1-U 1 tm2039045-1_1u.htm FORM 1-U

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 1-U

 

CURRENT REPORT

Pursuant Regulation A of the Securities Act of 1933

 

December 21, 2020

(Date of Report (Date of earliest event reported))

 

1st stREIT Office Inc.

(Exact name of issuer as specified in its charter)

 

Maryland   81-4602947
 (State or other jurisdiction of incorporation)   (IRS Employer Identification No.)
     
11601 Wilshire Boulevard, Ste. 1690 Los Angeles, CA   90025
             (Address of principal executive offices)    (ZIP Code)

 

(310) 421-1030

(Issuer’s telephone number, including area code)

 

Common Stock

(Title of each class of securities issued pursuant to Regulation A)

 

 

 

 

 

 

Item 9. Other Events

 

Declaration of Dividend 

 

On December 21, 2020, the board of directors of 1st stREIT Office Inc. (the “Company”) declared a regular quarterly cash dividend of $0.21 per share of common stock of the Company (“Common Stock”) for the period from October 1, 2020 to December 31, 2020. The dividend will be payable on January 8, 2021 to stockholders of record as of the close of business on December 24, 2020. The Company, as general partner of 1st stREIT Office Operating Partnership LP (the “Operating Partnership”), concurrently declared the same distribution per common unit of the Operating Partnership.

 

The quarterly cash dividend equates to 8.40% on an annualized basis calculated at the current rate, assuming a $10.00 per share of Common Stock purchase price.

 

Establishment of Purchase Price

 

Beginning with January 1, 2021, the purchase price per share of Common Stock will be $10.21 per share based on the net asset value (“NAV”) per share of the Company as of September 30, 2020 as calculated by the Company’s manager, SW Manager, LLC (the “Manager”). This price per share will be effective until the next announcement of the price per share by the Company, which is expected to happen on or within a commercially reasonable time after March 31, 2021, unless updated by the Company prior to that time. Redemptions of shares of Common Stock will be made pursuant to the Company’s redemption plan based on the then-current NAV per share.

 

Net Asset Value as of September 30, 2020

 

The Manager calculates the Company’s NAV on a quarterly basis as of the end of each prior fiscal quarter on a fully diluted basis. As of September 30, 2020, NAV per share of Common Stock was $10.21. This NAV is effective until updated by the Company on March 31, 2021 (or as soon as commercially reasonable thereafter), unless updated by the Company prior to that time.

 

Components of NAV

 

The following sets forth the calculation of NAV as of September 30, 2020:

 

   September 30, 2020 (1) 
Assets     
Real estate:     
Land  $7,230,647 
Buildings and improvements   74,269,353 
Total real estate, net, at fair value   81,500,000 
      
Cash   3,476,365 
Restricted cash   1,310,190 
Rents and other receivables, net   38,561 
Other assets, net   194,762 
Total assets  $86,519,878 
      
Liabilities and stockholders’ equity     
Liabilities:     
Secured notes payable, net  $41,457,518 
Unsecured note payable - affiliate, net   6,500,000 
Accounts payable, accrued and other liabilities   2,255,212 
Unearned tenant rents   169,437 
Security and investor deposits   424,802 
Due to affiliate   234,309 
Total liabilities   51,041,278 
      
Stockholders’ equity:     
Common stock; 900,000,000 shares authorized; 878,492 shares issued and outstanding at September 30, 2020   8,785 
Additional paid-in capital   8,557,670 
Cumulative distributions and net gain   407,192 
Noncontrolling interests   26,504,953 
Total stockholders' equity   35,478,600 
Total liabilities and stockholders' equity  $86,519,878 
Net asset value per share on 878,492 shares issued and outstanding at September 30, 2020(2)  $10.21 

 

(1) Unaudited consolidated balance sheet data as of September 30, 2020.

 

(2) The total amount of shares of Common Stock issued and outstanding used in the computation of NAV per share is the amount of shares outstanding as of September 30, 2020.  NAV per share computation excludes noncontrolling interests.

 

 

 

 

NAV per share was calculated by the Manager on a fully dilutive basis using a process that reflects several components, including (1) estimated values of the Company’s commercial real estate assets and investments, including related liabilities, based upon (a) market capitalization rates, comparable sales information, interest rates, discount rates, net operating income, and (b) in certain instances, individual appraisal reports of the underlying real estate provided by an independent valuation expert, (2) the price of liquid assets for which third party market quotes are available, (3) accruals of the Company’s periodic dividends and (4) estimated accruals of the Company’s operating revenues and expenses.

 

As described in the section titled “Valuation Policies” of the Company’s offering circular filed with the Securities and Exchange Commission (“SEC”), the Company’s goal is to provide a reasonable estimate of NAV per share of Common Stock on a quarterly basis. However, the majority of the Company’s assets consist of commercial office investments and, as with any commercial real estate valuation protocol, the conclusion reached by the Company or, solely in the case that there is a conflict, the conclusion reached by the Company’s independent valuation expert, will be based on a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. In instances where the Company determines that an independent appraisal of its real estate assets is necessary, including, but not limited to, instances where the Manager is unsure of its ability to accurately determine the estimated values of the Company’s commercial real estate assets and investments, or instances where third party market values for comparable properties are either nonexistent or extremely inconsistent, the Company may engage an appraiser that has expertise in appraising commercial real estate assets to act as its independent valuation expert. The independent valuation expert will not be responsible for, or prepare, the calculation of NAV per share. However, the Company may hire a third party to calculate, or assist with calculating, the NAV per share. The use of different judgments, assumptions or opinions would likely result in different estimates of the value of the Company’s commercial real estate assets and investments.

 

In addition, for any given quarter, the Company’s published NAV per share may not fully reflect certain material events, to the extent that the financial impact of such events on the Company’s portfolio is not immediately quantifiable. As a result, the quarterly calculation of NAV per share may not reflect the precise amount that might be paid for the shares of Common Stock in a market transaction, and any potential disparity in NAV per share may be in favor of either stockholders who redeem their shares, or stockholders who buy new shares, or existing stockholders. However, to the extent quantifiable, if a material event occurs in between quarterly updates of NAV that would cause NAV per share to change by 5% or more from the last disclosed NAV, the Company will disclose the updated NAV per share and the reason for the change in an offering circular supplement as promptly as reasonably practicable.

 

Historical NAV Information

 

Below is the NAV per share of Common Stock, as determined in accordance with the Company’s valuation policies, for the fiscal quarter ended September 30, 2020, and the four prior quarters thereof.

 

Date   NAV Per Share
September 30, 2019   $10.10
December 31, 2019   $10.00
March 31, 2020   $9.86
June 30, 2020   $10.07
September 30, 2020   $10.21

 

 

 

 

Safe Harbor Statement

 

This Current Report on Form 1-U contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Company’s Offering Statement on Form 1-A dated September 13, 2017, filed with the SEC, as such factors may be updated from time to time in the Company’s subsequent filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  1st stREIT OFFICE INC.  
     
  By: SW Manager, LLC  
  Its: Manager  
       
  By: /s/ Eliot Bencuya  
  Name:   Eliot Bencuya  
  Title: Chief Executive Officer  

 

Date: December 21, 2020