13. SEGMENTS

The Company’s reportable segments consist of the three types of commercial real estate properties for which the Company’s decision-makers internally evaluate operating performance and financial results: Office/Industrial Properties, Model Homes and Retail Properties. The Company also has certain corporate level activities including accounting, finance, legal administration and management information systems which are not considered separate operating segments. The accounting policies of the reportable segments are the same as those described in Note 2. There is no significant intersegment activity.

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt) less interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate investments and to make decisions about resource allocations.

The following tables reconcile the Company’s segment activity to its results of operations and financial position as of and for the years ended December 31, 2017 and 2016, respectively.

	For the Year Ended December 31,
	2017			2016
Office/Industrial Properties:
Rental income	$	25,442,638		$	25,564,763
Property and related expenses		(9,284,091	)		(8,747,722	)
Net operating income, as defined		16,158,547			16,817,041
Model Home Properties:
Rental income		3,899,570			2,278,832
Property and related expenses		(154,206	)		(113,187	)
Net operating income, as defined		3,745,364			2,165,645
Retail Properties:
Rental income		4,334,047			4,608,517
Property and related expenses		(1,305,702	)		(1,274,436	)
Net operating income, as defined		3,028,345			3,334,081
Reconciliation to net loss:
Total net operating income, as defined, for reportable segments		22,932,256			22,316,767
General and administrative expenses		(5,482,170	)		(5,065,579	)
Depreciation and amortization		(9,710,265	)		(10,256,185	)
Interest expense		(12,954,079	)		(13,531,337	)
Interest income		30,287			85,723
Gain on sale of real estate		2,623,469			2,186,481
Acquisition costs		(72,897	)		(145,040	)
Income taxes		(208,681	)		(213,860	)
Impairment of real estate		-			(948,053	)
Net loss	$	(2,842,080	)	$	(5,571,083	)

	December 31,		December 31,
Assets by Reportable Segment:	2017		2016

Office/Industrial Properties:
Land, buildings and improvements, net (1)	$	160,422,468	$	172,309,537
Total assets (2)	$	163,041,049	$	175,689,722
Model Home Properties:
Land, buildings and improvements, net (1)	$	43,245,832	$	34,813,680
Total assets (2)	$	44,782,943	$	35,960,179
Retail Properties:
Land, buildings and improvements, net (1)	$	30,865,644	$	33,398,992
Total assets (2)	$	32,534,890	$	35,320,092
Reconciliation to Total Assets:
Total assets for reportable segments	$	240,358,882	$	246,969,993
Other unallocated assets:
Cash and cash equivalents		8,310,575		7,387,795
Other assets, net		5,827,408		3,641,289
Total Assets	$	254,496,865	$	257,999,077

(1)	Includes lease intangibles and the land purchase option related to property acquisitions.

(2)	Includes land, buildings and improvements, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.

Capital Expenditures by Reportable Segment
	For the Year Ended December 31,
	2017		2016
Office/Industrial Properties:
Acquisition of operating properties	$	-	$	-
Capital expenditures and tenant improvements		3,418,722		4,092,875

Model Home Properties:
Acquisition of operating properties		17,560,745		23,667,535

Retail Properties:
Acquisition of retail properties		-		-
Capital expenditures and tenant improvements		203,002		57,338

Totals:
Acquisition of operating properties, net		17,560,745		23,667,535
Capital expenditures and tenant improvements		3,621,724		4,150,213
Total real estate investments	$	21,182,469	$	27,817,748