PART II 2 1klandaapp33105.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1−K

ANNUAL REPORT

 

ANNUAL REPORT PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

For the fiscal year ended December 31, 2023

 

Landa App 3 LLC
(Exact name of issuer as specified in its charter)

 

Delaware   87-2881696
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)

 

20 W. 22nd Street

New York, NY

   10010
(Address of principal executive offices)   (Zip Code)

 

646-905-0931
Issuer’s telephone number, including area code

 

 

THIS ANNUAL REPORT MAY CONTAIN FORWARD LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED HEREIN, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.

 

Factors that could cause or contribute to these differences include those contained in the section of THE COMPANY’s latest offering circular (the “Offering Circular”) FILED WITH the Securities and Exchange Commission (“SEC”) entitled “Risk Factors”, which section is incorporated herein by reference.

 

 

 

 

TABLE OF CONTENTS

 

Cautionary Statement Regarding Forward Looking Information 1
Business 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations 9
Directors and Officers 17
Security Ownership of Management and Certain Securityholders 19
Interest of Management and Others in Certain Transactions 19
Other Information 20
Financial Statements F-1
Exhibits 21

 

Capitalized terms used but not defined herein have the meanings given to them in Landa App 3 LLC’s offering circular (the “Offering Circular”) most recently qualified by the Securities and Exchange Commission (the “SEC”), dated June 22, 2023, which can be found here.

 

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Part II.

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

 

The information contained in this report includes some statements that are not historical and that are considered “forward looking statements.” A cautionary statement regarding forward looking statements applicable to forward looking statements found herein can be found under “Cautionary Statement Regarding Forward Looking Statements” of our Offering Circular, which can be found here and is incorporated herein by reference.

 

Item 1. Business

 

Company Overview

 

Landa App 3 LLC (“we,” “us,” “our,” or the “Company”) was formed in June 2021 as a series limited liability company pursuant to Sections 18-215 and 18-218 of the Delaware Limited Liability Company Act (the “LLC Act”) in order to offer a unique investment opportunity for eligible investors to benefit from the performance of curated and fully managed rental real estate properties.

 

From time to time, the Company will form separate series of membership interests (each a “Series” and the “Series”) for the purpose of offering a unique investment opportunity for eligible investors to benefit from the performance of curated and fully managed rental real estate properties. Each Series is formed to hold a residential rental property as its primary asset (each a “Property” and collectively, the “Properties”).

 

The Company generally offers 100,000 membership interests (each a “Share” and collectively, the “Shares”) in each of the Series (the respective offerings of Shares of each Series each individually referred to herein as an “Offering”). Investors that purchase Shares in any Series acquire a right to receive monthly distributions (which the Company also refers to as “dividends”) of a portion of the net rental income of such Series. The total distribution amount by a Series, if any, will be calculated by the Manager, acting in its sole discretion, and will be based on a number of factors, including, but not limited to, the total number of Shares sold, fees, expenses, taxes, amounts allocated to reserves, economic conditions, debt service requirements, actual and accrued cash flows of the applicable Series, and other factors that could differ materially from our current expectations. The total distribution amount, if any, will be allocated to each holder of Shares of the applicable Series on a pro-rata basis based on the number of Shares of that Series held.

 

The Company and each Series is managed by Landa Holdings, Inc. (the “Manager”).

 

All Shares are offered through the Landa Platform.

 

Series Offering Table

 

The table below shows key information related to the Offering of each Series pursuant to Regulation A of the Securities Act of 1933, as amended (“Regulation A”) subsequent to December 31, 2023 through June 3, 2024. Please also refer to “Properties” below for further details.

 

Series  Offering Status  Qualification Date  Opening Date  Closing
Date		   Total
Number of
Shares
Outstanding(1)		 
Landa Series 24 Ditmars Street  Open  6/27/2022  06/28/22                 14,002 
Landa Series 132 Cornelia Street  Open  6/27/2022  06/28/22        24,719 
Landa Series 368 Irwin Street NE  Closed  6/27/2022  06/28/22   

13/11/2023 

    - 
Landa Series 996 Greenwood Avenue NE  Open  6/27/2022  06/28/22        74,730 
Landa Series 1363 Hancock Street  Open  6/27/2022  06/28/22        31,114 
Landa Series 6696 Mableton Parkway SE  Closed  6/27/2022  06/28/22   

15/12/2022 

    - 

 

(1)

Reflected as of June 3, 2024.

 

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Properties

 

Descriptions of the Properties as of December 31, 2023 can be found under “Description of the Properties” of our Offering Circular, which can be found here and is incorporated herein by reference.

 

Investment Objectives

 

Our primary investment objectives are to:

 

●realize growth in the value of our Property investments;

 

●maximize net rental income in each of the Properties; and

 

●preserve, protect and return investor capital contribution.

 

The Company cannot assure that the Company will attain these objectives or that the value of our assets will not decrease. 

 

Investment Strategy

 

Our investment strategy is to acquire residential properties on an opportunistic basis. The Company will focus on multi-family homes, which may include newly constructed properties in neighborhoods with growing rental demand, strong rental history and in geographic regions which provide steady real estate asset growth, and properties that may need improvements or renovations. The Company intends to leverage our industry expertise, as well as our proprietary technology, to help streamline our property acquisition process.

 

The Company will focus on acquiring market ready properties, which may include existing income-producing properties or newly constructed properties, in neighborhoods with growing rental demand, strong rental history and in geographic regions which provide steady real estate asset growth. Our acquisition strategy does not include major rehabilitation or repurposing of existing structures, or new ground-up development.

 

Our expected target markets are neighborhoods surrounding metropolitan statistical areas of at least one million (1,000,000) residents, which the Company estimates having historical capitalization rates ranging from approximately five percent (5%) to ten percent (10%) for mutli-family homes. In addition, the Company expect to target cities with growing populations or cities that show strong rental demand.

 

Governmental Regulation

 

Each Series’ respective business practices and Properties are subject to regulation by numerous federal, state and local authorities. See the description of certain applicable regulations under “Regulations” of our Offering Circular, which can be found here and is incorporated herein by reference, for a discussion of applicable governmental regulations.

 

Industry

 

Residential Housing

 

Residential housing is the largest real estate asset class in the United States, with approximately 140 million total housing units and a total value of more than $43.4 trillion according to Zillow.com as of December 31, 2022. The average United States home value is $354,179, up 4.1% over the past year and goes to pending in around 20 days.Since 2010, the multi-family rental market has seen considerable growth in rents, and we expect this trend to continue. While 2020 saw a shift from urban to suburban, we believe that multi-family housing demand remains high as renters continue to delay homeownership due to a number of challenges involved with becoming a homeowner. First, mortgage financing for the consumer is now harder to obtain due to conservative mortgage underwriting standards which arose after the global financial crisis. Many Americans have limited credit and do not have the liquidity required to put a down payment on a home. Second, we believe that the U.S. is undergoing a demographic shift away from the desire to own a home. Americans are looking for more flexibility and mobility in their housing. Finally, over recent years, home prices have increased faster than wage growth which has created an affordability problem for potential homeowners. These factors have shifted the landscape in the U.S. housing market over the recent years and have contributed to the rise in the demand for rental housing.

 

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The Company believes that the increased demand for rental housing has created the institutionalization of multi-family investment ownership. Prior to 2012, the multi-family rental sector primarily consisted of smaller, non-institutional owners and managers, however, larger institutional investors have emerged in recent years. Despite this growth, it is estimated that institutional owners only represent approximately 375,000 units or 2.5% of all multi-family rental units in the United States, according to Institutional Real Estate, Inc. The expansion of institutional owners into this asset class has led to management efficiency and technology development in the industry which has improved the cost to manage a rental home. Operating metrics for institutionally managed multi-family rentals are now comparable to traditional single-family properties as multi-family rental properties exhibit similar occupancy levels to single-family properties with lower turnover rates. In addition, according to the National Association of Realtors, the multi-family housing market is the most liquid real estate asset class in the United States, with an average of 5.2 million sales of existing homes per year from 2005 to 2021.March 2024 brought 4.19 million in sales, a median sales price of $393,500, and 3.2 months of inventory. The median sales price is up 4.8% year-over-year, and inventory was up 0.5 months from March 2023.

 

Supply: Historically Low and Favorable Conditions Are Expected to Continue

 

The housing market in the United States has not kept pace with population growth and household formation resulting in a shortage in supply. The Company believes that this supply imbalance has led to higher demand for housing across the country which ultimately affects housing prices. Due to this shortage of housing, the median home prices have increased much faster than what the consumer can afford creating an affordability problem for many Americans, exemplified in the home price to income ratio. In 1995, the home price to income ratio was 4.24, meaning the median cost of a single-family home in the U.S. was 4.24x the average median income. As of December 31, 2021, the home price to income ratio was 7.58, according to the Federal Reserve Bank of St. Louis. The Company believes that the “American Dream” of owning is starting to fade from the psychology of the U.S. consumer due to the hurdles associated with purchasing a home and the limited affordable supply available. This is exemplified by changes in the homeownership over the past 15 years where the homeownership rate across the country decreased in 90% of U.S. metropolitan areas. As of the end of 2021, the homeownership rate was 65% compared to 69% at its all-time high in 2004, according to a report by the U.S. Census Bureau.

 

We believe that the multi-family rental industry is well-positioned to provide Americans, who prefer the lifestyle associated with being in a multi-family home, an affordable housing solution as supply constraints continue to keep home prices high and the rate of homeownership low.

 

Demand: Demographic Shifts and Professionally Managed Services

 

As the hurdles of homeownership continue to grow for the average American, the Company believes that the demand for rental housing has increased. This shift in demand for rental housing is one of the financial components driven by affordability, however, there is also a demographic shift in the perspective of housing. Delayed household formation, desired mobility, and the illiquidity associated with owning a home are large contributors to the increasing demand for rental housing in the U.S., specifically in the “millennial” population. Millennials, while potentially experiencing higher wage growth compared to previous generations, are also plagued with student debt. According to the Department of Education, as of December 2021, borrowers between ages 24-35 have an average outstanding loan balance of $33,600. This amounts to roughly 8% of the $408,100 median home price in the U.S. Said differently, many millennials have outstanding debt instead of liquidity that could be utilized for a down payment of a home. Millennials are also forming households much later than previous generations, meaning marriage and children are coming later in life. Typically, as these life events happen, the demand for more square footage and transition from apartment living to a single-family household occurs. The Company believes that the combination of student debt and the delay in household formation amongst the millennial population have contributed to the demand for multi-family rental housing

 

In addition to these structural hurdles that millennials face with respect to homeownership, we believe that there are psychological and geographic factors that play a part in the demand for rental housing. Psychologically, many millennials do not place as high of a value on homeownership as compared to previous generations. The purchase of a house is typically the largest investment that occurs in an individual' lifetime and millennials are the generation that witnessed this class of investment depreciate during the financial recession. In addition, many millennials have more mobility due to remote working and improved technology. As commerce, industry and technology improve, fewer Americans will be required to be in an office which may lead to an increase in moving especially in light of the recent move by many businesses to institute “work from home” policies as a result of the outbreak of COVID-19. The flexibility of being on an annual lease compared to owning a home allows for this optionality and thus aids to drive demand for multi-family rentals.

 

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Lastly, we believe demand for multi-family rentals will increase as the sophistication of the companies offering housing solutions improves. Since the recession, there has been an influx of institutional capital into the multi-family rental space which has changed the general landscape of rental housing. We believe they have played a significant role in changing the product. Institutional ownership of multi-family rental homes has provided services, technology and convenience to those looking to rent a multi-family home and these institutions have been well-positioned to experience the demographic shift away from homeownership. We believe that the institutionalization of the multi-family rental industry provides professional management services that make the renting process even easier for many Americans.

 

We believe that these drivers have impacted the multi-family rental industry positively already. Multi-family rental demand has increased by 14% in the past 10 years according to the Census American Community Survey, compared to 31% for single-family properties. Additionally, multi-family properties have outperformed single-family properties with respect to rent growth, vacancies, and rent payment delinquencies. As consumer preferences related to housing evolve, we expect that the demand for multi-family rental housing will increase and outpace other housing sectors.

 

Our Manager

 

Services Provided

 

Each Series has entered into a management agreement with the Manager (each, a “Management Agreement”). Pursuant to the Management Agreement, the Manager, among other things, provides certain property management, consulting, Landa Platform hosting and support and legal and accounting services to each Series, as well as provides each Series with a management team and the appropriate support personnel to meet our operational needs. Under the Management Agreement, the Manager’s services include, but are not limited to, identifying properties for potential acquisition, conducting any required due diligence with respect to each property, obtaining property appraisals, coordinating inspections and financing (if needed), negotiating the purchase of the properties, arranging for rental of any properties, undertaking, and providing customized advisory services. In addition, the Manager granted each Series a license to use the Landa Platform.

 

Investment Decisions and Asset Management 

 

Within our investment policies and objectives, the Manager has discretion with respect to the selection of specific investments and the purchase and sale of the Properties. We believe that successful real estate investment requires the implementation of strategies that permit favorable purchases, effective property management, and timely disposition of such Properties. As such, the Manager employs a disciplined investment approach that utilizes its experience with a structure that emphasizes thorough market research, stringent underwriting standards and an extensive down-side analysis of the risks of each investment. The approach also includes active management of each Property acquired.

 

To execute our disciplined investment approach, the Manager takes responsibility for the business plan of each investment. The following practices summarize our investment approach:

 

●Local Market Research – The Manager extensively researches the acquisition and underwriting of each transaction, utilizing both real time market data and the transactional knowledge and experience of our network of professionals and in market relationships.

 

●Underwriting Discipline – The Manager follows a tightly controlled and managed process to examine all elements of a potential investment, including its location, income-producing capacity, prospects for long-range appreciation, tax considerations and liquidity.

 

  ● Risk Management – Risk management is a fundamental principle in the management of each of the Properties. Operating or performance risks arise at the investment level and often require real estate operating experience to cure. The Manager reviews the operating performance of investments against projections and provides the oversight necessary to detect and resolve issues as they arise.

 

  ● Property Management – Prior to the purchase of a Property, the Manager develops an asset business strategy which is customized based on the acquisition and underwriting data. This is a forecast of the action items to be taken and the capital needed to achieve the anticipated returns. The Manager reviews asset business strategies regularly to anticipate changes or opportunities in the market during a given phase of a real estate cycle.

 

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Investments in Property

 

Our investment in real estate generally takes the form of holding fee simple title to the Properties.

 

Our obligation to purchase any Property generally is conditioned upon the delivery and verification of certain documents from the seller or developer, including, where appropriate:

 

●plans and specifications;

 

●evidence of marketable title subject to such liens and encumbrances as are acceptable to the Manager;

 

●auditable financial statements covering recent operations of Properties having operating histories;

 

●title and liability insurance policies; and

 

●any other documents or materials required in order to evaluate an investment in a property.

 

In purchasing, leasing and developing Properties, we are subject to risks generally incident to the ownership of real estate. For more information, please see the section entitled “Risk Factors – Risks Related to the Properties and the Series” of our latest Offering Circular, which can be found here and is incorporated herein by reference.

 

Investment Process

 

The Manager has the authority to make all the decisions regarding the Series’ investments consistent with the investment objectives and leverage policies approved by the Manager and subject to the limitations in each Series’ Operating Agreement.

 

The Manager focuses on the sourcing, acquisition and management of residential properties. The Manager sources investments from former and current financing and investment partners, third-party intermediaries, competitors looking to share risk and investment, and securitization or lending departments of major financial institutions. 

  

In selecting investments, the Manager utilizes its investment and underwriting process, which focuses on ensuring that each prospective investment is being evaluated appropriately. The criteria that the Manager will consider when evaluating prospective opportunities include:

 

●macroeconomic conditions that may influence operating performance;

 

●real estate market factors that may influence real estate valuations, real estate financing or the economic performance of real estate generally;

 

●fundamental analysis of the real estate, including tenant rosters, lease terms, zoning, operating costs and the asset’s overall competitive position in its market;

 

●real estate and leasing market conditions affecting the Properties;

 

●the cash flow in place and projected to be in place over the expected holding period of the Properties;

 

●the appropriateness of estimated costs and timing associated with capital improvements of the Properties;

 

●a valuation of the investment, investment basis relative to its value and the ability to liquidate an investment through a sale or refinancing of the Properties;

 

●review of third-party reports, including appraisals, engineering and environmental reports;

 

●physical inspections of the real estate and analysis of markets; and

 

●the overall structure of the investment and rights in the transaction documentation.

 

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The Manager analyzes each potential investment’s risk-return profile and reviews financing sources, if applicable, to ensure that the investment fits within the parameters of financing facilities and to ensure performance of the real estate asset. 

 

Disposition Policies 

 

We intend to hold and manage the Properties we acquire for an indefinite period of time. If the Manager, acting in its sole discretion, decides to sell a particular property, it will seek to achieve a selling price that maximizes the distributions to investors based on then-current market conditions. We cannot assure you that this objective will be realized.

 

The determination of when a particular Property should be sold or otherwise disposed of will be made by the Manager, acting in its sole discretion, after consideration of relevant factors, including, but not limited to, prevailing and projected economic conditions, whether the value of the Property is anticipated to appreciate or decline substantially, how any existing leases on a Property may impact the potential sales price, and any other factors that the Manager may deem relevant. Pursuant to the applicable Series’ operating agreement, as well as the Company’s operating agreement, the Manager may determine that it is in the best interests of members to dispose of a Property.

 

Following the sale of a Property, the Manager will distribute the proceeds of such sale pro-rata to the holders of the Shares of the given Series (after payment of any accrued liabilities or debt on the Property or of the Series at that time).

 

Operating Expenses

 

Each Series is responsible for certain expenses related to such Series or the Property held by such Series (hereinafter “Operating Expenses”), including, but not limited to:

 

  ● interest expense under the applicable acquisition note issued by such Series to the Manager (each an “Acquisition Note”);

 

  ● any and all fees, costs and expenses incurred in connection with the management of a Property, including Monthly Management Fees, Home Ownership Association fees, taxes, marketing fees, security and maintenance fees;

 

  ● any and all insurance premiums or expenses, including property insurance in connection with the Series’ Property;

 

  ● any withholding or transfer taxes imposed on the Company or a Series as a result of its or their earnings, investments or withdrawals in connection with the Property;

 

  ● any governmental fees imposed on the capital of the Company or a Series or incurred in connection with compliance with applicable regulatory requirements in connection with the Property;

 

  ● any legal fees and costs (including settlement costs) arising in connection with any disputes with tenants, litigation or regulatory investigation instituted against the Series or a Manager in connection with the affairs of the Series;

 

  ● any fees, costs and expenses of engaging a third-party registrar and transfer agent appointed by the Manager in connection with a Series;

 

  ● any indemnification payments to be made pursuant to the obligations of the Series’ Operating Agreement;

 

  ● the fees and expenses of the Company’s or a Series’ counsel in connection with advice directly relating to the Series’ legal affairs;

 

  ● the costs of any other outside appraisers, inspectors, valuation firms, accountants, attorneys or other experts or consultants engaged by the Manager in connection with the operations of the Series; and

 

  ● any similar expenses that may be determined to be Operating Expenses, as determined by the Manager in its reasonable discretion.

 

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The Manager bears its own expenses of an ordinary nature, including all administrative, operating and personnel costs and expenses, taxes, remuneration and expenses paid to employees and utilities expenditures.

 

If the Operating Expenses exceed the amount of revenues generated from a Series and cannot be covered by any Reserves of such Series' Property, the Manager may (a) pay such Operating Expenses and seek reimbursement and / or (b) loan the amount of the Operating Expenses to the applicable Series and be entitled to reimbursement of such amount from future revenues generated by such Series. In the case that the Manager provides a loan to a Series, the Series will be obligated to pay interest no greater than SOFR+3.5% on that loan at a rate to be determined solely by the Manager. See “Description of Our Business Our Manager - Manager Compensation.”

 

Further, if the Operating Expenses exceed the amount of revenues generated from a Series and cannot be covered by any Reserves of such Series, then you may be unable to receive distributions until the Series can generate revenue.

 

The Landa Platform

 

The Manager owns and operates a mobile and web app-based investment platform, which we call the “Landa Platform.” Through the Landa Platform, investors can:

 

  ● Browse Series’ Offerings and obtain information about a Series and/or Property, including location, property type and projected rental income;

 

  ● Analyze Properties by reviewing neighborhood statistics and comparable properties in the relevant market;

 

 

  ● Connect a bank account to the Landa Platform, transfer funds to their Landa Account and monitor their Landa Account balance;

 

  ● Review the Series Materials for the applicable Series;

 

  ● Transact entirely online, including executing digital legal documentation, funds transfer and ownership recordation; and

 

  ● Manage and track investments through an online portfolio; and receive distributions and regular financial and tax reports.

 

We intend to offer and sell the Shares in our Offerings exclusively through the Landa Platform. The Landa Platform is available for download on iOS , and Android devices, and www.landa.app.

 

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Competition

 

There is significant competition in the real estate industry, including numerous REITs with property acquisition objectives similar to the Series. In addition, we face competition primarily from other real estate investment platform companies such as Roofstock, Inc., Fundrise LLC, Arrived Homes, LLC and Compound Projects, LLC, as well as a range of emerging new companies providing real estate investment products and services. Although we believe that we are well positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively

 

Employees

 

We do not have any employees and are externally managed by the Manager. Currently, no Series has employees and we do not expect that any Series will have any employees. Employees of the Manager will provide all operational, administrative, and managerial services to the Company and each Series.

 

Legal Proceedings

 

There are no legal proceedings material to our business or financial condition pending and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.

 

Risk Factors

 

We face risks and uncertainties that could affect us and our business as well as the real estate industry generally. These risks are outlined under the heading “Risk Factors” contained in our Offering Circular, which can be found here and is incorporated herein by reference, as the same may be updated from time to time by our future filings under Regulation A. In addition, new risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. These risks could result in a decrease in the value of our common shares.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report. As noted in the independent auditor’s report, the audit of our financial statements was conducted for the purpose of forming an opinion on the combined financial statements as a whole. The series-level combining supplemental information is presented for purposes of additional analysis of the combined financial statements rather than to present the financial position, results of operations and cash flows of the individual series. The following discussion contains series-level detail that has not been audited. The following discussion contains forward looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements.

 

Overview

 

Landa App 3 LLC (the “Company,” “we”, “us,” or “our”) is a Delaware series limited liability company. The Company was formed for the purpose of creating one or more series (a “Series”) and offering membership interests (“Shares”) in such Series and may form new Series from time to time. Each Series will be governed by the Limited Liability Company Operating Agreement of the Company (the “Master Agreement”) and the Series Designation for such Series (as defined in the “Master Agreement”).

 

The purpose of the Series is to acquire, hold and manage multifamily rental properties (each a “Property”) and offer a unique investment opportunity for eligible investors to benefit from the performance of such Properties. The Series’ primary investment objective is to acquire desirable Properties that provide attractive, risk adjusted, returns. We intend to acquire Properties located in “metropolitan statistical areas” that provide economic growth and strong rental demand. Our objective is to manage each of the Properties in an effort to maximize net rental income and the amount of cash flow that is distributed to the holders of the Shares of the applicable Series. To that end, we will target Properties that we believe are in a stable condition as we determine through due diligence during the acquisition process. We will seek to acquire Properties that we believe will provide monthly net income distributions to investors, without holding periods, and without charging asset management fees. Real estate acquisitions will be on an opportunistic basis. However, there is no assurance that our management or acquisition objectives will be realized. We expect that the Company’s, and each Series’, sole source of income will be from rental income and any profits on the appreciation of any Property, if there is a disposition of the Property.

 

Each Series has been engaged primarily in acquiring its underlying Property from Landa Properties, LLC (“Landa Properties”) financed initially through promissory notes issued to Landa Holdings, Inc. (the “Manager”) and developing the financial, offering and other materials to begin offering Shares in such Series through the Landa Platform. See the Offering Circular under the headings “Description of the Properties” and “Use of Proceeds”, which can be found here, and are incorporated herein by reference, for a description of each of the Properties and information about their acquisition and financing.

 

We are a development-stage company, since we are devoting substantially all our efforts to establishing and maintaining our business and planned principal operations have only recently commenced. As such, the reported financial information herein will likely not be indicative of future operating results or operating conditions. Because of our corporate structure, we are in large part reliant on the Manager and its employees to grow and support our business. There are a number of key factors that will have large potential impacts on our operating results going forward, including, but not limited to, the Manager’s ability to:

 

●continue to identify and acquire high quality, attractive Properties at competitive prices to securitize on the Landa Mobile App;

 

●market the Landa Platform and the Offerings in individual Series and attract investors to the Landa Platform;

 

●continue to develop the Landa Platform and provide the information and technology infrastructure to support the issuance of interests; and

 

●continue to build our existing infrastructure to manage the Properties at a decreasing marginal cost per Property.

 

Each Series was organized in June 2022 and acquired title to its underlying Property from Landa Properties LLC (“Landa Properties”) in July, 2022.

 

Each Series commenced operations on June 24, 2022 (Inception).

 

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Recent Developments

 

The tables below provide information with respect to recent developments of the Series. These recent developments are incorporated by reference to their respective hyperlinked Form 1-U filed by the Company and incorporated herein by reference.

 

Form 1-U   Subject  
Filing Date and hyperlink   Leasing Status     Distributions     Other  
05/05/2023             X        
05/05/2023                   Issuance of Notes    
05/26/2023                   Departure of Certain Officers    
06/09/2023             X          
07/07/2023             X          
07/11/2023     X                  
08/04/2023             X          
09/13/2023             X          
09/25/2023                      
10/10/2023             X          
11/15/2023             X          
12/07/2023             X          
01/09/2024             X          
03/04/2024             X          
04/26/2024                   Change in Transfer Agent    
05/12/2024             X          

 

Market Outlook—Real Estate Finance Markets

 

While the ongoing impact of increased interest rates has created uncertainty about the overall stability of the economic and financial market, we remain encouraged by the fundamentals of the residential housing market and believe there will be an increased demand for multi-family rentals. As we look ahead the next three years, we believe improving fundamentals, transactions, and residential real estate lending activities will continue to strengthen in core United States metro markets. We also expect high foreign direct investment in United States markets and real estate assets to continue. Further, the assistance provided by governmental support programs and commitments is expected to support U.S. capital markets over the immediate future.

 

If markets continue to strengthen, the competition for risk-adjusted yield will become increasingly fierce. We believe that innovative funding options and quicker closing timelines from the Manager allow for greater financing availability in a period of rising competition amongst capital providers.

 

However, risks related to inflation, interest rate hikes and regulatory uncertainty could adversely affect growth and the values of our investments. In the event market fundamentals deteriorate, our real estate portfolio may be impaired as a result of lower occupancy, lower rental rates, and/or declining values. Further, these circumstances may materially impact the cost and availability of credit to borrowers, hampering the ability of the Manager to acquire new investments with attractive risk-reward dynamics.

 

Over the short term, we remain cautiously optimistic about the opportunity to acquire investments offering attractive risk-adjusted returns in our targeted investment markets. However, we recognize disruptions in financial markets can occur at any time. By targeting modest leverage and short target investment durations, we believe we will remain well positioned, as compared to our competitors, in the event current market dynamics deteriorate.

 

10

 

 

Recently, the US experienced the fastest increase in prices since 1981, leading to inflation exceeding nine percent (9%) in June 2022 and six and a half percent (6.5%) in December 2022, according to the U.S. Bureau of Labor Statistics. In response, the Federal Reserve raised interest rates by the largest amount since 1994, ending a near four-decade trend of falling, near-zero interest rates. This shift in interest rates drove mortgage rates to their highest levels in nearly 14 years. We believe that the net result of these increases in interest rates further deter home purchase activity generally, but particularly among millennials who are more likely to require debt, which ultimately may lead to an increase in demand for rentals.

 

Rising inflation may adversely affect a Series by increasing costs of goods, materials, labor, and fuel, which may increase such Series’ operating expenses. In addition, higher interest rates, may make it difficult or expensive for a Series to refinance any outstanding indebtedness, including the Acquisition Notes (as defined in the Offering Circular), with a new mortgage or other debt financing. As of the date of this Offering Circular, neither the Company nor any of the Series has been materially impacted by inflationary pressures or rising interest rates. The Manager will continue to monitor and assess economic conditions, and intends to take reasonable steps to mitigate any impact on a Series and/or its underlying Property, or the Company in general. 

 

Results of Operations

 

The following table sets forth key components of our combined results of operations during the year ended December 31, 2023 and 2022.

 

  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Rental income 

$

564,447		 

$

294,391		 
Management fee  27,920  16,604 
Repairs & maintenance  59,400  64,717 
Insurance  74,805  15,416 
Professional Fees  48,566  44,477 
Real estate taxes  67,215  34,673 
Depreciation expense  297,500  157,675 
Interest expense  892,372  384,048 
Utilities  10,118  14,268 
Net Operating Income (Loss) before Income Taxes  (913,448) (437,487)
Other income/(expense) 

19,769		 

 
Provision for income taxes  (2,608) 668 
Net income (loss) 

$

(896,287		)

$

(438,155		) 

 

11

 

 

Revenues

 

Revenues are generated at the Series level. Each Series generates revenue through rental income earned from its underlying Property. Our total revenue for all Series in the aggregate increased by $270,056 or 91.73% from the year ended December 31, 2022 to December 31, 2023.

 

The following table sets forth rental income during the year ended December 31, 2023 and 2022.

 

  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Landa Series 24 Ditmars Street 

$

124,973		 

$

62,248		 
Landa Series 132 Cornelia Street  109,213  55,704 
Landa Series 368 Irwin Street NE  63,371  37,909 
Landa Series 996 Greenwood Avenue NE  41,575  27,765 
Landa Series 1363 Hancock Street  178,155  89,184 
Landa Series 6696 Mabletown Parkway SE  47,160  21,581 
Total Combined 

$

564,447		 

$

294,391		 

 

The following table sets forth our combined other Income during the year ended December 31, 2023

 

Other Income    Year Ended
December 31, 2023		 
Landa Series 24 Ditmars Street 

 

$

-		 
Landa Series 132 Cornelia Street    5,818 
Landa Series 368 Irwin Street NE    - 
Landa Series 996 Greenwood Avenue NE    2,369 
Landa Series 1363 Hancock Street    11,582 
Landa Series 6696 Mableton Parkway SE    - 
Total Other Income 

 

$

19,769		 

 

Operating Expenses

 

Each Series is responsible for its own Operating Expenses.

 

For the year ended December 31, 2023 and 2022, the Series incurred a total aggregate of $585,523 and $347,830, respectively, in Operating Expenses (calculated on a combined basis).

 

The following table summarizes the Operating Expenses by category:

 

Category  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Management fee 

$

27,920		 

$

16,604		 
Professional Fees  59,400  44,477 
Repairs & maintenance  74,805  64,717 
Insurance  48,565  15,416 
Real estate taxes  67,215  34,673 
Depreciation expense  297,500  157,675 
Utilities  10,118  14,268 
Total Operating Expense 

$

585,523		 

$

347,830		 

  

12

 

 

The following table summarizes the Operating Expenses for each Series:

 

Series  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Landa App 3 

$

-		 

$

44,477		 
Landa Series 24 Ditmars Street  100,117  54,772 
Landa Series 132 Cornelia Street  83,553  42,755 
Landa Series 368 Irwin Street NE  63,060  37,061 
Landa Series 996 Greenwood Avenue NE  163,904  88,396 
Landa Series 1363 Hancock Street  138,161  65,997 
Landa Series 6696 Mableton Parkway SE  36,728  14,372 
Total Operating Expense 

$

585,523		 

$

347,830		 

 

Interest Expense

 

The following table summarizes Interest Expense for each Series:

 

Series  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Landa App 3 

$

701,090		 

$

199,832		 
Landa Series 24 Ditmars Street  28,336  33,302 
Landa Series 132 Cornelia Street  32,839  31,248 
Landa Series 368 Irwin Street NE  4,322  17,774 
Landa Series 996 Greenwood Avenue NE  73,983  50,263 
Landa Series 1363 Hancock Street  51,802  46,919 
Landa Series 6696 Mableton Parkway SE  -  4,710 
Total Interest Expense 

$

892,372		 

$

384,048		 

 

Net Income (Loss)

 

As a result of the cumulative effect of the foregoing factors, we generated aggregate net losses of $896,287 in 2023 and $438,155 in 2022. Of these balance, $701,090 in 2023 and $199,832 in 2022 pertained to interest expense and $44,477 in 2022 pertained to professional fees incurred by the Company and is not attributable to the individual series. The following table summarizes net income/(loss) for each Series:

 

Series  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Landa App 3 

$

(701,090		)

$

(244,309		)
Landa Series 24 Ditmars Street  (3,480) (25,826)
Landa Series 132 Cornelia Street  (1,361) (18,299)
Landa Series 368 Irwin Street NE  (4,011) (16,926)
Landa Series 996 Greenwood Avenue NE  (193,943) (110,894)
Landa Series 1363 Hancock Street  (226) (23,732)
Landa Series 6696 Mableton Parkway SE  7,824 1,831
Total Net Income (Loss) 

$

(896,287		)

$

(438,155		)

 

Liquidity and Capital Resources

 

The Company and each Series commenced its operations prior to the qualification of its initial Offering Statement and the transfer of title of each of the Properties from Landa Properties to the applicable Series. Once a Series commences its planned principal operations, it will incur significant additional expenses. Until such time as a Series has the capacity to generate cash flows from operations, it may seek additional capital, including from the Manager.

 

13

 

 

Cash Balances

 

As of December 31, 2023, the Company itself had no cash or cash equivalents on hand. Cash is held at the Series level. On a total combined basis, as of December 31, 2023 and 2022 the Series in the aggregate had $93,556 and $206,053 of cash on hand. The following table summarizes the cash and cash equivalents by Series:

 

Series  Year Ended
December 31, 2023		  Year Ended
December 31, 2022		 
Landa Series 24 Ditmars Street 

$

19,035		 

$

46,368		 
Landa Series 132 Cornelia Street  23,270  44,241 
Landa Series 368 Irwin Street NE  11,127  19,452 
Landa Series 996 Greenwood Avenue NE  1,550  12,474 
Landa Series 1363 Hancock Street  17,844  67,865 
Landa Series 6696 Mableton Parkway SE  20,730  15,653 
Total Cash 

$

93,556		 

$

206,053		 

 

Loans

 

Acquisition Notes

 

Each Series financed 100% of the costs associated with the acquisition of its Property, including an acquisition fee and expenses associated with sourcing its Property, with an Acquisition Note issued by such Series to the Manager, the terms of which are listed in the table below. Each of these Acquisition Notes represents a related-party loan between each respective Series and the Manager. The Acquisition Notes are interest-bearing and are an unsecured obligation of the applicable Series.

 

The following table sets forth the net amounts as of December 31, 2023.

 

Series  Original
Outstanding
Amount		   Annual
Interest
Rate		   Loan Date  Current
Amount
Outstanding		 
Landa Series 996 Greenwood Avenue NE  $2,542,151    4.5%  07/08/2022  $1,621,558 
Landa Series 6696 Mableton Parkway SE  $505,527    4.5%  07/08/2022  $- 
Landa Series 368 Irwin Street NE  $1,196,951    4.5%  07/08/2022  $- 
Landa Series 1363 Hancock Street  $2,736,598    4.5%  07/11/2022  $890,297 
Landa Series 24 Ditmars Street  $2,014,427    4.5%  07/11/2022  $379,548 
Landa Series 132 Cornelia Street  $1,901,367    4.5%  07/11/2022  $509,591 

 

 

The following table sets forth the net amounts as of December 31, 2022.

 

Series  Original
Outstanding
Amount		   Annual
Interest
Rate		   Loan Date  Current
Amount
Outstanding		 
Landa Series 996 Greenwood Avenue NE  $2,542,151    4.5%  07/08/2022  $1,788,449 
Landa Series 6696 Mableton Parkway SE  $505,527    4.5%  07/08/2022  $- 
Landa Series 368 Irwin Street NE  $1,196,951    4.5%  07/08/2022  $409,440 
Landa Series 1363 Hancock Street  $2,736,598    4.5%  07/11/2022  $1,647,752 
Landa Series 24 Ditmars Street  $2,014,427    4.5%  07/11/2022  $1,039,146 
Landa Series 132 Cornelia Street  $1,901,367    4.5%  07/11/2022  $966,509 

 

The principal amount is due and payable by the Series within 30 days after the demand by the Manager, as lender, at any time prior to the liquidation, dissolution or winding up of the Series.

 

 

14

 

 

Off-Balance Sheet Arrangements

 

Neither the Company nor any of the Series had during the periods presented, and does not currently have, any off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with GAAP requires the Manager to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

 

Revenue Recognition

 

The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments, effective June 24, 2022.

 

We determine revenue recognition through the following steps:

 

  ● identification of a contract with a customer;

 

  ● identification of the performance obligations in the contract;

 

  ● determination of the transaction price;

 

  ● allocation of the transaction price to the performance obligations in the contract; and

 

  ● recognition of revenue when or as the performance obligations are satisfied.

 

Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

 

Revenues are generated at the Series level. Rental revenue is generated from annual or month to month leases of the multi-family homes. The Company recognizes rental revenue on a monthly basis when earned.

 

Operating Expenses

 

If the Operating Expenses exceed the amount of revenues generated from a Series and cannot be covered by any Reserves of such Series, the Manager may (a) pay such Operating Expenses and seek reimbursement and/or (b) loan the amount of the Operating Expenses to the applicable Series and be entitled to reimbursement of such amount from future revenues generated by such Series. In the case that the Manager provides a loan to a Series, the Series will be obligated to pay interest on that loan at a rate to be determined solely by the Manager, but which will be no greater than SOFR + 3.5%. Further, if the Operating Expenses exceed the amount of revenues generated from a Series and cannot be covered by any Reserves of such Series, then you may be unable to receive distributions until the Series can generate revenue.

 

Fees to the Manager

 

Monthly Management Fee: The Manager receives fees, reimbursements, and compensation in connection with the acquisition and Property management of the Series’ real estate investments. Management fee percentage ranges from 5% for the New York properties to 8% for the Georgia properties. These management fees are earned based on rental income.

 

Acquisition Fee: The Acquisition Notes issued by each Series to the Manager in connection with the acquisition of its Property included amounts attributable to an acquisition fee due to the Manager ranging from five percent (5%) to ten percent (10%) of the purchase price of the Property.

 

Property Diligence Expenses: The Acquisition Notes issued by each Series to the Manager in connection with the acquisition of its Property included amounts attributable to any and all fees, costs and expenses incurred in connection with the evaluation, discovery, and investigation of such Property incurred prior to such acquisition, including legal fees associated with the title insurance, appraisal costs and inspection costs, and any other expenses associated with the acquisition of a Property.

 

15

 

 

Brokerage Fee: The broker of record for each Offering is expected to receive a brokerage fee equal to one percent (1%) of the amount raised from investors through each Series’ Offering. We comply with the requirements of FASB ASC 340-10-S99-1 with regards to offering costs. Prior to the completion of a Series’ Offering, offering costs are capitalized. The deferred offering costs are charged to members’ equity upon the completion of an Offering or to expense if the Offering is not completed.

 

Administrative Costs: In accordance with FASB ASC 720, administrative costs, including accounting fees and legal fees, are expensed as incurred. See “Item 1. Business—Operating Expenses” for additional information.

 

For more information about the fees payable to the Manager, please see “Description of our Business—Our Manager—Manager Compensation” of our Offering Circular, which can be found here and is incorporated herein by reference.

 

Fair Value of Financial Instruments

 

FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

 

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

 

The carrying amounts reported in the balance sheets approximate their fair value.

 

Earnings (Loss) / Income per Membership Interest

 

Upon completion of an Offering, each Series intends to comply with accounting and disclosure requirements of ASC Topic 260, Earnings per Share. For each Series, earnings (loss) / income per interest will be computed by dividing net (loss) / income for a particular Series by the weighted average number of outstanding interests in that particular Series during the year.

 

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU was effective for annual and interim periods beginning after December 15, 2019, including interim periods within those fiscal years. In April 2020, the FASB voted to defer the effective date of ASC 842 for private companies and certain not-for-profit entities for one year. For private companies and private NFPs, the leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this standard as of January 1, 2022. The adoption of this standard did not impact the Company's financial reporting and disclosure as all of the Company’s leases are twelve months or less and have no escalations in rental income.

 

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as modified by FASB ASU No. 2019-10 and other subsequently issued related ASUs. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new guidance effective January 1, 2023 utilizing the modified retrospective transition method. The adoption of this standard did not have a material impact on the Company's financial statements, but did change how the allowance for credit losses is determined.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying combined and combining financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

16

 

 

Item 3. Directors and Officers

 

Directors, Executive Officers and Significant Employees of the Company

 

Neither the Company, nor any Series, has any directors, executive officers, or employees, and we do not expect the Company or any Series to appoint or hire any directors, executive officers, or employees.

 

Directors, Executive Officers and Significant Employees of the Manager

 

The following individuals constitute the members of the board of directors (the “Board”), executive management and significant employees of the Manager:

 

Name  Position  Age  Term of Office
Directors and Executive Officers:         
Yishai Cohen  Chairman, Chief Executive Officer and President  28  Since September 2019
Non-Employee Directors:         
Arnon Dinur  Director  51  Since September 2019
Gigi Levy-Weiss  Director  51  Since September 2019
Yaniv Sarig  Director  41  Since September 2019

 

There are no family relationships between any director, executive officer or significant employee of the Manager.

 

Directors and Executive Officers

 

Yishai Cohen, Chairman, Chief Executive Officer and President. Mr. Cohen is the co-founder of Landa Holdings, Inc. and has served as its President and Chairman of the Board since September 2019, and its Chief Executive Officer since April 2020. Prior to founding Landa Holdings, Inc., Mr. Cohen was the founder of SmartBus, an Israeli-based business-to-business transportation platform, which was acquired in 2016. Mr. Cohen has extensive experience in internet and mobile products, marketplaces and technology.

 

17

 

Non-Employee Directors

 

Arnon Dinur, Director. Mr. Dinur has served as a member of the Board of Landa Holdings, Inc. since September 2019. Mr. Dinur is a partner at 83North, and serves also as a director at Applicaster Ltd., Beach Bum Ltd., Lendbuzz, Inc., Marqeta, Inc., Mixtiles Ltd., EX.CO Ltd., Podimo ApS, Snappy App, Inc., Stuff That Works Ltd., Superplay Ltd., Terrascope Limited (Fatmap) and VIA Transportation, Inc. He also serves as a board observer at Bluevine Capital Inc. and Wolt Enterprises Oy. Mr. Dinur is also a board member at Lobby99, a non-profit organization. Mr. Dinur holds an LL.B. in Law and a BA in accounting from Tel Aviv University, and an MBA from the University of Texas at Austin.

 

Gigi Levy-Weiss, Director. Mr. Levy-Weiss has served as a member of the Board of Landa Holdings, Inc. since September 2019. Mr. Levy-Weiss is the founding partner of NFX, a $275 million leading seed venture firm. Prior to NFX, Gigi served as the CEO of 888 Holdings, PLC (LSE: 888.L). Mr. Levy-Weiss previously founded, and assumed senior positions at, a number of startups including Playtika and Inception, and has been an investor in companies such as Kenshoo, Moon Active, Plarium, MyHeritage, Optimove, Selina, Houseparty, R2Net, SimilarWeb, NanoRep, Replay Technology, and SpaceApe. Mr. Levy-Weiss currently serves on the Supervisory Board of Bertelsmann SE & Co. kGaA and on the Client Advisory Council of Facebook. In addition, Mr. Levy-Weiss is a member of the board of directors of the Middle East Entrepreneurs of Tomorrow and is a member of the advisory board of the Technology Management, Innovation and Entrepreneurship MBA at Tel Aviv University. Mr. Levy-Weiss served as a pilot in the Israeli Air Force and holds an MBA from the Kellogg School of Management at Northwestern University.

 

Yaniv Sarig, Director. Mr. Sarig has served as a member of the Board of Landa Holdings, Inc. since September 2019. Mr. Sarig is a co-founder, director and President and Chief Executive Officer of Mohawk Group, Inc. Prior to co-founding Mohawk, Mr. Sarig led the Financial Services Engineering department at Coverity, a leading software startup providing code quality and security solutions for top financial institutions and hedge funds in New York including NYSE, Nasdaq, JPMC and Barclays, from April 2012 to April 2014. Before joining Coverity, Mr. Sarig held lead technical roles at Bloomberg from October 2011 to April 2012 and EPIQ Systems, Inc. (Nasdaq: EPIQ), a legal process outsourcing company, from February 2006 to October 2011. Prior to moving to New York City, Mr. Sarig lived in Israel where he held various software engineering roles at startups from various industries including companies involved in digital printing solutions and military navigation systems. Mr. Sarig served in the IDF Special Forces where he obtained the rank of Sergeant First Class and holds a BS in Computer Science from Touro College.

 

18

 

 

Compensation of Executive Officers

 

Neither the Company, nor any Series has any executive officers or employees, nor does the Company or any Series currently intend to hire any executive officers or employees who will be compensated directly by us. Each of the executive officers of our Manager manages our day-to-day affairs; oversees the review, selection and recommendation of investment opportunities; services acquired investments; and monitors the performance of these investments to ensure that they are consistent with our investment objectives. Each of these individuals receives compensation for his or her services, including services performed for us on behalf of our Manager, from our manager. Although each Series indirectly bears some of the costs of the compensation paid to these individuals, through the monthly management fee that each Series pays to the Manager, we do not intend to pay any compensation directly to these individuals.

 

Compensation of our Manager

 

For information regarding the compensation of our Manager, please see “Description of our Business – Manager Compensation” in our Offering Circular, which can be found here and is incorporated herein by reference.

 

Item 4. Security Ownership of Management and Certain Securityholders

 

The Company and each Series are managed by the Manager and do not have directors or executive officers. The Manager is the sole member of the Company and neither the Manager nor any of its directors or executive officers own Shares in any of the Series.

 

Item 5. Interest of Management and Others in Certain Transactions Other Information

 

We are subject to various conflicts of interest arising out of our relationship with the Manager and its affiliates.

 

Please see “Interest of Management and Others in Certain Transactions Other Information” in our Offering Circular, which can be found here and is incorporated herein by reference.

 

Transactions

 

Property Acquisitions

 

Each Series previously issued an Acquisition Note to the Manager in connection with the acquisition of its property.

 

The acquisitions of the Properties by the Series were not, or will not be, arm’s length transactions. Each Series treated, or will treat, its acquisition as a transaction between entities under common control per Accounting Standards Codification (“ASC”) 805-50 and recorded, or will record, the transaction at its carryover basis.

 

Nevertheless, Landa Properties acquired each Property for either the same purchase price that each Series paid for such Property or the most recent appraisal value or broker price opinion, as applicable, for such Property.

 

For more information on the purchase prices of the Properties, please see “Use of Proceeds” of our Offering Circular, which can be found here and is incorporated herein by reference.

 

Loans

 

Each Series financed 100% of the costs associated with the acquisition of its Property, including an acquisition fee and expenses associated with sourcing its Property, with an Acquisition Note issued by such Series to the Manager.

 

See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Loans for information related to the Loans.

 

19

 

 

Our Affiliates’ Interests

 

General

 

The Manager also serves as manager to Landa App LLC and Landa App 2 LLC, each a Delaware series limited liability company also formed for the purpose of offering a unique investment opportunity for eligible investors to benefit from the performance of curated and fully managed rental real estate properties. Each series of Landa App LLC and Landa App 2 LLC is similarly managed by the Manager. The Manager may also manage other affiliate companies in the future.

 

The executive officers of the Manager will also manage operations for each Series. These persons will have legal obligations with respect to those entities that are similar to their obligations to the Company. In the future, however, these persons and other affiliates of the Manager may organize other real estate-related programs and acquire for their own accounts real estate properties that may be suitable for us.

 

In addition, each of the Manager’s executive officers will also provide executive and management services to other affiliated entities. As a result, they will owe duties to each of these entities, their holders, members and partners. These duties may from time-to-time conflict with the duties that they owe to the Company and each Series. These persons will also have conflicts of interest with respect to our agreements and arrangements with the Manager and other affiliates of the Manager, which were not negotiated at arm’s length, and their terms may not have been as favorable to us as if they had been negotiated at arm’s length with an unaffiliated third party. Except as provided in the Master Agreement or the applicable Management Agreement, the Manager is not required to make available any particular individual personnel to us or any Series.

 

The Manager’s executive officers will not be required to devote a specific amount of time to our affairs. As a result, we cannot provide any assurances regarding the amount of time the Manager will dedicate to the management of our business. Accordingly, we may compete with the Manager and any of its current and future programs, funds, vehicles, managed accounts, ventures or other entities owned and/or managed by the Manager or one of its affiliates, including the Manager, which we refer to collectively as the Manager-sponsored vehicles, for the time and attention of these officers in connection with our business. We may not receive the level of support and assistance that we might otherwise receive if we were internally managed.

 

For more information related to the risks associated with the Manager' management of our affiliates who operate competing businesses, please see the section entitled “Risk Factors - Risk Related to the Company and the Manager: The Manager may have a conflict of interest as it manages multiple Series, the Company, and an affiliate company of ours that leases residential properties and has a financial interest in certain agreements of the Series, any of which could result in the Manager not acting in the best interest of a particular Series” of our Offering Circular, which can be found here and is incorporated herein by reference.

 

Payment of Certain Fees and Expenses of the Manager

 

Each Series pays or reimburses the Manager for fees and expenses incurred by the Manager in connection with its management of the Series and the Properties, including, but not limited to, any ongoing expense of the Series or the Property that is paid by the Manager, expenses in connection with the special servicing of the non-performing Properties and the liquidation of the Properties, and, if applicable, interest payments on related-party loans for operations, issued by the Manager to a Series. These fees and expenses payable by the Series to the Manager and its affiliates were not determined on an arm’s length basis.

 

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Fees to the Manager” for more information about the fees and expenses payable to the Manager. See also “Interest of Management and Others in Certain Transactions Other Information” in our Offering Circular, which can be found here and is incorporated herein by reference.

 

Item 6. Other Information

 

None.

 

20

 

 

Item 7. Financial Statements

 

INDEX TO THE FINANCIAL STATEMENTS

 

    Page
Report of the Independent Registered Public Accounting Firm (PCAOB ID #00536)   F-2
Combined and Combining Balance Sheets as of December 31, 2023 and 2022   F-3
Combined and Combining Statement of Comprehensive Income (Loss) for the Years ended December 31, 2023 and 2022   F-5
Combined and Combining Statement of Members’ Equity (Deficit) for the Years ended December 31, 2023 and 2022   F-7
Combined and Combining Statement of Cash Flows for the Years ended December 31, 2023 and 2022   F-8
Notes to the Combined and Combining Financial Statements   F-10

 

F-1

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Manager and Members of
Landa App 3 LLC and Series

New York, New York

 

Opinion on the Combined and Combining Financial Statements

 

We have audited the accompanying combined and combining balance sheets of Landa App 3 LLC and Series (the Company) as of December 31, 2023 and 2022, and the related combined and combining statements of comprehensive income (loss), members’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the combined and combining financial statements). In our opinion, the combined and combining financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying combined and combining financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the combined and combining financial statements, the Company’s lack of liquidity, nominal cash and losses from operations since inception raises substantial doubt about their ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The combined and combining financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These combined and combining financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s combined and combining financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the combined and combining financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the combined and combining financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined and combining financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined and combining financial statements. We believe that our audits provide a reasonable basis for our opinion. 

 

/s/ Morison Cogen LLP

 

We have served as the Company’s auditor since 2023.

 

Blue Bell, Pennsylvania

June 3, 2024

 

F-2

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING BALANCE SHEETS

 

   Landa App 3 LLC   Landa Series 24 Ditmars Street 
   As of December 31,   As of December 31, 
   2023   2022   2023   2022 
Assets                
Current assets:                
Cash  $-   $-   $5,216   $36,068 
Restricted cash   -    -    13,819    10,300 
Accounts receivable   -    -    -    - 
Loan fees   20,608    -    -    - 
Due from related party   5,376,226    5,722,168    10,360    - 
Total current assets   5,396,834    5,722,168    29,395    46,368 
                     
Property and equipment, net   -    -    1,889,118    1,943,925 
                     
Total assets  $5,396,834   $5,722,168   $1,918,513   $1,990,293 
                     
Liabilities and members’ equity (deficit)                    
Current liabilities:                    
Due to related party  $390,756   $-   $34,704   $32,366 
Prepaid rent   -    -    -    - 
Other current liabilities   44,477    44,477    4,262    - 
Security deposit   -    -    13,819    10,300 
Bridge notes payable   5,907,000    5,922,000    -    - 
Total current liabilities   6,342,233    5,966,477    52,785    42,666 
                     
Acquisition notes payable, related party   -    -    379,548    1,039,146 
Total liabilities   6,342,233    5,966,477    432,333    1,081,812 
                     
Members’ equity (deficit)   (945,399)   (244,309)   1,486,180    908,481 
Total liabilities and members’ equity (deficit)  $5,396,834   $5,722,168   $1,918,513   $1,990,293 

 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

F-3

 

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINING BALANCE SHEETS

(CONTINUED)

 

   Landa Series 132 Cornelia Street   Landa Series 368 Irwin Street NE 
   As of December 31,   As of December 31, 
   2023   2022   2023   2022 
Assets                
Current assets:                
Cash  $17,105   $32,491   $2,427   $15,027 
Restricted cash   6,165    11,750    8,700    4,425 
Accounts receivable   -    -    -    - 
Due from related party   -    -    36,479    - 
Total current assets  $23,270   $44,241   $47,606   $19,452 
                     
Property and equipment, net   1,736,579    1,787,331    1,106,891    1,137,356 
                     
Total assets  $1,759,849   $1,831,572   $1,154,497   $1,156,808 
                     
Liabilities and members’ equity (deficit)                    
Current liabilities:                    
Due to related party   26,874    28,217    9,474    14,230 
Prepaid rent   -    -    -    - 
Other current liabilities   4,262    -    4,262    - 
Security deposit   6,165    11,750    8,700    4,425 
Bridge notes payable   -    -    -    - 
Total current liabilities  $37,301   $39,967   $22,436   $18,655 
                     
Acquisition notes payable, related party   509,591    966,509    -    409,440 
Total liabilities  $546,892   $1,006,476   $22,436   $428,095 
                     
Members’ equity (deficit)   1,212,957    825,096    1,132,061    728,713 
Total liabilities and members’ equity (deficit)  $1,759,849   $1,831,572   $1,154,497   $1,156,808 

 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING BALANCE SHEETS

(CONTINUED)

 

   Landa Series 996 Greenwood Avenue NE   Landa Series 1363 Hancock Street 
   As of December 31,   As of December 31, 
   2023   2022   2023   2022 
Assets                
Current assets:                
Cash  $-   $3,749   $4,484   $53,165 
Restricted cash   1,550    8,725    13,360    14,700 
Accounts receivable   -    -    -    11,200 
Due from related party   -    -    14,442    - 
Total current assets  $1,550   $12,474   $32,286   $79,065 
                     
Property and equipment, net   2,097,181    2,147,511    2,526,553    2,584,639 
                     
Total assets  $2,098,731   $2,159,985   $2,558,839   $2,663,704 
                     
Liabilities and members’ equity (deficit)                    
Current liabilities:                    
Due to related party   185,423    53,979    29,429    44,291 
Prepaid rent   -    -    3,500    3,500 
Other current liabilities   4,262    -    4,262    - 
Security deposit   4,025    8,725    13,360    14,700 
Bridge notes payable   -    -    -    - 
Total current liabilities  $193,710   $62,704   $50,551   $62,491 
                     
Acquisition notes payable, related party   1,621,558    1,788,449    890,297    1,647,752 
Total liabilities  $1,815,268   $1,851,153   $940,848   $1,710,243 
                     
Members’ equity (deficit)   283,463    308,832    1,617,991    953,461 
Total liabilities and members’ equity (deficit)  $2,098,731   $2,159,985   $2,558,839   $2,663,704 

 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING BALANCE SHEETS

(CONTINUED)

 

   Landa Series 6696 Mableton Parkway SE   Total Combined Balance Sheet 
   As of December 31,   As of December 31, 
   2023   2022   2023   2022 
Assets                
Current assets:                
Cash  $14,645   $11,868   $43,877   $152,368 
Restricted cash   6,085    3,785    49,679    53,685 
Accounts receivable   1,985    1,985    1,985    13,185 
Loan fees   -    -    20,524    - 
Due from related party   24,565    24,317    5,462,072    5,746,485 
Total current assets  $47,280   $41,995   $5,578,137   $5,965,723 
                     
Property and equipment, net   467,966    479,754    9,824,288    10,080,516 
                     
Total assets  $515,246   $521,709   $15,402,425   $16,046,239 
                     
Liabilities and members’ equity (deficit)                    
Current liabilities:                    
Due to related party   776    -    677,436    173,083 
Prepaid rent   -    -    3,500    3,500 
Other current liabilities   28,344    21,474    94,131    65,951 
Security deposit   6,085    3,785    52,154    53,685 
Bridge notes payable   -    -    5,907,000    5,922,000 
Total current liabilities  $35,205   $25,259   $6,734,221   $6,218,219 
                     
Acquisition notes payable, related party   -    -    3,400,994    5,851,296 
Total liabilities  $35,205   $25,259   $10,135,215   $12,069,515 
                     
Members’ equity (deficit)   480,041    496,450    5,267,293    3,976,724 
Total liabilities and members’ equity (deficit)  $515,246   $521,709   $15,402,425   $16,046,239 

 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

F-4

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

   Landa App 3 LLC   Landa Series 24 Ditmars Street 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Rental income  $-   $-   $124,973   $62,248 
                     
Operating expenses                    
Management fee   -    -    5,847    3,112 
Professional Fees   -    44,477    4,542    - 
Repairs & maintenance   -    -    12,928    16,692 
Insurance   -    -    10,701    1,946 
Real estate taxes   -    -    4,607    2,353 
Depreciation expense   -    -    57,517    29,826 
Utilities   -        3,975    843 
Total operating expenses  $-   $44,477   $100,117   $54,772 
                     
Net operating income (loss)   -   (44,477)   24,856    7,476 
                     
Other income / (expense)                    
Other income   -   -   -   -
Interest expense   (701,090)   (199,832)   (28,336)   (33,302)
Net income (loss) before income taxes  $(701,090)  $(244,309)  $(3,480)  $(25,826)
                     
Provision for income taxes   -   -   -   -
                     
Net income (loss)  $(701,090)  $(244,309)  $(3,480)  $(25,826)

  

The accompanying notes are an integral part of these combined and combining financial statements.

 

F-5

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(CONTINUED)

 

   Landa Series 132 Cornelia Street   Landa Series 368 Irwin Street NE 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Rental income  $109,213   $55,704   $63,371   $37,909 
                     
Operating expenses                    
Management fee   5,154    2,785    4,232    3,016 
Professional Fees   4,560    -    4,865    - 
Repairs & maintenance   11,699    8,173    8,630    9,703 
Insurance   3,216    1,679    3,317    1,458 
Real estate taxes   3,519    1,792    8,178    4,246 
Depreciation expense   52,870    27,423    33,712    17,450 
Utilities   2,535    903    126    1,188 
Total expenses  $83,553   $42,755   $63,060   $37,061 
                 
Net operating income (loss)   25,660   12,949    311    848
                     
Other income / (expense)                    
Other income   5,818   -   -   -
Interest expense   (32,839)   (31,248)   (4,322)   (17,774)
Net income (loss) before income taxes   (1,361)   (18,299)   (4,011)   (16,926)
                     
Provision for income taxes   -    -    -   -
                     
Net income (loss)  $(1,361)  $(18,299)  $(4,011)  $(16,926)

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(CONTINUED)

 

   Landa Series 996 Greenwood Avenue NE   Landa Series 1363 Hancock Street 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Rental income  $41,575   $27,765   $178,155   $89,184 
                     
Operating expenses                    
Management fee   2,654    2,221    6,935    3,902 
Professional Fees   35,349    -    5,679    - 
Repairs & maintenance   14,450    15,937    24,901    11,519 
Insurance   14,724    6,084    7,115    3,554 
Real estate taxes   32,681    16,940    13,017    6,695 
Depreciation expense   64,046    36,929    77,032    39,656 
Utilities   -    10,285    3,482    671 
Total operating expenses  $163,904   $88,396   $138,161   $65,997 
                 
Net operating income (loss)   (122,329)   (60,631)   39,994    23,187
                     
Other income / (expense)                    
Other income   2,369   -   11,582   -
Interest expense   (73,983)   (50,263)   (51,802)   (46,919)
Net income (loss) before income taxes   (193,943)   (110,894)   (226)   (23,732)
                     
Provision for income taxes   -    -    -   -
                     
Net income (loss)  $(193,943)  $(110,894)  $(226)  $(23,732)

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

F-6

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(CONTINUED)

 

   Landa Series 6696 Mableton Parkway SE   Total Combined Statements of Comprehensive Income 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Rental income  $47,160   $21,581   $564,447   $294,391 
                     
Operating expenses                    
Management fee   3,098    1,568    27,920    16,604 
Professional Fees   4,405    -    59,400    44,477 
Repairs & maintenance   2,197    2,693    74,805    64,717 
Insurance   9,492    695    48,565    15,416 
Real estate taxes   5,213    2,647    67,215    34,673 
Depreciation expense   12,323    6,391    297,500    157,675 
Utilities   -    378    10,118    14,268 
Total operating expenses  $36,728   $14,372   $585,523   $347,830 
                 
Net operating income (loss)   10,432   7,209    (21,076)   (53,439)
                     
Other income / (expense)                    
Other income   -   -   19,769   -
Interest expense   -   (4,710)   (892,372)   (384,048)
Net income (loss) before income taxes   10,432   (2,499)   (893,679)   (437,487)
                     
Provision for income taxes   (2,608)   (668)   (2,608)   (668)
                     
Net income (loss)  $7,824  $1,831  $(896,287)  $(438,155)

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

LANDA APP 3 LLC AND ITS SERIES

COMBINED AND COMBINING STATEMENTS OF MEMBERS’ EQUITY (DEFICIT)

 

   Landa App
3 LLC		   Landa Series
24 Ditmars
Street		   Landa Series
132 Cornelia
Street		   Landa Series
368 Irwin
Street NE		 
Balance at December 31, 2021  $-   $-   $-   $- 
                     
Proceeds from sales of membership interests   -    973,892    883,985    762,773 
                     
Distributions   -    (39,585)   (40,590)   (17,134)
                     
Net income (loss)   (244,309)   (25,826)   (18,299)   (16,926)
                     
Balance at December 31, 2022  $(244,309)  $908,481   $825,096   $728,713 

 

                     
Proceeds from sales of membership interests   -    656,099    455,652    440,920 
                     
Distributions   -   (74,920)   (66,430)   (33,561)
                     
Net income (loss)   (701,090)   (3,480)   (1,361)   (4,011)
                     
Balance at December 31, 2023  $(945,399)  $1,486,180   $1,212,957   $1,132,061 

  

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

LANDA APP 3 LLC AND ITS SERIES

COMBINED AND COMBINING STATEMENTS OF MEMBERS’ EQUITY (DEFICIT)

(CONTINUED)

 

   Landa Series 996 Greenwood Avenue NE   Landa Series 1363 Hancock Street   Landa Series 6696 Mableton Parkway SE   Total Combined Members’ Equity 
Balance at December 31, 2021  $-   $-   $-   $- 
                     
Proceeds from sales of membership interests   427,967    1,027,448    505,527    4,581,592 
                     
Distributions   (8,241)   (50,255)   (10,908)   (166,713)
                     
Net income (loss)   (110,894)   (23,732)   1,831   (438,155)
                     
Balance at December 31, 2022  $308,832  $953,461   $496,450   $3,976,724 

 

                     
Proceeds from sales of membership interests   171,708    756,363    101    2,480,843 
                     
Distributions   (3,135)   (91,607)   (24,334)   (293,987)
                     
Net income (loss)   (193,942)   (226)   7,824   (896,287)
                     
Balance at December 31, 2023  $283,463   $1,617,991   $480,041   $5,267,293 

  

The accompanying notes are an integral part of these combined and combining financial statements.

 

F-7

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF CASH FLOWS

 

   Landa 3 App LLC   Landa Series 24 Ditmars Street 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Cash flows from operating activities:                
Net income (loss)  $(701,090)  $(244,309)  $(3,480)  $(25,826)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Depreciation   -    -    57,517    29,826 
Changes in assets and liabilities:                    
Restricted cash   -    -   (3,519)   (10,300)
Accounts receivable   -    -    -   - 
Loan fees   (20,608)   -    -   - 
Due from related party   345,942    199,832    (10,360)   - 
Due to related party   390,756    -    2,338    67,792 
Other current liabilities   -    44,477    4,262    - 
Security deposit   -    -    3,519    10,300 
Net cash provided by (used in) operating activities   15,000    -    50,277    71,792 
                     
Cash flows from investing activities:                    
Additions to building and improvements   -    -    (2,710)   - 
Net cash used in investing activities   -    -   (2,710)   -
                     
Cash flows from financing activities:                    
Proceeds from sales of membership interests   -    -    656,099    973,892 
Distributions   -    -   (74,920)   (39,585)
Repayment of acquisition note, related party   -    -   (659,598)   (970,031)
Repayment of bridge loan   (15,000)    -   -   -
Net cash provided by (used in) financing activities   (15,000)   -   (78,419)   (35,724)
                     
Net change in cash   -    -    (30,852)   36,068 
Cash at beginning of year   -    -    36,068    - 
Cash at end of year  $-   $-   $5,216   $36,068 
                     
Supplemental disclosure of cash flow information:                    
Cash paid for income taxes  $-   $-   $-   $- 
Cash paid for interest  $-   $-   $-   $- 
                     
Supplemental disclosure of non-cash investing and financing activities:                    
Property acquisition, related party  $-   $-   $-   $1,973,751 
Acquisition notes payable for property acquisition, net  $-   $-   $-   $2,009,177 
Bridge notes payable through due from related party  $(15,000)  $5,922,000   $-   $- 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

F-8

 

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF CASH FLOWS

(CONTINUED)

 

   Landa Series 132 Cornelia Street   Landa Series 368 Irwin Street NE 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Cash flows from operating activities:                
Net income (loss)  $(1,361)  $(18,299)  $(4,011)  $(16,926)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Depreciation   52,870    27,423    33,712    17,450 
Changes in assets and liabilities:                    
Restricted cash   5,585    (11,750)   (4,275)   (4,425)
Accounts receivable   -    -    -    - 
Due from related party   -    -    (36,479)   - 
Due to related party   (1,343)   62,330    (4,756)   35,900 
Other current liabilities   4,262    -    4,262    - 
Security deposit   (5,585)   11,750    4,275    4,425 
Net cash provided by (used in) operating activities   54,428    71,454    (7,272)   36,424 
                     
Cash flows from investing activities:                    
Additions to building and improvements   (2,118)   -    (3,247)   - 
Net cash provided by (used in) investing activities   (2,118)   -   (3,247)   -
                     
Cash flows from financing activities:                    
Proceeds from sales of membership interests   455,652    883,985    440,920    762,773 
Distributions   (66,430)   (40,590)   (33,561)   (17,134)
Repayment of acquisition note, related party   (456,918)   (882,358)   (409,440)   (767,036)
Net cash provided by (used in) financing activities   (67,696)   (38,963)   (2,081)   (21,397)
                     
Net change in cash   (15,386)   32,491   (12,600)   15,027 
Cash at beginning of year   32,491    -    15,027    - 
Cash at end of year  $17,105   $32,491   $2,427   $15,027 
                     
Supplemental disclosure of cash flow information:                    
Cash paid for income taxes  $-   $-   $-   $- 
Cash paid for interest  $-   $-   $-   $- 
                     
Supplemental disclosure of non-cash investing and financing activities:                    
Property acquisition, related party  $-   $1,814,754   $-   $1,154,806 
Acquisition notes payable for property acquisition, net  $-   $1,848,867   $-   $1,176,476 
Bridge notes payable through due from related party  $-   $-   $-   $- 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF CASH FLOWS

(CONTINUED)

 

   Landa Series 996 Greenwood Avenue NE   Landa Series 1363 Hancock Street 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Net income (loss)  $(193,94)  $(110,894)  $(226)  $(23,732)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Depreciation   64,046    36,929    77,032    39,656 
Changes in assets and liabilities:                    
Restricted cash   7,175    (8,725)   1,340   (14,700)
Accounts receivable   -    -    11,200    (11,200)
Due from related party   -    -    (14,442)   - 
Due to related party   131,444    94,590    (14,862)   93,594 
Prepaid rent   4,263    -    4,262    3,500 
Security deposit   (4,700)   8,725    1,340    14,700 
Net cash provided by (used in) operating activities   8,285    20,625    62,964    101,818 
                     
Cash flows from investing activities:                    
Additions to building and improvements   (13,716)   -    (18,945)   - 
Net cash provided by (used in) investing activities   (13,716)   -   (18,945)   -
                     
Cash flows from financing activities:                    
Proceeds from sales of membership interests   171,708    427,967    756,363    1,027,448 
Distributions   3,135    8,241   91,607   (50,255)
Repayment of acquisition note, related party   (166,891)   (436,602)   (757,455)   (1,025,846)
Net cash provided by (used in) financing activities   1,682    (16,876)   (92,699)   (48,653)
                     
Net change in cash   (3,749)   3,749    (48,681)   53,165 
Cash at beginning of year   3,749    -    53,165    - 
Cash at end of year  $-   $3,749   $4,484   $53,165 
                     
Supplemental disclosure of cash flow information:                    
Cash paid for income taxes  $-   $-   $-   $- 
Cash paid for interest  $-   $-   $-   $- 
                     
Supplemental disclosure of non-cash investing and financing activities:                    
Property acquisition, related party  $-   $2,110,582   $-   $2,544,983 
Acquisition notes payable for property acquisition, net  $-   $2,225,051   $-   $2,673,598 
Bridge notes payable through due from related party  $-   $-   $-   $- 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

LANDA APP 3 LLC AND SERIES

COMBINED AND COMBINING STATEMENTS OF CASH FLOWS

(CONTINUED)

 

   Landa Series 6696 Mableton Parkway SE   Total Combined Statements Of Cash Flows 
   For The Years Ended December 31,   For The Years Ended December 31, 
   2023   2022   2023   2022 
Cash flows from operating activities:                
Net income (loss)  $7,824  $1,831  $(896,287)  $(438,155)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Depreciation   12,323    6,391    297,500    157,675 
Changes in assets and liabilities:                    
Restricted cash   (2,300)   (3,785)   4,006   (53,685) 
Accounts receivable   -    (1,985)   11,200    (13,185) 
Loan fees   -    -    (20,608)   - 
Due from related party   (248)   (15,251)   284,413   184,581 
Due to related party   776    -    504,354    354,206 
Prepaid rent   -   -   -   3,500 
Other current liabilities   6,870    21,474    28,180    65,951 
Security deposit   2300    3,785    (1,531)   53,685 
Net cash provided by (used in) operating activities   27,545    12,460    211,227    314,573 
                     
Cash flows from investing activities:                    
Additions to building and improvements   (535)   -    (41,272)   -
Net cash used in investing activities   (535)   -   (41,272)   -
                     
Cash flows from financing activities:                    
Proceeds from sales of membership interests   101    505,527    2,480,843    4,581,592 
Distributions   (24,334)   (10,908)   (293,987)   (166,713)
Repayment of acquisition note, related party   -    (495,211)   (2,450,302)   (4,577,084)
Repayment of bridge loan   -    -   (15,000)   -
Net cash provided by (used in) financing activities   (24,232)   (592)   (278,446)   (162,205)
                     
Net change in cash   2,777    11,868    (108,491)   152,368 
Cash at beginning of year   11,868    -    152,368    - 
Cash at end of year  $14,645   $11,868   $43,877   $152,368 
                     
Supplemental disclosure of cash flow information:                    
Cash paid for income taxes  $-   $-   $-   $- 
Cash paid for interest  $-   $-   $-   $- 
                     
Supplemental disclosure of non-cash investing and financing activities:                    
Property acquisition, related party  $-   $473,363   $-   $10,072,239 
Acquisition notes payable for property acquisition, net  $-   $495,211   $-   $10,428,380 
Bridge notes payable through due from related party  $-   $-   $(15,000)  $5,922,000 

 

The accompanying notes are an integral part of these combined and combining financial statements.

 

 

F-9

 

 

LANDA APP 3 LLC AND SERIES

NOTES TO THE COMBINED AND COMBINING FINANCIAL STATEMENTS

 

1. ORGANIZATION AND NATURE OF ACTIVITIES

 

Landa App 3 LLC (“App 3”), is a Delaware series limited liability company organized in September 2021. App 3 is a wholly owned subsidiary of Landa Holdings, Inc. and currently operates under an operating agreement with Landa Holdings, Inc. (the “Manager”). The Manager serves as the manager for the real estate properties owned by App 3 and each underlying Series (as defined below).

 

Landa App 3 and its series (herein referred to as “the Company”) was formed to engage in the business of acquiring, managing and renting multi-family properties (each a “Property,” and collectively, the “Properties”). Landa Holdings, Inc. has created, and it is expected that Landa Holdings, Inc, will continue to create, separate series of interests registered under the Company (each a “Series,” and collectively, the “Series”), that each Property will be owned by a separate Series and that the assets and liabilities of each Series will be separate in accordance with Delaware law. Investors acquire membership interest, or shares, in each Series and will be entitled to share in the return of that particular Series but will not be entitled to share in the return of any other Series. The Company intends to treat each Series as a separate entity for U.S. federal income tax purposes and will elect to be treated as a corporation when it files its initial year Federal tax returns. Landa Holdings, Inc is the managing member and has controlling interest in Landa App 3 LLC and each individual Series, collectively referred to as the Company.

 

On September 29, 2021, the Company filed Certificates of Registered Series Limited Liability Company with the Secretary of State of the State of Delaware to register each of the Series.

 

The Series commenced operations on June 24, 2022. Subsequently, between July 8, 2022 and July 12, 2022, the initial set of properties were acquired from a related party by each of the respective Series. The acquisitions were accounted for as a commonly controlled transaction and recorded, accordingly at their carryover basis. 

 

 

2. GOING CONCERN

 

The accompanying combined and combining financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a lack of liquidity, nominal cash, and losses from operations since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months from the date of this Annual Report is dependent upon their ability to continue to generate cash flow from their rental properties and/or obtain financing from the Manager. However, there are no assurances that the Company can continue to generate cash flow from their rental properties or that the Manager will always be in the position to provide funding when needed. The combined and combining financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F-10

 

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company has adopted a calendar year as its fiscal year.

 

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2012 and has elected to comply with certain reduced public company reporting requirements; however, the Company may adopt accounting standards based on the effective dates for public entities.

 

The combined and combining financial statements of Landa App 3 LLC and each of the Series are being presented on a combined basis, in accordance with U.S. GAAP (ASC 810, Consolidation) due to common control by Landa Holdings, Inc., in its capacity as managing member to the Company and each Series.

 

The combined and combining financial statements include the six (6) multi-family properties located in the Atlanta metropolitan area in the state of Georgia and in the borough of Brooklyn in New York City, New York. Each Property was acquired by each respective Series, as set forth in the table below:

 

Series Name  Series Inception Date  Acquisition Date
Landa Series 24 Ditmars Street  March 1, 2022  July 11, 2022
Landa Series 132 Cornelia Street  May 23, 2022  July 11, 2022
Landa Series 368 Irwin Street NE  May 23, 2022  July 8, 2022
Landa Series 996 Greenwood Avenue NE  March 1, 2022  July 8, 2022
Landa Series 1363 Hancock Street  May 23, 2022  July 11, 2022
Landa Series 6696 Mableton Parkway SE  March 1, 2022  July 8, 2022

 

Principles of Combination

 

The combined and combining financial statements include the accounts of Landa App 3 LLC and each Series listed in the table above. All inter-company transactions and balances have been eliminated in the combined and combining financial statements.

 

Significant Risks and Uncertainties

 

The Company is subject to customary risks and uncertainties with development of new technology including, but not limited to, new technological innovations, dependence on key personnel, costs of services provided by third parties, the need to obtain additional financing, and limited operating history.

 

Use of Estimates

 

The preparation of the combined and combining financial statements in conformity with U.S. 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 combined and combining financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates inherent in the preparation of these combined and combining financial statements include, but are not limited to, allowance for credit losses, useful life of assets and depreciation expenses.

 

Restricted Cash

 

Each Series held the following amount of restricted cash as of December 31, 2023 and December 31, 2022:

 

Series  December 31, 2023   December 31, 2022  
Landa Series 24 Ditmars Street  $13,819   $10,300  
Landa Series 132 Cornelia Street   6,165    11,750  
Landa Series 368 Irwin Street NE   8,700    4,425  
Landa Series 996 Greenwood Avenue NE   1,550    8,725  
Landa Series 1363 Hancock Street   13,360    14,700  
Landa Series 6696 Mableton Parkway SE   6,085    3,785  
Total Restricted Cash  $49,679   $53,685  

 

Restricted cash is made up of security deposits.

 

As a matter of performing its duties, the Manager, at times, will collect and hold cash on behalf of the Series.

 

F-11

 

 

Revenue

 

The Company adopted FASB ASC 606, Revenue form Contracts with Customers, and its related amendments, effective at inception using the modified retrospective transition approach applied to all contracts. There are no cumulative impacts there were made. The Company determines revenue recognition through the following steps:

 

 ●Identification of a contract with a customer;

 

 ●Identification of the performance obligations in the contract;

 

● Determination of the transaction price;

 

● Allocation of the transaction price to the performance obligations in the contract; and

 

● Recognition of revenue when or as the performance obligations are satisfied

 

Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

 

Revenues are generated at the Series level. Rental revenue is generated from annual or month to month leases of the multi-family homes. The Company recognizes rental revenue on a monthly basis when earned.

 

Accounts Receivables

 

Accounts receivable are uncollateralized obligations due under normal rental terms generally requiring payment within 1 to 30 days from the start of the month. Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. Management estimates the allowance for credit losses using a loss rate approach based on historical loss information, adjusted for management's expectations about current and future economic conditions, as the basis to determine expected credit losses. Management exercises significant judgment in determining expected credit losses. Key inputs include macroeconomic factors, industry trends, the creditworthiness of counterparties, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. Management believes that the composition of receivables at year end is consistent with historical conditions as credit terms and practices and the client base has not changed significantly. The Company evaluates accounts receivable on a case to case basis to determine expected credit losses. The Company does not record rental revenue when recovery is uncertain.

 

The Company determined it was not necessary to record an allowance for credit losses as of December 31, 2023 and 2022.

 

Property Acquisitions

 

Upon acquisition from a third-party, the Company evaluates the acquired multi-family properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Upon adoption of ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, the purchases of properties are treated as asset acquisitions and are recorded at their purchase price, which is allocated between land and building.

 

Fair value is determined in accordance with ASC 820, Fair Value Measurements and Disclosures, and is primarily based on unobservable data inputs. In making estimates of fair values for purposes of allocating the purchase price of individually acquired properties subject to an existing lease, the Company utilizes its own market knowledge obtained from historical transactions, its internal construction program and published market data. In this regard, the Company also utilizes information obtained from county tax assessment records to assist in the determination of the fair value of the land and building.

 

Acquired leases are generally short-term in nature (less than one year).

 

Property acquisitions from Landa Holdings, Inc are considered transactions between entities under common control. Under ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests, in this case, the Series, shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer.

 

In July 2022, the initial set of properties were acquired from a related party by each of the respective Series. The acquisitions were accounted for as a commonly controlled transaction and recorded, accordingly at their carryover basis.

 

Property and equipment

 

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of buildings, improvements, and other assets. Buildings are depreciated over twenty-seven and half years and improvements and other assets are depreciated over their estimated economic useful lives, generally three to twenty-seven and one half (27.5) years.

 

Once a property is ready for its intended use, expenditures for ordinary maintenance and repairs are expensed to operations as incurred. The Company capitalizes expenditures above a pre-determined threshold that improve or extend the life of a property.

 

Impairment of Long Lived Assets

 

The Company continuously evaluates, by property, whether there are any events or changes in circumstances indicating that the carrying amount of the Series’ multi-family residential properties may not be recoverable. To the extent an event or change in circumstance is identified, a residential property is considered to be impaired only if it’s carrying value cannot be recovered through estimated future undiscounted cash flows from the use and eventual disposition of the property. To the extent an impairment has occurred, the carrying amount of the investment in a property is adjusted to its estimated fair value. The process whereby the company assess its multi-family residential properties for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. The company evaluates multiple information sources and perform a number of internal analyses, each of which are important components of the process with no one information source or analysis being necessarily determinative. No impairments on any property were recorded during the years ended as of December 31, 2023 and 2022.

 

F-12

 

 

Income Taxes

 

Landa App 3 intends to be taxed as a “disregarded entity” for federal income tax purposes and will not make any election or take any action that could cause it to be separately treated as an association taxable as a corporation under Subchapter C of the Internal Revenue Code of 1986. The elements of income and expense are included on the tax returns of the entity’s members.

 

Each individual Series has elected to be treated as a corporation for tax purposes. Each separate Series intends to be accounted for as described in ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the combined and combining financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

The Series recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the combined and combining financial statements from such positions are then measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon settlement. There were no uncertain tax positions as of December 31, 2023 and 2022.

 

The Series’ determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.

 

The Series is subject to income taxes for US Federal purposes and in the states of Georgia and New York. The Series’ tax years are open for examinations for all periods since inception.

 

Organization and Offering Costs

 

In accordance with FASB ASC 720, Organizational Costs, including accounting fees, legal fees, and costs of incorporation, are expensed as incurred.

 

Comprehensive Income (Loss)

 

The Company follows FASB ASC 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU was effective for annual and interim periods beginning after December 15, 2019, including interim periods within those fiscal years. In April 2020, the FASB voted to defer the effective date of ASC 842 for private companies and certain non-for-profit entities for one year. For private companies and private NFPs, the leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The company adopted this standard as of Januar 1, 2022. The adoption of this standard did not impact the Company’s financial reporting and disclosure as all of the Company’s leases are twelve months or less and have no escalations in rental income.

 

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as modified by FASB ASU No. 2019-10 and other subsequently issued related ASUs. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this new guidance effective January 1, 2023 utilizing the modified retrospective transition method. The adoption of this standard did not have a material impact on the Company's combined and combining financial statements, but did change how the allowance for credit losses is determined.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard on its combined and combining financial statements.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying combined and combining financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

F-13

 

 

4. FAIR VALUE MEASUREMENTS

 

Fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

 

Level 1 - Observable inputs, such as quoted prices for identical assets or liabilities in active markets;

 

Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, such as quoted prices for similar assets or liabilities, or market-corroborated inputs; and

 

Level 3 - Unobservable inputs for which there is little or no market data which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.

 

The valuation techniques that may be used to measure fair value are as follows:

 

Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

 

Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models, and excess earnings method.

 

Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

 

The carrying amounts of the Company’s financial instruments, such as cash, receivables, due to/from related party, and security deposit, approximate their fair value because of their short maturities. The Company believes the carrying amount of acquisition notes payable, related party and bridge note payable approximate fair value based on rates and other terms currently available to the Company for similar debt instruments.

 

5. INVESTMENTS IN MULTI-FAMILY RENTAL PROPERTIES

 

The following table sets forth the land, building and accumulated depreciation associated with each Series’ Property as of December 31, 2023.

 

Series  Land   Building   Total
Property		   Accum
Deprec		   Property,
Net		 
Landa Series 24 Ditmars Street  $394,750   $1,581,711   $1,976,461   $87,343   $1,,889,118 
Landa Series 132 Cornelia Street   362,951    1,453,921    1,816,872    80,293    1,736,579 
Landa Series 368 Irwin Street NE   230,961    927,092    1,158,053    51,162    1,106,891 
Landa Series 996 Greenwood Avenue NE   436,888    1,761,26    2,198,156    100,975    2,097,181 
Landa Series 1363 Hancock Street   524,859    2,118,382    2,643,241    116,688    2,526,553 
Landa Series 6696 Mableton Parkway SE   97,229    389,451    486,680    18,714    467,966 
Totals  $2,047,638   $8,231,825   $10,279,463   $455,175   $9,824,288 

  

 

The following table sets forth the land, building and accumulated depreciation associated with each Series’ Property as of December 31, 2022.

 

Series  Land   Building   Total
Property		   Accum
Deprec		   Property,
Net		 
Landa Series 24 Ditmars Street  $394,750   $1,579,001   $1,973,751   $29,826   $1,943,925 
Landa Series 132 Cornelia Street   362,951    1,451,803    1,814,754    27,423    1,787,331 
Landa Series 368 Irwin Street NE   230,961    923,845    1,154,806    17,450    1,137,356 
Landa Series 996 Greenwood Avenue NE   436,888    1,747,552    2,184,440    36,929    2,147,511 
Landa Series 1363 Hancock Street   524,859    2,099,436    2,624,295    39,656    2,584,639 
Landa Series 6696 Mableton Parkway SE   97,229    388,916    486,145    6,391    479,754 
Totals  $2,047,638   $8,190,553   $10,238,191   $157,675   $10,080,516 

  

For the year ended December 31, 2023, each Series recognized the following in depreciation expense:

 

Series  Depreciation Expense 
Landa Series 24 Ditmars Street  $57,517 
Landa Series 132 Cornelia Street   52,870 
Landa Series 368 Irwin Street NE   33,712 
Landa Series 996 Greenwood Avenue NE   64,046 
Landa Series 1363 Hancock Street   77,032 
Landa Series 6696 Mableton Parkway SE   12,323 
Total Depreciation Expense  $297,500 

 

  

For the year ended December 31, 2022, each Series recognized the following in depreciation expense:

 

Series  Depreciation Expense 
Landa Series 24 Ditmars Street  $29,826 
Landa Series 132 Cornelia Street   27,423 
Landa Series 368 Irwin Street NE   17,450 
Landa Series 996 Greenwood Avenue NE   36,929 
Landa Series 1363 Hancock Street   39,656 
Landa Series 6696 Mableton Parkway SE   6,391 
Total Depreciation Expense  $157,675 

 

F-14

 

 

6. RELATED PARTY TRANSACTIONS

 

Landa Holdings Inc., Manager

 

Acquisition Notes

 

Each Series financed 100% of the costs associated with the acquisition of its Property, including an acquisition fee and expenses associated with sourcing its Property, with an Acquisition Note issued by such Series to the Manager, the terms of which are listed in the table below. Each of these Acquisition Notes represents a related-party loan between each respective Series and the Manager. The Acquisition Notes are interest-bearing and are an unsecured obligation of the applicable Series. The maturity date of the Acquisition Notes are five years from the date of issuance. The interest expense related to the Acquisition Notes for the year ended December 31, 2023 and 2022 was $191,282 and $184,217.

 

The following table sets forth the net amounts as of December 31, 2023.

 

Series  Original
Outstanding
Amount		   Annual
Interest
Rate		   Loan Date  Current
Amount
Outstanding		 
Landa Series 996 Greenwood Avenue NE  $2,542,151    4.5%  07/08/2022  $1,621,558 
Landa Series 6696 Mableton Parkway SE   505,527    4.5%  07/08/2022   - 
Landa Series 368 Irwin Street NE   1,196,951    4.5%  07/08/2022   - 
Landa Series 1363 Hancock Street   2,736,598    4.5%  07/11/2022   890,297 
Landa Series 24 Ditmars Street   2,014,427    4.5%  07/11/2022   379,548 
Landa Series 132 Cornelia Street   1,901,367    4.5%  07/11/2022   509,591 
Total Acquisition Notes  $10,897,021           $3,400,994 

 

 

The following table sets forth the net amounts as of December 31, 2022.

 

Series  Original
Outstanding
Amount		   Annual
Interest
Rate		   Loan Date  Current
Amount
Outstanding		 
Landa Series 996 Greenwood Avenue NE  $2,542,151    4.5%  07/08/2022  $1,788,449 
Landa Series 6696 Mableton Parkway SE   505,527    4.5%  07/08/2022   - 
Landa Series 368 Irwin Street NE   1,196,951    4.5%  07/08/2022   409,440 
Landa Series 1363 Hancock Street   2,736,598    4.5%  07/11/2022   1,647,752 
Landa Series 24 Ditmars Street   2,014,427    4.5%  07/11/2022   1,039,146 
Landa Series 132 Cornelia Street   1,901,367    4.5%  07/11/2022   966,509 
Total Acquisition Notes  $10,897,021           $5,851,296 

 

Due from/(to) Related Party

 

The manager will provide loans to the series to be repaid from operating cash flow. During the years ended December 31, 2023 and December 31, 2022, Landa Series 363 Irwin Street and Landa Series 6696 Mableton repaid amounts in excess of the Acquisition note balance, resulting in a balance due from related party. During the years ended December 31, 2023 and 2022, App 3 obtained bridge notes as part of a management agreement on behalf of the Manager offset by interest expense and extension fees paid by the Manager (see note 7), resulting in a balance due from related party.

 

The following table sets forth the net amounts as of December 31, 2023 and 2022.

 

Series  December 31, 2023   December 31, 2022  
Landa App 3 LLC  $4,985,470   $5,722,168  
Landa Series 24 Ditmars Street  (24,344)  (32,366) 
Landa Series 132 Cornelia Street   (26,874)   (28,217) 
Landa Series 368 Irwin Street NE   27,005    (14,230) 
Landa Series 996 Greenwood Avenue NE   (185,423)   (53,979) 
Landa Series 1363 Hancock Street   (14,987)   (44,291) 
Landa Series 6696 Mableton Parkway SE   23,789    24,317  
Total Due (to)/from Related Party  $4,784,636   $5,573,402  

 

Management Fee

 

Monthly Management Fee: Each Series pays the Manager a monthly management fee ranging from five percent (5%) to ten percent (10%) of Gross Monthly Rent for each Property.

 

The following shows the amounts incurred from each Series for management fees for the year ended December 31, 2023 and 2022.

 

Series  December 31, 2023   December 31, 2022  
Landa Series 24 Ditmars Street  $5,847   $3,112  
Landa Series 132 Cornelia Street   5,154    2,785  
Landa Series 368 Irwin Street NE   4,232    3,016  
Landa Series 996 Greenwood Avenue NE   2,654    2,221  
Landa Series 1363 Hancock Street   6,935    3,902  
Landa Series 6696 Mableton Parkway SE   3,098    1,568  
Total Restricted Cash  $27,920   $16,604  

 

F-15

 

 

Acquisition Fee: The Acquisition Notes issued by each Series to the Manager in connection with the acquisition of its Property included amounts attributable to an acquisition fee due to the Manager ranging from five percent (5%) to ten percent (10%) of the purchase price of the Property, which is included in the cost of the property.

 

The following table sets forth the amounts incurred from each Series for acquisition fees for the year ended December 31, 2022. No acquisition fees were incurred during the year ended December 31, 2023.

 

Series 

December 31,2022

 
Landa Series 24 Ditmars Street  $111,789 
Landa Series 132 Cornelia Street   105,336 
Landa Series 368 Irwin Street NE   66,183 
Landa Series 996 Greenwood Avenue NE   139,951 
Landa Series 1363 Hancock Street   151,510 
Landa Series 6696 Mableton Parkway SE   27,786 
Total Acquisition Fees  $602,555 

 

Property Diligence Expenses: The Acquisition Notes issued by each Series to the Manager in connection with the acquisition of its Property included amounts attributable to any and all fees, costs and expenses incurred in connection with the evaluation, discovery, and investigation of such Property incurred prior to such acquisition, including legal fees associated with the title insurance, appraisal costs and inspection costs, and any other expenses associated with the acquisition of a Property. These expenses are included in the cost of the property.

 

The following table sets forth the amounts incurred from each Series for property diligence expenses for the year ended December 31, 2022 No property diligence expenses were incurred during the year ended December 31, 2023.

 

Series 

December 31,2022

 
Landa Series 24 Ditmars Street  $3,810 
Landa Series 132 Cornelia Street   3,810 
Landa Series 368 Irwin Street NE   5,080 
Landa Series 996 Greenwood Avenue NE   13,970 
Landa Series 1363 Hancock Street   7,620 
Landa Series 6696 Mableton Parkway SE   5,080 
Total Property Diligence Expenses  $39,370 

 

7. BRIDGE NOTE PAYABLE

 

In August 2022, App 3 refinanced a portion of each of the Series’ Acquisition Notes with senior secured bridge note payables provided by third-party lenders. In connection with each refinancing, App 3 entered into six Bridge Notes with third-party lenders (collectively the “Bridge Notes”). The principal amounts and associated interest are recognized by App 3 and is not attributable to any individual Series. The bridge loans are collateralized by the underlying Series properties land, improvements, fixtures, leases and rents. The management agreement entered into between the Company and the Manager allows the Manager to secure this debt. Interest expense for the bridge loans for the years ended December 31, 2023 and 2022 totaled $545,871 and $199,832 and was paid by the Manager and included in the due to related party balance. The following table sets forth the terms and the net amounts as of December 31, 2023 and 2022.

 

Property  Principal
Amount		   Annual
Interest
Rate		   Maturity Date  Current
Outstanding
Balance		 
1363 Hancock Street, Brooklyn, NY 11211  $1,225,000    12.375%  June 1, 2024  $1,225,000 
996 Greenwood Ave NE, Atlanta, GA 30306   1,012,000    12.375%  June 1, 2024   997,000 
6696 Mableton Parkway SE, Mableton, GA 30126   341,250    8.990%  January 1, 2024   341,250 
368 Irwin Street NE, Atlanta, GA 30312   810,000    8.990%  January 1, 2024   810,000 
132 Cornelia Street, Brooklyn, NY 11221   1,256,250    8.990%  January 1, 2024   1,256,250 
24 Ditmars Street, Brooklyn, NY 11221   1,277,500    8.990%  June 1, 2024   1,277,500 
Total Bridge Note Payable  $5,922,000           $5,907,000 

 

As of the date of this filing, 132 Cornelia Street, Brooklyn, NY 11221, 368 Irwin Street NE, Atlanta, GA 30312, and 6696 Mableton Parkway SE, Mableton, GA 30126, have matured bridge loans and the manager is in the process of refinancing them. If the refinance processes are not completed in a timely manner, the properties will face foreclosure risk.

 

During the year ended December 31, 2023, the loans for the properties at 24 Ditmars Street, 132 Cornelia Street, 6696 Mableton Parkway, 368 Irwin Street, 1363 Hancock, and 996 Greenwood Avenue were renegotiated. As part of these renegotiations, the maturity dates of the loans were extended with the respective lenders.

 

In connection with the revised agreements, the lenders charged extension fees amounting to $167,061. The extension fees were capitalized and amortized to interest expense over the term of the extensions. For the year ended December 31, 2023, Landa App 3 recognized $86,757 of interest expense associated with the amortization of the extension fees.

 

The amortization of the bridge note extension fees pertained to the following Series: $21,268 for 24 Ditmars Street, $33,542 for 132 Cornelia Street, $6,825 for 6696 Mableton Parkway SE, $10,773 for 368 Irwin, $4,487 for 1363 Hancock, and $9,862 for 996 Greenwood Avenue NE.

 

During 2023, the loan payments for the property at 24 Ditmars Street were made past their due dates. As a result, the lender charged late fees and additional interest. The total amount paid in 2023 for late fees was $1,933, while the additional interest incurred amounted to $15,688.

 

 

F-16

 

 

8. MEMBER’S EQUITY (DEFICIT)

 

The Company is organized as a series limited liability company. As such, the liability of the members of the Company for the financial obligations of the Company is limited to each member’s contribution of capital.

 

The Manager will be responsible for directing the management of Series’ business and affairs, managing the day-to-day affairs, and implementing the Series’ investment strategy. The Manager has a unilateral ability to amend the operating agreement and the allocation policy in certain circumstances without the consent of the investors. The investors only have limited voting rights with respect to the Series.

 

The Manager has sole discretion in determining what distributions, if any, are made to interest holders except as otherwise limited by law or the operating agreement. The Series expects the Manager to make distributions monthly. However, the Manager may change the timing of distributions or determine that no distributions shall be made, in its sole discretion.

 

Membership Interests

 

For the year ended December 31, 2023, the Series raised from their public offerings net proceeds of $2,480,843. For the year ended December 31, 2023, four series remained open and two closed. An “Open” series is defined as a series that has not sold out its primary offering. A “Closed” series has sold 100% of its offerings.

 

The following is a summary of the public offerings by each Series:

 

   December 31, 2023 
Series  # of
memberships
issued		   Net
proceeds
from the
issuance of
membership
interests		 
Landa Series 24 Ditmars Street   32,570   $656,099 
Landa Series 132 Cornelia Street   23,963    455,652 
Landa Series 368 Irwin Street NE*   36,270    440,920 
Landa Series 996 Greenwood Avenue NE   6,745    171,708 
Landa Series 1363 Hancock Street   27,638    756,363 
Landa Series 6696 Mableton Parkway SE*   -    101 
    127,186   $2,480,843 

 

*Series closed as at December 31, 2023.

 

For the year ended December 31, 2022, the Series raised from their public offerings net proceeds of $4,581,592. For the year ended December 31, 2022, five series remained open and one closed. An “Open” series is defined as a series that has not sold out its primary offering. A “Closed” series has sold 100% of its offerings.

 

The following is a summary of the public offerings by each Series:

 

   December 31, 2022 
Series  # of
memberships
issued		   Net
proceeds
from the
issuance of
membership
interests		 
Landa Series 24 Ditmars Street   48,350   $973,892 
Landa Series 132 Cornelia Street   46,498    883,985 
Landa Series 368 Irwin Street NE   63,730    762,773 
Landa Series 996 Greenwood Avenue NE   16,837    427,967 
Landa Series 1363 Hancock Street   37,546    1,027,448 
Landa Series 6696 Mableton Parkway SE*   100,000    505,527 
    312,961   $4,581,592 

 

*Series closed as at December 31, 2022.

 

Distributions

 

For the year ended December 31, 2023 and 2022, the Series made distributions to investors of the respective Series totaling $293,987 and $166,713 for the year ended December 31, 2022, which were recorded as a reduction to members’ equity.

 

The following is a summary of distributions by each Series for the years ended December 31, 2023 and 2022:

 

Series  December 31, 2023   December 31,2022 
Landa Series 24 Ditmars Street   74,920   $39,585 
Landa Series 132 Cornelia Street   66,430    40,590 
Landa Series 368 Irwin Street NE   33,561    17,134 
Landa Series 996 Greenwood Avenue NE   3,135    8,241 
Landa Series 1363 Hancock Street   91,607    50,255 
Landa Series 6696 Mableton Parkway SE   24,334    10,908 
Total Distribution   293,987   $166,713 

 

9. COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

There are no legal proceedings material to the Company’s business or financial condition pending and management is not aware of any legal proceedings contemplated or threatened.

 

F-17

 

 

10. INCOME TAXES

 

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

 

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is not required due to the current uncertainty of the future realization of the deferred tax assets.

 

Deferred tax assets were calculated using the Company’s combined effective tax rates, which it estimated to be ranging from 21.0% to 27.0% based on the state of the respective Series and the federal tax rate. The total deferred tax asset as of December 31, 2023 and 2022, was $361,482 and $118,302, which consists entirely of federal and state net operating loss carryforwards. Based on the available evidence, management believes that it is more likely than not that its deferred tax assets will not be realized and accordingly, nearly a full valuation allowance is provided for. The effective rate is reduced to approximately .1% for 2022 due to the valuation allowance on its net deferred tax assets. The provision for income taxes for the years ended December 31, 2023 and 2022 was $2,608 and $668. The Company did not have any permanent tax difference for the years ended December 31, 2023 and 2022.

 

The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. As of December 31, 2023 and 2022, the Company had net operating loss carryforwards available to offset future taxable income in the amount of $1,344,097 and $438,155 for state and federal purposes.

 

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the combined and combining statement of comprehensive income (loss). At January 1, 2023, the Company had no unrecognized tax benefits and no charge during 2023, and accordingly, the Company did not recognize any interest or penalties during 2023 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2023.

 

The Company is not presently subject to any income tax audit in any taxing jurisdiction, though its 2023 and 2022 tax year remains open to examination.

 

11. SUBSEQUENT EVENTS

 

During 2024, the Company has declared and distributed five (5) dividends for a total distribution of $49,759. The following table summarizes the dividends declared and distributed by Series:

 

Series  January 1,
2024		   February 1,
2024		   March 1,
2024		   April 1,
2024		   May 1,
2024		 
Landa Series 24 Ditmars Street  $3,225  $2,715  $3,225  $3,225  $-
Landa Series 132 Cornelia Street  2,775  2,775  2,775  2,775  2,633
Landa Series 368 Irwin Street NE  623  623  -  -  599
Landa Series 996 Greenwood Avenue NE  825  -  825  -  -
Landa Series 1363 Hancock Street  4,679  4,244  4,614  44 
Landa Series 6696 Mableton Parkway SE  1,312   1,312   1,312   1,312   $1,312 
Total Distributions  $13,439   $11,669   $12,751   $7,356   $4,544 

 

During 2024, the Company sold membership interest and received proceeds as follows:

 

Series  # of
memberships
issued		   Net
proceeds
from the
issuance of
membership
interests		 
Landa Series 24 Ditmars Street   5,078  $105,382 
Landa Series 132 Cornelia Street   4,820    96,424 
Landa Series 368 Irwin Street NE (1)   -    - 
Landa Series 996 Greenwood Avenue NE   1,688    43,092 
Landa Series 1363 Hancock Street   3,702    103,803 
Landa Series 6696 Mableton Parkway SE(1)   -    - 
    15,288   $348,701 

 

(1) This series was fully subscribed before January 1, 2024.

 

 

F-18

 

 

The following is a summary of payments made by each series towards acquisition notes during 2024.

 

Series

Amount

Landa Series 132 Cornelia Street

96,956

Landa Series 1363 Hancock Street

35,489

Landa Series 24 Ditmars Street

104,469

Landa Series 996 Greenwood Avenue NE

41,464

Landa Series 368 Irwin Street NE

-

Landa Series 6696 Mableton Parkway SE

-

Total Payments

278,378

 

 

 

Item 8. Exhibit Index

 

Exhibit No.   Exhibit Description
2.1     Certificate of Formation of Landa App 3 LLC (incorporated by reference to the copy thereof filed as Exhibit 2.1 to the Company’s Form 1-A filed March 1, 2022)*
2.2     Limited Liability Company Operating Agreement of Landa App 3 LLC (incorporated by reference to the copy thereof filed as Exhibit 2.2 to the Company’s Form 1-A filed March 1, 2022)*
3.1     Series Designation of Landa App 3 LLC – 6696 Mableton Parkway SE Mableton GA LLC (incorporated by reference to the copy thereof file as Exhibit 3.1 to the Company’s Form 1-A filed on March 1, 2022)*
3.2   Series Designation of Landa App 3 LLC – 996 Greenwood Avenue NE Atlanta GA LLC (incorporated by reference to the copy thereof file as Exhibit 3.2 to the Company’s Form 1-A filed on March 1, 2022)*
3.3   Series Designation of Landa App 3 LLC – 24 Ditmars Street Brooklyn NY LLC (incorporated by reference to the copy thereof file as Exhibit 3.3 to the Company’s Form 1-A filed on March 1, 2022)*
3.4   Series Designation of Landa App 3 LLC – 1363 Hancock Street Brooklyn NY LLC (incorporated by reference to the copy thereof file as Exhibit 3.4 to the Company’s Form 1-A/A filed on May 23, 2022)*
3.5   Series Designation of Landa App 3 LLC – 132 Cornelia Street Brooklyn NY LLC (incorporated by reference to the copy thereof file as Exhibit 3.5 to the Company’s Form 1-A/A filed on May 23, 2022)*
3.6   Series Designation of Landa App 3 LLC – 368 Irwin Street NE Atlanta GD LLC (incorporated by reference to the copy thereof file as Exhibit 3.6 to the Company’s Form 1-A/A filed on May 23, 2022)*
4.1   Form of Subscription Agreement (incorporated by reference to the copy thereof filed as Exhibit 4.1 to the Company’s Form 1-A filed March 1, 2022)*
6.1   Form of Management Agreement (incorporated by reference to the copy thereof filed as Exhibit 6.1 to the Company’s Form 1-A filed March 1, 2022)*
6.2   Broker Dealer Services Agreement by and between Dalmore Group, LLC and Landa App 3 LLC (incorporated by reference to the copy thereof filed as Exhibit 6.2 to the Company’s Form 1-A filed March 1, 2022)*
6.3   Landa Mobile App License Agreement (incorporated by reference to the copy thereof filed as Exhibit 6.3 to the Company’s Form 1-A filed March 1, 2022)*
6.4   Form of Promissory Note, by and between Landa Holdings, Inc. and a Landa App 3 Series (Acquisition Note)* (see “Description of the Properties – Loans” of the Company’s Form 1-A filed March 1, 2022 and “Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments” in this Form 1-SA for a schedule of certain material business terms of each Promissory Note with respect to each Series)
6.5   Form of NY Lease Agreement* (see “Description of the Properties” of the Company’s Form 1-A/A filed May 23, 2022 and “Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments” in this Form 1-SA for material business terms of each lease with respect to each Series that owns Property in New York)
6.6   Form of GA Lease Agreement* (see “Description of the Properties” of the Company’s Form 1-A/A filed May 23, 2022 and “Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments” in this Form 1-SA for material business terms of each lease with respect to each Series that owns Property in Georgia)
6.7   PPEX ATS Company Agreement, by and among North Capital Private Securities Corporation, Landa App 3 LLC and each of the Series set forth therein (incorporated by reference to the copy thereof filed as Exhibit 6.7 to the Company’s Form 1-A filed March 1, 2022)*
6.8   Letter Agreement between Dalmore Group, LLC and Landa Holdings, Inc. (incorporated by reference to the copy thereof filed as Exhibit 6.1 to the Company’s Form 1-U filed on January 12, 2023)*

 

* Previously filed

 

21

 

 

SIGNATURES

 

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

 

  Landa App 3 LLC
   
  By: Landa Holdings, Inc., its Manager
   
  By: /s/ Yishai Cohen
  Name:  Yishai Cohen
  Title: Chief Executive Officer

 

 

Date: June 3, 2024

 

Pursuant to the requirements of Regulation A, this Annual Report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Yishai Cohen   Chairman, Chief Executive Officer and   June 3, 2024
Yishai Cohen  

President of Landa Holdings, Inc.

(Principal Executive Officer)

    
         
         
         
/s/ Yishai Cohen   Acting Head of Finance of Landa Holdings, Inc.  

June 3, 2024

Yishai Cohen

   (Principal Financial Officer and
Principal Accounting Officer)		    

 

 

 

22