NOTE 5. INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company’s investments in unconsolidated entities are as follows:

	March 31, 2018		December 31, 2017
RU Martin Street Santa Clara (“TIC”)	$	10,973,640	$	11,103,547
Rich Uncles Real Estate Investment Trust I (“REIT I”)		3,357,258		3,420,475
	$	14,330,898	$	14,524,022

The Company’s income from investments in unconsolidated entities is as follows:

	Three Months Ended March 31,
	2018		2017
TIC	$	49,780	$	—
REIT I		5,099		7,957
	$	54,879	$	7,957

TIC

On September 28, 2017, the Company acquired an approximate 72.7% TIC interest in the Santa Clara property. The remaining approximate 27.3% of undivided interest in the Santa Clara property is held by Hagg Lane II, LLC (an approximate 23.4%) and Hagg Lane III, LLC (an approximate 3.9%). The manager of Hagg Lane II, LLC and Hagg Lane III, LLC is a board member of the Sponsor. The Santa Clara property does not qualify as a variable interest entity and consolidation is not required as the Company does not control the TIC. Therefore, the Company accounts for its interest in the TIC using the equity method. The Company receives approximately 72.7% of the cash flow distributions and recognizes approximately 72.7% of the results of operations.

The following is summarized financial information for the TIC:

	March 31 2018		December 31 2017
Assets:
Real estate investments, net	$	32,412,708	$	32,587,034
Cash and cash equivalents		599,327		615,436
Other assets		122,016		103,700
Total assets	$	33,134,051	$	33,306,170
Liabilities:
Mortgage notes payable	$	14,172,229	$	14,235,256
Below-market lease, net		3,216,592		3,247,480
Other liabilities		344,788		246,085
Total liabilities		17,733,609		17,728,821
Total equity		15,400,442		15,577,349
Total liabilities and equity	$	33,134,051	$	33,306,170

	Three Months Ended March 31, 2018 (1)
Total revenue	$	608,794
Expenses:
Interest expense		145,025
Depreciation and amortization		247,213
Other expense		146,336
Total expenses		538,574
Net income	$	70,220

(1) The Company’s investment in the TIC commenced on September 28, 2017; therefore, no TIC operating results are presented for the three months ended March 31, 2017.

REIT I

The Company’s investment in REIT I represented an approximate 4.3% and 4.4% ownership interest as of March 31, 2018 and December 31, 2017 respectively. The Company recorded its share of income (losses) of REIT I based on REIT I’s results of operations.

The following is summarized financial information for REIT I:

	March 31, 2018		December 31, 2017
Assets:
Real estate investments, net	$	129,945,167	$	131,166,670
Cash and cash equivalents and restricted cash		6,248,951		6,027,807
Other assets		2,784,434		2,658,777
Total assets	$	138,978,552	$	139,853,254
Liabilities:
Mortgage notes payable, net	$	62,054,451	$	62,277,387
Below-market lease intangibles, net		3,750,967		3,966,008
Other liabilities		3,992,026		2,937,247
Total liabilities		69,797,444		69,180,642
Redeemable common stock		586,895		586,242
Total shareholders’ equity		68,594,213		70,086,370
Total liabilities and shareholders’ equity	$	138,978,552	$	139,853,254

	Three Months Ended March 31,
	2018		2017
Total revenue	$	3,231,218	$	2,726,267
Expenses:
Depreciation and amortization		1,448,244		1,218,074
Interest expense		484,873		461,200
Other expense		1,180,037		652,825
Total expenses		3,113,154		2,332,099
Other income:
Other income		—		280
Net income	$	118,064	$	394,448