v3.22.2.2
INVESTMENTS IN REAL ESTATE
 12 Months Ended
Jun. 30, 2022
INVESTMENTS IN REAL ESTATE [Abstract]  
INVESTMENTS IN REAL ESTATE
NOTE 3 – INVESTMENTS IN REAL ESTATE
 
The following tables provide summary information regarding our operating properties, which are owned through our subsidiaries: the Operating Partnership, MacKenzie Satellite, Madison and PVT.
 
Consolidated Operating Properties
Property Name:
Addison Corporate Center
Commodore Apartments
Pon de Leo Apartments
Property Owner:
The Operating Partnership
Madison-PVT Partners LLC
PVT-Madison Partners LLC
Location:
Windsor, CT
Oakland, CA
Oakland, CA
Number of Tenants:
6
48
39
Year Built:
1980
1912
1929
Ownership Interest:
100%
100%
100%
 
 
 
 
Property Name:
Hollywood Property
Shoreline Apartments
Satellite Place
Property Owner:
The Operating Partnership
The Operating Partnership
MacKenzie Satellite Place Inc.
Location:
Hollywood, CA
Concord, CA
Duluth, GA
Number of Tenants:
16
76
1
Year Built:
1917
1968
2002
Ownership Interest:
100%
100%
100%
 
The following table presents the purchase price allocation of real estate assets acquired on October 4, 2021 based on asset acquisition accounting.
Property Name:
  
Hollywood Property
  
Acquisition Date:
  
October 4, 2021
  
Purchase Price Allocation
      
Land
  
$
8,704,595
  
Building
    
10,524,548
  
Site Improvements
    
30,436
  
Tenant Improvements
    
41,852
  
Furniture, Fixtures & Equipment
    
361,055
  
Lease In Place
    
204,346
  
Leasing Commissions
    
23,998
  
Total assets acquired
  
$
19,890,830
  

The following table presents the purchase price allocation of real estate assets acquired on May 16, 2022 based on asset acquisition accounting.
Property Name:
  
Shoreline Apartments
  
Acquisition Date:
  
May 16, 2022
  
Purchase Price Allocation
      
Land
  
$
7,559,390
  
Building
    
17,859,545
  
Site Improvements
    
1,407,789
  
Furniture, Fixtures & Equipment
    
857,443
  
Lease In Place
    
552,950
  
Total assets acquired
  
$
28,237,117
  

The following table presents the purchase price allocation of real estate assets acquired on June 1, 2022 based on asset acquisition accounting.
Property Name:
  
Satellite Place
  
Acquisition Date:
  
June 1, 2022
  
Purchase Price Allocation
      
Land
  
$
2,966,129
  
Building
    
6,465,450
  
Site Imporvements
    
2,114,369
  
Tenant Improvements
    
2,136,966
  
Lease in Place
    
1,028,415
  
Leasing Commissions
    
436,799
  
Total assets acquired
  

15,148,128
  
 
        
Net leasehold asset (liability)
  

(517,865
)
 
        
Total assets acquired, net
  
$
14,630,263
  

The total depreciation expense of our operating properties for the year ended June 30, 2022 was $2,866,400. The total depreciation expense of our operating properties for the six months ended June 30, 2021 was $1,107,467. We did not incur depreciation expense during the six months ended December 31, 2020 as we did not own and operate any real estate assets as of December 31, 2020.
Operating Leases:
 
Our real estate assets are leased to tenants under operating leases that contain varying terms and expirations. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. We retain substantially all the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, we do not require a security deposit from tenants on our commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants. Even when required, security deposits generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of the security deposit. Security deposits received in cash related to tenant leases are included in other accrued liabilities in the accompanying consolidated balance sheets and were immaterial as of June 30, 2022 and 2021.
 
The following table presents the components of income from real estate operations for the year ended June 30, 2022 and six months ended June 30, 2021:
 
 
  
Year Ended
    
Six Months Ended
  
 
  
June 30, 2022
    
June 30, 2021
  
 
            
Lease Income - Operating leases
  
$
8,783,327
    
$
3,141,111
  
Variable lease income (1)
    
1,585,847
      
604,004
  
 
  
$
10,369,174
    
$
3,745,115
  


(1)
Primarily includes tenant reimbursements for utilities and common area maintenance.

As of June 30, 2022, the future minimum rental income from our real estate properties under non-cancelable operating leases are as follows:
Year ended June 30,:
  
Rental Income
  
2023
  
$
3,111,256
  
2024
    
1,694,724
  
2025
    
1,727,946
  
2026
    
1,772,903
  
2027
    
1,819,230
  
Thereafter
    
5,591,966
  
Total
  
$
15,718,025
  

Lease Intangibles, Above-Market Lease Assets and Below-Market Lease Liabilities, Net
 
As of June 30, 2022 and 2021, our acquired lease intangibles, above-market lease assets, and below-market lease liabilities were as follows:
 
 
  
As of June 30, 2022
  
 
  
Lease Intangibles
    
Above-Market
Lease Asset
    
Below-Market
Lease Liabilities
  
 
                  
Cost
  
$
2,889,828
    
$
-
     $
1,455,317
  
Accumulated amortization
    
(586,168
)
    
-
      
(391,738
)
Total
  
$
2,303,660
    
$
-
     $
1,063,579
  
 
                        
Weighted average amortization period (years)
    
5.2
      
-
      
4.9
  
 
 
  
As of June 30, 2021
  
 
  
Lease Intangibles
    
Above-Market
Lease Asset
    
Below-Market
Lease Liabilities
  
 
                  
Cost
  
$
5,141,279
    
$
447,663
    
$
937,452
  
Accumulated amortization
    
(1,086,485
)
    
(63,952
)
    
(99,139
)
Total
  
$
4,054,794
    
$
383,711
    
$
838,313
  
 
                        
Weighted average amortization period (years)
    
3.1
      
3.5
      
3.4
  
 
Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the year ended June 30, 2022, were as follows:
 
 
  
Year Ended
  
 
  
June 30, 2022
  
 
  
Lease
Intangibles
    
Above-Market
Lease Asset
    
Below-Market
Lease Liabilities
  
Amortization
  
$
1,677,943
    
$
127,904
    
$
(292,599
)
 
Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the six months ended June 30, 2021, were as follows:
 
 
  
Six Months Ended
  
 
  
June 30, 2021
  
 
  
Lease
Intangibles
    
Above-Market
Lease Asset
    
Below-Market
Lease Liabilities
  
Amortization
  
$
1,086,486
    
$
63,952
    
$
(99,139
)
 
We did not have lease intangibles as of December 31, 2020. Therefore, we did not have any amortization.
 
The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:
 
  
Year Ended June 30, :
  
 
  
2023
    
2024
    
2025
    
2026
    
2027
    
Thereafter
  
In-place leases, to be included in amortization
  
$
491,084
    
$
350,698
    
$
350,698
    
$
333,418
    
$
212,460
    
$
565,302
  
 
                                                
Above-market lease intangibles
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Below-market lease liabilities
    
(335,985
)
    
(286,053
)
    
(134,237
)
    
(68,290
)
    
(68,290
)
    
(170,724
)
Total to be included in revenue from tenants
  
$
(335,985
)
  
$
(286,053
)
  
$
(134,237
)
  
$
(68,290
)
  
$
(68,290
)
  
$
(170,724
)