Maryland | 39-6594066 | |
(State or Other Jurisdiction of Incorporation or | (I.R.S. Employer | |
Organization) | Identification No.) | |
2600 South Gessner, Suite 555, Houston, Texas | 77063 | |
(Address of Principal Executive Offices) | (Zip Code) |
Page | |||
Item 1. | |||
Item 1B. | |||
Item 2. | |||
Item 3. | |||
Item 4. |
Item 5. | |||
Item 7. | |||
Item 8. | |||
Item 9. | |||
Item 9A. | |||
Item 9B. |
Item 10. | |||
Item 11. | |||
Item 12. | |||
Item 13. | |||
Item 14. |
• | uncertainties related to the national economy, the real estate industry in general and in our specific markets; |
• | legislative or regulatory changes; |
• | adverse economic conditions in Texas; |
• | adverse changes in governmental rules and fiscal policies; |
• | increases in interest rates and operating costs; |
• | availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures; |
• | decreases in rental rates or increases in vacancy rates; |
• | litigation risks; |
• | lease-up risks, including leasing risks arising from exclusivity and consent provisions in leases with significant tenants; |
• | our inability to renew tenants or obtain new tenants upon the expiration of existing leases; and |
• | our inability to generate sufficient cash flows due to market conditions, competition, uninsured losses, changes in tax or other applicable laws. |
• | our cash resources are limited; |
• | we have a history of losses; |
• | we have not raised funds through a public equity offering; |
• | our trustees control a significant percentage of our voting shares; |
• | shareholders could experience possible future dilution through the issuance of additional shares; |
• | we are dependent on a small number of key senior professionals who are part-time employees; and |
• | we currently do not plan to distribute dividends to the holders of our shares. |
Pillarstone Capital REIT | ||||||||||||||||||||||
Real Estate Assets | ||||||||||||||||||||||
As of December 31, 2017 | ||||||||||||||||||||||
Community Name | Location | Year Built/ Renovated | Gross Leasable Area (“GLA”) | Percent Occupied at 12/31/2017 | Annualized Base Rental Revenue (in thousands) (1) | Average Base Rental Revenue Per Sq. Ft. (2) | Average Net Effective Annual Base Rent Per Leased Sq. Ft.(3) | |||||||||||||||
9101 LBJ Freeway | Dallas | 1985 | 125,874 | 75 | % | $ | 1,439 | $ | 15.24 | $ | 14.43 | |||||||||||
Corporate Park Northwest | Houston | 1981 | 174,359 | 79 | % | 1,863 | 13.53 | 13.54 | ||||||||||||||
Corporate Park West | Houston | 1999 | 175,665 | 78 | % | 1,540 | 11.24 | 11.27 | ||||||||||||||
Corporate Park Woodland | Houston | 2000 | 99,937 | 97 | % | 1,003 | 10.35 | 10.76 | ||||||||||||||
Corporate Park Woodland II | Houston | 2000 | 16,220 | 88 | % | 167 | 11.70 | 15.55 | ||||||||||||||
Dairy Ashford | Houston | 1981 | 42,902 | 37 | % | 110 | 6.93 | 7.56 | ||||||||||||||
Holly Hall Industrial Park | Houston | 1980 | 90,000 | 91 | % | 642 | 7.84 | 7.34 | ||||||||||||||
Holly Knight | Houston | 1984 | 20,015 | 100 | % | 375 | 18.74 | 18.94 | ||||||||||||||
Interstate 10 Warehouse | Houston | 1980 | 151,000 | 86 | % | 579 | 4.46 | 4.60 | ||||||||||||||
Main Park | Houston | 1982 | 113,410 | 79 | % | 540 | 6.03 | 6.69 | ||||||||||||||
Plaza Park | Houston | 1982 | 105,530 | 64 | % | 636 | 9.42 | 9.11 | ||||||||||||||
Uptown Tower | Dallas | 1982 | 253,981 | 81 | % | 4,144 | 20.14 | 20.09 | ||||||||||||||
Westbelt Plaza | Houston | 1978 | 65,619 | 67 | % | 501 | 11.40 | 10.99 | ||||||||||||||
Westgate Service Center | Houston | 1984 | 97,225 | 99 | % | 720 | 7.48 | 7.46 | ||||||||||||||
Total / Weighted Average | 1,531,737 | 81 | % | $ | 14,259 | $ | 11.49 | $ | 11.51 |
(1) | Calculated as the tenant's actual December 31, 2017 base rent (defined as cash base rents including abatements) multiplied by 12. Excludes vacant space as of December 31, 2017. Because annualized base rental revenue is not derived from historical results that were accounted for in accordance with generally accepted accounting principles in the United States (“GAAP”), historical results differ from the annualized amounts. Total abatements for leases in effect as of December 31, 2017 equaled approximately $51,000 for the month ended December 31, 2017. |
(2) | Calculated as annualized base rent divided by GLA leased as of December 31, 2017. Excludes vacant space as of December 31, 2017. |
(3) | Represents (i) the contractual base rent for leases in place as of December 31, 2017, adjusted to a straight-line basis to reflect changes in rental rates throughout the lease term and amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (ii) square footage under commenced leases of December 31, 2017. |
For the Year Ended December 31, 2017 | High | Low | |||||||
First Quarter | $ | 5.25 | $ | 3.00 | |||||
Second Quarter | $ | 3.60 | $ | 3.50 | |||||
Third Quarter | $ | 3.50 | $ | 3.24 | |||||
Fourth Quarter | $ | 4.05 | $ | 2.78 | |||||
For the Year Ended December 31, 2016 | High | Low | |||||||
First Quarter | $ | 3.00 | $ | 1.40 | |||||
Second Quarter | $ | 3.00 | $ | 1.76 | |||||
Third Quarter | $ | 2.50 | $ | 2.00 | |||||
Fourth Quarter | $ | 5.25 | $ | 1.75 |
• | Explanation of changes in the results of operations in the Consolidated Statements of Operations for the year ended December 31, 2017 compared to the year ended December 31, 2016. |
• | Our critical accounting policies and estimates that require our subjective judgment and are important to the presentation of our financial condition and results of operations. |
• | Our primary sources and uses of cash for the year ended December 31, 2017, and how we intend to generate cash for long-term capital needs. |
• | Our current income tax status. |
• | borrowings from new loans; |
• | additional equity issuances of our common and preferred shares; and |
• | proceeds from the sales of our real estate, a technology segment, and marketable securities. |
Exhibit Number | Exhibit Description | |
Exhibit Number | Exhibit Description | |
Exhibit Number | Exhibit Description | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
(1) | Indicates a management contract or compensatory plan or arrangement |
(2) | Filed or furnished herewith |
PILLARSTONE CAPITAL REIT | ||||
Date: | March 29, 2018 | By: | /s/ James C. Mastandrea | |
James C. Mastandrea, Chairman and CEO | ||||
PILLARSTONE CAPITAL REIT | ||||
Date: | March 29, 2018 | By: | /s/ John J. Dee | |
John J. Dee, CFO |
Signature | Title | Date |
/s/ James C. Mastandrea James C. Mastandrea | Trustee, Chief Executive Officer and President | March 29, 2018 |
(Principal Executive Officer) | ||
/s/ John J. Dee John J. Dee | Trustee, Senior Vice President and Chief Financial Officer | March 29, 2018 |
(Principal Finance and Principal Accounting Officer) | ||
/s/ Daryl J. Carter Daryl J. Carter | Trustee | March 29, 2018 |
/s/ Daniel G. DeVos Daniel G. DeVos | Trustee | March 29, 2018 |
/s/ Paul T. Lambert Paul T. Lambert | Trustee | March 29, 2018 |
/s/ Dennis H. Chookaszian Dennis H. Chookaszian | Trustee | March 29, 2018 |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Page | ||
Pillarstone Capital REIT and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 179,385 | $ | 7,445 | ||||
Marketable securities | 100 | 100 | ||||||
Equity investment in Pillarstone Capital REIT Operating Partnership LP | — | 14,776 | ||||||
Other assets | 9,679 | 14,499 | ||||||
Fixed assets | 3,398 | — | ||||||
Total assets | $ | 192,562 | $ | 36,820 | ||||
LIABILITIES AND EQUITY (DEFICIT) | ||||||||
Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 92,105 | $ | 27,541 | ||||
Accounts payable - related party | 316,103 | 316,103 | ||||||
Convertible notes payable - related parties | 197,780 | 197,780 | ||||||
Accrued interest payable - related parties | 41,832 | 22,108 | ||||||
Negative equity investment in Pillarstone Capital REIT Operating Partnership LP | 88,880 | — | ||||||
Total liabilities | 736,700 | 563,532 | ||||||
Commitments and contingencies | — | — | ||||||
Shareholders' Equity (Deficit): | ||||||||
Preferred A Shares - $0.01 par value, 1,518,000 authorized: 256,636 Class A cumulative convertible shares issued and outstanding at December 31, 2017 and 2016, $10.00 per share liquidation preference | 2,567 | 2,567 | ||||||
Preferred C Shares - $0.01 par value, 300,000 authorized: 244,444 Class C cumulative convertible shares issued and outstanding at December 31, 2017 and 2016, $10.00 per share liquidation preference | 2,444 | 2,444 | ||||||
Common Shares - $0.01 par value, 400,000,000 authorized: 443,299 shares issued and 405,169 outstanding at December 31, 2017 and 2016 | 4,052 | 4,052 | ||||||
Additional paid-in capital | 28,146,986 | 28,146,986 | ||||||
Accumulated deficit | (27,899,452 | ) | (27,882,026 | ) | ||||
Treasury shares, at cost, 38,130 shares | (800,735 | ) | (800,735 | ) | ||||
Total Pillarstone Capital REIT shareholders' deficit | (544,138 | ) | (526,712 | ) | ||||
Total liabilities and equity (deficit) | $ | 192,562 | $ | 36,820 |
Pillarstone Capital REIT and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Revenues | ||||||||
Interest and dividend income | $ | — | $ | — | ||||
Total revenues | — | — | ||||||
Expenses | ||||||||
General and administrative | 273,015 | 491,925 | ||||||
Interest | 19,724 | 19,832 | ||||||
Total expenses | 292,739 | 511,757 | ||||||
Loss from operations | (292,739 | ) | (511,757 | ) | ||||
Equity in income of Pillarstone Capital REIT Operating Partnership LP | 275,313 | 14,776 | ||||||
Net loss attributable to common shareholders | (17,426 | ) | (496,981 | ) | ||||
Net loss attributable to common shareholders per common share: Basic and Diluted | $ | (0.04 | ) | $ | (1.23 | ) | ||
Weighted average number of common shares outstanding: Basic and Diluted | 405,169 | 405,169 |
Pillarstone Capital REIT and Subsidiaries | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) | ||||||||||||||||||||||||||||
Class A | Class C | Additional | Cost of | |||||||||||||||||||||||||
Preferred | Preferred | Common | Paid-in | Accumulated | Shares held | Total | ||||||||||||||||||||||
Shares | Shares | Shares | Capital | Deficit | in Treasury | Deficit | ||||||||||||||||||||||
Balance, December 31, 2015 | $ | 2,583 | $ | 2,444 | $ | 4,051 | $ | 28,146,971 | $ | (27,385,045 | ) | $ | (800,735 | ) | $ | (29,731 | ) | |||||||||||
Conversion of Class A Preferred Shares to Common Shares | (16 | ) | — | 1 | 15 | — | — | — | ||||||||||||||||||||
Net loss | — | — | — | — | (496,981 | ) | — | (496,981 | ) | |||||||||||||||||||
Balance, December 31, 2016 | 2,567 | 2,444 | 4,052 | 28,146,986 | (27,882,026 | ) | (800,735 | ) | (526,712 | ) | ||||||||||||||||||
Net loss | — | — | — | — | (17,426 | ) | — | (17,426 | ) | |||||||||||||||||||
Balance, December 31, 2017 | $ | 2,567 | $ | 2,444 | $ | 4,052 | $ | 28,146,986 | $ | (27,899,452 | ) | $ | (800,735 | ) | $ | (544,138 | ) |
Pillarstone Capital REIT and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (17,426 | ) | $ | (496,981 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Equity in income of Pillarstone Capital REIT Operating Partnership LP | (275,313 | ) | (14,776 | ) | ||||
Distributions received from Pillarstone Capital REIT Operating Partnership LP | 290,089 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Other assets | 4,820 | (4,547 | ) | |||||
Accounts payable and accrued expenses | 84,288 | 33,363 | ||||||
Accounts payable - related party | — | 316,103 | ||||||
Net cash provided by (used in) operations | 86,458 | (166,838 | ) | |||||
Cash flows from investing activities: | ||||||||
Excess distributions received from Pillarstone Capital REIT Operating Partnership LP | 88,880 | — | ||||||
Purchases of fixed assets | (3,398 | ) | — | |||||
Net cash provided by investing activities | 85,482 | — | ||||||
Cash flows from financing activities: | ||||||||
Net cash provided by financing activities | — | — | ||||||
Net increase (decrease) in cash and cash equivalents | 171,940 | (166,838 | ) | |||||
Cash and cash equivalents at beginning of year | 7,445 | 174,283 | ||||||
Cash and cash equivalents at end of year | $ | 179,385 | $ | 7,445 | ||||
Non cash investing and financing activities: | ||||||||
Conversion of Preferred A Shares to common shares | $ | — | $ | 16 | ||||
Investment in Pillarstone Capital REIT Operating Partnership LP | $ | — | $ | 4,121,312 | ||||
Distribution in kind from Pillarstone Capital REIT Operating Partnership LP | $ | — | $ | (4,121,312 | ) |
1. | ORGANIZATION |
Fair Value Measurement Using | |||||||||||
Level 1 | Level 2 | Level 3 | |||||||||
Marketable Securities | |||||||||||
December 31, 2017 | |||||||||||
Money Market Investment | $ | 100 | $ | — | $ | — | |||||
December 31, 2016 | |||||||||||
Money Market Investment | $ | 100 | $ | — | $ | — |
• | the date our gross assets exceed $50 million, or |
• | 50% of the restricted shares on March 4, 2004; 25% of the shares on March 4, 2005 and the remaining 25% of the shares on March 4, 2006. |
Unvested Restricted Common Shares | |||
Weighted-Average | |||
Number of | Grant-Date | ||
Shares | Fair Value | ||
Unvested at December 31, 2015 | 168,449 | $11.44 | |
Vested | — | — | |
Unvested at December 31, 2016 | 168,449 | $11.44 | |
Vested | — | — | |
Unvested at December 31, 2017 | 168,449 | $11.44 |
Options Outstanding | ||||||||||||
Weighted-Average | ||||||||||||
Weighted-Average | Remaining | |||||||||||
Number of | Exercise | Contractual Term | Aggregate | |||||||||
Shares | Price | (in years) | Intrinsic Value (1) | |||||||||
Balance at December 31, 2015 | 667 | $ | 33.75 | 1.25 | $ | — | ||||||
Granted | — | — | ||||||||||
Exercised | — | — | ||||||||||
Canceled / forfeited / expired | — | $ | — | |||||||||
Balance at December 31, 2016 | 667 | $ | 33.75 | 1.25 | $ | — | ||||||
Granted | — | — | ||||||||||
Exercised | — | — | ||||||||||
Canceled / forfeited / expired | — | — | ||||||||||
Balance at December 31, 2017 | 667 | $ | 33.75 | 1.25 | $ | — | ||||||
Vested and exercisable as of December 31, 2017 | — | $ | — | 0 | $ | — |
(1) | The aggregate intrinsic value is calculated as approximately the difference between the weighted average exercise price of the underlying awards and the Company’s estimated current fair market value at December 31, 2017. Because the weighted average exercise price exceeds fair market value at December 31, 2017, there is no aggregate intrinsic value for the options. |
Year ended December 31, | |||||||
2017 | 2016 | ||||||
Numerator | |||||||
Net loss attributable to common shareholders | (17,426 | ) | $ | (496,981 | ) | ||
Denominator | |||||||
Weighted average Common Shares outstanding at December 31, 2017 and December 31, 2016 - basic and diluted | 405,169 | 405,169 | |||||
Basic and Diluted EPS | |||||||
Net loss attributable to common shareholders - basic and diluted | $ | (0.04 | ) | $ | (1.23 | ) |
For the year ended December 31, | |||||||
2017 | 2016 | ||||||
Deferred benefit | $ | (6,000 | ) | $ | (40,000 | ) | |
Change in deferred rate (1) | 350,000 | 156,000 | |||||
Change in valuation allowance | (344,000 | ) | (116,000 | ) | |||
Total tax provision | $ | — | $ | — |
For the year ended December 31, | |||||||
2017 | 2016 | ||||||
Benefit at Federal statutory rate | $ | (6,000 | ) | $ | (40,000 | ) | |
Change in deferred rate (1) | 350,000 | 156,000 | |||||
Change in valuation allowance | (344,000 | ) | (116,000 | ) | |||
Tax provision | $ | — | $ | — |
(1) | The deferred tax rate decreased from 40% to 34% during 2016 and decreased from 34% to 21% during 2017. |
At December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforwards | $ | 571,000 | $ | 915,000 | |||
Valuation allowance | (571,000 | ) | (915,000 | ) | |||
Net deferred tax assets | $ | — | $ | — |
Year Expiring | Net Operating Loss | |||
2027 | $ | 1,551,000 | ||
2028 | 364,000 | |||
2029 | 248,000 | |||
2030 | 81,000 | |||
2031 | 52,000 | |||
2032 | 39,000 | |||
2033 | 61,000 | |||
2034 | 54,000 | |||
2035 | 57,000 | |||
2036 | 68,000 | |||
2037 | 95,000 | |||
2038 | (160,000 | ) | ||
Total loss carryforwards | $ | 2,510,000 |
Years Ended December 31, | Amount Due | ||
2018 | 14,178 | ||
2019 | 14,604 | ||
2020 | 7,410 | ||
Total | 36,192 |
Balance at | Charged to | Deductions | Balance at | |||||||||||||
Beginning | Costs and | from | End of | |||||||||||||
Description | of Year | Expense | Reserves | Year | ||||||||||||
Deferred tax asset allowance: | ||||||||||||||||
Year ended December 31, 2017 | $ | 915,000 | $ | (344,000 | ) | $ | — | $ | 571,000 | |||||||
Year ended December 31, 2016 | 1,031,000 | (116,000 | ) | — | 915,000 | |||||||||||
Year ended December 31, 2015 | 1,004,000 | 27,000 | — | 1,031,000 |
Costs Capitalized Subsequent | Gross Amount at which Carried at | |||||||||||||||||||||||||||
Initial Cost (in thousands) | to Acquisition (in thousands) | End of Period (in thousands)(1) (2) | ||||||||||||||||||||||||||
Building and | Improvements | Carrying | Building and | |||||||||||||||||||||||||
Property Name | Land | Improvements | (net) | Costs | Land | Improvements | Total | |||||||||||||||||||||
Pillarstone OP Properties: | ||||||||||||||||||||||||||||
9101 LBJ Freeway | $ | 1,597 | $ | 6,078 | $ | 1,128 | $ | — | $ | 1,597 | $ | 7,206 | $ | 8,803 | ||||||||||||||
Corporate Park Northwest | 1,534 | 6,306 | 2,268 | — | 1,534 | 8,574 | 10,108 | |||||||||||||||||||||
Corporate Park West | 2,555 | 10,267 | 1,615 | — | 2,555 | 11,882 | 14,437 | |||||||||||||||||||||
Corporate Park Woodland | 652 | 5,330 | 830 | — | 652 | 6,160 | 6,812 | |||||||||||||||||||||
Corporate Park Woodland II | 2,758 | — | 26 | — | 2,758 | 26 | 2,784 | |||||||||||||||||||||
Dairy Ashford | 226 | 1,211 | 49 | — | 226 | 1,260 | 1,486 | |||||||||||||||||||||
Holly Hall Industrial Park | 608 | 2,516 | 395 | — | 608 | 2,911 | 3,519 | |||||||||||||||||||||
Holly Knight | 320 | 1,293 | 402 | — | 320 | 1,695 | 2,015 | |||||||||||||||||||||
Interstate 10 Warehouse | 208 | 3,700 | 495 | — | 208 | 4,195 | 4,403 | |||||||||||||||||||||
Main Park | 1,328 | 2,721 | 1,113 | — | 1,328 | 3,834 | 5,162 | |||||||||||||||||||||
Plaza Park | 902 | 3,294 | 1,141 | — | 902 | 4,435 | 5,337 | |||||||||||||||||||||
Uptown Tower | 1,621 | 15,551 | 4,794 | — | 1,621 | 20,345 | 21,966 | |||||||||||||||||||||
Westbelt Plaza | 568 | 2,165 | 958 | — | 568 | 3,123 | 3,691 | |||||||||||||||||||||
Westgate Service Center | 672 | 2,776 | 1,175 | — | 672 | 3,951 | 4,623 | |||||||||||||||||||||
Total - Pillarstone OP Properties | $ | 15,549 | $ | 63,208 | $ | 16,389 | $ | — | $ | 15,549 | $ | 79,597 | $ | 95,146 |
Accumulated Depreciation | Date | Depreciation | ||||||||
Property Name | Encumbrances | (in thousands) | Acquired | Life | ||||||
Pillarstone OP Properties: | ||||||||||
9101 LBJ Freeway | $ | 2,634 | 12/8/2016 | 5-39 years | ||||||
Corporate Park Northwest | 3,679 | 12/8/2016 | 5-39 years | |||||||
Corporate Park West | (3) | 4,959 | 12/8/2016 | 5-39 years | ||||||
Corporate Park Woodland | (3) | 3,331 | 12/8/2016 | 5-39 years | ||||||
Corporate Park Woodland II | 5 | 12/8/2016 | 5-39 years | |||||||
Dairy Ashford | (3) | 686 | 12/8/2016 | 5-39 years | ||||||
Holly Hall Industrial Park | (3) | 1,356 | 12/8/2016 | 5-39 years | ||||||
Holly Knight | 1,090 | 12/8/2016 | 5-39 years | |||||||
Interstate 10 Warehouse | (3) | 2,852 | 12/8/2016 | 5-39 years | ||||||
Main Park | (3) | 1,957 | 12/8/2016 | 5-39 years | ||||||
Plaza Park | (3) | 2,352 | 12/8/2016 | 5-39 years | ||||||
Uptown Tower | (4) | 7,384 | 12/8/2016 | 5-39 years | ||||||
Westbelt Plaza | (3) | 1,981 | 12/8/2016 | 5-39 years | ||||||
Westgate Service Center | (3) | 1,714 | 12/8/2016 | 5-39 years | ||||||
Total - Pillarstone OP Properties | $ | 35,980 |
(1) | Reconciliations of total real estate carrying value for the years ended December 31, 2017 and 2016 follows: |
( in thousands) | ||||||||
2017 | 2016 | |||||||
Balance at beginning of period | $ | 92,338 | $ | — | ||||
Additions during the period: | ||||||||
Acquisitions | 2,550 | 92,338 | ||||||
Improvements | 1,265 | — | ||||||
3,815 | 92,338 | |||||||
Deductions - cost of real estate sold or retired | (1,007 | ) | — | |||||
Balance at close of period | $ | 95,146 | $ | 92,338 |
(2) | The aggregate cost of real estate (in thousands) for federal income tax purposes is $84,646. |
(3) | These properties secure a $37.0 million mortgage note. |
(4) | This property secures a $16.5 million mortgage note. |
1. | I have reviewed this annual report on Form 10-K of Pillarstone Capital REIT (the “Registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially effect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
1. | I have reviewed this annual report on Form 10-K of Pillarstone Capital REIT (the “Registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially effect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
PILLARSTONE CAPITAL REIT | |||||
By: | /s/ James C. Mastandrea | ||||
Date: | March 29, 2018 | James C. Mastandrea Chairman, Chief Executive Officer and President |
PILLARSTONE CAPITAL REIT | |||||
By: | /s/ John J. Dee | ||||
Date: | March 29, 2018 | John J. Dee Chief Financial Officer and Senior Vice President |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Page | ||
Pillarstone Capital REIT Operating Partnership LP and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except per unit data) | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Real estate assets, at cost | ||||||||
Property | $ | 95,146 | $ | 92,338 | ||||
Accumulated depreciation | (35,980 | ) | (32,533 | ) | ||||
Total real estate assets | 59,166 | 59,805 | ||||||
Cash and cash equivalents | 2,812 | 1,236 | ||||||
Escrows and acquisition deposits | 2,188 | 2,274 | ||||||
Accrued rents and accounts receivable, net of allowance for doubtful accounts | 3,624 | 3,692 | ||||||
Unamortized lease commissions and deferred legal costs, net | 1,265 | 1,150 | ||||||
Prepaid expenses and other assets | 65 | 82 | ||||||
Total assets | $ | 69,120 | $ | 68,239 | ||||
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) | ||||||||
Liabilities: | ||||||||
Notes payable | $ | 64,313 | $ | 65,474 | ||||
Accounts payable and accrued expenses | 4,499 | 3,746 | ||||||
Tenants' security deposits | 1,191 | 996 | ||||||
Total liabilities | 70,003 | 70,216 | ||||||
Commitments and contingencies: | — | — | ||||||
Partners' capital (deficit): | ||||||||
General partner, 3,096,403 units issued and outstanding as of December 31, 2017 and 2016 | (86 | ) | 15 | |||||
Limited partner, 13,591,764 units issued and outstanding as of December 31, 2017 and 2016 | (797 | ) | (1,992 | ) | ||||
Total partners' capital (deficit) | (883 | ) | (1,977 | ) | ||||
Total liabilities and partners' capital (deficit) | $ | 69,120 | $ | 68,239 |
Year Ended December 31, 2017 | For the Period September 23, 2016 (Inception) to December 31, 2016 | |||||||
Rental revenues | $ | 13,685 | $ | 938 | ||||
Other revenues | 2,517 | 154 | ||||||
Total property revenues | 16,202 | 1,092 | ||||||
Property expenses | ||||||||
Property operation and maintenance | 5,029 | 397 | ||||||
Real estate taxes | 2,672 | 174 | ||||||
Total property expenses | 7,701 | 571 | ||||||
Other expenses | ||||||||
General and administrative | 235 | — | ||||||
Depreciation and amortization | 3,940 | 285 | ||||||
Interest expense | 2,706 | 156 | ||||||
Total other expense | 6,881 | 441 | ||||||
Income before income taxes and loss on disposal of assets | 1,620 | 80 | ||||||
Provision for income taxes | (88 | ) | — | |||||
Loss on sale or disposal of assets | (31 | ) | — | |||||
Net income | $ | 1,501 | $ | 80 | ||||
Net income per unit: Basic and Diluted | $ | 0.09 | $ | 0.00 | ||||
Weighted average number of units outstanding: Basic and Diluted | 16,688 | 16,688 |
Pillarstone Capital REIT Operating Partnership LP and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands) | ||||||||||||||||||
Total | ||||||||||||||||||
Partners' | ||||||||||||||||||
General Partner | Limited Partner | Capital | ||||||||||||||||
Units | Amount | Units | Amount | (Deficit) | ||||||||||||||
Balance, September 23, 2016 (Inception) | — | $ | — | — | $ | — | $ | — | ||||||||||
Contributions from partners | 3,096 | 4,121 | 13,592 | 18,090 | 22,211 | |||||||||||||
Deemed distributions to partners | — | (4,121 | ) | — | (20,147 | ) | (24,268 | ) | ||||||||||
Net income | — | 15 | — | 65 | 80 | |||||||||||||
Balance, December 31, 2016 | 3,096 | $ | 15 | 13,592 | $ | (1,992 | ) | $ | (1,977 | ) | ||||||||
Contributions from limited partner | — | — | — | 1,635 | 1,635 | |||||||||||||
Distributions to partners | — | (379 | ) | — | (1,663 | ) | (2,042 | ) | ||||||||||
Net income | — | 278 | — | 1,223 | 1,501 | |||||||||||||
Balance, December 31, 2017 | 3,096 | $ | (86 | ) | 13,592 | $ | (797 | ) | $ | (883 | ) |
Pillarstone Capital REIT Operating Partnership LP and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
Year Ended December 31, 2017 | For the Period September 23, 2016 (Inception) to December 31, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 1,501 | $ | 80 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 3,939 | 285 | ||||||
Amortization of deferred loan costs | 97 | — | ||||||
Loss on sale or disposal of assets | (31 | ) | — | |||||
Bad debt expense | 412 | 127 | ||||||
Changes in operating assets and liabilities: | ||||||||
Escrows and acquisition deposits | 86 | — | ||||||
Accrued rent and accounts receivable | (344 | ) | (2,153 | ) | ||||
Unamortized lease commissions and deferred legal costs | (565 | ) | (8 | ) | ||||
Prepaid expenses and other assets | 98 | — | ||||||
Accounts payable and accrued expenses | 753 | 1,431 | ||||||
Tenants' security deposits | 195 | 61 | ||||||
Net cash provided by (used in) operating activities | 6,141 | (177 | ) | |||||
Cash flows from investing activities: | ||||||||
Additions to real estate | (1,265 | ) | — | |||||
Net cash used in investing activities | (1,265 | ) | — | |||||
Cash flows from financing activities: | ||||||||
Distributions paid to General Partner | (379 | ) | — | |||||
Distributions paid to Limited Partner | (1,663 | ) | — | |||||
Proceeds from issuance of OP units, net of offering costs | — | 1,413 | ||||||
Repayments of notes payable | (1,258 | ) | — | |||||
Net cash provided by (used in) financing activities | (3,300 | ) | 1,413 | |||||
Net increase in cash and cash equivalents | 1,576 | 1,236 | ||||||
Cash and cash equivalents at beginning of period | 1,236 | — | ||||||
Cash and cash equivalents at end of period | $ | 2,812 | $ | 1,236 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 2,611 | $ | — | ||||
Non cash investing and financing activities: | ||||||||
Note payable assumed with acquisitions of real estate | $ | — | $ | 65,937 | ||||
Value of OP units exchanged for real estate | $ | — | $ | 16,677 | ||||
OP units issued to general partner | $ | — | $ | 4,121 | ||||
Deemed distributions to partners | $ | — | $ | (24,268 | ) | |||
Additions to real estate contributed by limited partner | $ | 1,635 | $ | — | ||||
Disposal of fully depreciated real estate | $ | 847 | $ | — |
December 31, | ||||||||
2017 | 2016 | |||||||
Tenant receivables | $ | 680 | $ | 294 | ||||
Receivables due from partners | 1,576 | 1,695 | ||||||
Accrued rents and other recoveries | 1,907 | 1,828 | ||||||
Allowance for doubtful accounts | (539 | ) | (125 | ) | ||||
Totals | $ | 3,624 | $ | 3,692 |
December 31, | ||||||||
2017 | 2016 | |||||||
Leasing commissions | $ | 2,936 | $ | 2,507 | ||||
Deferred legal cost | 47 | — | ||||||
Total cost | 2,983 | 2,507 | ||||||
Less: leasing commissions accumulated amortization | (1,709 | ) | (1,357 | ) | ||||
Less: deferred legal cost accumulated amortization | (9 | ) | — | |||||
Total cost, net of accumulated amortization | $ | 1,265 | $ | 1,150 |
Years Ended December 31, | Leasing Commissions | Deferred Legal Costs | Total | |||||||||
2018 | $ | 380 | $ | 11 | $ | 391 | ||||||
2019 | 272 | 9 | 281 | |||||||||
2020 | 222 | 7 | 229 | |||||||||
2021 | 155 | 5 | 160 | |||||||||
2022 | 100 | 4 | 104 | |||||||||
Thereafter | 98 | 2 | 100 | |||||||||
Total | $ | 1,227 | $ | 38 | $ | 1,265 |
Years Ended December 31, | Minimum Future Rents | |||
2018 | $ | 11,532 | ||
2019 | 8,568 | |||
2020 | 6,839 | |||
2021 | 4,429 | |||
2022 | 2,584 | |||
Thereafter | 13,160 | |||
Total | $ | 47,112 |
December 31, | ||||||||
Description | 2017 | 2016 | ||||||
Fixed rate notes | ||||||||
$37.0 million 3.76% Note, due December 1, 2020 | $ | 33,148 | $ | 34,166 | ||||
$16.5 million 4.97% Note, due September 26, 2023 | 16,058 | 16,298 | ||||||
Floating rate notes | ||||||||
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 | 15,473 | 15,473 | ||||||
Total notes payable principal | 64,679 | 65,937 | ||||||
Less deferred financing costs, net of accumulated amortization | (366 | ) | (463 | ) | ||||
$ | 64,313 | $ | 65,474 |
Amount Due | ||||
Year | (in thousands) | |||
2018 | $ | 16,817 | ||
2019 | 1,376 | |||
2020 | 31,286 | |||
2021 | 308 | |||
2022 | 323 | |||
Thereafter | 14,569 | |||
Total | $ | 64,679 |
(in thousands, except per unit data) | Year Ended December 31, 2017 | For the Period September 23, 2016 (Inception) to December 31, 2016 | ||||||
Numerator: | ||||||||
Net income | $ | 1,501 | $ | 80 | ||||
Denominator: | ||||||||
Weighted average number of units - basic and dilutive | 16,688 | 16,688 | ||||||
Earnings Per Unit: | ||||||||
Basic and Diluted: | ||||||||
Net income per unit | $ | 0.09 | $ | 0.00 |
General | Limited | |||||||||||
Partner | Partner | Total | ||||||||||
Quarter Paid(1) | Amount Paid | Amount Paid | Amount Paid | |||||||||
2017 | ||||||||||||
Fourth Quarter | $ | — | $ | — | $ | — | ||||||
Third Quarter | 112 | 494 | 606 | |||||||||
Second Quarter | 226 | 989 | 1,215 | |||||||||
First Quarter | 41 | 180 | 221 | |||||||||
Total | $ | 379 | $ | 1,663 | $ | 2,042 |
(in thousands) | Year Ended December 31, 2017 | For the Period September 23, 2016 (Inception) to December 31, 2016 | ||||||
Revenue | ||||||||
Rental revenue | $ | 782 | $ | 58 | ||||
Interest Expense | ||||||||
Related party Note | 528 | 26 |
(in thousands) | Year Ended December 31, 2017 | For the Period September 23, 2016 (Inception) to December 31, 2016 | ||||||
Property management fees | $ | 732 | $ | 57 | ||||
Asset management fees | 264 | 17 |
December 31, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Receivables due from related parties | ||||||||
Tenant receipts received by Whitestone OP | $ | 892 | $ | 1,180 | ||||
Reimbursement of general and administrative expenses (1) | 316 | 316 | ||||||
Reimbursement of operating expenses (2) | 368 | 199 | ||||||
Total receivables due from related parties | $ | 1,576 | $ | 1,695 | ||||
Payables due to related parties | ||||||||
Property management fees | $ | 61 | $ | 57 | ||||
Asset management fees | 23 | 17 | ||||||
Related party Note interest | 44 | 26 | ||||||
Reimbursement of operating expenses (2) | 877 | 165 | ||||||
Total payables due from related parties | $ | 1,005 | $ | 265 | ||||
Related party Note, LIBOR plus 1.40% to 1.95%, due December 8, 2018 | $ | 15,473 | $ | 15,473 |
(1) | Reimbursement of general and administrative expenses primarily related to legal fees paid by Pillarstone OP on Pillarstone Capital REIT's behalf. |
(2) | Reimbursement of operating expenses primarily related to insurance, leasing commissions, utilities and legal fees either paid by Pillarstone OP on Whitestone OP's behalf or paid by Whitestone OP on Pillarstone OP's behalf. |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Mar. 23, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | PILLARSTONE CAPITAL REIT | ||
Entity Central Index Key | 0000928953 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2017 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 628,383 | ||
Entity Common Stock, Shares Outstanding | 405,169 |
Consolidated Statements of Operations - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenues | ||
Interest and dividend income | $ 0 | $ 0 |
Total revenues | 0 | 0 |
Expenses | ||
General and administrative | 273,015 | 491,925 |
Interest | 19,724 | 19,832 |
Total expenses | 292,739 | 511,757 |
Loss from operations | (292,739) | (511,757) |
Equity in income of Pillarstone Capital REIT Operating Partnership LP | 275,313 | 14,776 |
Net loss attributable to common shareholders | $ (17,426) | $ (496,981) |
Net loss attributable to common shareholders per common share: Basic and Diluted (in dollars per share) | $ (0.04) | $ (1.23) |
Weighted average number of common shares outstanding: Basic and Diluted (in shares) | 405,169 | 405,169 |
Consolidated Statements of Changes In Equity (Deficit) - USD ($) |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
Cost of Shares held In Treasury [Member] |
Redeemable Convertible Series A Preferred Stock [Member] |
Redeemable Convertible Series C Preferred Stock [Member] |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ (29,731) | $ 4,051 | $ 28,146,971 | $ (27,385,045) | $ (800,735) | $ 2,583 | $ 2,444 |
Conversion of Class A Preferred Shares to Common Shares | 0 | 1 | 15 | (16) | |||
Net loss | (496,981) | (496,981) | |||||
Balance at Dec. 31, 2016 | (526,712) | 4,052 | 28,146,986 | (27,882,026) | (800,735) | 2,567 | 2,444 |
Net loss | (17,426) | (17,426) | |||||
Balance at Dec. 31, 2017 | $ (544,138) | $ 4,052 | $ 28,146,986 | $ (27,899,452) | $ (800,735) | $ 2,567 | $ 2,444 |
Organization |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | ORGANIZATION Pillarstone Capital REIT (the “Company,” “Pillarstone,” “we,” “our,” or “us”) is a Maryland real estate investment trust (“REIT”) engaged in investing in, owning and operating commercial properties. In 2016, the shareholders of Pillarstone approved changing the Company's name from Paragon Real Estate Equity and Investment Trust to Pillarstone Capital REIT. Future real estate investments may include (i) acquisition and development of retail, office, office warehouse, industrial, multifamily, hotel, and other commercial properties, (ii) acquisition of or merger with a real estate investment trust (“REIT”) or real estate operating company and (iii) joint venture investments. We serve as the general partner of Pillarstone Capital REIT Operating Partnership LP (“Pillarstone OP”), which was formed on September 23, 2016 as a Delaware limited partnership. We are the sole general partner of Pillarstone OP and we conduct substantially all operations and activities through Pillarstone OP. As of December 31, 2017, we owned 18.6% of the outstanding equity in Pillarstone OP. |
Basis of Presentation |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION Basis of consolidation. We have prepared the consolidated financial statements pursuant to the rules and regulations of the SEC. In our opinion, all adjustments (consisting solely of normal recurring items) necessary for a fair presentation of our financial position as of December 31, 2017 and 2016, the results of our operations for the years ended December 31, 2017 and 2016, and of our cash flows for the years ended December 31, 2017 and 2016 have been included. The Company presents its financial statements on a consolidated basis because it combines its accounts with a wholly-owned subsidiary that discontinued operations in 2002. All significant inter-company balances are eliminated in the consolidated financial statements. The Company's consolidated financial statements include equity in income of Pillarstone OP based on the Company's percentage of ownership in Pillarstone OP, an investment for which the Company accounts using the equity method. Going concern. The financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continued operations as a public company and paying liabilities in the normal course of business. The Company, through Pillarstone OP, acquired an equity investment in 14 real estate assets in December 2016 and its distributions of cash from Pillarstone OP are expected to be sufficient for the Company to continue as a going concern. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting. Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. Use of estimates. In order to conform with generally accepted accounting principles in the United States (“GAAP”), management, in preparation of our consolidated financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2017 and December 31, 2016, and the reported amounts of revenues and expenses for the years ended December 31, 2017 and 2016. Actual results could differ from those estimates. Significant estimates include deferred taxes and the related valuation allowance for deferred taxes, and these significant estimates, as well as other estimates and assumptions, may change in the near term. Cash and cash equivalents. We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents as of December 31, 2017 and 2016 consisted of demand deposits at commercial banks and brokerage accounts. We maintain our cash in bank accounts that are federally insured. Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's (“FASB”) Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income. Equity method investment. The Company accounts for its investment in Pillarstone OP in accordance with ASC 323, “Investments - Equity Method and Joint Ventures,” which addresses the accounting for investments in entities over which the investor is deemed to exercise significant influence. The Company serves as the general partner of Pillarstone OP, with a 18.6% equity ownership interest and is a party to the Amended and Restated Agreement of Limited Partnership of Pillarstone OP, as described in Note 5 herein, which gives the general partner, subject to certain protective rights of the limited partners as described in Note 5, the responsibility and discretion for the management of Pillarstone OP, including the ability to cause Pillarstone OP to enter into certain major transactions including a merger of Pillarstone OP or a sale of substantially all of the assets of Pillarstone OP. As such, the Company is deemed to exercise significant influence but not complete control over Pillarstone OP. Additionally, we determined that we are not the primary beneficiary and thus the investment in Pillarstone OP qualifies for usage of the equity method of accounting. Investments in equipment. Our investments in equipment assets are reported at cost. Depreciation expense is computed using the straight-line method based on the following useful lives: Furniture, fixtures and equipment 3-7 years There was no depreciation expense for the years ended December 31, 2017 and December 31, 2016. Other assets. As of December 31, 2017, other assets totaled $9,679 for director and officer liability insurance. As of December 31, 2016, other assets of $14,499 are prepaid expenses for director and officer liability insurance of $9,202 and $5,297 of prepaid SEC filing charges. Revenue recognition. Revenues are interest earned on cash balances and equity in earnings of an investee, and are recognized during the period in which they are earned. Stock-based compensation. The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 generally requires that these transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards. Income taxes. Because we have not elected to be taxed as a REIT for federal income tax purposes, we account for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the period 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 Company evaluates potential uncertain tax positions on an annual basis in conjunction with the board of trustees and its tax accountants. Authoritative literature provides a two-step approach to recognize and measure tax benefits when realization of the benefits is uncertain. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. The Company has no uncertain tax positions that required adjustments to our consolidated financial statements in 2017 or 2016. At December 31, 2017, we have net operating loss carryforwards totaling $2,510,000. While these losses created a deferred tax asset, a valuation allowance was applied against the asset because of the uncertainty of whether we will be able to use these loss carryforwards, which will expire in varying amounts through the year 2038. Pursuant to regulations set forth in the Internal Revenue Code of 1986 as amended (the “Code”), Pillarstone will be limited to using $651,600 of the prior net operating losses of $11,246,000. These same regulations also limit the amount of loss used in any one year. We are also subject to certain state and local income, excise and franchise taxes. The provision for state and local taxes has been reflected in general and administrative expense in the consolidated statements of operations and has not been separately stated due to its insignificance. Fair value of financial instruments. We adopted ASC 820, “Fair Value Measurements and Disclosures,” as it applies to our financial instruments, and ASC 825, “Financial Instruments.” ASC 820 defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. ASC 825 permits companies to irrevocably choose to measure certain financial instruments and other items at fair value. ASC 825 also establishes presentation and disclosure requirements designed to facilitate comparison between entities that choose different measurement attributes for similar types of assets and liabilities. Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. ASC 820 establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. ASC 820 requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our Consolidated Balance Sheets, we have elected not to record any other assets or liabilities at fair value, as permitted by ASC 825. No events occurred during 2017 which would require adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis. The following table provides information on those assets and liabilities measured at fair value on a recurring basis.
The fair value of the marketable securities is based on quoted market prices in an active market. Recent accounting pronouncements. Management has reviewed recently issued accounting pronouncements and does not expect the implementation of these pronouncements to have a significant effect on the Company's consolidated financial statements. |
Marketable Securities |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
Marketable Securities | MARKETABLE SECURITIES We had $100 of investments in marketable securities as of December 31, 2017 and 2016. All of the Company’s investments were in an insured deposit account at a securities brokerage firm. During 2017 and 2016, the Company made no transfers from the account at the securities brokerage firm to the operating account. There was no interest earned on the cash balances during 2017 and 2016. |
Equity Method Investment |
12 Months Ended |
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Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | EQUITY METHOD INVESTMENT On December 8, 2016, Pillarstone and Pillarstone OP, entered into a Contribution Agreement (the “Contribution Agreement”) with Whitestone REIT Operating Partnership, L.P. (“Whitestone OP”), a subsidiary and the operating partnership of Whitestone REIT (“Whitestone”), both of which are related parties to Pillarstone and Pillarstone OP, pursuant to which Whitestone OP contributed to Pillarstone OP all of the equity interests in four of its wholly-owned subsidiaries: Whitestone CP Woodland Ph. 2, LLC, a Delaware limited liability company (“CP Woodland”); Whitestone Industrial-Office, LLC, a Texas limited liability company (“Industrial-Office”); Whitestone Offices, LLC, a Texas limited liability company (“Whitestone Offices”); and Whitestone Uptown Tower, LLC, a Delaware limited liability company (“Uptown Tower”, and together with CP Woodland, Industrial-Office and Whitestone Offices, the “Entities”) that own fourteen real estate assets (the “Real Estate Assets” and, together with the Entities, the “Property”) for aggregate consideration of approximately $84 million, consisting of (1) approximately $18.1 million of Class A units representing limited partnership interests in Pillarstone OP (“OP Units”), issued at a price of $1.331 per OP Unit; and (2) the assumption of approximately $65.9 million of liabilities by Pillarstone OP. Pursuant to the Contribution Agreement, Pillarstone became the general partner of Pillarstone OP with an equity ownership interest in Pillarstone OP totaling approximately a 18.6% valued at $4,121,312 as of the date of the agreement. In connection with the Contribution Agreement, on December 8, 2016, the Company, as the general partner of Pillarstone OP, entered into an Amended and Restated Agreement of Limited Partnership of Pillarstone OP (as amended and restated, the “Amended and Restated Agreement of Limited Partnership”). Pursuant to the Amended and Restated Agreement of Limited Partnership, subject to certain protective rights of the limited partners described below, the general partner has responsibility and discretion in the management of Pillarstone OP, including the ability to cause Pillarstone OP to enter into certain major transactions including a merger of Pillarstone OP or a sale of substantially all of the assets of Pillarstone OP. Management agreements are in place delegating the management of the Real Estate Assets to Whitestone OP. The responsibilities delegated include property management, leasing and day-to-day advisory and administrative services. The limited partners have no power to remove the general partner without the general partner's consent. In addition, pursuant to the Amended and Restated Agreement of Limited Partnership, the general partner may not conduct any outside business without the consent of a majority of the limited partners other than in connection with certain actions described therein. As such, the Company is deemed to exercise significant influence but not complete control over Pillarstone OP. Additionally, we determined that we are not the primary beneficiary and thus the investment in Pillarstone OP qualifies for usage of the equity method of accounting. The Amended and Restated Agreement of Limited Partnership designates two classes of units of limited partnership interest in Pillarstone OP: the OP Units and LTIP units. In general, LTIP units are similar to the OP Units and will receive the same quarterly per-unit profit distributions as the OP Units. The rights, privileges, and obligations related to each series of LTIP units will be established at the time the LTIP units are issued. As profits interests, LTIP units initially will not have full parity, on a per-unit basis, with OP Units with respect to liquidating distributions. Upon the occurrence of specified events, LTIP units can over time achieve full parity with the OP Units and therefore accrete to an economic value for the holder equivalent to OP Units. If such parity is achieved, vested LTIP units may be converted on a one-for-one basis into OP Units, which in turn are redeemable by the holder for cash or, at the Company’s election, exchangeable for Common Shares on a one-for-one basis. The equity method of accounting requires our investment in Pillarstone OP be shown on our Balance Sheets as a single amount. Pillarstone's investment in Pillarstone OP amounted to an 18.6% ownership interest and carrying values of $(88,880) and $14,776 as of December 31, 2017 and December 31, 2016, respectively. As of December 31, 2017, the $(88,880) carrying value of our equity investment exceeded our equity in the underlying net assets of Pillarstone OP by approximately $78,000 and included equity in earnings of Pillarstone OP of $275,313 for the twelve month periods then ended, offset by distributions totaling $378,969 for the twelve month period ended December 31, 2017. This difference arose due to the $4,121,312 distribution in kind we received during December 2016, and the difference between the carrying value attributed to the assets and liabilities transferred to Pillarstone OP under common control accounting rules and their fair values. We are amortizing the difference over 25 years based on the estimate of the remaining useful lives of the properties acquired. Amortization of the difference is $3,120 for the twelve months December 31, 2017. There was no amortization during 2016. Pillarstone's investment in Pillarstone OP is negative as of December 31, 2017 due to the reductions in the balance from distributions received from Pillarstone OP and amortization offset by increases in the balance from equity in earnings from Pillarstone OP. |
Convertible Notes Payable - Related Parties |
12 Months Ended |
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Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable - Related Parties | CONVERTIBLE NOTES PAYABLE - RELATED PARTIES On November 20, 2015, five trustees on our board of trustees loaned $197,780 to the Company in exchange for convertible notes payable. The convertible notes payable accrue interest at 10% per annum and mature on November 20, 2018. The convertible notes payable can be converted by the noteholder into Common Shares at the rate of $1.331 per Common Share at any time. After six months, the Company can convert the notes payable into Common Shares. At maturity or when the Company chooses to convert the convertible notes payable into Common Shares, the noteholders have the option to receive cash plus accrued interest or convert the convertible notes payable into Common Shares. |
Shareholders' Equity |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | SHAREHOLDERS' EQUITY Recent developments. Our common shareholders, Preferred Class A shareholders, and Preferred Class C shareholders approved changes to our declaration of trust, as amended and restated, in March 2016. We presently have authority to issue up to 450,000,000 shares of beneficial interest, $0.01 par value per share, of which 400,000,000 are classified as Common Shares of beneficial interest, $0.01 par value per share and 50,000,000 are classified as preferred shares of beneficial interest, $0.01 par value per share. Of the 50,000,000 preferred shares of beneficial interest, 1,518,000 shares are designated as Preferred Class A Shares and 300,000 shares are designated as Preferred Class C Shares. Previously, we had authority to issue up to 110,000,000 shares of beneficial interest, $0.01 par value per share, of which 100,000,000 were classified as Common Shares of beneficial interest, $0.01 par value per share, and 10,000,000 were classified as preferred shares of beneficial interest, $0.01 par value per share, with 1,518,000 shares designated as Preferred Class A Shares and 300,000 shares designated as Preferred Class C Shares. Conversion of OP Units by limited partners. At any time on or after six months following the date of the initial issuance thereof, limited partners in Pillarstone OP holding OP Units have the right to convert their OP Units for cash, or at the option of the general partner, common shares of the Company. As of December 31, 2017 and 2016, there were 16,688,167 OP Units outstanding. Preferred shares. The Company has outstanding 95,226 Class A Cumulative Convertible Preferred Shares (“Class A Preferred Shares”) that were issued to the public. The Class A Preferred Shares bear a liquidation value of $10.00 per share. The Class A Preferred Shares are each convertible into 0.046 Common Shares subject to certain formulas. We have the right to redeem the Class A Preferred Shares. Effective June 30, 2003, we issued 696,078 Class A Preferred Shares valued at approximately $2.4 million to James C. Mastandrea, our Chairman, Chief Executive Officer and President, and John J. Dee, our Chief Financial Officer and Senior Vice President, pursuant to separate restricted share agreements. Under each restricted share agreement, the restricted shares vest upon the later of the following dates:
In conjunction with a one-time incentive exchange offer for Class A Preferred shareholders, Messrs. Mastandrea and Dee exchanged 534,668 of these restricted Class A Preferred Shares into 163,116 restricted Common Shares. The restrictions described above are also applicable to their Common Shares. The remaining 161,410 restricted Class A Preferred Shares held by Messrs. Mastandrea and Dee can each be converted into 0.305 restricted Common Shares. The market value of 161,410 restricted Class A Preferred Shares and 163,116 restricted Common Shares is approximately $590,000 at December 31, 2017 and there is limited trading volume of the Common Shares on OTC Bulletin Board. The number of Common Shares and the conversion factor have been revised to reflect the 1-for-75 reverse split of the Common Shares that occurred in July 2006. During 2017, no Class A Preferred Shares were converted into Common Shares, and during 2016, 1,600 Class A Preferred Shares were converted into 73 Common Shares. Effective September 29, 2006, Pillarstone filed articles supplementary to its Declaration of Trust, as amended, restated and supplemented with the State Department of Assessment and Taxation of Maryland designating 300,000 Class C Convertible Preferred Shares (“Class C Preferred Shares”). The Class C Preferred Shares have voting rights equal to the number of Common Shares into which they are convertible. Each Class C Preferred Share is convertible into Common Shares by dividing the sum of $10.00 and any accrued but unpaid dividends on the Class C Preferred Shares by the conversion price of $1.00. The Class C Preferred Shares have a liquidation preference of $10.00 per share, plus any accrued but unpaid dividends, and can be redeemed by the board of trustees at any time, with notice, at the same price per share. Effective September 29, 2006, three independent trustees of Pillarstone signed subscription agreements to purchase 125,000 Class C Preferred Shares for an aggregate contribution of $500,000 to maintain Pillarstone as a corporate shell current in its SEC filings. In addition, on September 29, 2006, Mr. Mastandrea signed a subscription agreement to purchase 44,444 restricted shares of Class C Preferred Shares. The consideration for the purchase was Mr. Mastandrea’s services as an officer of Pillarstone for the period beginning September 29, 2006 and ending September 29, 2008. The Class C Preferred Shares are subject to forfeiture and are restricted from being sold by Mr. Mastandrea until the latest to occur of a public offering by Pillarstone sufficient to liquidate the Class C Preferred Shares, an exchange of Pillarstone’s existing shares for new shares, or September 29, 2008. These shares were fully amortized by the original date in 2008. Each of the trustees of Pillarstone signed a restricted share agreement with Pillarstone, dated September 29, 2006, to receive a total of 12,500 restricted Class C Preferred Shares in lieu of receiving fees in cash for service as a trustee for the two years ending September 29, 2008. The restrictions on the Class C Preferred Shares are to be removed upon the latest to occur of a public offering by Pillarstone sufficient to liquidate the Class C Preferred Shares, an exchange of Pillarstone's existing shares for new shares, or September 29, 2008. These shares were fully amortized by the original date in 2008. Shares held in treasury. On October 1, 2003, we completed the sale of our 92.9% general partnership interest in our four commercial properties. A portion of the proceeds from the sale was paid in 38,130 of our Common Shares at an average closing price for the 30 calendar days prior to June 27, 2003 of $21.00 or approximately $801,000. These shares are recorded at cost in the accompanying consolidated balance sheets under treasury shares. Restricted Common Shares. The following table summarizes the activity of our unvested restricted Common Shares for the years ended December 31, 2017 and 2016:
In the above table, 163,116 restricted shares vest upon meeting performance goals as discussed under “Preferred Shares.” Since the grant date, we have determined that meeting these performance goals is not probable, and no compensation expense has been recognized related to this grant. The grant date fair value of $1,847,000 would be recognized at the point we deem it probable that we would meet the performance goals. The balance of 5,333 restricted shares had grant date fair values totaling $79,000, which was recognized in prior periods though the restrictions remain on the shares. On June 30, 2003, our shareholders approved the issuance of an agreement to issue additional Common Shares to Paragon Real Estate Development, LLC of which Mr. Mastandrea is the managing member, and Mr. Dee is a member. In September 2006, Pillarstone amended this agreement to include each of the trustees to the agreement so that if a trustee brings a new transaction to Pillarstone, he would receive additional Common Shares of Pillarstone in accordance with a formula in the agreement. In January 2016, the non-employee trustees and Mr. Mastandrea agreed to make this agreement for only non-employee trustees. The agreement is intended to serve as an incentive for our trustees to increase the asset base, net operating income, funds from operations, and share value of Pillarstone. The exact number of Common Shares that would be issued will be calculated in accordance with a formula in the agreement based on future acquisition, development or redevelopment transactions. Any of these transactions would be subject to approval by the members of our board of trustees who are not receiving the additional Common Shares. We would issue our Common Shares only upon the closing of a transaction. The maximum number of Common Shares a trustee may receive under the additional contribution agreement is limited to a total value of $26 million based on the average closing price of our Common Shares for 30 calendar days preceding the closing of any acquisition transaction. The Common Shares will be restricted until we achieve the five year pro forma income target for the acquisition, as approved by the board of trustees, and an increase of 5% in Pillarstone's net operating income and funds from operations. The restricted shares would vest immediately upon any “shift in ownership,” as defined in the agreement. Options. On November 16, 1998, we adopted the 1998 Share Option Plan. In 2004, the board of trustees unanimously recommended and the shareholders approved amendments to our 1998 Share Option Plan to increase the number of shares available for grant from 42,222 to 46,666 and to conform with then current tax regulations (“2004 Plan”). The 2004 Plan expired in 2014; the one outstanding grant of 667 options remains effective until 90 days after the term ends of the individual trustee. The following table summarizes the activity for outstanding stock options:
The Company did not recognize any stock-based compensation expense during the years ending December 31, 2017 and 2016. As of December 31, 2017 and December 31, 2016, there was no remaining unrecognized cost related to stock options. |
Incentive Equity Plan |
12 Months Ended |
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Dec. 31, 2017 | |
Equity [Abstract] | |
Incentive Equity Plan | INCENTIVE EQUITY PLAN At the 2016 Annual Meeting of Shareholders, our shareholders approved the 2016 Equity Plan (“2016 Plan”). The 2016 Plan provides that awards may be made in Common Shares of the Company or units in the Company’s operating partnership, which may be converted into Common Shares. Subject to adjustment as provided by the terms of the 2016 Plan, the maximum aggregate number of Common Shares with respect to which awards may be granted under the 2016 Plan will be increased based on future issuances of Common Shares and units of the operating partnership, including issuances pursuant to the 2016 Plan, so that at any time the maximum number of shares that may be issued under the 2016 Plan shall equal 12.5% of the aggregate number of Common Shares and units of the operating partnership issued and outstanding (other than treasury shares and/or units issued to or held by the Company). The Management, Organization and Compensation Committee (the “Committee”) administers the 2016 Plan, except with respect to awards to non-employee trustees, for which the 2016 Plan is administered by the board of trustees. Subject to the terms of the 2016 Plan, the Committee is authorized to select participants, determine the type and number of awards to be granted, determine and later amend (subject to certain limitations) the terms and conditions of any award, interpret and specify the rules and regulations relating to the 2016 Plan, and make all other determinations which may be necessary or desirable for the administration of the 2016 Plan. The 2016 Plan includes the types of awards for grants and the types of financial performance measures. As of December 31, 2017, the maximum number of Common Shares or OP Units available to be granted is 2,356,426, and no grants have been issued under the 2016 Plan. DIVIDENDS AND DISTRIBUTIONS No cash distributions were declared during 2017 and 2016 with respect to the common or preferred shares. |
Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share | LOSS PER SHARE The Company applies the guidance of ASC 260, “Earnings Per Share,” for all periods presented herein. Net loss per weighted average common share outstanding - basic and diluted - are computed based on the weighted average number of Common Shares outstanding for the period. The weighted average number of Common Shares outstanding for the years ended December 31, 2017 and 2016 was 405,169. Common share equivalents of 3,083,284 as of December 31, 2017 and 3,068,358 as of December 31, 2016 include outstanding convertible preferred shares, convertible notes payable and stock options, and are not included in net loss per weighted average common share outstanding-diluted as they would be anti-dilutive.
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Dividends and Distributions |
12 Months Ended |
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Dec. 31, 2017 | |
Distributions Made to Members or Limited Partners [Abstract] | |
Dividends and Distributions | INCENTIVE EQUITY PLAN At the 2016 Annual Meeting of Shareholders, our shareholders approved the 2016 Equity Plan (“2016 Plan”). The 2016 Plan provides that awards may be made in Common Shares of the Company or units in the Company’s operating partnership, which may be converted into Common Shares. Subject to adjustment as provided by the terms of the 2016 Plan, the maximum aggregate number of Common Shares with respect to which awards may be granted under the 2016 Plan will be increased based on future issuances of Common Shares and units of the operating partnership, including issuances pursuant to the 2016 Plan, so that at any time the maximum number of shares that may be issued under the 2016 Plan shall equal 12.5% of the aggregate number of Common Shares and units of the operating partnership issued and outstanding (other than treasury shares and/or units issued to or held by the Company). The Management, Organization and Compensation Committee (the “Committee”) administers the 2016 Plan, except with respect to awards to non-employee trustees, for which the 2016 Plan is administered by the board of trustees. Subject to the terms of the 2016 Plan, the Committee is authorized to select participants, determine the type and number of awards to be granted, determine and later amend (subject to certain limitations) the terms and conditions of any award, interpret and specify the rules and regulations relating to the 2016 Plan, and make all other determinations which may be necessary or desirable for the administration of the 2016 Plan. The 2016 Plan includes the types of awards for grants and the types of financial performance measures. As of December 31, 2017, the maximum number of Common Shares or OP Units available to be granted is 2,356,426, and no grants have been issued under the 2016 Plan. DIVIDENDS AND DISTRIBUTIONS No cash distributions were declared during 2017 and 2016 with respect to the common or preferred shares. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES There was no income tax provision for the years ended December 31, 2017 and 2016.
The tax provision differs from the expense that would result from applying Federal statutory rates as follows:
Deferred tax assets and liabilities consist of the following:
Realization of deferred tax assets is dependent upon generation of sufficient future taxable income and the effects of other loss utilization provisions. Management has determined that sufficient uncertainty exists regarding the realizability of the net deferred tax assets and has provided a full valuation allowance of $571,000 and $915,000, against the net deferred tax assets of the Company as of December 31, 2017 and 2016, respectively. A valuation allowance is considered to be a significant estimate that may change in the near term. At December 31, 2017, the Company had net operating loss carryforwards of $2,510,000 available to be carried to future periods. Net operating loss carryforwards of $1,859,000 are available for Pillarstone to use without any limitation or restriction imposed by tax regulations. Changes in the ownership of Pillarstone’s shares that occurred in 2001, 2003 and 2006 have limited the amount of net operating losses to be used to approximately $72,400 per year for another 9 years, or a total of $651,600. Prior net loss carryforwards of approximately $10,642,000 cannot be used due to the limitations imposed by Section 382 of the Code related to the 2001, 2003 and 2006 changes of share ownership. The loss carryforwards expire as follows:
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Related Party Transactions |
12 Months Ended |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS During the year ended December 31, 2016, the Company incurred certain general and administrative expenses which were paid by Pillarstone OP on the Company's behalf, with the intent that the amount would be repaid in full at a later date, resulting in a related party payable as of December 31, 2016 totaling $316,103. This payable balance represented 77% and 92% of the Company's total accounts payable as of December 31, 2017 and December 31, 2016, respectively. These expenses represented 64.3% of the Company's total general and administrative expenses incurred during the year ended December 31, 2016. No such amounts were paid by Pillarstone OP during the year ended December 31, 2017 and the payable balance as of December 31, 2016 remains outstanding. On December 8, 2016, the Company entered into the Contribution Agreement with Pillarstone OP and Whitestone OP, both of which are related parties, resulting in the contribution of an equity ownership interest in Pillarstone OP to the Company valued at $4,121,312 and representing approximately 18.6% of the outstanding equity in Pillarstone OP. The terms of the Contribution Agreement were determined through arm's-length negotiations and were recommended to the board of trustees by a special committee of the board of trustees consisting solely of disinterested trustees of the Company and approved by the full board. During the period of December 8, 2016 through December 31, 2016, Pillarstone received a distribution in kind totaling $4,121,321 from Pillarstone OP and recognized equity in income of Pillarstone OP totaling $14,776, resulting in an ending equity investment balance in Pillarstone OP of $14,776 as of December 31, 2016. During the year ended December 31, 2017, the Company received distributions from Pillarstone OP totaling $378,969 and recognized equity in income of Pillarstone OP totaling $275,313, resulting in an ending negative equity investment balance in Pillarstone OP of $88,880 as of December 31, 2017. Pursuant to the Contribution Agreement, the Company has agreed to file with the SEC on or prior to June 8, 2018, a shelf registration statement to register for sale under the Securities Act, the issuance of the Common Shares that may be issued upon redemption of the OP Units issued pursuant to each of the Contribution Agreement and the OP Unit Purchase Agreement (as defined below) and the offer and resale of such Common Shares by the holders thereof. In addition, pursuant to the Contribution Agreement, in the event of a Change of Control (as defined therein) of Whitestone, Pillarstone OP shall have the right, but not the obligation, to repurchase the OP Units issued thereunder from Whitestone OP at their initial issue price of $1.331 per OP Unit. In connection with the Contribution Agreement, on December 8, 2016, the Company and Pillarstone OP entered into an OP Unit Purchase Agreement (the “OP Unit Purchase Agreement”) with Whitestone OP pursuant to which Pillarstone OP may require Whitestone OP to purchase up to an aggregate of $3.0 million of OP Units at a price of $1.331 per OP Unit over the two-year term of the OP Unit Purchase Agreement on the terms set forth therein. In addition, pursuant to the OP Unit Purchase Agreement, in the event of a Change of Control (as defined therein) of Whitestone, Pillarstone OP shall have the right, but not the obligation, to repurchase the OP Units issued thereunder from Whitestone OP at their initial issue price of $1.331 per OP Unit. In connection with the Contribution Agreement, on December 8, 2016, the Company and Pillarstone OP entered into a Tax Protection Agreement (the “Tax Protection Agreement”) with Whitestone OP pursuant to which Pillarstone OP agreed to indemnify Whitestone OP for certain tax liabilities resulting from its recognition of income or gain prior to December 8, 2021 if such liabilities result from a transaction involving a direct or indirect taxable disposition of all or a portion of the property acquired in the Contribution Agreement or if Pillarstone OP fails to maintain and allocate to Whitestone OP for taxation purposes minimum levels of liabilities as specified in the Tax Protection Agreement, the result of which causes such recognition of income or gain and Whitestone incurs taxes that must be paid to maintain its REIT status for federal tax purposes. The provisions of the Tax Protection Agreement would not apply if there were a Change of Control (as defined in the Purchase Agreement) and the Operating Partnership were to repurchase the OP Units issued under the Purchase Agreement from Whitestone OP at their initial issue price of $1.331 per OP Unit. As detailed further in Note 13 below, in February 2017, the Company leased office space from Whitestone in Houston, Texas to support the day-to-day operations of Pillarstone OP. The termination date for the leased space is June 30, 2020. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Employment Agreements On April 3, 2006, the board of trustees authorized modifications to Mr. Mastandrea’s employment agreement. The modification agreement allows Mr. Mastandrea to devote time to other business and personal investments while performing his duties for Pillarstone. The original employment agreement with Mr. Mastandrea provides for an annual salary of $60,000 effective as of March 4, 2003. The initial term of Mr. Mastandrea’s employment is for two years and may be extended for terms of one year. Mr. Mastandrea’s base annual salary may be adjusted from time to time, except that the adjustment may not be lower than the preceding year’s base salary. The employment agreement provides that Mr. Mastandrea will be entitled to base salary and bonus at the rate in effect before any termination for a period of three years in the event that his employment is terminated without cause by us or for good reason by Mr. Mastandrea. Effective September 29, 2006, in lieu of an annual salary of $100,000 and to conserve cash, Mr. Mastandrea agreed to receive 44,444 Class C Preferred Shares for his services as an officer of Pillarstone through September 29, 2008. The shares were fully amortized by the original date in 2008. Mr. Dee’s employment agreement was also modified on April 3, 2006 in a similar way to Mr. Mastandrea’s employment agreement as explained above, except Mr. Dee does not receive any Class C Preferred Shares for his services as an officer of Pillarstone. Mr. Dee’s base annual salary may be adjusted from time to time, except that the adjustment may not be lower than the preceding year’s base salary. The employment agreement provides that Mr. Dee will be entitled to base salary and bonus at the rate in effect before any termination for a period of three years in the event that his employment is terminated without cause by us or for good reason by Mr. Dee. On September 29, 2006, the board of trustees approved compensation to Mr. Dee of $125 per hour, up to a maximum of $5,000 per month. However, Mr. Dee has forgone receiving any cash compensation under this arrangement in order to preserve the Company’s cash. In February 2017, the Company leased office space from Whitestone in Houston, Texas to support the day-to-day operations of Pillarstone OP. For the year ended December 31, 2017, we expensed $12,634 in rent expense. A summary of the minimum future rents payable under our lease as of December 31, 2017 is as follows:
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Schedule II - Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation and Qualifying Accounts |
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Schedule III - Real Estate and Accumulated Depreciation |
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SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule III - Real Estate and Accumulated Depreciation |
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Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Accounting | Basis of Accounting. Our financial records are maintained on the accrual basis of accounting whereby revenues are recognized when earned and expenses are recorded when incurred. |
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Use of estimates | Use of estimates. In order to conform with generally accepted accounting principles in the United States (“GAAP”), management, in preparation of our consolidated financial statements, is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 2017 and December 31, 2016, and the reported amounts of revenues and expenses for the years ended December 31, 2017 and 2016. Actual results could differ from those estimates. Significant estimates include deferred taxes and the related valuation allowance for deferred taxes, and these significant estimates, as well as other estimates and assumptions, may change in the near term. |
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Cash and cash equivalents | Cash and cash equivalents. We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents as of December 31, 2017 and 2016 consisted of demand deposits at commercial banks and brokerage accounts. We maintain our cash in bank accounts that are federally insured. |
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Marketable Securities | Marketable Securities. We classify our existing marketable equity securities as available-for-sale in accordance with the Financial Accounting Standards Board's (“FASB”) Investments-Debt and Equity Securities guidance. These securities are carried at fair value with unrealized gains and losses reported in equity as a component of accumulated other comprehensive income or loss. The fair value of the marketable securities is determined using Level 1 inputs under FASB Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” Level 1 inputs represent quoted prices available in an active market for identical investments as of the reporting date. Gains and losses on securities sold are based on the specific identification method, and are reported as a component of interest, dividend and other investment income. |
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Equity method investment | Equity method investment. The Company accounts for its investment in Pillarstone OP in accordance with ASC 323, “Investments - Equity Method and Joint Ventures,” which addresses the accounting for investments in entities over which the investor is deemed to exercise significant influence. The Company serves as the general partner of Pillarstone OP, with a 18.6% equity ownership interest and is a party to the Amended and Restated Agreement of Limited Partnership of Pillarstone OP, as described in Note 5 herein, which gives the general partner, subject to certain protective rights of the limited partners as described in Note 5, the responsibility and discretion for the management of Pillarstone OP, including the ability to cause Pillarstone OP to enter into certain major transactions including a merger of Pillarstone OP or a sale of substantially all of the assets of Pillarstone OP. As such, the Company is deemed to exercise significant influence but not complete control over Pillarstone OP. Additionally, we determined that we are not the primary beneficiary and thus the investment in Pillarstone OP qualifies for usage of the equity method of accounting. |
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Investment in equipment | Investments in equipment. Our investments in equipment assets are reported at cost. Depreciation expense is computed using the straight-line method based on the following useful lives: Furniture, fixtures and equipment 3-7 years |
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Revenue Recognition | Revenue recognition. Revenues are interest earned on cash balances and equity in earnings of an investee, and are recognized during the period in which they are earned. |
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Stock-based compensation | Stock-based compensation. The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 generally requires that these transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards. |
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Income taxes | Income taxes. Because we have not elected to be taxed as a REIT for federal income tax purposes, we account for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the period 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 Company evaluates potential uncertain tax positions on an annual basis in conjunction with the board of trustees and its tax accountants. Authoritative literature provides a two-step approach to recognize and measure tax benefits when realization of the benefits is uncertain. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. The Company has no uncertain tax positions that required adjustments to our consolidated financial statements in 2017 or 2016. At December 31, 2017, we have net operating loss carryforwards totaling $2,510,000. While these losses created a deferred tax asset, a valuation allowance was applied against the asset because of the uncertainty of whether we will be able to use these loss carryforwards, which will expire in varying amounts through the year 2038. Pursuant to regulations set forth in the Internal Revenue Code of 1986 as amended (the “Code”), Pillarstone will be limited to using $651,600 of the prior net operating losses of $11,246,000. These same regulations also limit the amount of loss used in any one year. We are also subject to certain state and local income, excise and franchise taxes. The provision for state and local taxes has been reflected in general and administrative expense in the consolidated statements of operations and has not been separately stated due to its insignificance. |
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Fair value of financial instruments | Fair value of financial instruments. We adopted ASC 820, “Fair Value Measurements and Disclosures,” as it applies to our financial instruments, and ASC 825, “Financial Instruments.” ASC 820 defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. ASC 825 permits companies to irrevocably choose to measure certain financial instruments and other items at fair value. ASC 825 also establishes presentation and disclosure requirements designed to facilitate comparison between entities that choose different measurement attributes for similar types of assets and liabilities. Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. ASC 820 establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. ASC 820 requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our Consolidated Balance Sheets, we have elected not to record any other assets or liabilities at fair value, as permitted by ASC 825. No events occurred during 2017 which would require adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis. The following table provides information on those assets and liabilities measured at fair value on a recurring basis.
The fair value of the marketable securities is based on quoted market prices in an active market |
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Recent accounting pronouncements | Recent accounting pronouncements. Management has reviewed recently issued accounting pronouncements and does not expect the implementation of these pronouncements to have a significant effect on the Company's consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table provides information on those assets and liabilities measured at fair value on a recurring basis.
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Shareholders' Equity (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity of our unvested restricted common shares | The following table summarizes the activity of our unvested restricted Common Shares for the years ended December 31, 2017 and 2016:
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Schedule of activity for outstanding stock options | The following table summarizes the activity for outstanding stock options:
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Loss Per Share (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loss per share |
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Income taxes (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax provision |
There was no income tax provision for the years ended December 31, 2017 and 2016.
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Schedule of income tax rate reconciliation | The tax provision differs from the expense that would result from applying Federal statutory rates as follows:
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Schedule of deferred tax assets and liabilities | Deferred tax assets and liabilities consist of the following:
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Summary of loss carryovers | The loss carryforwards expire as follows:
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Minimum Future Rents Payable | A summary of the minimum future rents payable under our lease as of December 31, 2017 is as follows:
|
Organization Organization (Details) |
Dec. 31, 2017 |
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Pillarstone OP [Member] | |
Variable Interest Entity [Line Items] | |
Ownership percentage | 18.60% |
Basis of Presentation (Details Narrative) |
1 Months Ended |
---|---|
Dec. 31, 2016
property
| |
Accounting Policies [Abstract] | |
Number of real estate assets acquired | 14 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 0 | |
Other assets | $ 9,679 | $ 14,499 |
Uncertain tax position to be recognized based on maximum cumulative probability percentage | 50.00% | |
Unrecognized tax benefits | $ 0 | 0 |
Total loss carryovers | 2,510,000 | |
Operating loss carryforwards subject to limitations total | 651,600 | |
Net loss carryovers with restriction | $ 11,246,000 | |
Prepaid SEC Filing Charges [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Other assets | 5,297 | |
Directors and Officers Liability Insurance [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Other assets | $ 9,202 | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 7 years | |
Pillarstone OP [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Ownership percentage | 18.60% | |
Useful life | 25 years |
Summary of Significant Accounting Policies - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 100 | $ 100 |
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 100 | 100 |
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 0 | $ 0 |
Marketable Securities (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Marketable Securities [Abstract] | ||
Marketable securities | $ 100 | $ 100 |
Proceeds from the sale of marketable securities | 0 | 0 |
Interest earned on cash | $ 0 | $ 0 |
Convertible Notes Payable - Related Parties (Details Narrative) |
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Nov. 20, 2015
USD ($)
trustee
$ / shares
|
---|---|---|---|
Debt Disclosure [Abstract] | |||
Number of trustees | trustee | 5 | ||
Convertible notes payable - related parties | $ | $ 197,780 | $ 197,780 | $ 197,780 |
Interest rate | 10.00% | ||
Conversion price (in dollars per share) | $ / shares | $ 1.331 |
Shareholders' Equity - Schedule of Unvested Restricted Common Shares Activity (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Number of Shares | ||
Unvested, beginning balance (in shares) | 168,449 | 168,449 |
Vested (in shares) | 0 | 0 |
Unvested, ending balance (in shares) | 168,449 | 168,449 |
Weighted-Average Grant-Date Fair Value | ||
Unvested, beginning balance (in dollars per share) | $ 11.44 | $ 11.44 |
Vested (in shares) | 0.00 | 0.00 |
Unvested, ending balance (in dollars per share) | $ 11.44 | $ 11.44 |
Incentive Equity Plan (Details) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized (in shares) | 450,000,000 | 110,000,000 |
2016 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percent of total shares authorized | 12.50% | |
Shares authorized (in shares) | 2,356,426 | |
Shares granted (in shares) | 0 |
Loss Per Share (Details Narrative) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Weighted average number of common shares outstanding: Basic and Diluted (in shares) | 405,169 | 405,169 |
Antidilutive securities excluded from computation of loss per share (in shares) | 3,083,284 | 3,068,358 |
Loss Per Share - Schedule of Calculation of Numerator and Denominator in Earnings Per Share (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net loss attributable to common shareholders | $ (17,426) | $ (496,981) |
Weighted average Common Shares outstanding at December 31, 2017 and December 31, 2016 - basic and diluted (in shares) | 405,169 | 405,169 |
Net loss attributable to common shareholders - basic and diluted (in dollars per share) | $ (0.04) | $ (1.23) |
Dividends/Distributions (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Distributions Made to Members or Limited Partners [Abstract] | ||
Dividends | $ 0 | $ 0 |
Income Taxes (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 571,000 | $ 915,000 |
Total loss carryovers | 2,510,000 | |
Net operating loss carryovers available without restriction | 1,859,000 | |
Operating loss carryforwards subject to limitations per year | $ 72,400 | |
Operating loss carryforwards subject to limitations, year | 9 years | |
Operating loss carryforwards subject to limitations total | $ 651,600 | |
Net loss carryovers with restriction | $ 10,642,000 |
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Deferred benefit | $ (6) | $ (40) | |
Change in deferred rate | 350 | 156 | |
Change in valuation allowance | (344) | (116) | |
Total tax provision | $ 0 | $ 0 | |
Deferred tax rate | 21.00% | 34.00% | 40.00% |
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Benefit at Federal statutory rate | $ (6) | $ (40) | |
Change in deferred rate | 350 | 156 | |
Change in valuation allowance | (344) | (116) | |
Total tax provision | $ 0 | $ 0 | |
Deferred tax rate | 21.00% | 34.00% | 40.00% |
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 571 | $ 915 |
Valuation allowance | (571) | (915) |
Net deferred tax assets | $ 0 | $ 0 |
Commitments and Contingencies (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
shares
| |
Loss Contingencies [Line Items] | |
Rent expense | $ 12,634 |
James C. Mastandrea [Member] | |
Loss Contingencies [Line Items] | |
Officers' Compensation | $ 60,000 |
Initial term of CEO's employment, Duration | 2 years |
Terms of employment extension, Duration | 1 year |
Period of time after termination the officer will be entitled to his effective salary | 3 years |
Stock Issued During Period, Value, Other | $ 100,000 |
Stock Issued During Period, Shares, Other | shares | 44,444 |
John J. Dee [Member] | |
Loss Contingencies [Line Items] | |
Period of time after termination the officer will be entitled to his effective salary | 3 years |
Per hour compensation rate | $ 125 |
Maximum monthly compensation rate issued | $ 5,000 |
Commitments and Contingencies - Summary of Minimum Future Rents Payable (Details) |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 14,178 |
2019 | 14,604 |
2020 | 7,410 |
Total | $ 36,192 |
Schedule II - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 915,000 | $ 1,031,000 | $ 1,004,000 |
Charged to Costs and Expense | (344,000) | (116,000) | 27,000 |
Deductions from Reserves | 0 | 0 | 0 |
Balance at End of Year | $ 571,000 | $ 915,000 | $ 1,031,000 |
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