|
NOTE
5 – DEFERRED RENTS RECEIVABLE
The
Company is the lessor under operating leases which contain rent holidays, escalating rents over time, options to renew, requirements
to pay property taxes, insurance and/or maintenance costs, and contingent rental payments based on a percentage of monthly tenant
revenues. The Company is not the lessor under any finance leases.
The
Company recognizes fixed rental receipts from such lease agreements on a straight-line basis over the expected lease term. Differences
between amounts received and amounts recognized are recorded under Deferred Rents Receivable on the balance sheet. Contingent
rentals are recognized only after tenants’ revenues are finalized and if such revenues exceed certain minimum levels.
The
Company leases the following owned properties:
| |
● |
Delaware
– a 45,000 square foot facility purchased in September 2016 and developed into a cannabis cultivation, processing, and
dispensary facility which is leased to a cannabis-licensed client under a triple net lease that commenced in 2017 and expires
in 2035. |
| |
|
|
| |
● |
Maryland
– a 180,000 square foot former manufacturing facility purchased in January 2017 and developed by the Company into a
cultivation and processing facility which is leased to a licensed cannabis client under a triple net lease that commenced
2018 and expires in 2037. |
| |
|
|
| |
● |
Massachusetts
– a 138,000 square foot industrial property of which approximately half of the available square footage is leased to
a non-cannabis manufacturing company under a lease that commenced in 2017 and expires in 2022. |
The
Company subleases the following properties:
| |
● |
Delaware
– 4,000 square feet of retail space in a multi-use building space which the Company developed into a cannabis dispensary
and is subleased to its cannabis-licensed client under a under a triple net lease expiring in December 2021 with a five-year
option to extend. |
| |
|
|
| |
● |
Delaware
– a 100,000
square foot warehouse which the Company is
developing into a cultivation and processing facility to be subleased to its cannabis-licensed client. The
lease expires in March 2030, with an option to extend the term for three additional five-year periods.
|
| |
|
|
| |
● |
Delaware
– a 12,000
square foot premises which the Company developed into a cannabis production facility with offices, and is subleased to its
cannabis-licensed client. The
lease expires in January 2026 and contains an option to negotiate an extension at the end of the lease term. |
As
of March 31, 2021 and December 31, 2020, cumulative fixed rental receipts under such leases approximated $15.1 million and $13.9
million, respectively, compared to revenue recognized on a straight-line basis of approximately $17.0 and 15.8 million. Accordingly,
the deferred rents receivable balance approximated $1.9 million at March 31, 2021 and December 31, 2020.
Future
minimum rental receipts for non-cancelable leases and subleases as of March 31, 2021 were:
SCHEDULE OF FUTURE MINIMUM RENTAL RECEIPTS FOR NON-CANCELABLE LEASES AND SUBLEASES
| |
|
|
2021 |
|
| 2021 |
|
$ |
3,593,589 |
|
| 2022 |
|
|
4,712,200 |
|
| 2023 |
|
|
4,417,620 |
|
| 2024 |
|
|
4,476,205 |
|
| 2025 |
|
|
4,543,917 |
|
| Thereafter |
|
|
39,589,047 |
|
| Total |
|
$ |
61,332,578 |
|
|