultants and for third‐party reports, for legal fees incurred in connection with negotiating and entering into this Agreement, up to a maximum, in the aggregate, of Fifty Thousand and No/100ths Dollars ($50,000).
|
34.
|
Fixed Rents.
The fixed periodic payments under any Lease.
|
35.
|
General Intangibles
. All general intangibles relating to design, development, operation, management and use of the Real Property; all certificates of occupancy, zoning variances, building, use or other permits, approvals, authorizations, licenses and consents obtained from any governmental authority or other person in connection with the development, use, operation or management of the Real Property; all engineering reports, architectural drawings, plans and specifications relating to all or any portion of the Real Property, and all payment and performance bonds or warranties or guarantees relating to the Real Property; and all of Seller’s right, title and interest in and to any and all of the following to the extent assignable: trademarks, service marks, logos or other source and business identifiers, trademark registration and applications for registration used at or relating to the Real Property and any written agreement granting to Seller any right to use any trademark or trademark registration at or in connection with the Real Property.
|
36.
|
Hazardous Materials
. Any substance which is (a) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, toxic substance, pollutant or contaminant under any federal or state law or regulation, (b) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (c) PCBs, (d) asbestos or asbestos-containing products, (e) a flammable explosive, (f) an infectious material, (g) a radioactive material, (h) a carcinogenic, or (i) a reproductive toxicant.
|
37.
|
Improvements
. All buildings, parking lots, parking garages, signs, walks and walkways, fixtures and equipment and all other improvements located at or on or affixed to the Land to the full extent that such items are owned by Seller and constitute realty under the laws of the state in which the Land is located.
|
38.
|
Initial Earnest Money Deposit
. The initial earnest money deposit(s) paid by Buyer pursuant to the Section entitled “Consideration,” in the amount(s) of Seventy-Five Thousand and No/100ths Dollars ($75,000.00).
|
39.
|
Invasive Testing
. Any physically intrusive, invasive or destructive testing or investigation (however characterized) of, on or under the Property or any portion or part thereof, for the presence or absence of Hazardous Materials, or for other purposes, including, without limitation, by (i)
taking, sampling or testing groundwater or soils, (ii) air quality sampling or testing, or (iii) probing, cutting, penetrating, removing or otherwise disturbing any interior or exterior feature of the Land or Improvements in order to sample, test, observe or monitor normally inaccessible areas, components, features or systems.
|
40.
|
Kroger Tanks
. The USTs described as such in
Section 4
of this Agreement.
|
41.
|
Land
. The land described in
Schedule 2
to this Agreement, together with all appurtenances thereto, including without limitation easements and mineral and water rights.
|
42.
|
Laws
. All Environmental Laws, zoning and land use laws, and other local, state and federal laws and regulations applicable to the Property, the Parties, and/or the transactions contemplated by this Agreement.
|
43.
|
Leases
. The leases for the Tenants listed in the Rent Roll, together with any leases of all or any portion of the Real Property executed between the Effective Date and the Closing Date, and all amendments, modifications and guarantees thereof.
|
44.
|
Major Loss.
Any damage or destruction to, or condemnation of, any Real Property as to which the cost to repair, or the value of the portion taken, as the case may be, exceeds Four Hundred Thousand and No/100ths Dollars ($400,000.00).
|
45.
|
Major Tenants.
Kroger and Family Dollar Store.
|
46.
|
Material Damage Ceiling.
Damage in the aggregate of Four Hundred Thousand and No/100ths Dollars ($400,000.00) suffered by Buyer as a result of any inaccuracy or breach of
|
47.
|
Material Damage Floor
. Damage in excess of Eighty Thousand and No/100ths Dollars ($80,000.00) suffered by Buyer as a result of any inaccuracy or breach of any representation or warranty or any breach of any covenant (on a cumulative basis and not per occurrence) by Seller hereunder.
|
48.
|
Minor Loss.
Damage or destruction to, or condemnation of, any Real Property that is not a Major Loss.
|
49.
|
Monetary Liens.
As defined in the Section entitled “Approval of Title.”
|
50.
|
New Exception.
An exception to title to the Real Property that materially affects the condition of title to the Real Property and is not (i) included in or referenced in any preliminary report delivered to Buyer prior to the Approval Date, or in any exception document delivered to Buyer by the Title Company prior to the Approval Date, (ii) disclosed to Buyer in any of the Due Diligence Materials, (iii) shown on or referenced in the Survey, (iv) caused by Buyer or any of Buyer’s Agents, or (v) previously approved in writing by Buyer or any of Buyer’s Agents.
|
51.
|
Non-Refundable Payment
. See
Section 3(b)
.
|
52.
|
Parties.
Buyer and Seller.
|
53.
|
Percentage Rents.
Rents under any Lease based on a percentage of Tenant revenue, sales or income, or on the performance of the business of any Tenant.
|
54.
|
Permitted Exceptions
. The Leases and the exceptions to title approved by Buyer during the Due Diligence Period, pursuant to the title review procedure set forth in the Agreement.
|
55.
|
Person
. An individual, partnership, corporation, business trust, joint stock company, limited liability company, trust, unincorporated association, joint venture or governmental authority.
|
56.
|
Personal Property
. All of Seller’s right, title and interest in and to the personal property and any interest therein owned by Seller or held directly for the benefit of Seller, if any, located on the Real Property and used in the operation or maintenance of the Real Property.
|
57.
|
Property.
The Real Property, the Leases, the Personal Property, the General Intangibles, and the Contracts (excluding Contracts to be terminated by Seller pursuant to this Agreement).
|
58.
|
Property Taxes.
As defined in Section
7(c)(ii)(c)
, entitled “Property Taxes.”
|
59.
|
Real Property
. The Land and Improvements.
|
60.
|
Remaining Earnest Money Deposit
. The additional earnest money deposit(s) paid by Buyer on or after the Approval Date pursuant to the Section entitled “Consideration”, in the amount of Seventy-Five Thousand and No/100ths Dollars ($75,000.00)
|
61.
|
Rent Roll
. The list of each of the Tenants under Leases as of the date of this Agreement, attached to this Agreement as
Schedule 5
.
|
62.
|
Rents
. Fixed Rents and Percentage Rents.
|
63.
|
Required Tenants
. The Major Tenants and other Tenants which along with the Major Tenants in the aggregate occupy eighty percent (80%) of the occupied rentable area of the Property.
|
64.
|
Responsible Individuals
. With respect to Buyer: David Salomon; and with respect to Seller: Alan Shapiro.
|
65.
|
Seller
. The “Seller” in the preamble to this Agreement.
|
66.
|
Seller Related Party
. Seller, any Affiliate of Seller, and any of its or their respective shareholders, partners, members, managers, officers, directors, employees, contractors, agents, attorneys or other representatives of Seller.
|
67.
|
Seller’s Broker
. STRIVE.
|
68.
|
Seller Closing Conditions
. Conditions precedent to Seller’s obligation to consummate this transaction, as set forth in
Section 5(b)
.
|
69.
|
Service Contracts
. All Contracts involving ongoing services and periodic payment therefor, as distinguished from franchise agreements, easements, guarantees, warranties and the like.
|
70.
|
SNDA
. As defined in
Section 8(d)
.
|
71.
|
Specific Performance Amount
. One Hundred Thousand and No/100ths Dollars ($100,000.00).
|
72.
|
Survey
. That certain ALTA/NSPS Land Title Survey of the Property identified in Schedule 1 to this Agreement and delivered to Buyer with the Due Diligence Materials.
|
73.
|
Tenant(s)
. Tenants under the Leases and listed on the Rent Roll.
|
74.
|
Tenant Estoppel(s)
. Estoppel certificates in the form attached to this Agreement as
Exhibit F
(or on such other form as may be prescribed in the Tenant Lease or otherwise permitted under this Agreement), to be provided by Seller as provided in the Section entitled “Tenant Estoppel(s).”
|
75.
|
Title Company
. First American Title Insurance Company – National Commercial Services, at its office located at 2755 Campus Drive, Suite 125, San Mateo, CA 94403; Attention: Erwin
|
76.
|
Title Policy
. An owner’s standard coverage ALTA title policy, issued by Title Company in the amount of the Consideration, showing title vested in Buyer subject only to the Permitted Exceptions.
|
77.
|
Transaction Documents
. The Deed, Bill of Sale, Assignment of Contracts, Assignment of Leases, and any and all other agreements entered into by the Parties in connection with the Closing.
|
•
|
ALTA/ACSM Land Title Survey
|
o
|
ALTA/NSPS Land Title Survey prepared by American National dated October 9, 2017
|
•
|
Aged Receivables
|
o
|
A/R as of February 28, 2018
|
•
|
CAM Recs
|
o
|
2017 CAM Recovery Schedules
|
o
|
2016 CAM Recovery Schedules
|
o
|
2015 CAM Recovery Schedules
|
•
|
Certificates of Occupancy
|
•
|
Environmental
|
◦
|
Phase I Environmental Site Assessment prepared by AEI Consultants dated August 16, 2017
|
◦
|
Limited Phase II Subsurface Investigation prepared by AEI Consultants dated Sept. 27, 2017
|
◦
|
Asbestos Containing Materials O & M Program, prepared by AEI Consultants dated Sept. 5, 2017
|
◦
|
Phase I Environmental Site Assessment prepared by ASM dated December 20, 2011
|
•
|
Leases
|
o
|
Pantego Dentist dba A Smile Above
|
§
|
Lease dated November 5, 2014
|
§
|
Form of Guaranty dated November 5, 2014
|
§
|
First Amendment to Lease dated March 4, 2015
|
§
|
Second Amendment to Lease dated August 11, 2017
|
§
|
Third Amendment to Lease dated December 12, 2017
|
§
|
Landlord’s Waiver dated February 3, 2015
|
§
|
Notice of Lease Term dates dated November 17, 2014
|
o
|
Family Dollar Stores of Texas, LLC
|
§
|
Lease Agreement dated June 11, 2008
|
§
|
First Amendment to Lease Agreement dated December 30, 2009
|
§
|
Second Amendment to Lease Agreement dated June 3, 2013
|
o
|
Fort Worth Community Credit Union
|
§
|
Lease dated April 2, 1998
|
§
|
First Amendment to Lease dated February 8, 2001
|
§
|
Second Amendment to Lease dated January 23, 2003
|
§
|
Third Amendment to Lease dated January 18, 2005
|
§
|
Fourth Amendment to Lease dated March 1, 2007
|
§
|
Fifth Amendment to Lease dated March 1, 2009
|
§
|
Sixth Amendment to Lease dated July 28, 2001
|
§
|
Seventh Amendment to Lease dated October 29, 2014
|
§
|
Eighth Amendment to Lease dated December 13, 2016
|
§
|
Ninth Amendment to Lease dated January 17, 2018
|
o
|
Kroger Texas L.P.
|
§
|
Lease Agreement dated February 3, 1998
|
§
|
Lease Modification Agreement No. 1 dated August 10, 2007
|
§
|
Renewal Notice dated November 13, 2017
|
o
|
Hong Tran dba Nail Salon
|
§
|
Lease dated August 4, 2010
|
§
|
First Amendment to Lease dated December 22, 2015
|
o
|
Karen Denise Jackson dba Salon Ensenada
|
§
|
Shopping Center Lease dated May 27, 2011
|
§
|
Lease Amendment No. 1 dated June 9, 2011
|
•
|
Operating Statements
|
◦
|
Operating Statement as of December 31, 2015
|
◦
|
Operating Statement as of December 31, 2016
|
◦
|
Operating Statement as of December 31, 2017
|
◦
|
Operating Statement as of February 28, 2018
|
•
|
Property Taxes
|
◦
|
Account:00000870897-2017 Tax Statement
|
◦
|
Account:00000870897-2016 Tax Statement
|
◦
|
Account: 00000870897-2015 Tax Statement
|
•
|
Rent Roll
|
◦
|
Rent Roll dated April 2018
|
•
|
Roof Report
|
◦
|
2014 Roof Assessment Report prepared by KPost Company, dated September 26, 2014
|
◦
|
Repairs completed by KPost Company
|
•
|
Service Contracts
|
◦
|
Excell Electric-Service Parking Light Inspections
|
◦
|
Landmark Protective Services-Security
|
◦
|
Prestonwood Landscape Services
|
◦
|
Site Services Group-Janitorial/Day porter
|
•
|
Tenant Sales
|
•
|
Title
|
◦
|
First American Title Insurance-Commitment dated August 2, 2017
|
•
|
Warranty
|
o
|
Duro Last roof warranty effective date of June 2, 2008
|
•
|
Zoning
|
◦
|
Final Zoning Compliance Report prepared by Global Zoning dated August 22, 2017
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Andrew Batinovich
|
|
Andrew Batinovich
|
|
Chief Executive Officer, Corporate Secretary and Director
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Terri Garnick
|
|
Terri Garnick
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Andrew Batinovich
|
|
Andrew Batinovich
|
|
Chief Executive Officer, Corporate Secretary and Director
|
|
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Terri Garnick
|
|
Terri Garnick
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|