Segments

3 Months Ended

Mar. 31, 2019

12. 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 months ended March 31, 2019 and 2018.

	For the Three Months Ended March 31,
	2019			2018
Office/Industrial Properties:
Rental, fees and other income	$	5,454,153		$	6,157,147
Property and related expenses		(2,504,787	)		(2,350,611	)
Net operating income, as defined		2,949,366			3,806,536
Model Home Properties:
Rental, fees and other income		1,081,684			1,123,767
Property and related expenses		(50,422	)		(52,526	)
Net operating income, as defined		1,031,262			1,071,241
Retail Properties:
Rental, fees and other income		643,427			943,920
Property and related expenses		(208,341	)		(246,772	)
Net operating income, as defined		435,086			697,148
Reconciliation to net loss:
Total net operating income, as defined, for reportable segments		4,415,714			5,574,925
General and administrative expenses		(1,760,703	)		(1,333,465	)
Depreciation and amortization		(2,210,081	)		(2,339,044	)
Interest expense		(2,545,203	)		(3,076,976	)
Other income (expense)		5,524			(18,291	)
Income tax expense		(81,430	)		(32,423	)
Gain on sale of real estate		1,214,242			74,213
Net loss	$	(961,937	)	$	(1,151,061	)

	March 31,		December 31,
Assets by Reportable Segment:	2019		2018
Office/Industrial Properties:
Land, buildings and improvements, net (1)	$	133,923,477	$	138,694,773
Total assets (2)	$	138,049,968	$	143,620,315
Model Home Properties:
Land, buildings and improvements, net (1)	$	43,624,148	$	48,762,869
Total assets (2)	$	47,453,048	$	48,864,060
Retail Properties:
Land, buildings and improvements, net (1)	$	24,658,611	$	23,650,423
Total assets (2)	$	26,209,214	$	27,702,384
Reconciliation to Total Assets:
Total assets for reportable segments	$	211,712,230	$	220,186,759
Other unallocated assets:
Cash equivalents and restricted cash		12,839,227		9,776,215
Other assets, net		514,767		3,087,066
Total Assets	$	225,066,224	$	233,050,040

(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.

	For the Three Months Ended March 31,
Capital Expenditures by Reportable Segment	2019		2018
Office/Industrial Properties:
Capital expenditures and tenant improvements	$	2,696,422	$	1,185,518
Model Home Properties:
Acquisition of operating properties		-		7,284,141
Retail Properties:
Capital expenditures and tenant improvements		-		19,260
Totals:
Acquisition of operating properties, net		-		7,284,141
Capital expenditures and tenant improvements		2,696,422		1,204,778
Total real estate investments	$	2,696,422	$	8,488,919