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Investment in Partnership
 12 Months Ended
Dec. 31, 2020
Investment In Partnership [Abstract]  
Investment in Partnership

3. Investment in Partnership


On December 16, 2016, the Company and its newly formed operating partnership, Presidential OP, entered into an interest contribution agreement (the “Initial Agreement”) with First Capital Real Estate Trust Incorporated (“FC REIT”), First Capital Real Estate Operating Partnership (the “FC OP”), Township Nine Owner, LLC (T9/JV), Capital Station Holdings, LLC, Capital Station Member, LLC, Capital Station 65 LLC and Avalon Jubilee LLC.


On January 6, 2017, the Company and the other parties to the Initial Agreement entered into the First Amendment to the Initial Agreement (the “Amendment,” and, together with the Initial Agreement, the “Agreement”) and FC OP entered into the Agreement of Limited Partnership (the “Limited Partnership Agreement”) of Presidential OP, as limited partner, with the Company as general partner. The Agreement contemplated that Presidential OP would acquire from FC OP a 31.3333% interest in the owner of a residential community referred to as the “Avalon Property” (as defined below) and 66% (the “T9 Transferred Interest”) of FC OP’s 92% interest (FC/T9 Interest) in the owner of a development property known as the “T9 Property.” The purchase price for the interests was to be payable in limited partnership interests in Presidential OP (“Presidential OP Units”) convertible under certain conditions into shares of the Company’s Class B common stock or redeemable for cash at the Company’s discretion.


Presidential OP’s acquisition of the interest in the Avalon Property was completed on January 6, 2017. The Avalon Property consisted of 251 non-contiguous single-family residential lots, at various stages of development, within the Jubilee at Los Lunas subdivision located in Los Lunas, New Mexico (the “Avalon Property”). At the Closing, in exchange for the contribution to Presidential OP of FC OP’s membership interests in the Avalon Property, FC OP received 4,632,000 Presidential OP Units in, and became a limited partner of, Presidential OP. Such limited partnership interests were convertible, upon the satisfaction of certain conditions, into shares of Class B common stock of the Company on a one-for-one basis or redeemable into cash at the Company’s discretion. Presidential OP never completed its acquisition of the T9 Property from FC OP and all agreements related to the acquisition and transfer of the interests in the property were canceled.


In connection with the Closing, FC REIT paid $800,000 to Presidential to be used as operating capital, of which $300,000 was used for direct fees in connection with the transaction. The Company recorded this payment as other income in 2017. The agreements also provided that FC REIT would contribute additional working capital for the seamless integration of the FC REIT properties, up listing of the Company on a national securities exchange and asset growth plans as conditions precedent to the closing of the Agreement. FC REIT did not provide the required working capital to complete these activities. All the agreements relating to the FC REIT transactions entered into in 2016 and 2017 were considered terminated due to the lack of performance by FC REIT except the 31.3333% ownership interest in the Avalon Property. On March 21, 2018 FC OP redeemed its 4,632,000 shares of Presidential OP Units in exchange for $90,381 previously owed to Presidential from FC REIT. Upon the redemption of the Presidential OP Units the Presidential OP Partnership was terminated pursuant to the terms of the Limited Partnership Agreement and Presidential retained the 31.3333% interest in the Avalon Property. The Company believes that it does not have any further obligations to FC REIT or any other parties in connection with the Agreement due to the lack of contractual performance by FC REIT, numerous closing conditions precedent in the Agreement not being met, and the balance of transactions contemplated in the Agreement not being completed.


On January 6, 2017 Presidential OP recorded the fair value of their interest in Avalon Jublee LLC at $4,222,027 based on the appraised value of the property under the assumptions that the partnership would be building and selling single-family homes. In 2018 the managing member in the Avalon Property changed their focus from building and selling single-family homes to improving and selling developed lots. The change in strategy has significantly impaired our investment. (See Note 8 for changes in fair value)


Based on the redemption features associated with FC OP’s limited partnership interest in Presidential OP, the non-controlling interest of FC OP’s interest is reported as mezzanine equity. The redemption feature allowed FC OP to redeem their interest in Presidential OP one year after their initial contribution whereby such interest could be redeemed in full or partial through the settlement of cash or issuance of the Company’s Class B Common Stock, based solely on the Company’s discretion. The Company has elected to adjust the non-controlling interest to the redemption amount at each balance sheet date. As of December 31, 2017, the redemption amount of the non-controlling interest was less than the initial carrying value adjusted for the portion of net income allocated to the non-controlling interest for the year-end December 31, 2017 and as such, the non-controlling interest is reported at its carrying amount.


On December 31, 2020 the Avalon Property consisted of 34 finished, single-family subdivision lots and approximately 21.42 acres of subsequent phases of undeveloped land in Los Lunas, New Mexico.


As of December 31, 2020, we owned a 31.3333% interest in Avalon Jublee, LLC partnership with an aggregate fair value of $-0-. The Company has elected the fair value option versus accounting under the equity method as the fair value better represents the Company’s realization of this investment.


Summary financial information for Avalon Property (31.3333% owned) accounted for by the fair value method is as follows:


   December 31, 
   2020   2019   2018   2017 
Condensed balance sheet                
Cash  $114,223   $613,185   $199,350   $236,390 
Accounts receivable   394,158    1,240,483    56,350    34,886 
Inventory   2,266,107    455,922    2,024,410    2,552,846 
Fixed assets net   320    534    748    1,047 
Other assets   68,690    133,240    165,147    276,319 
Total assets  $2,843,498   $2,443,364   $2,446,005   $3,101,488 
                     
Accounts payable  $1,054,716   $513,022   $702,310   $434,369 
Other liabilities   378,563    922,698    733,790    235,152 
Loans from partners   320,000    110,000    -    - 
Mortgages   485,104    495,120    260,104    575,000 
Partners’ capital   605,115    402,524    749,801    1,856,967 
Total liabilities and capital  $2,843,498   $2,443,364   $2,446,005   $3,101,488 
                     
Condensed statement of operations                    
Gross receipts  $554,692   $5,935,519   $3,163,118   $6,020,120 
Cost of goods sold   281,932    5,316,116    3,000,965    4,223,171 
Gross profit   272,760    619,403    162,153    1,796,949 
Other expenses (income)   262,263    966,680    1,074,530    1,375,532 
Net income (loss)  $10,497   $(347,277)  $(912,377)  $421,417 
Net income (loss) attributed to Presidential Realty Corporation  $3,289   $(108,813)   $(285,878)   $132,044