Loans Payable (Tables)

9 Months Ended

Sep. 30, 2023

Loans Payable

Schedule of mortgages payables, net

The Company’s mortgages payables, net consists of the following:

							September 30,
	Monthly		Interest				2023		December 31,
Property	Payment		Rate		Maturity	(unaudited)		2022
Franklin Square (a)		Interest only	3.808	%	December 2031	$	13,250,000	$	13,250,000
Hanover Square (b)	$	78,098	6.94	%	December 2027		9,683,815		9,877,867
Ashley Plaza (c)	$	52,795	3.75	%	September 2029		10,765,077		10,930,370
Brookfield Center (d)	$	22,876	3.90	%	November 2029		4,594,324		4,663,206
Parkway Center (e)	$	28,161	Variable		November 2031		4,890,170		4,992,427
Wells Fargo Facility (f)	$	103,438	4.50	%	June 2027		18,078,183		18,351,981
Unamortized issuance costs, net							(644,625)		(725,592)
Total mortgages payable, net						$	60,616,944	$	61,340,259

(a) The mortgage loan for the Franklin Square Property in the principal amount of $13,250,000 has a ten-year term and a maturity date of December 6, 2031.  The mortgage loan bears interest at a fixed rate of 3.808% and is interest only until January 6, 2025, at which time the monthly payment will become $61,800, which includes interest and principal based on a thirty-year amortization schedule. The mortgage loan includes covenants for the Company to maintain a net worth of $13,250,000, excluding the assets and liabilities associated with the Franklin Square Property and for the Company to maintain liquid assets of no less than $1,000,000. As of September 30, 2023 and December 31, 2022 the Company believes that it is compliant with these covenants.  The Company has guaranteed the payment and performance of the obligations of the mortgage loan.

(b) The mortgage loan for the Hanover Square Property bore interest at a fixed rate of 4.25% until January 1, 2023, when the interest rate adjusted to a fixed rate of 6.94%, which was determined by adding 3.00% to the daily average yield on United States Treasury securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board, with a minimum of 4.25%. As a result of the interest rate change, as of February 1, 2023, the fixed monthly payment of $56,882 increased to $78,098 which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule.  The mortgage loan agreement for the Hanover Square property includes covenants to (i) maintain a Debt Service Coverage Ratio (“DSCR”) in excess of 1.35 and (ii) maintain a loan-to-value of real estate ratio of 75%.  As of September 30, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.

(c) The mortgage loan for the Ashley Plaza Property bears interest at a fixed rate of 3.75% and was interest only for the first twelve months.  Beginning on October 1, 2020, the monthly payment became $52,795 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule.

(d) The mortgage loan for the Brookfield Property bears interest at a fixed rate of 3.90% and was interest only for the first twelve months.  Beginning on November 1, 2020, the monthly payment became $22,876 for the remaining term of the loan, which includes interest at the fixed rate, and principal, based on a thirty-year amortization schedule.

(e) The interest rate for the mortgage loan for the Parkway Property was originally based on ICE LIBOR plus 225 basis points, with a minimum rate of 2.25%.  After the discontinuation of LIBOR on June 30, 2023, the ICE LIBOR index was replaced by 1 month CME Term SOFR (“SOFR”), with an adjusted margin of 236.44 basis points.  Under the terms of the mortgage, the interest rate payable each month shall not change by greater than 1% during any six-month period and 2% during any 12-month

period.  As of September 30, 2023 and December 31, 2022 the rate in effect for the Parkway Property mortgage was 6.05% and 4.3117%, respectively. The monthly payment, which varies based on the interest rate in effect each month, includes interest at the variable rate, and principal based on a thirty-year amortization schedule.  The mortgage loan for the Parkway Property includes a covenant to maintain a debt service coverage ratio of not less than 1.30 to 1.00 on an annual basis.  As of September 30, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with this covenant.  

(f) On June 13, 2022, the Company entered into a mortgage loan facility with Wells Fargo Bank (the “Wells Fargo Mortgage Facility”) in the principal amount of $18,609,500.  The proceeds of this mortgage were used to finance the acquisition of the Salisbury Marketplace Property and to refinance the mortgages payable on the Lancer Center Property and the Greenbrier Business Center Property.  The Wells Fargo Mortgage Facility bears interest at a fixed rate of 4.50% for a five-year term.  The monthly payment, which includes interest at the fixed rate, and principal, based on a twenty-five-year amortization schedule, is $103,438.  The Company has provided an unconditional guaranty of the payment of and performance under the terms of the Wells Fargo Mortgage Facility.  The Wells Fargo Mortgage Facility credit agreement includes covenants to maintain a debt service coverage ratio of not less than 1.50 to 1.00 on an annual basis, a minimum debt yield of 9.5% on the Salisbury Marketplace, Lancer Center and Greenbrier Business Center properties, and the maintenance of liquid assets of not less than $1,500,000.  As of September 30, 2023 and December 31, 2022, respectively, the Company believes that it is compliant with these covenants.  

Schedule of interest expense, including amortization of capitalized issuance costs and payments received from the Company's interest rate protection transactions for the Hampton Inn Property and Clemson Best Western Property

	For the three months ended September 30, 2023
	(unaudited)
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square	$	128,943	$	7,093	$	—	$	—	$	136,036
Hanover Square		166,532		3,223		—		—		169,755
Ashley Plaza		103,339		4,358		—		—		107,697
Brookfield Center		45,943		2,837		—		—		48,780
Parkway Center		74,047		2,757		(29,953)		—		46,851
Wells Fargo Facility		208,298		6,721		—		—		215,019
Wells Fargo Line of Credit		—		—		—		14,636		14,636
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		61,408		—		100,000		161,408
Total interest expense	$	727,102	$	88,397	$	(29,953)	$	114,636	$	900,182

	For the three months ended September 30, 2022
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square	$	128,943		7,093		—		136,036
Hanover Square		108,222		3,223		—		111,445
Ashley Plaza		105,438		4,357		—		109,795
Clemson Best Western		146,507		—		1,082		147,589
Brookfield Center		46,844		2,838		—		49,682
Parkway Center		56,023		2,757		—		58,780
Wells Fargo Facility		212,895		6,722		—		219,617
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		56,311		100,000		156,311
Total interest expense	$	804,872	$	83,301	$	101,082	$	989,255

	For the nine months ended September 30, 2023
	(unaudited)
			Amortization		Interest rate
	Mortgage		of discounts and		protection		Other
	Interest		capitalized		transaction		interest
	Expense		issuance costs		payments		expense		Total
Franklin Square	$	382,625	$	21,279	$	—	$	—	$	403,904
Hanover Square		506,699		9,668		—		—		516,367
Ashley Plaza		308,208		13,073		—		—		321,281
Brookfield Center		137,001		8,512		—		—		145,513
Parkway Center		155,640		8,270		(74,950)		—		88,960
Wells Fargo Facility		621,513		20,165		—		—		641,678
Wells Fargo Line of Credit		—		—		—		14,636		14,636
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		180,303		—		300,000		480,303
Total interest expense	$	2,111,686	$	261,270	$	(74,950)	$	314,636	$	2,612,642

	For the nine months ended September 30, 2022
	(unaudited)
			Amortization
	Mortgage		of discounts and		Other
	Interest		capitalized		interest
	Expense		issuance costs		expense		Total
Franklin Square	$	382,625		21,279		—	$	403,904
Hanover Square		319,640		9,668		—		329,308
Ashley Plaza		314,378		13,072		—		327,450
Clemson Best Western		425,109		—		1,648		426,757
Brookfield Center		139,646		8,513		—		148,159
Lancer Center		115,179		11,928		—		127,107
Greenbrier Business Center		81,409		1,155		—		82,564
Parkway Center		124,490		8,270		—		132,760
Wells Fargo Facility		254,766		6,722		—		261,488
Amortization and preferred stock dividends on mandatorily redeemable preferred stock		—		165,338		300,000		465,338
Total interest expense	$	2,157,242	$	245,945	$	301,648	$	2,704,835

Schedule of interest accrued and accumulated amortization of capitalized issuance costs

	As of September 30, 2023 (unaudited)				As of December 31, 2022
			Accumulated				Accumulated
			amortization of				amortization
	Accrued		capitalized		Accrued		of capitalized
	interest		issuance costs		interest		issuance costs
Franklin Square	$	42,046	$	52,015	$	43,448	$	30,736
Hanover Square		57,871		69,548		38,792		59,880
Ashley Plaza		33,641		71,181		35,296		58,109
Brookfield Center		—		45,406		—		36,893
Parkway Center		24,655		21,134		26,502		12,864
Wells Fargo Facility		67,810		33,609		—		13,444
Wells Fargo Line of Credit		6,503		—		—		—
Amortization and accrued preferred stock dividends on mandatorily redeemable preferred stock (1)		170,004		769,942		70,004		589,639
Total	$	402,530	$	1,062,835	$	214,042	$	801,565

(1) Recorded as accrued interest under accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.

Schedule of principal repayments on indebtedness

For the remaining three months ending December 31, 2023	$	268,067
2024		1,093,513
2025		1,391,757
2026		1,461,762
2027		26,029,841
Thereafter		31,016,629
Total principal payments and debt maturities		61,261,569
Less unamortized issuance costs		(644,625)
Net principal payments and debt maturities	$	60,616,944