[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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MVP REIT, INC.
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(Exact name of registrant as specified in its charter)
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MARYLAND
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45-4963335
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(State or Other Jurisdiction of
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(I.R.S. Employer
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Incorporation or Organization)
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Identification No.)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
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Smaller reporting company [ X ]
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Page
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Exhibit 31.1
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Exhibit 31.2
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Exhibit 32
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September 30, 2016
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December 31, 2015
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Cash
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$
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3,490,000
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$
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10,511,000
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||||
Cash – restricted
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884,000
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1,133,000
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||||||
Accounts receivable
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77,000
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42,000
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||||||
Prepaid expenses
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183,000
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316,000
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||||||
Deferred rental assets
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241,000
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159,000
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||||||
Investments in real estate and fixed assets:
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||||||||
Land and improvements
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63,579,000
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44,507,000
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||||||
Building and improvements
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49,826,000
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43,010,000
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||||||
Fixed assets
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88,000
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88,000
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||||||
113,493,000
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87,605,000
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|||||||
Accumulated depreciation
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(1,799,000
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)
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(865,000
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)
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||||
Total investments in real estate and fixed assets, net
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111,694,000
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86,740,000
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||||||
Deposits
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406,000
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16,010,000
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||||||
Other assets
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120,000
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140,000
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||||||
Investment in equity method investee
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6,628,000
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--
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||||||
Assets held for sale
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6,162,000
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--
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||||||
Total assets
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$
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129,885,000
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$
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115,051,000
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||||
LIABILITIES AND EQUITY
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||||||||
Liabilities
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||||||||
Accounts payable and accrued liabilities
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$
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813,000
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$
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462,000
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||||
Deferred revenue
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65,000
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25,000
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||||||
Due to related parties
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139,000
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7,000
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||||||
Security deposits
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208,000
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211,000
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||||||
Notes payable, net of unamortized loan issuance cost of $919,000 and $534,000 at September 30, 2016 and December 31, 2015, respectively
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48,349,000
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28,177,000
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||||||
Total liabilities
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49,574,000
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28,882,000
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||||||
Commitments and contingencies
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||||||||
Equity
MVP REIT, Inc. Shareholders' Equity
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||||||||
Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding
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--
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--
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||||||
Non-voting, non-participating convertible stock, $0.001 par value, 1,000 shares authorized, issued and outstanding as of September 30, 2016 and December 31, 2015
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--
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--
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||||||
Common stock, $0.001 par value, 98,999,000 shares authorized, 10,972,898 and 11,002,902 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively
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11,000
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11,000
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||||||
Additional paid-in capital
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91,996,000
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97,277,000
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||||||
Accumulated deficit
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(15,082,000
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)
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(12,925,000
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)
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||||
Total MVP REIT, Inc. Shareholders' Equity
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76,925,000
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84,363,000
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||||||
Non-controlling interest
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3,386,000
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1,806,000
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||||||
Total equity
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80,311,000
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86,169,000
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||||||
Total liabilities and equity
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$
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129,885,000
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$
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115,051,000
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For the Three Months
Ended September 30,
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For the Nine Months
Ended September 30,
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|||||||||||||||
2016
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2015
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2016
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2015
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|||||||||||||
Revenues
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||||||||||||||||
Rental revenue
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$
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2,336,000
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$
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1,353,000
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$
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6,285,000
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$
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3,101,000
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||||||||
Total revenues
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2,336,000
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1,353,000
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6,285,000
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3,101,000
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||||||||||||
Operating expenses
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||||||||||||||||
General and administrative
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190,000
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198,000
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1,208,000
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650,000
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||||||||||||
Acquisition expenses
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337,000
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153,000
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765,000
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481,000
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||||||||||||
Acquisition expenses – related party
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--
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75,000
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1,326,000
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1,856,000
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||||||||||||
Operation and maintenance
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747,000
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271,000
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2,269,000
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606,000
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||||||||||||
Loss from impairment
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100,000
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--
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100,000
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--
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||||||||||||
Depreciation
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326,000
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221,000
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934,000
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518,000
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||||||||||||
Total operating expenses
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1,700,000
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918,000
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6,602,000
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4,111,000
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||||||||||||
Income (loss) from operations
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636,000
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435,000
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(317,000
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)
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(1,010,000
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)
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||||||||||
Other income (expense)
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||||||||||||||||
Interest expense
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(621,000
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)
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(365,000
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)
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(1,682,000
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)
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(935,000
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)
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||||||||
Income from investment in equity method investee
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58,000
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--
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61,000
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--
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||||||||||||
Loss on acquisition in real estate
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--
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--
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(2,000
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)
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--
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|||||||||||
Interest income
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--
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--
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1,000
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--
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||||||||||||
Total other expense
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(563,000
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)
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(365,000
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)
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(1,622,000
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)
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(935,000
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)
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||||||||
Income (loss) from continuing operations
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73,000
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70,000
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(1,939,000
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)
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(1,945,000
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)
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||||||||||
Discontinued operations, net of income taxes
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||||||||||||||||
Income (loss) from assets held for sale, net of income taxes
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(63,000
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)
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34,000
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(182,000
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)
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189,000
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||||||||||
Gain on sale of investment in real estate held for sale
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--
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--
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--
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288,000
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||||||||||||
Total income (loss) from discontinued operations
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(63,000
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)
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34,000
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(182,000
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)
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477,000
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||||||||||
Provision for income taxes
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--
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--
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--
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--
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||||||||||||
Net income (loss)
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10,000
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104,000
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(2,121,000
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)
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(1,468,000
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)
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||||||||||
Net income attributable to non-controlling interest – related party
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55,000
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48,000
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36,000
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136,000
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||||||||||||
Net income (loss) attributable to common stockholders
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$
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(45,000
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)
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$
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56,000
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$
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(2,157,000
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)
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$
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(1,604,000
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)
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|||||
Basic and diluted income (loss) per weighted average common share
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||||||||||||||||
Income (loss) from continuing operations attributable to MVP REIT common stockholders – basic and diluted
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0.01
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0.01
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(0.18
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)
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(0.33
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)
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||||||||||
Income (loss) from discontinued operations – basic and diluted
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(0.01
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)
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(0.00
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)
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(0.02
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)
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0.08
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|||||||||
Net income (loss) attributable to MVP REIT common stockholders - basic and diluted
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||||||||||||||||
$
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(0.00
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)
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$
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0.01
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$
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(0.19
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)
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$
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(0.25
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)
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||||||
Weighted average common shares outstanding, basic and diluted
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11,009,139
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8,140,809
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11,018,552
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6,381,719
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Convertible stock
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Common stock
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|||||||||||||||||||||||||||||||
Number of Shares
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Par Value
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Number of Shares
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Par Value
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Additional Paid-in Capital
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Accumulated Deficit
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Non-controlling Interest -Related Party
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Total
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|||||||||||||||||||||||||
Balance, December 31, 2015
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1,000
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$
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--
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11,002,902
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$
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11,000
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$
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97,277,000
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$
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(12,925,000
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)
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$
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1,806,000
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$
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86,169,000
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|||||||||||||||||
Distributions to non-controlling interest
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(79,000
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)
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(79,000
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)
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||||||||||||||||||||||||||||
Distribution – loan proceeds to non-controlling interest
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(1,058,000
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)
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(1,058,000
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)
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||||||||||||||||||||||||||||
Purchase of non-controlling interest
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(750,000
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)
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(750,000
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)
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||||||||||||||||||||||||||||
Issuance of common stock – DRIP
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--
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--
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99,283
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--
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868,000
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--
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--
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868,000
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||||||||||||||||||||||||
Non-controlling interest
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--
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--
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--
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--
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--
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--
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3,431,000
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3,431,000
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||||||||||||||||||||||||
Redeemed shares
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--
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--
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(129,287
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)
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--
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(1,163,000
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)
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--
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--
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(1,163,000
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)
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|||||||||||||||||||||
Distributions
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--
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--
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--
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--
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(4,986,000
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)
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--
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--
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(4,986,000
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)
|
||||||||||||||||||||||
Net income (loss)
|
--
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--
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--
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--
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--
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(2,157,000
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)
|
36,000
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(2,121,000
|
)
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||||||||||||||||||||||
Balance, September 30, 2016
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1,000
|
$
|
--
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10,972,898
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$
|
11,000
|
$
|
91,996,000
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$
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(15,082,000
|
)
|
$
|
3,386,000
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$
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80,311,000
|
For the Nine Months Ended September 30,
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||||||||
Cash flows from operating activities:
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2016
|
2015
|
||||||
Net loss
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$
|
(2,121,000
|
)
|
$
|
(1,468,000
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
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934,000
|
518,000
|
||||||
Amortization of loan costs
|
113,000
|
--
|
||||||
Income from investment in equity method investee
|
(61,000
|
)
|
--
|
|||||
Loss from impairment
|
100,000
|
--
|
||||||
Change in operating assets and liabilities:
|
||||||||
Restricted cash
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249,000
|
(860,000
|
)
|
|||||
Prepaid expenses
|
133,000
|
83,000
|
||||||
Deferred rental assets
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(196,000
|
)
|
(150,000
|
)
|
||||
Accounts receivable
|
79,000
|
--
|
||||||
Other assets
|
20,000
|
(13,000
|
)
|
|||||
Capitalized loan fees
|
(498,000
|
)
|
(120,000
|
)
|
||||
Security deposits
|
(3,000
|
)
|
211,000
|
|||||
Assets held for sale
|
(62,000
|
)
|
(405,000
|
)
|
||||
Due to related parties
|
132,000
|
(10,000
|
)
|
|||||
Deferred revenue
|
40,000
|
--
|
||||||
Accounts payable and accrued liabilities
|
352,000
|
473,000
|
||||||
Net cash used in operating activities
|
(789,000
|
)
|
(1,741,000
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of investment in real estate
|
(9,957,000
|
)
|
(32,024,000
|
)
|
||||
Purchase of asset held for sale
|
(6,100,000
|
)
|
--
|
|||||
Payment of deposits, net of deposits returned
|
(347,000
|
)
|
(2,560,000
|
)
|
||||
Investment in equity method investee
|
(6,584,000
|
)
|
--
|
|||||
Building improvements
|
(80,000
|
)
|
(159,000
|
)
|
||||
Proceeds from sale of Red Mountain
|
--
|
5,426,000
|
||||||
Net cash used in investing activities
|
(23,068,000
|
)
|
(29,317,000
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock, net commissions
|
--
|
52,420,000
|
||||||
Proceeds from promissory note
|
21,340,000
|
3,656,000
|
||||||
Capital contribution from non-controlling interest – related party
|
3,431,000
|
--
|
||||||
Redeemed shares
|
(1,163,000
|
)
|
(134,000
|
)
|
||||
Purchase of non-controlling interest
|
(750,000
|
)
|
--
|
|||||
Payments on notes payable
|
(784,000
|
)
|
(550,000
|
)
|
||||
Distribution received from investment in equity method investee
|
17,000
|
--
|
||||||
Payments on notes payable held for sale
|
--
|
(2,643,000
|
)
|
|||||
Distribution to non-controlling interest
|
(1,137,000
|
)
|
(29,000
|
)
|
||||
Stockholders' distributions
|
(4,118,000
|
)
|
(1,909,000
|
)
|
||||
Net cash provided by financing activities
|
16,836,000
|
50,811,000
|
||||||
NET CHANGE IN CASH
|
(7,021,000
|
)
|
19,753,000
|
|||||
Cash and cash equivalents, beginning of period
|
10,511,000
|
13,812,000
|
||||||
Cash and cash equivalents, end of period
|
$
|
3,490,000
|
$
|
33,565,000
|
||||
Supplemental disclosures of cash flows information:
|
||||||||
Interest paid
|
$
|
1,682,000
|
$
|
935,000
|
||||
Non-cash investing and financing activities:
|
||||||||
Distributions – DRIP
|
$
|
868,000
|
$
|
413,000
|
||||
Capitalized loan fees related to promissory note
|
$
|
498,000
|
$
|
16,000
|
||||
Deposits applied to purchase of investment in real estate
|
$
|
15,951,000
|
$
|
--
|
||||
Debt assumed in acquisitions
|
$
|
--
|
$
|
12,180,000
|
(a) |
the Company has made total distributions on the then outstanding common shares equal to the invested capital attributable to those shares plus a 6.00% cumulative, non-compounded, annual pre-tax return on such invested capital; or
|
·
|
Declines in real estate market conditions, which can cause a decrease in expected market value;
|
·
|
Discovery of undisclosed liens for community improvement bonds, easements and delinquent property taxes;
|
·
|
Lack of progress on real estate developments after the Company advances funds. The Company customarily utilizes disbursement agents to monitor the progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances;
|
·
|
Unanticipated legal or business issues that may arise subsequent to loan origination or upon the sale of foreclosed property; and
|
·
|
Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the value of the property.
|
Property
|
Location
|
Date Acquired
|
Property Type
|
Investment Amount
|
Size / Acreage
|
# Spaces
|
Retail /Office Square Ft.
|
Ownership %
|
Ft. Lauderdale
|
208 SE 6th St, Ft Lauderdale, FL
|
7/31/2013
|
Parking Lot / Office Bldg.
|
$3,409,000
|
.75 acre
|
66
|
4,061
|
100%
|
Memphis Court
|
216 Court St, Memphis, TN
|
8/28/2013
|
Parking Lot
|
$194,000
|
.41 acre
|
37
|
N/A
|
100%
|
Memphis Poplar
|
212 Poplar Ave, Memphis, TN
|
8/28/2013
|
Parking Lot
|
$2,693,000
|
.86 acre
|
125
|
N/A
|
100%
|
Kansas City
|
1130 Holmes St, Kansas City, MO
|
8/28/2013
|
Parking Lot
|
$1,550,000
|
1.18 acres
|
164
|
N/A
|
100%
|
St. Louis
|
1300 Spruce St, St. Louis, MO
|
9/4/2013
|
Parking Lot
|
$4,137,000
|
1.22 acres
|
179
|
N/A
|
100%
|
Mabley Place
|
400 Race Street, Cincinnati, OH
|
12/9/2014
|
Parking Facility
|
$14,700,000
|
.91 acre
|
775
|
8,400
|
83%
|
Denver Sherman
|
1963 Sherman Street, Denver, CO
|
1/26/2015
|
Parking Lot
|
$585,000
|
.14 acre
|
28
|
N/A
|
100%
|
Ft. Worth
|
814 Taylor Street, Fort Worth, Texas
|
3/16/2015
|
Parking Facility
|
$23,336,000
|
1.18 acres
|
1,013
|
11,828
|
100%
|
Milwaukee Old World
|
822 N. Old World Third Street, Milwaukee, WI
|
3/31/2015
|
Parking Lot
|
$1,000,000
|
.27 acre
|
54
|
N/A
|
100%
|
St. Louis Convention
|
1010 Convention Plaza , St. Louis, MO
|
5/31/2015
|
Parking Lot
|
$2,575,000
|
1.26 acres
|
221
|
N/A
|
100%
|
Houston Saks Garage
|
611 Fannin Street, Houston, Tx
|
5/28/2015
|
Parking Facility
|
$8,380,000
|
.36 acre
|
265
|
5,000
|
100%
|
St. Louis Lucas
|
Lucas Ave, St. Louis, MO
|
6/29/2015
|
Parking Lot
|
$3,463,000
|
1.07 acres
|
217
|
N/A
|
100%
|
Milwaukee Wells
|
215 W. Wells Street, Milwaukee, WI
|
6/30/2015
|
Parking Lot
|
$3,900,000
|
.95 acre
|
100
|
N/A
|
100%
|
Wildwood NJ Lot I
|
400 East Magnolia Ave, Wildwood, NJ
|
7/10/2015
|
Parking Lot
|
$994,000
|
.29 acre
|
29
|
N/A
|
100%
|
Indy City Parking Garage
|
120 E. Washington Street, Indianapolis, IN
|
10/5/15
|
Parking Facility
|
$10,500,000
|
.44 acre
|
370
|
N/A
|
100%
|
KC Cherry Lot
|
1109 Cherry Street, Kansas City, MO
|
10/9/15
|
Parking Lot
|
$515,000
|
.60 acre
|
84
|
N/A
|
100%
|
Indy WA Street
|
301 E. Washington Street, Indianapolis, IN
|
10/29/15
|
Parking Lot
|
$4,995,000
|
1.07 acres
|
150
|
N/A
|
100%
|
Wildwood NJ Lot II
|
401 E. Glenwood Ave., Wildwood, NJ
|
12/16/15
|
Parking Lot
|
$615,000
|
.31 acre
|
45
|
N/A
|
100%
|
Indianapolis Meridian
|
239 S. Meridian Street, Indianapolis, IN
|
1/15/16
|
Parking Lot
|
$1,498,000
|
.24 acre
|
39
|
N/A
|
100%
|
Milwaukee Clybourn
|
412 E. Clybourn Street, Milwaukee, WI
|
1/20/16
|
Parking Lot
|
$205,000
|
.055 acre
|
15
|
N/A
|
100%
|
Milwaukee Arena
|
1124 North Old World Third Street, Milwaukee, WI
|
2/01/16
|
Parking Lot
|
$3,900,000
|
1.10 acres
|
75
|
N/A
|
100%
|
Clarksburg Lot
|
327 Washington Avenue, Clarksburg, WV
|
2/09/16
|
Parking Lot
|
$628,000
|
.81 acres
|
94
|
N/A
|
100%
|
Denver 1935 Sherman
|
1935 Sherman Street, Denver, CO
|
2/12/16
|
Parking Lot
|
$2,438,000
|
.43 acres
|
72
|
N/A
|
76%
|
Bridgeport Fairfield
|
314 Fairfield Avenue, Bridgeport, Connecticut
|
03/30/16
|
Parking Facility
|
$7,800,000
|
1.01 acres
|
878
|
N/A
|
90%
|
Minneapolis City Parking
|
Hennepin, Minneapolis, MN
|
1/06/16
|
Parking Lot
|
$9,395,000
|
4.46 acres
|
270
|
N/A
|
87%
|
Fixed Assets
|
$88,000
|
|||||||
Total
|
$113,493,000
|
Property
|
Location
|
Zoning
|
Height Restriction
|
Parking Tenant
|
Lease Commencement Date
|
Lease Term
|
Ft. Lauderdale
|
208 SE 6th St, Ft Lauderdale, FL
|
RAC-CC
|
150 Feet
|
SP+
|
02/01/14
|
5 yr. w/2 5 yr. ext.
|
Memphis Court
|
216 Court St, Memphis, TN
|
CBD
|
Unlimited
|
SP+
|
03/14/12
|
2 Years remaining
|
Memphis Poplar
|
212 Poplar Ave, Memphis, TN
|
CBD
|
Unlimited
|
Best Park
|
03/01/14
|
5 yr. w/2 5 yr. ext.
|
Kansas City
|
1130 Holmes St, Kansas City, MO
|
B4-5
|
Unlimited
|
SP+
|
03/14/12
|
15 Years
|
St. Louis
|
1300 Spruce St, St. Louis, MO
|
I (CBD)
|
200 Feet
|
SP+
|
12/01/13
|
5 yr. w/2 5 yr. ext.
|
Mabley Place
|
400 Race Street, Cincinnati, OH
|
DD-A
|
510 Feet
|
SP+
|
12/09/14
|
10 Years
|
Denver Sherman
|
1963 Sherman Street, Denver, CO
|
CMX-16
|
200 Feet
|
Denver SD
|
07/01/14
|
10 Years w/1 5 yr. ext.
|
Ft. Worth
|
814 Taylor Street, Fort Worth, Texas
|
CBD-H
|
Unlimited
|
SP+
|
03/16/15
|
10 Years
|
Milwaukee Old World
|
822 N. Old World Third Street, Milwaukee, WI
|
C9-E
|
40 Feet
|
SP+
|
03/31/15
|
5 yr. w/1 5 yr. ext.
|
St. Louis Convention
|
1010 Convention Plaza, St. Louis, MO
|
I (CBD)
|
200 Feet
|
SP+
|
05/13/15
|
5 yr. w/1 5 yr. ext.
|
Houston Saks Garage
|
611 Fannin Street, Houston, Tx
|
N/A
|
Unlimited
|
iPark
|
05/28/15
|
10 yr. w/1 5 yr. ext.
|
St. Louis Lucas
|
Lucas Ave, St. Louis, MO
|
I (CBD)
|
200 Feet
|
SP+
|
06/29/15
|
5 yr. w/1 5 yr. ext.
|
Milwaukee Wells
|
215 W. Wells Street, Milwaukee, WI
|
C9-E
|
40 Feet
|
SP+
|
06/30/15
|
10 Years
|
Wildwood NJ Lot
|
400 East Magnolia Ave, Wildwood, NJ
|
T/E
|
35 feet
|
SP+
|
1/1/16
|
5 yr. w/1 5 yr. ext.
|
Indy City Parking Garage
|
120 E. Washington Street, Indianapolis, IN
|
CDB-1 RC
|
5 Stories
|
ABM
|
10/5/15
|
5 yr. w/1 5 yr. ext.
|
KC Cherry Lot
|
1109 Cherry Street, Kansas City, MO
|
UR
|
Per Plan
|
SP+
|
10/9/15
|
5 yr. w/1 5 yr. ext.
|
Indy WA Street
|
301 E. Washington Street, Indianapolis, IN
|
CBD-2
|
Unlimited
|
Denison
|
10/30/15
|
10 Years
|
Wildwood NJ Lot II
|
401 E. Glenwood Ave., Wildwood, NJ
|
T/E
|
35 feet
|
SP+
|
1/01/16
|
5 yr. w/1 5 yr. ext.
|
Indianapolis Meridian
|
239 S. Meridian Street, Indianapolis, IN
|
CBD-2/RC
|
Unlimited
|
Denison Parking
|
1/20/2016
|
10 Years
|
Milwaukee Clybourn
|
412 E. Clybourn Street, Milwaukee, WI
|
C9F(A)
|
30 Feet
|
Secure Parking USA
|
2/1/2016
|
5 Years
|
Milwaukee Arena
|
1124 North Old World Third Street, Milwaukee, WI
|
RED
|
Unlimited
|
SP+
|
2/9/2016
|
5 yr. w/1 5 yr. ext.
|
Clarksburg Lot
|
327 Washington Avenue, Clarksburg, WV
|
BPO
|
60 Feet
|
ABM
|
2/12/2016
|
5 Years
|
Denver 1935 Sherman
|
1935 Sherman Street, Denver, CO
|
CMX-16
|
200 Feet
|
SP+
|
3/30/2016
|
10 Years
|
Bridgeport Fairfield
|
314 Fairfield Avenue, Bridgeport, Connecticut
|
DVD-CORE
|
65 Feet
|
SP+
|
1/15/2016
|
10 Years
|
Minneapolis City Parking
|
Hennepin, Minneapolis, MN
|
B4C-1
|
Unlimited
|
SP+
|
1/15/2016
|
5 yr. w/1 5 yr. ext.
|
Assets
|
Liabilities
|
|||||||||||||||||||
Land and Improvements
|
Building and improvements
|
Total assets acquired
|
Notes Payable Assumed
|
Net assets and liabilities acquired
|
||||||||||||||||
Minneapolis Venture*
|
$
|
6,100,000
|
$
|
--
|
$
|
6,100,000
|
$
|
--
|
$
|
6,100,000
|
||||||||||
Indianapolis Meridian
|
1,550,000
|
--
|
1,550,000
|
--
|
1,550,000
|
|||||||||||||||
Milwaukee Clybourn
|
205,000
|
--
|
205,000
|
--
|
205,000
|
|||||||||||||||
Milwaukee Arena
|
3,900,000
|
--
|
3,900,000
|
--
|
3,900,000
|
|||||||||||||||
Clarksburg Lot
|
620,000
|
--
|
620,000
|
--
|
620,000
|
|||||||||||||||
Denver 1935 Sherman
|
2,438,000
|
--
|
2,438,000
|
--
|
2,438,000
|
|||||||||||||||
Bridgeport Fairfield
|
972,000
|
6,828,000
|
7,800,000
|
--
|
7,800,000
|
|||||||||||||||
Minneapolis City Parking
|
9,395,000
|
--
|
9,395,000
|
--
|
9,395,000
|
|||||||||||||||
|
$
|
25,180,000
|
$
|
6,828,000
|
$
|
32,008,000
|
$
|
--
|
$
|
32,008,000
|
For the three months ended September 30, 2016
|
For the three months ended September 30, 2015
|
For the nine months ended September 30, 2016
|
For the nine months ended September 30, 2015
|
|||||||||||||
Revenues from continuing operations
|
$
|
2,336,000
|
$
|
1,776,000
|
$
|
6,427,000
|
$
|
4,369,000
|
||||||||
Net income (loss) available to common stockholders
|
$
|
(45,000
|
)
|
$ |
447,000
|
$
|
(2,015,000
|
)
|
$ |
(336,000
|
)
|
|||||
Net loss available to common stockholders per share – basic
|
$
|
(0.00
|
)
|
$
|
0.05
|
$
|
(0.18
|
)
|
$
|
(0.05
|
)
|
|||||
Net loss available to common stockholders per share – diluted
|
$
|
(0.00
|
)
|
$
|
0.05
|
$
|
(0.18
|
)
|
$
|
(0.05
|
)
|
Revenue
|
$
|
1,142,000
|
||
Expenses
|
(1,088,000
|
)
|
||
Net income
|
$
|
54,000
|
Ownership
|
|||||||||||||
Property Name
|
Purchase Date
|
Purchase Price
|
MVP REIT
|
MVP REIT II
|
|||||||||
Cleveland West 9th
|
05/11/2016
|
$
|
2,788,000
|
49
|
%
|
51
|
%
|
||||||
33740 Crown Colony
|
05/17/2016
|
$
|
1,489,000
|
49
|
%
|
51
|
%
|
||||||
White Front Garage
|
09/30/2016
|
$
|
2,307,000
|
20
|
%
|
80
|
%
|
||||||
Total
|
$
|
6,584,000
|
2016
|
$
|
246,000
|
||
2017
|
1,133,000
|
|||
2018
|
1,188,000
|
|||
2019
|
4,956,000
|
|||
2020
|
1,187,000
|
|||
Thereafter
|
40,558,000
|
|||
Total
|
$
|
49,268,000
|
Property
|
Location
|
Current Loan Balance
|
Interest Rate
|
Loan Maturity
|
||||||
Ft. Lauderdale
|
208 SE 6th St, Ft Lauderdale, FL
|
$
|
1,463,000
|
4.94
|
%
|
2/1/2019
|
||||
Memphis Court
|
216 Court St, Memphis, TN
|
|
137,000
|
4.94
|
%
|
2/1/2019
|
||||
Memphis Poplar
|
212 Poplar Ave, Memphis, TN
|
|
1,232,000
|
4.94
|
%
|
2/1/2019
|
||||
St. Louis
|
1300 Spruce St, St. Louis, MO
|
|
1,227,000
|
4.94
|
%
|
2/1/2019
|
||||
Mabley Place
|
400 Race Street, Cincinnati, OH
|
|
8,728,000
|
4.25
|
%
|
12/26/2024
|
||||
Ft. Worth
|
814 Taylor Street, Fort Worth, Texas
|
|
11,785,000
|
5.59
|
%
|
8/1/2021
|
||||
Houston Saks Garage
|
611 Fannin Street, Houston, TX
|
|
3,555,000
|
4.25
|
%
|
8/1/2025
|
||||
St. Louis Lucas
|
Lucas Ave, St. Louis, MO
|
|
3,447,000
|
4.59
|
%
|
2/1/2026
|
||||
Indy Garage
|
120 E. Washington Street, Indianapolis, IN
|
|
8,100,000
|
4.59
|
%
|
2/1/2026
|
||||
Minneapolis City Parking
|
1022 Hennepin Avenue, Minneapolis, MN
|
|
5,202,000
|
4.50
|
%
|
4/30/2026
|
||||
Bridgeport Fairfield
|
310 Fairfield Ave, Bridgeport, CT
|
|
4,392,000
|
4.00
|
%
|
8/1/2026
|
||||
Less loan issuance costs
|
|
(919,000
|
)
|
|||||||
Total
|
$
|
48,349,000
|
·
|
the fact that we have a limited operating history, as we commenced operations on December 11, 2012;
|
·
|
the fact that we have had a net loss for each annual period since inception;
|
·
|
our ability to effectively deploy the proceeds raised in our initial public offering;
|
·
|
the performance of properties and other investments the Company has acquired or may acquire or;
|
·
|
changes in economic conditions generally and the real estate and debt markets specifically;
|
·
|
legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs);
|
·
|
potential damage and costs arising from natural disasters, terrorism and other extraordinary events, including extraordinary events affecting parking facilities included in our portfolio;
|
·
|
risks inherent in the real estate business, including ability to secure leases or parking management contracts at favorable terms, tenant defaults, tenant concentration risk; potential liability relating to environmental matters and the lack of liquidity of real estate investments;
|
·
|
competitive factors that may limit our ability to make investments or attract and retain tenants;
|
·
|
our ability to generate sufficient cash flows to pay distributions to our stockholders;
|
·
|
our failure to maintain our status as a REIT;
|
·
|
the availability of capital and debt financing generally, and any failure to obtain debt financing at favorable terms or a failure to satisfy the conditions and requirements of that debt;
|
·
|
interest rates; and
|
·
|
changes to generally accepted accounting principles, or GAAP.
|
Rental revenues (by property)
|
2016
|
2015
|
||||||
Ft. Lauderdale
|
$
|
42,000
|
$
|
42,000
|
||||
Memphis Court
|
4,000
|
4,000
|
||||||
Memphis Poplar
|
68,000
|
69,000
|
||||||
Kansas City
|
29,000
|
30,000
|
||||||
St. Louis
|
63,000
|
62,000
|
||||||
Mabley Place
|
(a) |
507,000
|
(b) |
389,000
|
||||
Denver Sherman
|
9,000
|
9,000
|
||||||
Fort Worth
|
375,000
|
374,000
|
||||||
Milwaukee Old World
|
40,000
|
(c) |
53,000
|
|||||
St. Louis Convention
|
75,000
|
46,000
|
||||||
Houston Saks Garage
|
153,000
|
149,000
|
||||||
St. Louis Lucas
|
86,000
|
55,000
|
||||||
Milwaukee Wells
|
70,000
|
71,000
|
||||||
Wildwood NJ
|
19,000
|
--
|
||||||
Indy Garage
|
(a) |
236,000
|
--
|
|||||
KC Cherry Lot
|
(a) |
26,000
|
--
|
|||||
Indy WA Street
|
94,000
|
--
|
||||||
Indianapolis Meridian
|
24,000
|
--
|
||||||
Milwaukee Clybourn
|
5,000
|
--
|
||||||
Milwaukee Arena
|
54,000
|
--
|
||||||
MVP Clarksburg Lot
|
14,000
|
--
|
||||||
Denver 1935 Sherman
|
30,000
|
--
|
||||||
Bridgeport Fairfield
|
113,000
|
--
|
||||||
Minneapolis City Parking
|
200,000
|
--
|
||||||
Total revenues
|
$
|
2,336,000
|
$
|
1,353,000
|
Operating expenses
|
2016
|
2015
|
||||||
General and administrative
|
$
|
190,000
|
$
|
198,000
|
||||
Acquisition expenses
|
337,000
|
153,000
|
||||||
Acquisition expenses – related party
|
--
|
75,000
|
||||||
Operation and maintenance
|
747,000
|
271,000
|
||||||
Loss on impairment
|
100,000
|
--
|
||||||
Depreciation
|
326,000
|
221,000
|
||||||
Total operating expenses
|
$
|
1,700,000
|
$
|
918,000
|
Other income and expense
|
2016
|
2015
|
||||||
Interest expense
|
$
|
(621,000
|
)
|
$
|
(365,000
|
)
|
||
Income from investment in equity method investee
|
58,000
|
--
|
||||||
Total other expense
|
$
|
(563,000
|
)
|
$
|
(365,000
|
)
|
Discontinued operations, net of income taxes
|
2016
|
2015
|
||||||
Income (loss) from assets held for sale, net of income taxes
|
$
|
(63,000
|
)
|
$
|
34,000
|
|||
Total income (loss) from discontinued operations
|
$
|
(63,000
|
)
|
$
|
34,000
|
Rental revenues (by property)
|
2016
|
2015
|
||||||
Ft. Lauderdale
|
$
|
127,000
|
$
|
127,000
|
||||
Memphis Court
|
12,000
|
12,000
|
||||||
Memphis Poplar
|
205,000
|
205,000
|
||||||
Kansas City
|
88,000
|
88,000
|
||||||
St. Louis
|
188,000
|
180,000
|
||||||
Mabley Place*
|
(a) |
1,219,000
|
(b) |
1,171,000
|
||||
Denver Sherman
|
26,000
|
24,000
|
||||||
Fort Worth
|
1,127,000
|
812,000
|
||||||
Milwaukee Old World
|
120,000
|
(c) |
80,000
|
|||||
St. Louis Convention
|
(a) |
184,000
|
71,000
|
|||||
Houston Saks Garage
|
(a) |
465,000
|
205,000
|
|||||
St. Louis Lucas
|
197,000
|
55,000
|
||||||
Milwaukee Wells
|
210,000
|
71,000
|
||||||
Wildwood NJ
|
23,000
|
--
|
||||||
Indy Garage
|
(a) |
611,000
|
--
|
|||||
KC Cherry Lot
|
(a) |
58,000
|
--
|
|||||
Indy WA Street
|
285,000
|
--
|
||||||
Indianapolis Meridian
|
67,000
|
--
|
||||||
Milwaukee Clybourn
|
14,000
|
--
|
||||||
Milwaukee Arena
|
145,000
|
--
|
||||||
MVP Clarksburg Lot
|
35,000
|
--
|
||||||
Denver 1935 Sherman
|
76,000
|
--
|
||||||
Bridgeport Fairfield
|
224,000
|
--
|
||||||
Minneapolis City Parking
|
579,000
|
--
|
||||||
Total revenues
|
$
|
6,285,000
|
$
|
3,101,000
|
Operating expenses
|
2016
|
2015
|
||||||
General and administrative
|
$
|
1,208,000
|
$
|
650,000
|
||||
Acquisition expenses
|
765,000
|
481,000
|
||||||
Acquisition expenses – related party
|
1,326,000
|
1,856,000
|
||||||
Operation and maintenance
|
2,269,000
|
606,000
|
||||||
Loss on impairment
|
100,000
|
--
|
||||||
Depreciation
|
934,000
|
518,000
|
||||||
Total operating expenses
|
$
|
6,602,000
|
$
|
4,111,000
|
Other income and expense
|
2016
|
2015
|
||||||
Interest expense
|
$
|
(1,682,000
|
)
|
$
|
(935,000
|
)
|
||
Income from investment in equity method investee
|
61,000
|
--
|
||||||
Loss on acquisition of investment in real estate
|
(2,000
|
)
|
--
|
|||||
Interest income
|
1,000
|
--
|
||||||
Total other expense
|
$
|
(1,622,000
|
)
|
$
|
(935,000
|
)
|
Discontinued operations, net of income taxes
|
2016
|
2015
|
||||||
Income (loss) from assets held for sale, net of income taxes
|
$
|
(182,000
|
)
|
$
|
189,000
|
|||
Gain on sale of investment in real estate held for sale
|
--
|
288,000
|
||||||
Other discontinued operation expense
|
--
|
--
|
||||||
Total income (loss) from discontinued operations
|
$
|
(182,000
|
)
|
$
|
477,000
|
·
|
Straight-line rent. Most of our leases provide for periodic minimum rent payment increases throughout the term of the lease. In accordance with GAAP, these periodic minimum rent payment increases during the term of a lease are recorded to rental revenue on a straight-line basis in order to reconcile the difference between accrual and cash basis accounting. As straight-line rent is a GAAP non-cash adjustment and is included in historical earnings, it is added back to FFO to arrive at MFFO as a means of determining operating results of our portfolio.
|
·
|
Amortization of in-place lease valuation. As this item is a cash flow adjustment made to net income in calculating the cash flows provided by (used in) operating activities, it is added back to FFO to arrive at MFFO as a means of determining operating results of our portfolio.
|
·
|
Acquisition-related costs. The Company was organized primarily with the purpose of acquiring or investing in income-producing real property and loans secured by real estate in order to generate operational income and cash flow that will allow us to provide regular cash distributions to our stockholders. In the process, the Company incurs non-reimbursable affiliated and non-affiliated acquisition-related costs, which in accordance with GAAP, are expensed as incurred and are included in the determination of income (loss) from operations and net income (loss). These costs have been and will continue to be funded with cash proceeds from the offering or included as a component of the amount borrowed to acquire such real estate. If the Company acquires a property after all offering proceeds from the offering have been invested, there will not be any offering proceeds to pay the corresponding acquisition-related costs. Accordingly, unless our Advisor determines to waive the payment of any then-outstanding acquisition-related costs otherwise payable to our Advisor, such costs will be paid from additional debt, operational earnings or cash flow, net proceeds from the sale of properties, or ancillary cash flows. In evaluating the performance of our portfolio over time, management employs business models and analyses that differentiate the costs to acquire investments from the investments' revenues and expenses. Acquisition-related costs may negatively affect our operating results, cash flows from operating activities and cash available to fund distributions during periods in which properties are acquired, as the proceeds to fund these costs would otherwise be invested in other real estate related assets. By excluding acquisition-related costs, MFFO may not provide an accurate indicator of our operating performance during periods in which acquisitions are made. However, it can provide an indication of our on-going ability to generate cash flow from operations and continue as a going concern after the Company ceases to acquire properties on a frequent and regular basis, which can be compared to the MFFO of other non-listed REITs that have completed their acquisition activity and have similar operating characteristics to ours. Management believes that excluding these costs from MFFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management.
|
For the Three Months
Ended September 30,
|
For the Nine Months
Ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net income (loss) attributable to MVP REIT, Inc. common shareholders
|
$ |
(45,000
|
)
|
$ |
56,000
|
$ |
(2,157,000
|
)
|
$ |
(1,604,000
|
)
|
|||||
Subtract:
|
||||||||||||||||
Deferred rental assets
|
(166,000
|
)
|
(27,000
|
)
|
(82,000
|
)
|
(150,000
|
)
|
||||||||
Gain on Sale of REO
|
--
|
--
|
--
|
(288,000
|
)
|
|||||||||||
Add:
|
||||||||||||||||
Depreciation and amortization of real estate assets
|
326,000
|
221,000
|
934,000
|
518,000
|
||||||||||||
Asset impairment write-downs
|
100,000
|
--
|
100,000
|
--
|
||||||||||||
FFO
|
215,000
|
250,000
|
(1,205,000
|
)
|
(1,524,000
|
)
|
||||||||||
Add:
|
||||||||||||||||
Acquisition fees and expenses to non-affiliates
|
337,000
|
153,000
|
765,000
|
481,000
|
||||||||||||
Acquisition fees and expenses to affiliates
|
--
|
75,000
|
1,326,000
|
1,856,000
|
||||||||||||
MFFO attributable to MVP REIT, Inc common shareholders
|
$ |
552,000
|
$ |
478,000
|
$ |
886,000
|
$ |
813,000
|
For the nine months ended
September 30,
|
||||||||
2016
|
2015
|
|||||||
Acquisition Fees – related party
|
$
|
1,326,000
|
$
|
1,856,000
|
||||
Asset Management Fees
|
694,000
|
324,000
|
||||||
Debt Financing Fees
|
81,000
|
48,000
|
||||||
Total
|
$
|
2,101,000
|
$
|
2,228,000
|
Distributions paid in Cash
|
Distributions paid through DRIP
|
Total
Distributions Paid
|
Cash Flows Used in Operations (GAAP basis)
|
|||||||||||||
1st Quarter, 2016
|
$
|
1,041,000
|
$
|
621,000
|
$
|
1,662,000
|
$
|
(1,179,000
|
)
|
|||||||
2nd Quarter, 2016
|
1,461,000
|
205,000
|
1,666,000
|
20,000
|
||||||||||||
3rd Quarter, 2016
|
1,616,000
|
42,000
|
1,658,000
|
370,000
|
||||||||||||
Total 2016
|
$
|
4,118,000
|
$
|
868,000
|
$
|
4,986,000
|
$
|
(789,000
|
)
|
Distributions paid in Cash
|
Distributions paid through DRIP
|
Total
Distributions Paid
|
Cash Flows Used in Operations (GAAP basis)
|
|||||||||||||
1st Quarter, 2015
|
$
|
535,000
|
$
|
148,000
|
$
|
683,000
|
$
|
(911,000
|
)
|
|||||||
2nd Quarter, 2015
|
623,000
|
265,000
|
888,000
|
(436,000
|
)
|
|||||||||||
3rd Quarter, 2015
|
751,000
|
388,000
|
1,139,000
|
(394,000
|
)
|
|||||||||||
4th Quarter, 2015
|
1,015,000
|
590,000
|
1,605,000
|
(717,000
|
)
|
|||||||||||
Total 2015
|
$
|
2,924,000
|
$
|
1,391,000
|
$
|
4,315,000
|
$
|
(2,458,000
|
)
|
Contractual Obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
|||||||||||||||
Long-term debt obligations
|
$
|
49,268,000
|
$
|
246,000
|
$
|
2,321,000
|
$
|
6,143,000
|
$
|
40,558,000
|
||||||||||
Capital Lease Obligations
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Operating Lease Obligations
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Purchase Obligations
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
$
|
49,268,000
|
$
|
246,000
|
$
|
2,321,000
|
$
|
6,143,000
|
$
|
40,558,000
|
For the Years Ending December 31,
|
||||||||||||||||||||||||||||||||
2016
|
2017
|
2018
|
2019
|
2020
|
Thereafter
|
Total
|
Fair Value
|
|||||||||||||||||||||||||
Fixed rate debt
|
$
|
246,000
|
$
|
1,133,000
|
$
|
1,188,000
|
$
|
4,956,000
|
$
|
1,187,000
|
$
|
40,558,000
|
$
|
49,268,000
|
$
|
41,700,000
|
||||||||||||||||
Average interest rate
|
4.86
|
%
|
4.83
|
%
|
4.83
|
%
|
4.90
|
%
|
4.83
|
%
|
4.79
|
%
|
Type
|
Number of Shares - Convertible
|
Number of Shares - Common
|
Value
|
|||||||||
Issuance of common stock – purchase
|
--
|
8,631,754
|
$
|
75,348,000
|
||||||||
Issuance of common stock – acquisition
|
--
|
2,217,537
|
19,484,000
|
|||||||||
Issuance of convertible stock
|
1,000
|
--
|
1,000
|
|||||||||
Stock based compensation
|
--
|
7,032
|
63,000
|
|||||||||
DRIP shares
|
--
|
299,172
|
2,613,000
|
|||||||||
Redeemed shares
|
--
|
(182,597
|
)
|
(1,634,000
|
)
|
|||||||
Distributions –Cash
|
--
|
--
|
(11,982,000
|
)
|
||||||||
Contribution from Advisor
|
--
|
--
|
8,114,000
|
|||||||||
Total
|
1,000
|
10,972,898
|
$
|
92,007,000
|
3.1(2)
|
|
Articles of Incorporation of MVP Monthly Income Realty Trust, Inc.
|
|
3.2(2)
|
|
Bylaws of MVP Monthly Income Realty Trust, Inc.
|
|
3.3(2)
|
|
Articles of Amendment (Name Change)
|
|
3.4(3)
|
|
Articles of Amendment and Restatement of MVP REIT, Inc.
|
|
3.5(2)
|
|
Amended and Restated Bylaws of MVP REIT, Inc.
|
|
3.6(4)
|
|
Articles of Amendment of MVP REIT, Inc.
|
|
3.7(5)
|
|
Articles of Amendment of MVP REIT, Inc.
|
|
4.1(6)
|
|
Form of Subscription Agreement
|
|
31.1(1)
|
Certification of Chief Executive Officer pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2(1)
|
Certification of Chief Financial Officer pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32(1)
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101(1)
|
The following materials from the Company's Quarterly report on Form 10-Q for the nine months ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheet as of September 30, 2016 and December 31, 2015 (unaudited), (ii) Statements of Operations for the period for the three and nine months ended September 30, 2016 and 2015 (unaudited), (iii) Statement of Equity (Deficit) for the nine months ended September 30, 2016 (unaudited), (iv) Statement of Cash Flows for the nine months ended September 30, 2016, and 2015 (unaudited) (v) Notes to Financial Statements (unaudited).
|
(1)
|
Filed concurrently herewith.
|
(2)
|
Filed previously with the Pre-Effective Amendment No. 2 to the Registration Statement on Form S-11 on June 13, 2012, and incorporated herein by reference.
|
(3)
|
Filed previously with the Pre-Effective Amendment No. 3 to the Registration Statement on Form S-11 on July 9, 2012, and incorporated herein by reference.
|
(4)
|
Filed previously with the Pre-Effective Amendment No. 6 to the Registration Statement on Form S-11 on September 6, 2012, and incorporated herein by reference.
|
(5)
|
Filed previously with the Pre-Effective Amendment No. 7 to the Registration Statement on Form S-11 on September 18, 2012, and incorporated herein by reference.
|
(6)
|
Filed previously on Post-Effective Amendment No. 5 to the Registration Statement on Form S-11 on April 10, 2015, and incorporated herein by reference.
|
MVP REIT, Inc.
|
||
By:
|
/s/ Michael V. Shustek
|
|
Michael V. Shustek
|
||
Chief Executive Officer
|
||
Date:
|
November 9, 2016
|
|
By:
|
/s/ Ed Bentzen
|
|
Ed Bentzen
|
||
Chief Financial Officer
|
||
Date:
|
November 9, 2016
|
/s/ Michael V. Shustek
|
Michael V. Shustek
|
Chief Executive Officer
(Principal Executive Officer)
|
MVP REIT, Inc.
|
/s/ Ed Bentzen
|
Ed Bentzen
|
Chief Financial Officer
|
(Principal Accounting Officer)
MVP REIT, Inc.
|
/s/ Michael V. Shustek
|
Michael V. Shustek
|
Chief Executive Officer
(Principal Executive Officer)
|
MVP REIT, Inc.
|
/s/ Ed Bentzen
|
Ed Bentzen
|
Chief Financial Officer
|
(Principal Accounting Officer)
MVP REIT, Inc.
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 09, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | MVP REIT, Inc. | |
Entity Central Index Key | 0001546609 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 10,945,923 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2016 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes Payable, Unamortized Loan Issuance Cost | $ 919,000 | $ 534,000 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 98,999,000 | 98,999,000 |
Common stock, shares issued | 10,972,898 | 11,002,902 |
Common stock, shares outstanding | 10,972,898 | 11,002,902 |
Non Voting Non Participating Convertible Stock | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1,000 | 1,000 |
Common stock, shares outstanding | 1,000 | 1,000 |
Condensed Consolidated Statement of Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) |
Convertible Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Non-controlling Interest Related Party |
Total |
---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2015 | $ 11,000 | $ 97,277,000 | $ (12,925,000) | $ 1,806,000 | $ 86,169,000 | |
Balance (Shares) at Dec. 31, 2015 | 1,000 | 11,002,902 | 11,002,902 | |||
Distributions to non-controlling interest | (79,000) | $ (79,000) | ||||
Distribution - loan proceeds to non-controlling interest | (1,058,000) | (1,058,000) | ||||
Issuance of common stock - DRIP | 868,000 | 868,000 | ||||
Issuance of common stock - DRIP (Shares) | 99,283 | |||||
Non-controlling interest | 3,431,000 | 3,431,000 | ||||
Redeemed shares | (1,163,000) | (1,163,000) | ||||
Redeemed shares (Shares) | (129,287) | |||||
Distributions | (4,986,000) | (4,986,000) | ||||
Net income (loss) | (2,157,000) | 36,000 | (2,121,000) | |||
Balance at Sep. 30, 2016 | $ 11,000 | $ 91,996,000 | $ (15,082,000) | $ 3,386,000 | $ 80,311,000 | |
Balance (Shares) at Sep. 30, 2016 | 1,000 | 10,972,898 | 10,972,898 |
Organization, Proposed Business Operations and Capitalization |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Organization, Proposed Business Operations and Capitalization | Note A — Organization, Business Operations and Capitalization
Organization and Business
MVP REIT, Inc. (the “Company” or “MVP”) was incorporated on April 3, 2012 as a Maryland corporation, and has elected to be taxed, and operates in a manner that will allow the Company to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2013. Pursuant to its initial public offering (the “Offering”), which closed in September 2015, the Company issued 10,856,323 shares of its common stock for which it received net proceeds of approximately $97.0 million. Of this amount, approximately $19.5 million of shares were issued in consideration of the contribution of commercial properties to the Company. The Company has also registered up to $50 million for the issuance of common stock pursuant to a distribution reinvestment plan (the “DRIP”) under which common stockholders may elect to have their distributions reinvested in additional shares of common stock.
The Company operates as a real estate investment trust (“REIT”). The Company is not a mutual fund or an investment company within the meaning of the Investment Company Act of 1940, nor is the Company subject to any regulation thereunder. As a REIT, the Company is required to have a December 31st fiscal year end. Among other requirements, REITs are required to satisfy certain gross income and asset tests, which may affect the composition of assets the Company acquires with the proceeds from its public offering. In addition, REITs are required to distribute to stockholders at least 90% of their annual REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain).
The Company’s investment strategy was originally to invest available net proceeds from its Offering in direct investments in real property and real estate secured loans that meet the Company’s investment objectives and strategies. In March 2014, the Company’s board of directors approved a plan to increase the focus of the Company’s investment strategy on parking and self-storage facilities located throughout the United States as the Company’s core assets. As part of this strategy, the Company exchanged office properties with affiliated entities to exchange all of its ownership interests in certain non-core assets (consisting of four office buildings) for all of the affiliated entities’ ownership interests in five parking facilities and one self-storage facility. The property exchanges were consummated on April 30, 2014.
In June 2014, the Company’s board decided to further focus its efforts primarily on parking facilities. Additionally, during July and August, 2014, the Company sold its membership interest in the two remaining office buildings owned by the Company to affiliates of its advisor, Vestin Realty Mortgage I, Inc., a Maryland corporation and OTC Pink Sheets-listed company (“VRM I”) and Vestin Realty Mortgage II, Inc., a Maryland corporation and Nasdaq-listed company (“VRM II”). The Company may, from time to time, invest in non-core assets, including investments in companies that manage real estate or mortgage investment companies; however, the Company has agreed that no more than 25% of the gross proceeds from the Offering will be used to invest in real properties other than parking facilities.
In June 2016, the Company and MVP REIT II, Inc. jointly announced the engagement of Ladenburg Thalmann & Co., Inc. to assist in evaluating various courses of action intended to enhance stockholder liquidity and value. In connection with the engagement, the Company decided to defer taking further action to list the Company’s common shares on the NASDAQ Global Market until Ladenburg Thalmann completes its evaluation. The Company’s board had authorized taking such action in March 2016. After reviewing the Ladenburg Thalmann’s completed evaluation, the Company’s board of directors will decide whether to proceed with a listing on the NASDAQ Global Market or take other action to enhance stockholder liquidity and value. The Company currently expects that no decision on this matter will be made prior to the end of the first fiscal quarter of 2017. Following the Company’s engagement of Ladenburg Thalmann, the Company’s board of directors approved the reinstatement DRIP in July 2016, since no decision on liquidity is expected until the end of the first fiscal quarter of 2017. There can be no assurance as to if or when the Company will again pursue a listing or another liquidity transaction.
Estimated Value Per Share
As previously reported on April 7, 2016, the Company’s board of directors determined an estimated net asset value of approximately $100.8 million or $9.14 per common share as of March 30, 2016. Shares in the initial public offering were sold at $9.00 per share. In determining an estimated value per share of the Company’s common stock, the Company’s board of directors relied upon information provided by MVP Realty Advisors, LLC, the Company’s advisor and the board’s experience with, and knowledge of, the Company’s real property and other assets.
The Company is providing the estimated value per share to assist broker-dealers and stockholders pursuant to certain rules of the Financial Industry Regulatory Authority, Inc., or FINRA. The objective of the board of directors in determining the estimated value per share was to arrive at a value, based on recent available data, that it believed was reasonable based on methods that it deemed appropriate after consultation with the Advisor. Accordingly, the Company’s advisor performed the valuation of the Company’s common stock with Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013 as a guide. The estimated value per share is based on (x) the estimated value of the Company’s assets less the estimated value of the Company’s liabilities divided by (y) the number of outstanding shares of the Company’s common stock, all as of March 30, 2016. For more information regarding the determination of the estimated value per share, please see the Form 8K filed with the SEC on April 11, 2016.
Starting April 11, 2016, the NAV of $9.14 per common share will be used for purposes of effectuating permitted redemptions of the Company’s common stock and issuing shares pursuant to the Company’s distribution reinvestment plan.
The Company’s sponsor is MVP Capital Partners, LLC (“MVPCP” or the “Sponsor”), an entity owned and managed by Michael V. Shustek, the Company’s Chairman and Chief Executive Officer. The Company’s advisor is MVP Realty Advisors, LLC (the “Advisor”). VRM II owns 60% of the Advisor, and the remaining 40% is owned by VRM I. Michael Shustek owns a significant majority of Vestin Mortgage, LLC, a Nevada limited liability company, which is the manager of VRM I and VRM II. The Advisor is responsible for managing the Company’s affairs on a day-to-day basis and for identifying and making investments on the Company’s behalf pursuant to an advisory agreement between the Company and the Advisor (the “Advisory Agreement”).
The Company is the sole member of its operating limited liability company, MVP Real Estate Holdings, LLC, a Nevada limited liability company (“REH”). Substantially all of the Company’s business is conducted through our wholly owned subsidiary REH. The operating agreement provides that REH is operated in a manner that enables the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability, and (3) ensure that REH is not classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code, which classification could result in REH being taxed as a corporation.
Distributions
On October 3, 2012, the Company confirmed that its board of directors had approved a plan for payment of initial monthly cash distributions of $0.045 per share. On January 25, 2013, the Company issued a press release announcing that its board of directors had approved an increase in its monthly distribution rate on its common shares to an annualized distribution rate of 6.2 percent, or $0.558 per share annually or $0.0465 monthly, assuming a purchase price of $9.00 per share. The distribution, previously 6 percent, increased beginning with the January 2013 distribution, paid to stockholders of record as of January 24, 2013 on February 10, 2013. On June 4, 2013, the Company issued a press release announcing that its board of directors has approved an increase in its monthly distribution rate on its common shares to an annualized distribution rate of 6.7 percent, assuming a purchase price of $9.00 per share or $0.05025 monthly. The Company anticipates paying future distributions monthly in arrears, with a record date on the 24th of each month and distributions paid on the 10th day of the following month (or the next business day if the 10th is not a business day).
From inception through September 30, 2016, the Company has paid approximately $12.0 million in distributions including approximately $2.6 million in DRIP distributions to the Company’s stockholders, all of which have been paid from offering proceeds and constituted a return of capital. The Company may pay distributions from sources other than cash flow from operations, including proceeds from the Offering, the sale of assets, or borrowings. The Company has no limits on the amounts it may pay from such sources. If the Company continues to pay distributions from sources other than cash flow from operations, the funds available to the Company for investments would be reduced and the share value may be diluted.
Capitalization
As of September 30, 2016 the Company had 10,972,898 shares of common stock issued and outstanding and 1,000 shares of non-voting, non-participating convertible stock, $0.001 par value, issued and outstanding (the “Convertible Stock”).
Upon formation, the Company sold 22,222 shares of common stock to the Sponsor for $200,000. In addition, upon the commencement of our offering, we issued 1,000 shares of the Convertible Stock to our advisor. After giving effect to the release of waivers and waiver agreements executed in August and September of 2014, all of which were previously disclosed in Form 8-Ks and prospectus supplements, the Convertible Stock will convert into shares of our common stock representing 3.50% of the outstanding shares of our common stock immediately preceding the conversion if and when:
(b) (i) the Company lists its common shares for trading on a national securities exchange and (ii) (x) the sum of the aggregate market value of the issued and outstanding common shares plus the aggregate amount of all distributions on the Company’s common shares exceeds (y) the sum of the aggregate capital contributed by investors (less any capital returned in the form of distributions) plus an amount equal to a 6% cumulative, pre-tax non-compounded annual return to investors; or
(c) the advisory agreement is terminated or not renewed, but only if at the time of such termination or non-renewal, the requirements for conversion set forth in either of the immediately preceding clause (a) or (b) also shall have been satisfied.
For purposes of such calculation, the market value of the Company’s outstanding common stock will be calculated based on the average market value of the shares of common stock issued and outstanding at listing over the 30 trading days beginning 180 days after the shares are first listed for trading on a national securities exchange.
Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving distributions. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. Participants purchasing shares pursuant to the DRIP have the same rights and are treated in the same manner as if such shares were issued pursuant to the Offering. The board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the accompanying balance sheets in the period distributions are declared. An investor’s participation in the DRIP will terminate automatically if the Company dishonors, or partially dishonors, any requests by such investor to redeem shares of its common stock in accordance with the Company’s share repurchase program. As of September 30, 2016, 299,178 common shares have been issued under the DRIP.
In addition, the Company has a Share Repurchase Program (“SRP”) that may provide stockholders who generally have held their shares for at least one year an opportunity to sell their shares to the Company, subject to certain restrictions and limitations. On April 11, 2016, the Company established an estimated value per share of common stock of $9.14. The Company will repurchase shares at 100% of the estimated value per share.
The number of shares to be repurchased during a calendar quarter is limited to the lesser of: (i) 2.0% of the number of shares of common stock outstanding on December 31st of the prior calendar year, and (ii) those repurchases that can be funded from the net proceeds of the sale of shares under the DRIP in the prior calendar year. The board of directors may also limit the amounts available for repurchase at any time at its sole discretion. The SRP will terminate if the shares of common stock are listed on a national securities exchange. Effective as of December 14, 2014, the Company has amended the SRP to provide that it will agree to satisfy all repurchase requests made in connection with the death or disability (as defined in the Code) of a stockholder in accordance with the terms of the SRP within 15 days following the Company’s receipt of such repurchase request or as soon as practicable thereafter. Redemption requests other than those made in connection with the death or disability (as defined in the Code) of a stockholder will continue to be repurchased as of March 31st, June 30th, September 30th and December 31st of each year in accordance with the terms of the SRP. As of the date of this filing, 182,597 shares have been redeemed and the Company has received additional requests for repurchase of 31,766 shares in the amount of approximately $290,344, which exceeds the amount allowable for 2016 repurchase and will be paid in April 2017 which will be the next date shares will be available for repurchase. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||
Summary of Significant Accounting Policies | Note B — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying unaudited condensed consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
The condensed consolidated balance sheet as of December 31, 2015 contained herein has been derived from the audited consolidated financial statements as of December 31, 2015, but do not include all disclosures required by GAAP.
Consolidation
The Company’s unaudited condensed consolidated financial statements include its accounts and the accounts of its subsidiaries, REH and all of the following subsidiaries as well as the Company’s assets that were sold during 2015. All intercompany profits and losses, balances and transactions are eliminated in consolidation.
MVP PF Ft. Lauderdale 2013, LLC MVP PF Memphis Court 2013, LLC MVP PF Memphis Poplar 2013, LLC MVP PF St. Louis 2013, LLC MVP PF Kansas City 2013, LLC Mabley Place Garage; LLC MVP Denver Sherman; LLC MVP Fort Worth Taylor, LLC MVP Milwaukee Old World, LLC MVP St. Louis Convention Plaza, LLC MVP Houston Saks Garage, LLC MVP St. Louis Lucas, LLC MVP Milwaukee Wells, LLC MVP Wildwood NJ Lot, LLC MVP Indianapolis City Park Garage, LLC MVP KC Cherry Lot, LLC MVP Indianapolis Washington Street Lot, LLC MVP Minneapolis Venture, LLC MVP Indianapolis Meridian, LLC MVP Milwaukee Clybourn, LLC MVP Milwaukee Arena, LLC MVP Clarksburg Lot, LLC MVP Denver 1935 Sherman, LLC MVP Bridgeport Fairfield, LLC MVP Minneapolis City Parking
Under GAAP, the Company’s consolidated financial statements will also include the accounts of its consolidated subsidiaries and joint ventures in which the Company is the primary beneficiary, or in which the Company has a controlling interest. In determining whether the Company has a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, the Company’s management considers factors such as an entity’s purpose and design and the Company’s ability to direct the activities of the entity that most significantly impacts the entity’s economic performance, ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which it will absorb the majority of the entity’s expected losses, if they occur, or receive the majority of the expected residual returns, if they occur, or both.
Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method. The Company's share of its equity method investees' earnings or losses is included in other income in the accompanying unaudited condensed consolidated statements of operations. Investments in which the Company is not able to exercise significant influence over the investee are accounted for under the cost method.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and derivative financial instruments and hedging activities, as applicable.
Concentration
The Company had seven and five parking tenants as of September 30, 2016 and 2015, respectively. One tenant, Standard Parking + (“SP+”), represented a concentration for the three and nine months ended September 30, 2016 and 2015, in regards to parking base rental revenue. During the three months ended September 30, 2016 and 2015, SP+ accounted for 69% and 77%, respectively, of the parking base rental revenue. During the nine months ended September 30, 2016 and 2015, SP+ accounted for 69% and 83%, respectively, of the parking base rental revenue.
Acquisitions
The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.
The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings and improvements, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.
The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) management's estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. Our below-market operating leases generally do not include fixed rate or below-market renewal options.
The fair value of acquired in-place leases is derived based on management's assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered by us in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand at market rates.
In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The amount recorded for acquired in-place leases is included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If a lease were to be terminated or if termination were determined to be likely prior to its contractual expiration (for example resulting from bankruptcy), amortization of the related unamortized in-place lease intangible would be accelerated.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.
The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred. During the three months ended September 30, 2016, the Company expensed approximately $337,000 non-related party acquisition costs. During the nine months ended September 30, 2016, the Company expensed approximately $1,326,000 of related party and $765,000 non-related party acquisition costs. Our acquisition expenses are directly related to our acquisition activity and if our acquisition activity was to increase or decrease, so would our acquisition costs. Costs directly associated with development acquisitions accounted for as asset acquisitions are capitalized as part of the cost of the acquisition. During the three and nine months ended September 30, 2016, the Company did not capitalize any such acquisition costs.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.
Derivative Instruments
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings.
Cash
The Company maintains the majority of its cash balances in a national financial institution located in Las Vegas, Nevada. The balances are insured by the Federal Deposit Insurance Corporation under the same ownership category of $250,000. As of September 30, 2016 and December 31, 2015, the Company had approximately $1.6 million and approximately $9.1 million in excess of the federally-insured limits, respectively.
Restricted Cash
Restricted cash primarily consists of escrowed tenant improvement funds, real estate taxes, capital improvement funds, insurance premiums, and other amounts required to be escrowed pursuant to loan agreements.
Revenue Recognition
The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since some of the Company’s leases will provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.
The Company may recognize interest income from loans on an accrual basis over the expected terms of the loans using the effective interest method. The Company may recognize fees, discounts, premiums, anticipated exit fees and direct cost over the terms of the loans as an adjustment to the yield. The Company may recognize fees on commitments that expire unused at expiration. The Company may recognize interest income from available-for-sale securities on an accrual basis over the life of the investment on a yield-to-maturity basis.
The Company will continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company will record an increase in the Company’s allowance for uncollectible accounts or record a direct write-off of the receivable after exhaustive efforts at collection.
Advertising Costs
Advertising costs incurred in the normal course of operations and are expensed as incurred. During the three and nine months ended September 30, 2016 and 2015, the Company had no advertising costs.
Investments in Real Estate and Fixed Assets
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.
Investments in Real Estate Loans
Subject to the restrictions on related-party transactions set forth in the Company’s charter, the Company may, from time to time, acquire or sell investments in real estate loans from or to the advisor or other related parties without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans the Company makes and the similarity of interest rates in loans the Company normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. The Company has both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received or when management’s assessment of the value has changed, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral.
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (“TDR”) as defined by ASC 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected.
Allowance for Loan Losses
The Company will maintain an allowance for loan losses to the extent it makes investments in real estate loans for estimated credit impairment. The Company’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. The Company and the Advisor generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry performed will not reveal all material facts pertaining to a borrower and the security.
Additional facts and circumstances may be discovered as the Company continues efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. Circumstances that may cause significant changes in our estimated allowance include, but are not limited to:
Organization, Offering and Related Costs
Certain organization, offering and related costs, including legal, accounting, printing, marketing expenses and the salaries and direct expenses of the employees of the Advisor and its affiliates, have been incurred by the Advisor on behalf of the Company. After the Company reimbursed $100,000 of such costs, which has been paid to the Advisor, no additional reimbursements will be made unless the aggregate amount of such reimbursements does not exceed 0.75% of the gross offering proceeds as of the date of reimbursement. Prior to the commencement of our operations, such offering costs had been deferred and such deferred offering costs have been amortized to expense as offering costs over the 12-month period commenced January 1, 2013 through December 31, 2013, on a straight-line basis.
Stock-Based Compensation
The Company has a stock-based incentive award plan, which is accounted for under the guidance for share based payments. The expense for such awards will be included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met (See Note G — Stock-Based Compensation).
Income Taxes
The Company has elected, and operates in a manner that will allow the Company, to qualify to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2013. If the Company qualifies for taxation as a REIT, it generally will not be subject to federal corporate income tax to the extent it distributes all of its REIT taxable income to its stockholders, and so long as it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies to be taxed as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.
Per Share Data
The Company calculates basic earnings per share by dividing net income for the period by weighted-average shares of its common stock outstanding for a respective period. Diluted earnings per share takes into account the effect of dilutive instruments, such as stock options and convertible stock, but uses the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. The Company had no outstanding common share equivalents during the three and nine months ended September 30, 2016.
In September 2012, upon the commencement of our offering, the Company issued 1,000 shares of convertible stock to our advisor.
After giving effect to the release of waivers and waiver agreements executed in August and September of 2014, all of which were previously disclosed in Form 8-Ks and prospectus supplements, the convertible stock will convert into shares of our common stock representing 3.50% of the outstanding shares of our common stock immediately preceding the conversion if and when:
(a) the Company has made total distributions on the then outstanding common shares equal to the invested capital attributable to those shares plus a 6.00% cumulative, non-compounded, annual pre-tax return on such invested capital; or
(b) (i) the Company lists its common shares for trading on a national securities exchange and (ii) (x) the sum of the aggregate market value of the issued and outstanding common shares plus the aggregate amount of all distributions on the Company’s common shares exceeds (y) the sum of the aggregate capital contributed by investors (less any capital returned in the form of distributions) plus an amount equal to a 6% cumulative, pre-tax non-compounded annual return to investors; or
(c) the advisory agreement is terminated or not renewed, but only if at the time of such termination or non-renewal, the requirements for conversion set forth in either of the immediately preceding clause (a) or (b) also shall have been satisfied.
For purposes of such calculation, the market value of the Company’s outstanding common stock will be calculated based on the average market value of the shares of common stock issued and outstanding at listing over the 30 trading days beginning 180 days after the shares are first listed for trading on a national securities exchange.
Reportable Segments
The Company is currently authorized to operate two reportable segments, investments in real estate loans and investments in real property. As of September 30, 2016, the Company only operates in the investment in real property segment.
Reclassifications
In conjunction with the adoption of new accounting standards, certain debt or loan issuance costs for the three and nine months ended September 30, 2015 as well as certain amounts as of December 31, 2015, have been reclassified to conform to the current year’s presentation.
Accounting and Auditing Standards Applicable to “Emerging Growth Companies”
The Company is an “emerging growth company” under the recently enacted JOBS Act. For as long as the Company remains an “emerging growth company,” which may be up to five fiscal years, the Company is not required to (1) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (2) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. The Company intends to take advantage of such extended transition period. Since the Company will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, the Company’s financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If the Company were to subsequently elect to instead comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.
Non-controlling Interests
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note C — Commitments and Contingencies
Litigation
In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company as of the filing date of this report.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. During the Company’s due diligence of a property, purchased on March 31, 2015 and located in Milwaukee, it was discovered that the soil and ground water at the subject property had been impacted by the site’s historical use as a printing press as well as neighboring property uses. As a result, the Company retained a local environmental engineer to seek a closure letter or similar certificate of no further action from the State of Wisconsin due to the Company’s use of the property as a parking lot. As of September 30, 2016, management does not anticipate a material adverse effect related to this environmental matter. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations. |
Investments in Real Estate |
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Investments in Real Estate | Note D – Investments in Real Estate
As of September 30, 2016 the Company had the following Investments in Real Estate:
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Related Party Transactions and Arrangements |
9 Months Ended |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Arrangements | Note E — Related Party Transactions and Arrangements
The transactions described in this Note were approved by a majority of the Company’s board of directors (including a majority of the independent directors) not otherwise interested in such transaction as fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from unaffiliated third parties.
Acquisition Expense
During the three and nine months ended September 30, 2016, JNL Parking, a brokerage and consulting company specializing in the parking industry and co-founded by the Company’s former Chief Investment Officer and former Chief Technology Officer, earned fees of approximately $0.2 and $0.4 million, respectively, for 1% commission on purchases. In addition, JNL Parking received brokerage fees from third parties. Dan Huberty, President of the Company received certain fees from JNL Parking for prior closings. This fee is no longer paid to Dan Huberty. JNL Parking may continue to receive broker fees from the Company, for deals in which they acted as a broker, after John Roy and Lance Miller’s employment ended with the Company.
Ownership of Company Stock
As of September 30, 2016, the Sponsor owned 22,222 shares of the Company’s outstanding common stock, VRM I owned 73,164 shares of the Company’s outstanding common stock, JNL Parking owned 66,457 shares of the Company’s outstanding common stock, Dan Huberty owned 9,239 shares of the Company’s outstanding common stock and the Advisor owned 1,000 shares of the Convertible Stock. See “Capitalization” under Note A “Organization, Business Operations and Capitalization” for further information, including a description of the terms of the Convertible Stock.
Ownership of Interests of Advisor
During April 2012, VRM II contributed $1,000 for a 40% interest in the Advisor. Mr. Shustek, through a wholly owned company named MVP Capital Partners, LLC (the “Sponsor”) contributed $1,500 for a 60% interest in the Advisor. As of June 30, 2013, VRM II and the Sponsor had loaned approximately $3.6 million and approximately $1.2 million, respectively, to the Advisor for purposes of funding the Company’s operations. On June 30, 2013, the Sponsor decided to forgive the full amount of its $1.2 million loan. VRM II has not forgiven the balance due from the Advisor. However the decision by the Sponsor to forgive the full amount of its loans created uncertainty as to when VRM II will be repaid the amounts loaned to the Advisor. Based on this uncertainty, VRM II determined to treat as fully impaired the balance of this note receivable.
In December 2013, VRM II and the Sponsor entered into a membership interest transfer agreement, dated as of December 19, 2013, pursuant to which VRM II acquired from the Seller an additional 20% of the membership interests of the Advisor. Concurrently therewith, the Sponsor and VRM I entered into a separate membership interest transfer agreement pursuant to which VRM I acquired the remaining 40% interest in the Advisor from the Sponsor. As a result, VRM II and VRM I now own 60% and 40%, respectively, of the aggregate membership interests of the Advisor. As of September 30, 2016, VRM I and VRM II had notes receivable from the Advisor of approximately $4.6 million and $12.8 million, respectively, which amount has been fully impaired. The Advisor’s ability to repay the sums due VRM I and VRM II will likely depend upon the success of the Company’s investments in real estate.
Pursuant to the transfer agreements entered into in December 2013, neither VRM I nor VRM II paid any up-front consideration for the acquired interests, but each will be responsible for its proportionate share of future expenses of the Advisor. In recognition of the Sponsor’s substantial investment in the Advisor for which the Sponsor received no up-front consideration, the transfer agreements and the amended operating agreement of the Advisor further provide that once VRM I and VRM II have been repaid in full for any capital contributions to the Advisor or for any expenses advanced on the Advisor’s behalf (“Capital Investment”), and once they have received an annualized return on their Capital Investment of 7.5%, then the Sponsor will receive one-third of the net profits of the Advisor.
Fees and Expenses Paid in Connection with the Offering
The Company completed its initial public offering in September 2015. The Company appointed MVP American Securities (“MVP AS”), formerly known as Ashton Garnett Securities, LLC, an entity indirectly owned by our CEO and third-party selling agents to act as the selling agents for the offering. Broker Dealers received 3.00% of the gross offering proceeds sold in the offering, subject to reductions based on volume and for certain categories of purchasers. No selling commissions are payable on shares sold under the distribution reinvestment plan. Additionally, the Sponsor or its affiliates (other than MVP REIT, Inc.) paid up to an additional 5.25% of the gross offering proceeds for third party broker dealer commissions and due diligence expenses. Since the offering has terminated, the Company does not anticipate incurring any additional fees or expenses in connection with the offering.
Certain organizational, offering and related costs will be incurred by the Advisor on behalf of the Company. After the Company has reimbursed $100,000 of such costs, which amount has been paid to the Advisor, no additional reimbursements will be made unless the aggregate amount of such reimbursements does not exceed 0.75% of the gross offering proceeds as of the date of reimbursement. Such reimbursable costs may include legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses of the Advisor’s employees and employees of the Advisor’s affiliates and others. Such reimbursable costs do not include any broker-dealer commissions paid by the Advisor in excess of the 3.00% paid by the Company, including any sponsor commissions or sponsor due diligence fees. Any reimbursement of the Advisor will not exceed actual expenses incurred by the Advisor. On November 1, 2013, the advisor forgave the reimbursement of the full amount of offering costs incurred.
Fees and Expenses Paid in Connection With the Operations of the Company
The Company has no paid employees. The Company has retained the Advisor to manage its affairs on a day-to-day basis. Pursuant to an amendment of the advisory agreement effective November 21, 2013, the Company will reimburse, no less than monthly, the Advisor for audit, accounting and legal fees, and other fees for professional services provided by third parties relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Board or any committee of the Board; provided, however, that the Advisor shall not be entitled to reimbursement by the Company for any personnel or related employment costs incurred by the Advisor or its affiliates in performing the services, including but not limited to salary and benefits of employees and overhead, until the first anniversary of (i) the listing of the Company’s shares on a national securities exchange or (ii) a merger, a sale of all or substantially all of the Company’s assets or another liquidity event transaction approved by the Company’s board. As of September 30, 2016, the aggregate amount of expense reimbursements waived by the Advisor was approximately $6.9 million.
The Advisor must reimburse the Company at least quarterly for reimbursements paid to the Advisor in any four consecutive fiscal quarters to the extent that such reimbursements to the Advisor cause the Company’s total operating expenses to exceed the greater of (1) 2% of our average invested assets, which generally consists of the average book value of the Company’s real properties before deducting depreciation, bad debts or other non-cash reserves and the average book value of securities, or (2) 25% of the Company’s net income, which is defined as the Company’s total revenues less total expenses for any given period excluding reserves for depreciation, bad debts or other similar non-cash reserves, unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. The Advisor does not currently owe any amounts to the Company under this provision. As the Company commences the reimbursement of the expenses to the Advisor, the Company will verify that such reimbursements do not exceed the limits identified above or, in the event of any excessive payments, will obtain reimbursements from the Advisor.
The Advisor or its affiliates will receive an acquisition fee of 3.0% of the purchase price of any real estate or loan acquired at a discount, provided, however, the Company will not pay any fees when acquiring loans from its affiliates. During the three months ended September 30 2015, MVP REIT incurred approximately $0.4 million, in acquisition fees to the Advisor. There were no fees earned in the three months ended September 30, 2016. During the nine months ended September 30, 2016 and 2015, MVP REIT incurred approximately $1.1 million and $1.8 million, respectively, in acquisition fees to the Advisor.
The Advisor or its affiliates is entitled to receive a monthly asset management fee at an annual rate equal to 0.85% of the fair market value of (i) all assets then held by the Company or (ii) the Company’s proportionate share thereof in the case of an investment made through a joint venture or other co-ownership arrangement, excluding (only for clause (ii)) debt financing obtained by the Company or made available to the Company. The fair market value of real property shall be based on annual “AS-IS”, “WHERE-IS” appraisals, and the fair market value of real estate-related secured loans shall be equal to the face value of the such loan, unless it is non-performing, in which case the fair market value shall be equal to the book value of such loan. The asset management fee will be reduced to 0.75% if the Company is listed on a national securities exchange. obtained by the Company or made available to the Company. The fair market value of real property shall be based on annual “AS-IS”, “WHERE-IS” appraisals, and the fair market value of real estate-related secured loans shall be equal to the face value of the such loan, unless it is non-performing, in which case the fair market value shall be equal to the book value of such loan. The asset management fee will be reduced to 0.75% if the Company is listed on a national securities exchange. There can be no assurance as to if or when the Company will pursue a listing of its common stock on a national securities exchange. Asset management fees for the three months ended September 30, 2016 and 2015 were approximately $0.2 million and $0.1 million, respectively. Asset management fees for the nine months ended September 30, 2016 and 2015 were approximately $0.7 million and $0.3 million, respectively.
Notwithstanding the foregoing, no asset management fee will be paid or payable with respect to any mortgage assets held by us at this time. We will not pay any asset management fee on any of our mortgage assets unless we restructure our mortgage program in a manner consistent with the NASAA Mortgage Program Guidelines that would permit us to pay an asset management fee on our mortgage assets, including making available 84% of our capital contribution to invest in mortgages assets. We have no present intention to revise our investment strategy in a manner that would permit such payment under the NASAA Mortgage Program Guidelines, but may elect to do so in the future. If we do make such an election to restructure our mortgage program, then, subject to satisfaction of the requirements of the NASAA Mortgage Program Guidelines, we may pay our advisor or its affiliates an annual asset-based fee equal to 0.75% of the “Base Amount” (as defined in the NASAA Mortgage Program Guidelines) of the capital contributions, if any, committed to investments in mortgages and 0.5% of the capital contributions temporarily held while awaiting investments in mortgages, in addition to any other fees and compensation that is allowed under the NASAA Mortgage Program Guidelines.
The advisory agreement currently provides for payment to our advisor of a monthly market-based fee for property management services of up to 6.00% of the gross revenues generated by our properties. The Advisor has irrevocably waived its rights to receive a property management fee with respect to any real property owned that are subject to triple net leases. As a result of this waiver, no property management fee will be paid on any real property owned that are subject to triple net leases pursuant to which the tenants pay all or a majority of all real estate taxes, building insurance, and maintenance expenses.
The Advisor or its affiliates is entitled to receive a monthly debt financing fee at an annual rate equal to 0.25% of the aggregate debt financing obtained by the Company or made available to the Company, such as mortgage debt, lines of credit, and other term indebtedness, including refinancing. In the case of a joint venture, the Company pays this fee only on the Company’s pro rata share. Debt financing fees for the three months ended September 30, 2016 and 2015 were approximately $32,000, and $18,000, respectively. Debt financing fees for the nine months ended September 30, 2016 and 2015 were approximately $81,000, and $48,000, respectively.
Disposition Fee
For substantial assistance in connection with the sale of real property, as determined by the independent directors, the Company will pay the Advisor or its affiliate the lesser of (i) 3.00% of the contract sale price of the real property sold or (ii) 50% of the customary commission which would be paid to a third-party broker for the sale of a comparable property. The amount paid, when added to the sums paid to unaffiliated parties, may not exceed either the customary commission or an amount equal to 6.00% of the contract sales price. The disposition fee will be paid concurrently with the closing of any such disposition of all or any portion of any real property. The Company will not pay a disposition fee upon the maturity, prepayment, workout, modification or extension of a loan or other debt-related investment; provided, however, that the Advisor or its affiliates may receive an exit fee or a prepayment penalty paid by the borrower. If the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such real property equal to 3.00% of the sales price. With respect to real property held in a joint venture, the foregoing commission will be reduced to a percentage reflecting the Company’s economic interest in the joint venture. There were no disposition fees earned by the Advisor for the three and nine months ended September 30, 2016 and 2015.
Fees and Expense Reimbursements Payable by Borrowers and Other Third Parties
The Company or its affiliates may be entitled to late fees, loan servicing fees, loan extension and loan modification fees and other fees and expense reimbursement payable by borrowers and other third parties. |
Dependency |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Dependency | Note F —Dependency
The Company has no employees and is dependent on the Advisor for services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations.
In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services. In this regard, the Company notes that the Advisor has agreed to waive certain fees and expenses it otherwise would be entitled to under the Advisory Agreement as further described under “Note E – Related Party Transactions and Arrangements – Fees and Expenses Paid in Connection With the Operations of the Company” to the unaudited condensed consolidated financial statements included in this Quarterly Report. If the Company is required to find an alternative advisor, the Company may not be able to find an alternative advisor who would be willing to continue to waive such fees and expenses. As a result, the Company may have to incur additional costs and expenses if it is required to replace the Advisor or other agents that are providing services to the Company. |
Stock-Based Compensation |
9 Months Ended |
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Sep. 30, 2016 | |
Equity [Abstract] | |
Stock-Based Compensation | Note G — Stock-Based Compensation
Equity Incentive Plan
The Company has adopted an equity incentive plan. The equity incentive plan offers certain individuals an opportunity to participate in the Company’s growth through awards in the form of, or based on, the Company’s common stock. The Company has no current intention to issue any awards under the equity incentive plan but may do so in the future in order to attract and retain qualified directors, officers, employees, and consultants.
The equity incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or deferred stock units, performance awards, dividend equivalents, other stock-based awards and cash-based awards to directors, employees and consultants of the Company selected by the board of directors for participation in the equity incentive plan. Stock options granted under the equity incentive plan will not exceed an amount equal to 10% of the outstanding shares of the Company’s common stock on the date of grant of any such stock options. Any stock options and stock appreciation rights granted under the equity incentive plan will have an exercise price or base price that is not less than the fair market value of the Company’s common stock on the date of grant.
The board of directors, or the compensation committee of the board of directors, will administer the equity incentive plan, with sole authority to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted if the grant or vesting of the awards would jeopardize the Company’s status as a REIT under the Code or otherwise violate the ownership and transfer restrictions imposed under the Company’s charter. Unless otherwise determined by the board of directors, no award granted under the equity incentive plan will be transferable except through the laws of descent and distribution.
The Company has authorized and reserved an aggregate maximum of 300,000 shares for issuance under the equity incentive plan. In the event of a transaction between the Company and its stockholders that causes the per-share value of common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the equity incentive plan will be adjusted proportionately, and the board of directors must make such adjustments to the equity incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the equity incentive plan will automatically be adjusted proportionately and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.
Unless otherwise provided in an award certificate or any special plan document governing an award, in the event of a corporate transaction (as defined in the Company’s equity incentive plan), if any award issued under the Company’s equity incentive plan is not assumed or replaced as part of the corporate transaction, then such portion of the award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) immediately prior to the effective date of such corporation transaction, so long as the grantee’s continuous service has not terminated prior to such date. Unless otherwise provided in an award certificate or any special plan document governing an award, in the event of a change in control, each outstanding award issued automatically shall become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value), immediately prior to the effective date of such change in control, provided that the grantee’s continuous service has not terminated prior to such date. Under the equity incentive plan, a “corporate transaction” is defined to include (i) a merger or consolidation in which the Company is not the surviving entity; (ii) the sale of all or substantially all of the Company’s assets; (iii) the Company’s complete liquidation or dissolution; and (iv) acquisitions by any person of beneficial ownership of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities (but excluding any transactions determined by our administrator not to constitute a “corporate transaction”). Under the equity incentive plan, a “change in control” is defined generally as a change in ownership or control of the Company effected either through (i) acquisitions of securities by any person (or related group of persons) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to a tender offer or exchange offer that the Company’s directors do not recommend the Company’s stockholders accept; or (ii) a change in the composition of the board over a period of 12 months or less such that a majority of the Company’s board members will no longer serve as directors, by reason of one or more contested elections for board membership.
The equity incentive plan will automatically expire on the tenth anniversary of the date on which it is approved by the board of directors and stockholders, unless extended or earlier terminated by the board of directors. The board of directors may terminate the equity incentive plan at any time. The expiration or other termination of the equity incentive plan will have no adverse impact on any award previously granted under the equity incentive plan. The board of directors may amend the equity incentive plan at any time, but no amendment will adversely affect any award previously granted, and no amendment to the equity incentive plan will be effective without the approval of the Company’s stockholders if such approval is required by any law, regulation or rule applicable to the equity incentive plan.
In addition, no option, warrant or any other equity award will be issued under our equity incentive plan or otherwise to our advisor, our sponsor or any of their affiliates, if the issuance of any such award would result in a violation of any applicable NASAA REIT Guidelines, including the limitations imposed under the NASAA REIT Guidelines on our total operating expenses (after giving effect to the expense associated with such equity award). Please see “Note E — Related Party Transactions and Arrangements – Fees and Expenses Paid in Connection with the Operations of the Company” for more information regarding the NASAA REIT Guidelines’ limitations on operating expenses. |
Recent Accounting Pronouncements |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note H – Recent Accounting Pronouncements
In April 2015, the FASB issued ASU 2015-03, Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to borrowings be presented in the balance sheet as a direct deduction from the carrying amount of the borrowing, consistent with debt discounts. The ASU does not affect the amount or timing of expenses for debt issuance costs. The Company adopted ASU 2015-03 effective January 1, 2016 on a retrospective basis, by recasting all prior periods shown to reflect the effect of adoption, the effect of which is not material.
In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting ("ASU 2016-07"). ASU 2016-07 eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. ASU 2016-07 is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. We do not currently have significant investments that are accounted for by a method other than the equity method and do not expect ASU 2016-07 to have a significant impact on our consolidated financial condition and results of operations.
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-07 is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. We are currently assessing the potential impact of ASU 2016-09 on our consolidated financial condition and results of operations.
In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This update provides guidance on how to record eight specific cash flow issues. This update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted and a retrospective transition method should be applied. The Company is currently evaluating the effect of this update on its consolidated financial statements. |
Acquisitions |
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Acquisitions | Note I - Acquisitions
Minneapolis Venture and Minneapolis City Parking
On January 6, 2016, the Company along with MVP REIT II closed on the purchase of two parking lots located in Minneapolis for a purchase price of approximately $15.5 million in cash plus closing costs. The Company’s share of the purchase price is approximately $13.5 million plus closing costs and the Company will own an 87.09% interest in the limited liability company. The first parking lot is located at 1022 Hennepin Avenue (the “Hennepin lot”). The Hennepin lot consists of approximately 90,658 square feet and has approximately 270 parking spaces. The second parking lot is located at 41 10th Street North (the “10th Street lot”). The 10th street lot consists of approximately 107,952 square feet and has approximately 185 parking spaces. During April 2016, the Hennepin lot was put into a new entity Minneapolis City Parking, LLC and is leased by SP Plus Corporation under a net lease agreement where the Minneapolis City Parking, LLC is responsible for property taxes and SP Plus Corporation will pay for all insurance and maintenance costs. SP Plus Corporation will pay an annual rent of $800,000 for the Hennepin lot. In addition, the lease provides revenue participation with Minneapolis Venture receiving 70.0% of gross receipts over $1,060,000 but not in excess of $1,300,000 plus 80.0% of annual gross receipts in excess of $1,300,000. The term of the lease is for 5 years. During June 2016, Minneapolis Venture entered into a purchase and sales agreement (the“PSA”) to sell the 10th Street lot “as is” to a third party for approximately $6.1 million. During October 2016, the PSA was cancelled. We will continue to market the property and account for this property as cost method investee – held for sale.
Indianapolis Meridian
On January 15, 2016, the Company closed on the purchase of a parking lot for approximately $1.6 million in cash plus closing costs. The property is located at 239 S. Meridian Street, Indianapolis, Indiana. The parking lot consists of approximately 10,290 square feet and has approximately 39 parking spaces. The parking lot is leased to Denison Parking, Inc., an Indianapolis parking operator. Denison Parking, Inc. pays annual rent of $95,000 and pays all regular occurring maintenance expenses associated with the parking lot other than property taxes. In addition, the lease provides revenue participation with MVP receiving 60% of gross receipts over $155,000. The term of the lease is 10 years. During the three months ended September 30, 2016 the Company recorded a loss on impairment of $0.1 million in accordance with an appraisal received by the Company.
Milwaukee Clybourn
On January 20, 2016, the Company closed on the purchase of a parking lot for approximately $0.2 million in cash plus closing costs. The property is located at 412 E. Clybourn Street, Milwaukee, Wisconsin. The parking lot consists of 15 parking spaces and is leased to Secure Parking USA, LLC. The parking lot is leased to Secure Parking USA, Inc., an Indianapolis parking operator. Secure Parking USA, Inc. pays annual rent of $20,000 and pays all regular occurring maintenance expenses associated with the parking garage other than property taxes. In addition, the lease provides revenue participation with MVP receiving 75% of gross receipts over $45,000. The term of the lease is 5 years.
Milwaukee Arena
On February 1, 2016, the Company closed on the purchase of a parking lot for approximately $3.9 million in cash plus closing costs. The property is located at 1124 N. Old World Third Street, Milwaukee, Wisconsin. The Wisconsin parking lot consists of approximately 38,600 square feet and has 75 parking spaces. The Wisconsin parking lot is leased by SP Plus Corporation, a national parking operator. SP Plus pays a first year annual lease payment of $200,000 with annual increases and pays all regular occurring maintenance expenses associated with the parking garage other than property taxes. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $325,000. The term of the lease is 5 years.
Clarksburg Lot
On February 9, 2016, the Company closed on the purchase of a parking lot for approximately $0.6 million in cash plus closing costs. The parking lot is located at 327 Washington Avenue, Clarksburg, West Virginia 26301. The parking lot consists of approximately 35,000 square feet and has approximately 94 parking spaces. The parking lot is leased by ABM Parking Services Inc. ("ABM"), a national parking operator, under a net lease agreement where MVP is responsible for property taxes and ABM pays for all insurance and maintenance costs. ABM pays annual rent of $55,400. In addition, the lease provides revenue participation with MVP receiving 50% of gross receipts over $112,000. The term of the lease is for 5 years.
Denver 1935 Sherman
On February 12, 2016, the Company along with MVP REIT II, closed on the purchase of a parking lot for approximately $2.4 million in cash plus closing costs, 75.51% owned by MVP and 24.49% owned by MVP REIT II of which MVP’s share was approximately $1.8 million. The parking lot is located at 1935 Sherman Avenue, Denver, Colorado. The Denver parking lot consists of approximately 18,765 square feet and has approximately 72 parking spaces. The Denver parking lot is leased by SP Plus Corporation, under a net lease agreement where MVP Denver is responsible for property taxes and SP Plus pays for all insurance and maintenance costs. SP Plus Corporation pays annual rent of $120,000. In addition, the lease provides revenue participation with MVP Denver receiving 70% of gross receipts over $160,000. The term of the lease is for 10 years.
Bridgeport Fairfield
On March 30, 2016, the Company along with MVP REIT II, through MVP Bridgeport Fairfield Garage, LLC, a Delaware limited liability company (“MVP Bridgeport”), an entity owned 90% by the Company and 10% by MVP REIT II, closed on the purchase of a multi-level parking garage consisting of approximately 878 parking spaces, together with approximately 4,349 square feet of retail space, located in Bridgeport, Connecticut, for a purchase price of $7.8 million in cash plus closing costs of which MVP REIT’s share was approximately $7.0 million. The parking garage is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP Bridgeport is responsible for property taxes above a $100,000 threshold, and SP Plus Corporation pays for insurance and maintenance costs. SP Plus Corporation pays annual rent of $400,000. In addition, the lease provides revenue participation with MVP Bridgeport receiving 65% of gross receipts over $775,000. The term of the lease is for 10 years.
The following table is a summary of the acquisitions for the nine months ended September 30, 2016:
*Minneapolis Venture is currently reported as held for sale.
Pro forma results of the Company
The following table of pro forma unaudited condensed consolidated results of operations of the Company for the three and nine months ended September 30, 2016 and 2015, and assumes that the acquisitions were completed as of January 1, 2015.
Revenue and expenses of acquisitions since acquisition dates included in the unaudited condensed consolidated statement of operations
The following is a summary of the results of operations related to the net assets and liabilities acquired for the period from acquisition dates through September 30, 2016:
On August 18, 2016, we acquired an additional 13.3% tenant-in-common interest in the Mabley Place Garage, LLC, bringing our total ownership to 83.34%, for approximately $0.9 million. |
Investment in Equity Method Investee |
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Investment in Equity Method Investee | Note J – Investment in Equity Method Investee
On May 11, 2016, the Company through a wholly owned entity it owns, along with MVP REIT II, closed the purchase of all of the membership interests of an entity that owns a surface parking lot, for approximately $5.7 million in cash. The Company’s share of the purchase was approximately $2.8 million in cash plus closing costs and the Company will own a 49% interest in the entity. The surface parking lot is located at 1200-1240 W. 9th Street and W. 10th Street, Cleveland, Ohio (the “parking lot”). The parking lot consists of approximately 87,052 square feet with approximately 260 parking spaces. The parking lot is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP will be responsible for property taxes above a $120,000 threshold, and SP Plus Corporation will pay insurance and maintenance costs. SP Plus Corporation will pay annual rent of $330,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $650,000. The term of the lease will be for 5 years.
On May 17, 2016, the Company through a wholly owned entity it owns, along with MVP REIT II, closed on the purchase of all of the membership interests of an entity that owns a surface parking lot, for approximately $3.0 million in cash. The Company’s share of the purchase was approximately $1.5 million and the Company will own a 49% interest in the entity. The surface parking lot is located at 1239 W. 9th Street, Cleveland, Ohio (the “Crown Colony parking lot”). The Crown Colony parking lot consists of approximately 23,000 square feet with approximately 82 parking spaces. The Crown Colony parking lot is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP will be responsible for property taxes above a $40,000 threshold, and SP Plus Corporation will pay insurance and maintenance costs. SP Plus Corporation will pay annual rent of $185,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $325,000. The term of the lease will be for 5 years.
On September 30, 2016, the Company through a wholly owned entity it owns, along with MVP REIT II, closed on the purchase of all of the membership interests of an entity that owns parking garage, for approximately $11.5 million in cash. The Company’s share of the purchase was approximately $2.3 million and the Company will own a 20% interest in the entity. The parking garage is located at 205 2nd Avenue North, Nashville, TN (the “White Front Garage”). The White Front Garage consists of approximately 11,000 square feet with approximately 155 parking spaces. The White Front Garage is leased by Premier Parking of Tennessee, LLC (“Premier Parking”), a parking operator with over 300 locations in nine different states, under a NNN lease agreement. Premier Parking will pay annual rent of $700,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $850,000. The term of the lease will be for 10 years.
The following is a summary of MVP REIT’s portion of the equity method investments purchased per their agreements:
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Notes Payable |
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Notes Payable | Note K — Notes Payable
During January 2014, the entities holding four parking facilities (MVP PF Ft. Lauderdale 2013, LLC, MVP PF Memphis Court 2013, LLC, MVP PF Memphis Poplar 2013, LLC and MVP PF St. Louis 2013, LLC) issued a promissory note to Key Bank National Association for $4.3 million. This note bears an annual interest rate of 4.94%, is secured by four parking facilities, matures in February 2019 and is payable in monthly principal and interest payments of approximately $25,000.
During December 2014, through the acquisition of Mabley Place, the Company issued a promissory note to Wells Fargo Bank for $9.0 million. This note bears an annual interest rate of 4.25%, is secured by the property, matures in December 2024 and is payable in monthly principal and interest payments of approximately $44,000.
During March 2015, through the acquisition of Ft. Worth Taylor, the Company assumed a 10-year term loan with a balance of approximately $12.2 million, collateralized by real property located in Ft. Worth, Texas, matures in August 2021, bears an annual interest rate of 5.59%, and is payable in monthly installment payments of principal and interest totaling approximately $78,000.
During August 2015, Houston Saks Garage issued a promissory note for approximately $3.7 million. The note is collateralized by real property located in Houston, Texas, bears an annual interest rate of 4.25%, and is payable in monthly installment payments of principal and interest totaling approximately $30,000, maturing in August 2025.
During January 2016, Indy City Park and Indy WA Street issued a promissory note to KeyBank for $8.6 million. The note is secured by real property located in Indianapolis, Indiana. The loan has a term of 10 years and has an annual interest rate of 4.59% and is payable in monthly installment payments of principal and interest totaling approximately $46,000, maturing in January 2026.
During January 2016, St. Louis Convention, St. Louis Lucas and KC Cherry issued a promissory note to KeyBank for $3.5 million loan secured by real property located in St. Louis and Kansas City, Missouri. The loan has a term of 10 years and has an annual interest rate of 4.59% and is payable in monthly installment payments of principal and interest totaling approximately $20,000, maturing in January 2026.
During April 2016, Minneapolis City Parking, LLC issued a promissory note to American National Insurance Company for $5.3 million loan secured by real property located in Minneapolis, Minnesota. The loan has a term of 10 years and has an interest rate of 4.5% and is payable in monthly installment payments of principal and interest totaling approximately $29,000, maturing in April 2026.
During July 2016, Bridgeport Fairfield issued a promissory note to FBL Financial Group, Inc. for $4.4 million loan secured by real property located in Bridgeport, Connecticut. The loan has a term of 10 years and has an annual interest rate of 4.00% and is payable in monthly installment payments of principal and interest totaling approximately $23,000, maturing in August 2026.
Total interest expense incurred for the three months ended September 30, 2016 and 2015 is $1.0 million and $0.3 million, respectively. Total interest expense incurred for the nine months ended September 30, 2016 and 2015 is $1.6 million and $0.9 million, respectively. Total loan amortization cost for the three months ended September 30, 2016 and 2015 is $39,000 and $27,000, respectively. Total loan amortization cost for the nine months ended September 30, 2016 and 2015 is $113,000 and $59,000, respectively.
As of September 30, 2016, future principal payments on the notes payable are as follows:
Principal payments table amount does not reflect the unamortized loan issuance cost of $919,000 as of September 30, 2016.
As of September 30, 2016, the principal balances on notes payable are as follows:
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Assets held for sale |
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Property, Plant and Equipment [Abstract] | |
Assets held for sale | Note L — Assets held for sale
As of September 30, 2016, we had an 87.09% ownership interest in one property that was listed as held for sale, with a carrying value of approximately $6.1 million. This property was acquired on January 6, 2016, along with MVP REIT II, with the purchase of two parking lots located in Minneapolis, Minnesota. This property is accounted for at the fair value based on an appraisal. During June 2016, Minneapolis Venture entered into a PSA to sell the 10th Street lot “as is” to a third party for approximately $6.1 million. During October 2016, the PSA was cancelled. We will continue to market the property and account for this property as cost method investee – held for sale. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | Note M — Subsequent Events
The following subsequent events have been evaluated through the date of this filing with the SEC.
On October 5, 2016, the Company, through its Operating Partnership, and MVP REIT II, (the “REITs”) through a wholly owned subsidiary (the "Borrowers") entered into a credit agreement (the "Unsecured Credit Agreement") with KeyBank, National Association ('KeyBank") as the administrative agent and KeyBank Capital Markets ("KeyBank Capital Markets") as the lead arranger. Pursuant to the Unsecured Credit Agreement, the Borrowers were provided with a $30 million unsecured credit facility (the "Unsecured Credit Facility"), which may be increased up to $100 million, in minimum increments of $10 million. The Unsecured Credit Facility has an initial term of two years, maturing on October 5, 2018, and may be extended for a one-year period if certain conditions are met and upon payment of an extension fee. The Unsecured Credit Facility has an interest rate calculated based on LIBOR Rate plus 2.25% or Base Rate plus 1.25%, both as provided in the Unsecured Credit Agreement. The Base Rate is calculated as the greater of (i) the KeyBank Prime rate or (ii) the Federal Funds rate plus ½ of 1%. Payments under the Unsecured Credit Facility are interest only and are due on the first day of each quarter. The obligations of the Borrowers of the Unsecured Credit Agreement are joint and several. The REITs have entered into cross-indemnification provisions with respect to their joint and several obligations under the Unsecured Credit Agreement.
The foregoing summary is qualified in its entirety by reference to the Unsecured Credit Agreement and related documents, copies of which are attached as Exhibits 10.1 through 10.4 to the Company’s Form 8-K filed on October 6, 2016 and incorporated herein by reference.
During October 2016, Cleveland West 9th and 33740 Crown Colony issued a promissory note to American National Insurance Company of New York for a $5.3 million loan secured by real properties located in Cleveland, OH, of which we own a 49% interest in these entities . The loan has a term of 10 years, has an interest rate of 4.5% and is payable in monthly installment payments of principal and interest totaling approximately $30,000, maturing in October 2026.
On November 5, 2016, MVP REIT II, Inc. purchase 338,409.475 shares of MVP REIT, Inc’s common stock from a unrelated third party for $3.0 million or $8.865 per share. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||
Basis of Accounting | Basis of Accounting
The accompanying unaudited condensed consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with principles generally accepted in the United States of America (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
The condensed consolidated balance sheet as of December 31, 2015 contained herein has been derived from the audited consolidated financial statements as of December 31, 2015, but do not include all disclosures required by GAAP. |
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Consolidation | Consolidation
The Company’s unaudited condensed consolidated financial statements include its accounts and the accounts of its subsidiaries, REH and all of the following subsidiaries as well as the Company’s assets that were sold during 2015. All intercompany profits and losses, balances and transactions are eliminated in consolidation.
MVP PF Ft. Lauderdale 2013, LLC MVP PF Memphis Court 2013, LLC MVP PF Memphis Poplar 2013, LLC MVP PF St. Louis 2013, LLC MVP PF Kansas City 2013, LLC Mabley Place Garage; LLC MVP Denver Sherman; LLC MVP Fort Worth Taylor, LLC MVP Milwaukee Old World, LLC MVP St. Louis Convention Plaza, LLC MVP Houston Saks Garage, LLC MVP St. Louis Lucas, LLC MVP Milwaukee Wells, LLC MVP Wildwood NJ Lot, LLC MVP Indianapolis City Park Garage, LLC MVP KC Cherry Lot, LLC MVP Indianapolis Washington Street Lot, LLC MVP Minneapolis Venture, LLC MVP Indianapolis Meridian, LLC MVP Milwaukee Clybourn, LLC MVP Milwaukee Arena, LLC MVP Clarksburg Lot, LLC MVP Denver 1935 Sherman, LLC MVP Bridgeport Fairfield, LLC MVP Minneapolis City Parking
Under GAAP, the Company’s consolidated financial statements will also include the accounts of its consolidated subsidiaries and joint ventures in which the Company is the primary beneficiary, or in which the Company has a controlling interest. In determining whether the Company has a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, the Company’s management considers factors such as an entity’s purpose and design and the Company’s ability to direct the activities of the entity that most significantly impacts the entity’s economic performance, ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which it will absorb the majority of the entity’s expected losses, if they occur, or receive the majority of the expected residual returns, if they occur, or both.
Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method. The Company's share of its equity method investees' earnings or losses is included in other income in the accompanying unaudited condensed consolidated statements of operations. Investments in which the Company is not able to exercise significant influence over the investee are accounted for under the cost method. |
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Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and derivative financial instruments and hedging activities, as applicable. |
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Concentration | Concentration
The Company had seven and five parking tenants as of September 30, 2016 and 2015, respectively. One tenant, Standard Parking + (“SP+”), represented a concentration for the three and nine months ended September 30, 2016 and 2015, in regards to parking base rental revenue. During the three months ended September 30, 2016 and 2015, SP+ accounted for 69% and 77%, respectively, of the parking base rental revenue. During the nine months ended September 30, 2016 and 2015, SP+ accounted for 69% and 83%, respectively, of the parking base rental revenue. |
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Acquisitions | Acquisitions
The Company records the acquired tangible and intangible assets and assumed liabilities of acquisitions of all operating properties and those development and redevelopment opportunities that meet the accounting criteria to be accounted for as business combinations at fair value at the acquisition date. The Company assesses and considers fair value based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates that the Company deems appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an operating property acquisition generally include but are not limited to: land, buildings and improvements, construction in progress and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market operating leases and ground leases, acquired in-place lease values and tenant relationships, if any.
The fair value of land is derived from comparable sales of land within the same submarket and/or region. The fair value of buildings and improvements, tenant improvements, and leasing costs are based upon current market replacement costs and other relevant market rate information.
The fair value of the above-market or below-market component of an acquired in-place operating lease is based upon the present value (calculated using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining non-cancellable lease term and (ii) management's estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition measured over the remaining non-cancellable term of the lease for above-market operating leases and the initial non-cancellable term plus the term of any below-market fixed rate renewal options, if applicable, for below-market operating leases. The amounts recorded for above-market operating leases are included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and are amortized on a straight-line basis as a reduction of rental income over the remaining term of the applicable leases. The amounts recorded for below-market operating leases are included in deferred revenue and acquisition-related liabilities, net on the balance sheet and are amortized on a straight-line basis as an increase to rental income over the remaining term of the applicable leases plus the term of any below-market fixed rate renewal options, if applicable. Our below-market operating leases generally do not include fixed rate or below-market renewal options.
The fair value of acquired in-place leases is derived based on management's assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases; (2) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered by us in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses, and estimates of lost rental revenue during the expected lease-up periods based on current market demand at market rates.
In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The amount recorded for acquired in-place leases is included in deferred leasing costs and acquisition-related intangibles, net on the balance sheet and amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If a lease were to be terminated or if termination were determined to be likely prior to its contractual expiration (for example resulting from bankruptcy), amortization of the related unamortized in-place lease intangible would be accelerated.
The determination of the fair value of any debt assumed in connection with a property acquisition is estimated by discounting the future cash flows using interest rates available for the issuance of debt with similar terms and remaining maturities.
The determination of the fair value of the acquired tangible and intangible assets and assumed liabilities of operating property acquisitions requires us to make significant judgments and assumptions about the numerous inputs discussed above. The use of different assumptions in these fair value calculations could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related amortization and depreciation expense recorded for such assets and liabilities. In addition, because the value of above and below market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations.
Costs directly associated with all operating property acquisitions and those development and redevelopment acquisitions that meet the accounting criteria to be accounted for as business combinations are expensed as incurred. During the three months ended September 30, 2016, the Company expensed approximately $337,000 non-related party acquisition costs. During the nine months ended September 30, 2016, the Company expensed approximately $1,326,000 of related party and $765,000 non-related party acquisition costs. Our acquisition expenses are directly related to our acquisition activity and if our acquisition activity was to increase or decrease, so would our acquisition costs. Costs directly associated with development acquisitions accounted for as asset acquisitions are capitalized as part of the cost of the acquisition. During the three and nine months ended September 30, 2016, the Company did not capitalize any such acquisition costs. |
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Impairment of Long Lived Assets | Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income. |
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Derivative Instruments | Derivative Instruments
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings. |
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Cash | Cash
The Company maintains the majority of its cash balances in a national financial institution located in Las Vegas, Nevada. The balances are insured by the Federal Deposit Insurance Corporation under the same ownership category of $250,000. As of September 30, 2016 and December 31, 2015, the Company had approximately $1.6 million and approximately $9.1 million in excess of the federally-insured limits, respectively. |
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Restricted Cash | Restricted Cash
Restricted cash primarily consists of escrowed tenant improvement funds, real estate taxes, capital improvement funds, insurance premiums, and other amounts required to be escrowed pursuant to loan agreements. |
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Revenue Recognition | Revenue Recognition
The Company’s revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. Since some of the Company’s leases will provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.
The Company may recognize interest income from loans on an accrual basis over the expected terms of the loans using the effective interest method. The Company may recognize fees, discounts, premiums, anticipated exit fees and direct cost over the terms of the loans as an adjustment to the yield. The Company may recognize fees on commitments that expire unused at expiration. The Company may recognize interest income from available-for-sale securities on an accrual basis over the life of the investment on a yield-to-maturity basis.
The Company will continually review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company will record an increase in the Company’s allowance for uncollectible accounts or record a direct write-off of the receivable after exhaustive efforts at collection. |
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Advertising Costs | Advertising Costs
Advertising costs incurred in the normal course of operations and are expensed as incurred. During the three and nine months ended September 30, 2016 and 2015, the Company had no advertising costs. |
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Investments in Real Estate and Fixed Assets | Investments in Real Estate and Fixed Assets
Investments in real estate and fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are primarily 3 to 40 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability. |
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Investments in Real Estate Loans | Investments in Real Estate Loans
Subject to the restrictions on related-party transactions set forth in the Company’s charter, the Company may, from time to time, acquire or sell investments in real estate loans from or to the advisor or other related parties without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans the Company makes and the similarity of interest rates in loans the Company normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.
Investments in real estate loans are secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. The Company has both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate. Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received or when management’s assessment of the value has changed, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include troubled debt restructuring, and performing and non-performing loans in which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral.
Loans that have been modified from their original terms are evaluated to determine if the loan meets the definition of a Troubled Debt Restructuring (“TDR”) as defined by ASC 310-40. When the Company modifies the terms of an existing loan that is considered a TDR, it is considered performing as long as it is in compliance with the modified terms of the loan agreement. If the modification calls for deferred interest, it is recorded as interest income as cash is collected. |
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Allowance for Loan Losses | Allowance for Loan Losses
The Company will maintain an allowance for loan losses to the extent it makes investments in real estate loans for estimated credit impairment. The Company’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property. As a commercial real estate lender willing to invest in loans to borrowers who may not meet the credit standards of other financial institutional lenders, the default rate on our loans could be higher than those generally experienced in the real estate lending industry. The Company and the Advisor generally approve loans more quickly than other real estate lenders and, due to our expedited underwriting process; there is a risk that the credit inquiry performed will not reveal all material facts pertaining to a borrower and the security.
Additional facts and circumstances may be discovered as the Company continues efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. Circumstances that may cause significant changes in our estimated allowance include, but are not limited to:
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Organization, Offering and Related Costs | Organization, Offering and Related Costs
Certain organization, offering and related costs, including legal, accounting, printing, marketing expenses and the salaries and direct expenses of the employees of the Advisor and its affiliates, have been incurred by the Advisor on behalf of the Company. After the Company reimbursed $100,000 of such costs, which has been paid to the Advisor, no additional reimbursements will be made unless the aggregate amount of such reimbursements does not exceed 0.75% of the gross offering proceeds as of the date of reimbursement. Prior to the commencement of our operations, such offering costs had been deferred and such deferred offering costs have been amortized to expense as offering costs over the 12-month period commenced January 1, 2013 through December 31, 2013, on a straight-line basis. |
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Stock-Based Compensation | Stock-Based Compensation
The Company has a stock-based incentive award plan, which is accounted for under the guidance for share based payments. The expense for such awards will be included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met (See Note G — Stock-Based Compensation). |
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Income Taxes | Income Taxes
The Company has elected, and operates in a manner that will allow the Company, to qualify to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2013. If the Company qualifies for taxation as a REIT, it generally will not be subject to federal corporate income tax to the extent it distributes all of its REIT taxable income to its stockholders, and so long as it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies to be taxed as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. |
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Per Share Data | Per Share Data
The Company calculates basic earnings per share by dividing net income for the period by weighted-average shares of its common stock outstanding for a respective period. Diluted earnings per share takes into account the effect of dilutive instruments, such as stock options and convertible stock, but uses the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. The Company had no outstanding common share equivalents during the three and nine months ended September 30, 2016.
In September 2012, upon the commencement of our offering, the Company issued 1,000 shares of convertible stock to our advisor.
After giving effect to the release of waivers and waiver agreements executed in August and September of 2014, all of which were previously disclosed in Form 8-Ks and prospectus supplements, the convertible stock will convert into shares of our common stock representing 3.50% of the outstanding shares of our common stock immediately preceding the conversion if and when:
(a) the Company has made total distributions on the then outstanding common shares equal to the invested capital attributable to those shares plus a 6.00% cumulative, non-compounded, annual pre-tax return on such invested capital; or
(b) (i) the Company lists its common shares for trading on a national securities exchange and (ii) (x) the sum of the aggregate market value of the issued and outstanding common shares plus the aggregate amount of all distributions on the Company’s common shares exceeds (y) the sum of the aggregate capital contributed by investors (less any capital returned in the form of distributions) plus an amount equal to a 6% cumulative, pre-tax non-compounded annual return to investors; or
(c) the advisory agreement is terminated or not renewed, but only if at the time of such termination or non-renewal, the requirements for conversion set forth in either of the immediately preceding clause (a) or (b) also shall have been satisfied.
For purposes of such calculation, the market value of the Company’s outstanding common stock will be calculated based on the average market value of the shares of common stock issued and outstanding at listing over the 30 trading days beginning 180 days after the shares are first listed for trading on a national securities exchange. |
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Reportable Segments | Reportable Segments
The Company is currently authorized to operate two reportable segments, investments in real estate loans and investments in real property. As of September 30, 2016, the Company only operates in the investment in real property segment. |
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Reclassifications | Reclassifications
In conjunction with the adoption of new accounting standards, certain debt or loan issuance costs for the three and nine months ended September 30, 2015 as well as certain amounts as of December 31, 2015, have been reclassified to conform to the current year’s presentation. |
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Accounting and Auditing Standards Applicable to "Emerging Growth Companies" | Accounting and Auditing Standards Applicable to “Emerging Growth Companies”
The Company is an “emerging growth company” under the recently enacted JOBS Act. For as long as the Company remains an “emerging growth company,” which may be up to five fiscal years, the Company is not required to (1) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (2) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (3) comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (4) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. The Company intends to take advantage of such extended transition period. Since the Company will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, the Company’s financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If the Company were to subsequently elect to instead comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act. |
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Non-controlling Interests | Non-controlling Interests
The FASB issued authoritative guidance for non-controlling interests in December 2007, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. |
Investments in Real Estate (Tables) |
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Schedule Of Real Estate Properties |
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Acquired And Liabilities Assumed |
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Pro Forma Consolidated Results Of Operations |
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Revenue And Expenses Of Acquisitions Included In Consolidated Statement Of Operations |
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Investment in Equity Method Investee (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Equity Method Investments |
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Notes Payable (Tables) |
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Future Principal Payments On The Notes Payable |
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Schedule Of Debt |
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Acquisitions (Detail) - Pro Forma Consolidated Results Of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Business Combinations [Abstract] | ||||
Revenues from continuing operations | $ 2,336,000 | $ 1,776,000 | $ 6,427,000 | $ 4,369,000 |
Net income (loss) available to common stockholders | $ (45,000) | $ 447,000 | $ (2,015,000) | $ (336,000) |
Net loss available to common stockholders per share - basic | $ 0 | $ 0.05 | $ (0.18) | $ (0.05) |
Net loss available to common stockholders per share - diluted | $ 0 | $ 0.05 | $ (0.18) | $ (0.05) |
Acquisitions (Detail) - Revenue And Expenses Of Acquisitions Included In Consolidated Statement Of Operations |
9 Months Ended |
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Sep. 30, 2016
USD ($)
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Business Combinations [Abstract] | |
Revenue | $ 1,142,000 |
Expenses | (1,088,000) |
Net income | $ 54,000 |
Investment in Equity Method Investee (Detail) - Schedule Of Equity Method Investments - USD ($) |
3 Months Ended | |
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Sep. 30, 2016 |
Dec. 31, 2015 |
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Purchase Price | $ 6,628,000 | |
Cleveland West 9th [Member] | ||
Purchase Date | May 11, 2016 | |
Purchase Price | $ 2,788,000 | |
Ownership | 49.00% | |
Cleveland West 9th [Member] | MVP REIT II [Member] | ||
Ownership | 51.00% | |
33740 Crown Colony [Member] | ||
Purchase Date | May 17, 2016 | |
Purchase Price | $ 1,489,000 | |
Ownership | 49.00% | |
33740 Crown Colony [Member] | MVP REIT II [Member] | ||
Ownership | 51.00% | |
White Front Garage [Member] | ||
Purchase Date | Sep. 30, 2016 | |
Purchase Price | $ 2,307,000 | |
Ownership | 20.00% | |
White Front Garage [Member] | MVP REIT II [Member] | ||
Ownership | 80.00% | |
Total [Member] | ||
Purchase Price | $ 6,584,000 |
Notes Payable (Detail) - Future Principal Payments On The Notes Payable |
Sep. 30, 2016
USD ($)
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2016 [Member] | |
Principal Payments | $ 246,000 |
2017 [Member] | |
Principal Payments | 1,133,000 |
2018 [Member] | |
Principal Payments | 1,188,000 |
2019 [Member] | |
Principal Payments | 4,956,000 |
2020 [Member] | |
Principal Payments | 1,187,000 |
Thereafter [Member] | |
Principal Payments | 40,558,000 |
Total [Member] | |
Principal Payments | $ 49,268,000 |
Notes Payable (Detail) - Schedule of Debt - USD ($) |
1 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jul. 31, 2016 |
Apr. 30, 2016 |
Aug. 31, 2015 |
Mar. 30, 2015 |
Dec. 31, 2014 |
Jan. 31, 2014 |
Sep. 30, 2016 |
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Loan Maturity | Aug. 31, 2026 | Apr. 30, 2026 | Aug. 31, 2025 | Aug. 31, 2021 | Dec. 31, 2024 | Feb. 28, 2019 | |
Ft. Lauderdale [Member] | |||||||
Location | 208 SE 6th St, Ft Lauderdale, FL | ||||||
Current Loan Balance | $ 1,463,000 | ||||||
Interest Rate | 4.94% | ||||||
Loan Maturity | Feb. 01, 2019 | ||||||
Memphis Court [Member] | |||||||
Location | 216 Court St, Memphis, TN | ||||||
Current Loan Balance | $ 137,000 | ||||||
Interest Rate | 4.94% | ||||||
Loan Maturity | Feb. 01, 2019 | ||||||
Memphis Poplar [Member] | |||||||
Location | 212 Poplar Ave, Memphis, TN | ||||||
Current Loan Balance | $ 1,232,000 | ||||||
Interest Rate | 4.94% | ||||||
Loan Maturity | Feb. 01, 2019 | ||||||
St. Louis [Member] | |||||||
Location | 1300 Spruce St, St. Louis, MO | ||||||
Current Loan Balance | $ 1,227,000 | ||||||
Interest Rate | 4.94% | ||||||
Loan Maturity | Feb. 01, 2019 | ||||||
Mabley Place [Member] | |||||||
Location | 400 Race Street, Cincinnati, OH | ||||||
Current Loan Balance | $ 8,728,000 | ||||||
Interest Rate | 4.25% | ||||||
Loan Maturity | Dec. 26, 2024 | ||||||
Ft. Worth [Member] | |||||||
Location | 814 Taylor Street, Fort Worth, Texas | ||||||
Current Loan Balance | $ 11,785,000 | ||||||
Interest Rate | 5.59% | ||||||
Loan Maturity | Aug. 01, 2021 | ||||||
Houston Saks Garage [Member] | |||||||
Location | 611 Fannin Street, Houston, TX | ||||||
Current Loan Balance | $ 3,555,000 | ||||||
Interest Rate | 4.25% | ||||||
Loan Maturity | Aug. 01, 2025 | ||||||
St. Louis Lucas [Member] | |||||||
Location | Lucas Ave, St. Louis, MO | ||||||
Current Loan Balance | $ 3,447,000 | ||||||
Interest Rate | 4.59% | ||||||
Loan Maturity | Feb. 01, 2026 | ||||||
Indy Garage [Member] | |||||||
Location | 120 E. Washington Street, Indianapolis, IN | ||||||
Current Loan Balance | $ 8,100,000 | ||||||
Interest Rate | 4.59% | ||||||
Loan Maturity | Feb. 01, 2026 | ||||||
Minneapolis City Parking [Member] | |||||||
Location | 1022 Hennepin Avenue, Minneapolis, MN | ||||||
Current Loan Balance | $ 5,202,000 | ||||||
Interest Rate | 4.50% | ||||||
Loan Maturity | Apr. 30, 2026 | ||||||
Bridgeport Fairfield [Member] | |||||||
Location | 310 Fairfield Ave, Bridgeport, CT | ||||||
Current Loan Balance | $ 4,392,000 | ||||||
Interest Rate | 4.00% | ||||||
Loan Maturity | Aug. 01, 2026 | ||||||
Less loan issuance costs [Member] | |||||||
Current Loan Balance | $ (919,000) | ||||||
Total [Member] | |||||||
Current Loan Balance | $ 48,349,000 |
Organization, Proposed Business Operations and Capitalization (Details Narrative) - USD ($) |
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2016 |
Apr. 07, 2016 |
Dec. 31, 2015 |
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Date of Incorporation | Apr. 03, 2012 | |||
Incorporation State | Maryland | |||
Year End | taxable year ended December 31, 2013 | |||
Shares Issued in Period | 10,856,323 | |||
Share Value Used to Buy Property | $ 19,500,000 | |||
Registered Amount for DRIP | 50,000,000 | |||
Total assets | $ 129,885,000 | $ 100,800,000 | $ 115,051,000 | |
Total Asset Value Per Common Share | $ 9.14 | |||
Shares Outstanding | 10,972,898 | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
Non Voting Non Participating Convertible Stock | ||||
Shares Outstanding | 1,000 | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 21 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2015 |
Dec. 31, 2015 |
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Acquisition expenses - related party | $ 75,000 | $ 1,326,000 | $ 1,856,000 | |||
Acquisition expenses | 337,000 | 153,000 | 765,000 | 481,000 | ||
Federally Insured Amount Limit | 250,000 | 250,000 | $ 250,000 | |||
Cash In Excess Of The Federally Insured Limits | 1,600,000 | 1,600,000 | $ 9,100,000 | |||
Advertising Costs | ||||||
Parking Base Rental Revenue [Member] | ||||||
Concentration, Standard Parking + | 69.00% | 77.00% | 69.00% | 83.00% |
Dependency (Details Narrative) |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaborative Arrangement Nature And Purpose | The Company has no employees and is dependent on the Advisor for services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations. |
Stock-Based Compensation (Details Narrative) |
9 Months Ended |
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Sep. 30, 2016
shares
| |
Equity [Abstract] | |
Stock Options Granted Percentage Limit | 10.00% |
Aggregate Maximum Number of Shares Under Incentive Plan | 300,000 |
Acquisitions (Details Narrative) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
ft²
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
ft²
|
Sep. 30, 2015
USD ($)
|
|
Purchase Price Shared | $ 6,628,000 | $ 6,628,000 | ||
Rental revenue | 2,336,000 | $ 1,353,000 | 6,285,000 | $ 3,101,000 |
Loss from impairment | 100,000 | $ 100,000 | ||
Minneapolis Venture [Member] | ||||
Date of Acquisition | Jan. 06, 2016 | |||
Purchase Price Shared | $ 15,500,000 | $ 15,500,000 | ||
Purchase Price | $ 13,500,000 | |||
Percentage Owned | 87.09% | 87.09% | ||
Lease Arrangement | During April 2016, the Hennepin lot was put into a new entity Minneapolis City Parking, LLC and is leased by SP Plus Corporation under a net lease agreement where the Minneapolis City Parking, LLC is responsible for property taxes and SP Plus Corporation will pay for all insurance and maintenance costs. SP Plus Corporation will pay a annual rent of $800,000 for the Hennepin lot. In addition, the lease provides revenue participation with Minneapolis Venture receiving 70.0% of gross receipts over $1,060,000 but not in excess of $1,300,000 plus 80.0% of annual gross receipts in excess of $1,300,000. The term of the lease is for 5 years. | |||
Minneapolis Venture [Member] | Hennepin Lot [Member] | ||||
Size / Acreage (ac) / (sqft) | ft² | 90,658 | 90,658 | ||
# Spaces / Units | 270 | 270 | ||
Rental revenue | $ 800,000 | |||
Minneapolis Venture [Member] | 10th Street lot [Member] | ||||
Size / Acreage (ac) / (sqft) | ft² | 107,952 | 107,952 | ||
# Spaces / Units | 185 | 185 | ||
Purchase and Sales Agreement | During June 2016, Minneapolis Venture entered into a purchase and sales agreement PSA to sell the 10th Street lot as is to a third party for approximately $6.1 million. | |||
Indianapolis Meridian [Member] | ||||
Date of Acquisition | Jan. 15, 2016 | |||
Purchase Price | $ 1,600,000 | |||
Size / Acreage (ac) / (sqft) | ft² | 10,290 | 10,290 | ||
# Spaces / Units | 39 | 39 | ||
Rental revenue | $ 95,000 | |||
Lease Arrangement | The parking lot is leased to Denison Parking, Inc., an Indianapolis parking operator. Denison Parking, Inc. pays annual rent of $95,000 and pays all regular occurring maintenance expenses associated with the parking lot other than property taxes. In addition, the lease provides revenue participation with MVP receiving 60% of gross receipts over $155,000. The term of the lease is 10 years. | |||
Loss from impairment | $ 100,000 | |||
Milwaukee Clybourn [Member] | ||||
Date of Acquisition | Jan. 20, 2016 | |||
Purchase Price | $ 200,000 | |||
Rental revenue | $ 20,000 | |||
Lease Arrangement | Secure Parking USA, Inc. pays annual rent of $20,000 and pays all regular occurring maintenance expenses associated with the parking garage other than property taxes. In addition, the lease provides revenue participation with MVP receiving 75% of gross receipts over $45,000. The term of the lease is 5 years. | |||
Milwaukee Arena [Member] | ||||
Date of Acquisition | Feb. 01, 2016 | |||
Purchase Price | $ 3,900,000 | |||
Size / Acreage (ac) / (sqft) | ft² | 38,600 | 38,600 | ||
# Spaces / Units | 75 | 75 | ||
Rental revenue | $ 200,000 | |||
Lease Arrangement | The Wisconsin parking lot is leased by SP Plus Corporation, a national parking operator. SP Plus pays a first year annual lease payment of $200,000 with annual increases and pays all regular occurring maintenance expenses associated with the parking garage other than property taxes. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $325,000. The term of the lease is 5 years. | |||
Clarksburg Lot [Member] | ||||
Date of Acquisition | Feb. 09, 2016 | |||
Purchase Price | $ 600,000 | |||
Size / Acreage (ac) / (sqft) | ft² | 35,000 | 35,000 | ||
# Spaces / Units | 94 | 94 | ||
Rental revenue | $ 55,400 | |||
Lease Arrangement | The parking lot is leased by ABM Parking Services Inc. ("ABM"), a national parking operator, under a net lease agreement where MVP is responsible for property taxes and ABM pays for all insurance and maintenance costs. ABM pays annual rent of $55,400. In addition, the lease provides revenue participation with MVP receiving 50% of gross receipts over $112,000. The term of the lease is for 5 years. | |||
Denver 1935 Sherman [Member] | ||||
Date of Acquisition | Feb. 12, 2016 | |||
Purchase Price Shared | $ 2,400,000 | $ 2,400,000 | ||
Purchase Price | $ 1,800,000 | |||
Percentage Owned | 75.51% | 75.51% | ||
Size / Acreage (ac) / (sqft) | ft² | 18,765 | 18,765 | ||
# Spaces / Units | 72 | 72 | ||
Rental revenue | $ 120,000 | |||
Lease Arrangement | The Denver parking lot is leased by SP Plus Corporation, under a net lease agreement where MVP Denver is responsible for property taxes and SP Plus pays for all insurance and maintenance costs. SP Plus Corporation pays annual rent of $120,000. In addition, the lease provides revenue participation with MVP Denver receiving 70% of gross receipts over $160,000. The term of the lease is for 10 years. | |||
Denver 1935 Sherman [Member] | MVP REIT II [Member] | ||||
Percentage Owned | 24.49% | 24.49% | ||
Bridgeport Fairfield [Member] | ||||
Date of Acquisition | Mar. 30, 2016 | |||
Purchase Price Shared | $ 7,800,000 | $ 7,800,000 | ||
Purchase Price | $ 7,000,000 | |||
Retail Space | ft² | 4,349 | |||
Rental revenue | $ 400,000 | |||
Lease Arrangement | The parking garage is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP Bridgeport is responsible for property taxes above a $100,000 threshold, and SP Plus Corporation pays for insurance and maintenance costs. SP Plus Corporation pays annual rent of $400,000. In addition, the lease provides revenue participation with MVP Bridgeport receiving 65% of gross receipts over $775,000. The term of the lease is for 10 years. |
Investment in Equity Method Investee (Details Narrative) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
ft²
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
ft²
|
Sep. 30, 2015
USD ($)
|
|
Purchase Price Shared | $ 6,628,000 | $ 6,628,000 | ||
Rental revenue | 2,336,000 | $ 1,353,000 | $ 6,285,000 | $ 3,101,000 |
Cleveland Ohio Parking Lot [Member] | ||||
Date of Acquisition | May 11, 2016 | |||
Purchase Price Shared | $ 5,700,000 | $ 5,700,000 | ||
Purchase Price | $ 2,800,000 | |||
Percentage Owned | 49.00% | 49.00% | ||
Size / Acreage (ac) / (sqft) | ft² | 87,052 | 87,052 | ||
# Spaces / Units | 260 | 260 | ||
Rental revenue | $ 330,000 | |||
Lease Arrangement | The parking lot is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP will be responsible for property taxes above a $120,000 threshold, and SP Plus Corporation will pay insurance and maintenance costs. SP Plus Corporation will pay annual rent of $330,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $650,000. The term of the lease will be for 5 years. | |||
Crown Colony Parking Lot [Member] | ||||
Date of Acquisition | May 17, 2016 | |||
Purchase Price Shared | $ 3,000,000 | $ 3,000,000 | ||
Purchase Price | $ 1,500,000 | |||
Percentage Owned | 49.00% | 49.00% | ||
Size / Acreage (ac) / (sqft) | ft² | 23,000 | 23,000 | ||
# Spaces / Units | 82 | 82 | ||
Rental revenue | $ 185,000 | |||
Lease Arrangement | The Crown Colony parking lot is leased by SP Plus Corporation, a national parking operator, under a net lease agreement where MVP will be responsible for property taxes above a $40,000 threshold, and SP Plus Corporation will pay insurance and maintenance costs. SP Plus Corporation will pay annual rent of $185,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $325,000. The term of the lease will be for 5 years. | |||
White Front Garage [Member] | ||||
Date of Acquisition | Sep. 30, 2016 | |||
Purchase Price Shared | $ 2,307,000 | $ 2,307,000 | ||
Purchase Price | $ 11,500,000 | |||
Percentage Owned | 20.00% | 20.00% | ||
Size / Acreage (ac) / (sqft) | ft² | 11,000 | 11,000 | ||
# Spaces / Units | 155 | 155 | ||
Rental revenue | $ 700,000 | |||
Lease Arrangement | The White Front Garage is leased by Premier Parking of Tennessee, LLC (Premier Parking), a parking operator with over 300 locations in nine different states, under a NNN lease agreement. Premier Parking will pay annual rent of $700,000. In addition, the lease provides revenue participation with MVP receiving 70% of gross receipts over $850,000. The term of the lease will be for 10 years. |
Notes Payable (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2016 |
Apr. 30, 2016 |
Jan. 31, 2016 |
Aug. 31, 2015 |
Mar. 30, 2015 |
Dec. 31, 2014 |
Jan. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Notes Payable | |||||||||||
Amount | $ 4,400,000 | $ 5,300,000 | $ 3,700,000 | $ 12,200,000 | $ 9,000,000 | $ 4,300,000 | |||||
Term | 10 years | 10 years | 10 years | ||||||||
Interest | 4.00% | 4.50% | 4.25% | 5.59% | 4.25% | 4.94% | |||||
Collateral | secured by real property located in Bridgeport, Connecticut | secured by real property located in Minneapolis, Minnesota | collateralized by real property located in Houston, Texas | collateralized by real property located in Ft. Worth, Texas | secured by the property | secured by four parking facilities | |||||
Periodic Payment | $ 23,000 | $ 29,000 | $ 30,000 | $ 78,000 | $ 44,000 | $ 25,000 | |||||
Frequency of Periodic Payment | monthly | monthly | monthly | monthly | monthly | monthly | |||||
Maturity Date | Aug. 31, 2026 | Apr. 30, 2026 | Aug. 31, 2025 | Aug. 31, 2021 | Dec. 31, 2024 | Feb. 28, 2019 | |||||
Interest expense | $ 1,000,000 | $ 300,000 | $ 1,600,000 | $ 900,000 | |||||||
Loan Amortization Cost | 39,000 | $ 27,000 | 113,000 | $ 59,000 | |||||||
Unamortized Loan Issuance Cost | $ 919,000 | $ 919,000 | |||||||||
KeyBank Promissory Note (1) [Member] | |||||||||||
Notes Payable | |||||||||||
Amount | $ 8,600,000 | ||||||||||
Term | 10 years | ||||||||||
Interest | 4.59% | ||||||||||
Collateral | secured by the following properties in Indianapolis: 110-120 E. Washington Street, and 301 E. Washington Street | ||||||||||
Periodic Payment | $ 46,000 | ||||||||||
Frequency of Periodic Payment | monthly | ||||||||||
Maturity Date | Jan. 31, 2026 | ||||||||||
KeyBank Promissory Note (2) [Member] | |||||||||||
Notes Payable | |||||||||||
Amount | $ 3,500,000 | ||||||||||
Term | 10 years | ||||||||||
Interest | 4.59% | ||||||||||
Collateral | secured by the following properties in Missouri: 1010 Convention Plaza, St. Louis, 901, 909, 925 Lucas Avenue and 900, 908, 910 & 916 Convention Plaza, St. Louis and 1109 Cherry Street, Kansas City | ||||||||||
Periodic Payment | $ 20,000 | ||||||||||
Frequency of Periodic Payment | monthly | ||||||||||
Maturity Date | Dec. 31, 2026 |
Assets held for sale (Details Narrative) |
Sep. 30, 2016
USD ($)
|
---|---|
Property, Plant and Equipment [Abstract] | |
Property Held For Sale, Ownership Percentage | 87.09% |
Property Held For Sale, Carrying Value | $ 6,100,000 |
Subsequent Events (Details Narrative) |
1 Months Ended | |
---|---|---|
Nov. 09, 2016 |
Oct. 31, 2016 |
|
Date of Event | Nov. 05, 2016 | Oct. 05, 2016 |
Description | On November 5, 2016, MVP REIT II, Inc. purchase 338,409.475 shares of MVP REIT, Incs common stock from a unrelated third party for $3.0 million or $8.865 per share. | On October 5, 2016, the Company, through its Operating Partnership, and MVP REIT II, (the REITs) through a wholly owned subsidiary (the "Borrowers") entered into a credit agreement (the "Unsecured Credit Agreement") with KeyBank, National Association ('KeyBank") as the administrative agent and KeyBank Capital Markets ("KeyBank Capital Markets") as the lead arranger. Pursuant to the Unsecured Credit Agreement, the Borrowers were provided with a $30 million unsecured credit facility (the "Unsecured Credit Facility"), which may be increased up to $100 million, in minimum increments of $10 million. The Unsecured Credit Facility has an initial term of two years, maturing on October 5, 2018, and may be extended for a one-year period if certain conditions are met and upon payment of an extension fee. The Unsecured Credit Facility has an interest rate calculated based on LIBOR Rate plus 2.25% or Base Rate plus 1.25%, both as provided in the Unsecured Credit Agreement. The Base Rate is calculated as the greater of (i) the KeyBank Prime rate or (ii) the Federal Funds rate plus ½ of 1%. Payments under the Unsecured Credit Facility are interest only and are due on the first day of each quarter. The obligations of the Borrowers of the Unsecured Credit Agreement are joint and several. The REITs have entered into cross-indemnification provisions with respect to their joint and several obligations under the Unsecured Credit Agreement. |
Promissory Note [Member] | ||
Description | During October 2016, Cleveland West 9th and 33740 Crown Colony issued a promissory note to American National Insurance Company of New York for a $5.3 million loan secured by real properties located in Cleveland, OH, of which we own a 49% interest in these entities . The loan has a term of 10 years, has an interest rate of 4.5% and is payable in monthly installment payments of principal and interest totaling approximately $30,000, maturing in October 2026. |
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