11. SEGMENTS

The Company’s reportable segments consist of 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 Home Properties 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 inter segment 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). 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 three and six months ended June 30, 2018 and 2017.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2018			2017			2018			2017
Office/Industrial Properties:
Rental, fee and other income	$	6,058,387		$	6,535,722		$	12,215,534		$	12,779,101
Property and related expenses		(2,306,483	)		(2,295,720	)		(4,657,093	)		(4,514,238	)
Net operating income, as defined		3,751,904			4,240,002			7,558,441			8,264,864
Model Home Properties:
Rental, fee and other income		1,169,890			930,062			2,293,657			1,806,607
Property and related expenses		(34,825	)		(35,038	)		(87,351	)		(73,995	)
Net operating income, as defined		1,135,065			895,024			2,206,306			1,732,612
Retail Properties:
Rental, fee and other income		936,139			1,052,289			1,880,059			2,178,893
Property and related expenses		(320,915	)		(305,304	)		(567,688	)		(684,933	)
Net operating income, as defined		615,224			746,985			1,312,371			1,493,960
Reconciliation to net loss:
Total net operating income, as defined, for reportable segments		5,502,193			5,882,011			11,077,118			11,491,436
General and administrative expenses		(1,357,578	)		(1,439,820	)		(2,692,672	)		(2,629,837	)
Depreciation and amortization		(2,265,889	)		(2,443,817	)		(4,604,933	)		(4,947,333	)
Interest expense		(3,147,179	)		(3,311,421	)		(6,224,156	)		(6,627,617	)
Other expense /(income)		12,449			5,829			(5,842	)		15,097
Deferred offering costs		(1,507,599	)		-			(1,507,599	)		-
Income tax expense		(88,671	)		(13,746	)		(119,465	)		(108,356	)
Gain on sale of real estate		355,276			1,485,589			429,489			2,027,051
Net (loss) income	$	(2,496,998	)	$	164,625		$	(3,648,060	)	$	(779,559	)

	June 30,		December 31,
Assets by Reportable Segment:	2018		2017

Office/Industrial Properties:
Land, buildings and improvements, net (1)	$	158,668,576	$	160,422,469
Total assets (2)	$	162,477,991	$	163,041,049
Model Home Properties:
Land, buildings and improvements, net (1)	$	49,137,958	$	43,245,832
Total assets (2)	$	51,006,321	$	44,782,943
Retail Properties:
Land, buildings and improvements, net (1)	$	30,646,160	$	30,865,644
Total assets (2)	$	32,355,214	$	32,534,890
Reconciliation to Total Assets:
Total assets for reportable segments	$	245,839,526	$	240,358,882
Other unallocated assets:
Cash equivalents and restricted cash		12,450,950		8,310,575
Other assets, net		2,990,654		5,827,408
Total Assets	$	261,281,130	$	254,496,865

(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 Six Months Ended June 30,
	2018		2017
Office/Industrial Properties:
Capital expenditures and tenant improvements	$	1,788,880	$	1,783,814

Model Home Properties:
Acquisition of operating properties		10,196,098		9,694,785

Retail Properties:
Capital expenditures and tenant improvements		19,260		35,777

Totals:
Acquisition of operating properties, net		10,196,098		9,694,785
Capital expenditures and tenant improvements		1,808,140		1,819,591
Total real estate investments	$	12,004,238	$	11,514,376