Forward-Looking Statements
This report contains statements that do not relate to historical facts, but are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Forward-looking statements are all statements, other than statements of historical facts, that discuss our current expectation and projections relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and objectives of management. These statements may be preceded by, followed by, or include the words "aim," "anticipate," "believe," "can," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "outlook," "plan," "potential," "predict," "project," "seek," "should," "will," "would," the negatives or plurals thereof, and other words and terms of similar meaning, although not all forward-looking statements contain these identifying words.
We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct. You should understand that the following important factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
? Our ability to implement plans for growth; ? Our ability to finance the acquisition of new real estate assets; ? Our ability to manage growth; ? Our ability to generate operating liquidity; ? Our ability to attract and maintain tenants for our rental properties; ? The demand for rental properties and the creditworthiness of tenants; ? Financial results for 2021 and beyond; ? Future acquisitions and dispositions of assets; ? Future development and redevelopment opportunities; ? Future issuances of capital stock; ? Market and industry trends; ? Interest rates; ? The outcome and impact of any litigation; ? Operating performance including statements relating to creating value for stockholders; ? Governmental actions and initiatives; ? Environmental and safety requirements; ? The form, timing and/or amount of dividend distributions in future periods.
Any forward-looking statements are based upon management's beliefs, assumptions and expectations of our future performance, taking into account information currently available. These beliefs, assumptions and expectations may change as a result of possible events or factors, not all of which are known. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements due to, but not limited to, the following:
? the availability and terms of capital and financing; ? the ability to refinance or repay indebtedness as it matures; ? the failure of purchase, sale, or other contracts to ultimately close; ? the failure to achieve anticipated benefits from acquisitions and investments or from dispositions; ? the potential dilutive effect of common or preferred stock offerings; ? the impact of future financing arrangements including secured and unsecured indebtedness; ? the availability of buyers and pricing with respect to the disposition of assets; ? risks and uncertainties related to national and local economic conditions, the real estate industry in general, and the commercial real estate markets in particular; 16 ? leasing risks, including the ability to obtain new tenants or renew expiring tenants, the ability to lease newly developed and/or recently acquired space, and the risk of declining leasing rates; ? the adverse change in the financial condition of one or more of our major tenants; ? volatility in interest rates and insurance rates; ? competition from other developers or investors; ? the risks associated with real estate developments (such as zoning approval, receipt of required permits, construction delays, cost overruns, and leasing risk); ? the loss of key personnel; ? the potential liability for uninsured losses, condemnation, or environmental issues; ? the potential liability for a failure to meet regulatory requirements; ? the financial condition and liquidity of, or disputes with, joint venture partners; ? any failure to comply with debt covenants under credit agreements; ? any failure to continue to qualify for taxation as a real estate investment trust and meet regulatory requirements; ? risks associated with the COVID 19 Pandemic; ? potential changes to tax legislation; ? potential changes to state, local or federal regulations applicable to our business; ? changes in demand for properties; ? risks associated with the acquisition, development, expansion, leasing and management of properties; ? significant costs related to condemnation, or environmental issues; ? those additional risks and factors discussed in reports filed with theSecurities and Exchange Commission ("SEC") by us.
In light of these risks and uncertainties, we may not actually achieve the
plans, intentions, or expectations disclosed in our forward-looking statements,
and you should not place undue reliance on our forward-looking statements.
Actual results or events could differ materially from the plans, intentions, and
expectations disclosed in the forward-looking statements we make. We have
included important factors in the cautionary statements included in Part I Item
1A - Risk Factors of the Annual Report on Form 10-K for the fiscal year ended
You should read this Quarterly Report on Form 10-Q in conjunction with our
Annual Report on Form 10-K for the fiscal year ended
Overview
We have only one business segment: our real estate interests. Our principal assets fall into the following categories:
We own a Rental Property, which consists of the Mapletree Industrial Center
located in
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We own a 31.3333% interest in
We outsource the property management of the Mapletree Industrial Center to
We obtain funds for working capital and investment from our available cash, operating activities, and refinancing of mortgage loans on our real estate.
On
Critical Accounting Policies
In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in
Real Estate
Real estate is carried at cost, net of accumulated depreciation. Additions and improvements are capitalized whereas repairs and maintenance are charged to rental property operating expenses as incurred. Depreciation is generally provided on the straight-line method over the estimated useful life of the asset. The useful life of each property, as well as the allocation of the costs associated with a property to its various components, requires estimates by management. If management incorrectly estimates the allocation of those costs or incorrectly estimates the useful lives of its real estate, depreciation expense may be miscalculated.
The Company reviews its properties for impairment if events or changes in
circumstances warrant. If impairment were to occur, the property would be
written down to its estimated fair value. The Company assesses the
recoverability of its investment in real estate based on undiscounted cash flow
estimates. The future estimated cash flows of a property are based on current
rental revenues and operating expenses, as well as the current local economic
climate affecting the property. Considerable judgment is required in making
these estimates and changes in these estimates could cause the estimated cash
flows to change and impairment could occur. As of
Rental Revenue Recognition
Rental revenues include revenues from the leasing of space at our Mapletree Property, which primarily consist of monthly base rents in addition to the reimbursement of utilities. Other rental revenues, which are included as a component of rental revenue, primarily include fees related to build-out or other services performed by the Company on the property.
The Company adopted ASU 2014-09, Revenue from Contracts with Customers (ASC 606)
effective
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Revenues from the leasing of space at our property to tenants includes (i) lease components, including fixed and variable lease payments, and nonlease components which include reimbursement of electric expense and (ii) reimbursement of real estate taxes. As lessor, we have elected to combine the lease and nonlease components of our operating lease agreements and account for the components as a single lease component in accordance with ASC 842.
Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable period of the lease, together with renewal options that are reasonably certain of being exercised. We commence rental revenue recognition when the underlying asset is available for use by the lessee. Revenue derived from the reimbursement of real estate taxes and electric expense are generally recognized in the same period as the related expenses are incurred, which did not change as a result of the adoption of ASU 2016-02.
The Company assesses the collectability of lease receivables (including future minimum rental payments) both at commencement and throughout the lease term. If our assessment of collectability changes during the lease term, any difference between the revenue that would have been received under the straight-line method and the lease payments that have been collected will be recognized as a current period adjustment to rental revenue. Rental revenue associated with leases where collectability has been deemed less than probable is recognized on a cash basis in accordance with ASC 842.
Allowance for Doubtful Accounts
The Company assesses the collectability of amounts due from tenants and other
receivables, using indicators such as past-due accounts, the nature and age of
the receivable, the payment history and the ability of the tenant or debtor to
meet its payment obligations. Management's estimate of allowances for doubtful
accounts is subject to revision as these factors change. Any subsequent recovery
of tenant receivables that were previously reserved is recorded as a reduction
in the allowance of bad debt. As of
Investments in Joint Venture
The Company has an equity investment in a joint venture and accounts for this investment using the fair value method of accounting.
Income Taxes
We operate in a manner intended to enable us to continue to qualify as a Real
Estate Investment Trust under Sections 856 to 860 of the Code. Under those
sections, a REIT which meets certain requirements is not subject to Federal
income tax on that portion of its taxable income, which is distributed to its
shareholders, if at least 90% of its REIT taxable income (exclusive of capital
gains) is so distributed. As a result of using our ordinary tax loss carry
forwards in 2020 there was no requirement to make a distribution in 2021. In
addition, no provision for income taxes was required at
Results of Operations
Results of Operations for the nine months ended
2021 2020 Total Revenue$ 761,765 $ 766,197 Operating expenses 403,095 430,095 Net income$ 41,888 $ 18,068
Revenues decreased by
Net income for the nine months ended
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Results of Operations for the three months ended
2021 2020 Total Revenue$ 244,590 $ 239,675 Operating expenses 114,962 136,899 Net Income (loss)$ 32,219 $ (4,076 )
Revenues increased by
Net income for the three months ended
Balance Sheet
Net real estate decreased by
Prepaid expenses increased by
Mortgage escrow decreased
Accounts payable and accrued liabilities decreased by
Other liabilities decreased
Liquidity and Capital Resources
We obtain funds for working capital and investment from our available cash and operating activities.
On
20 Operating Activities
Cash from operating activities includes net cash received from rental property
operations. For the nine months ended
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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