Company Quick10K Filing
Quick10K
Rodin Income Trust
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
8-K 2019-09-28 Enter Agreement, Shareholder Rights, Exhibits
8-K 2019-06-26 Shareholder Vote
8-K 2019-02-12 Other Events
8-K 2018-11-01 Other Events, Exhibits
8-K 2018-09-28 Enter Agreement, Exhibits
8-K 2018-09-21 Other Events, Exhibits
SUIC Sino United Worldwide Consolidated 168
COSM Cosmos Holdings 45
LFAP Lifeapps Brands 14
WCVC West Coast Ventures Group 1
WGL WGL Holdings 0
MSCG Managed Futures Premier Graham 0
DIFU Diversified 2000 Futures Fund 0
FRZT Freeze Tag 0
YEWB Yew Bio-Pharm 0
FNEC First National Energy 0
RIT 2019-06-30
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization and Business Purpose
Note 2 - Summary of Significant Accounting Policies
Note 3 - Commercial Mortgage Loans, Held for Investment
Note 4 - Loan Participations Sold
Note 5 - Stockholders' Equity
Note 6 - Related Party Transactions
Note 7 - Economic Dependency
Note 8 - Commitments and Contingencies
Note 9 - Fair Value Measurements
Note 10 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 rit-ex311_8.htm
EX-31.2 rit-ex312_6.htm
EX-32 rit-ex32_7.htm

Rodin Income Trust Earnings 2019-06-30

RIT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rit-10q_20190630.htm 10-Q rit-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                   

Commission file number: 333-221814

 

Rodin Income Trust, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

81-1144197

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

110 E. 59th Street, New York, NY

 

10022

(Address of principal executive offices)

 

(Zip Code)

(212) 938-5000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes        No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes        No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 12, 2019, the registrant had 271,574 Class A shares, 95,033 Class I Shares, and 14,381 Class T shares of $0.01 par value common stock outstanding.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

N/A

N/A

 


 

 

RODIN INCOME TRUST, INC.

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I - FINANCIAL INFORMATION

 

3

 

 

 

Item 1. Financial Statements (Unaudited)

 

3

 

 

 

Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

3

 

 

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and June 30, 2018

 

4

 

 

 

Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2019 and June 30, 2018

 

5

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and June 30, 2018

 

7

 

 

 

Notes to Consolidated Financial Statements

 

8

 

 

 

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

 

29

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

53

 

 

 

Item 4. Controls and Procedures.

 

53

 

 

 

PART II - OTHER INFORMATION

 

54

 

 

 

Item 1. Legal Proceedings.

 

54

 

 

 

Item 1A. Risk Factors.

 

54

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

55

 

 

 

Item 3. Defaults Upon Senior Securities.

 

56

 

 

 

Item 4. Mine Safety Disclosures.

 

56

 

 

 

Item 5. Other Information.

 

56

 

 

 

Item 6. Exhibits.

 

56

 

 

 

Signatures

 

58

 

 

2


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

RODIN INCOME TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

295,294

 

 

$

179,251

 

Commercial mortgage loans, held for investment

 

25,302,770

 

 

 

24,886,944

 

Accrued interest receivable

 

166,691

 

 

 

169,768

 

Stock subscriptions receivable

 

45,404

 

 

 

 

Prepaid expenses

 

27,359

 

 

 

9,493

 

Due from related party

 

1,999

 

 

 

10,012

 

Total assets

$

25,839,517

 

 

$

25,255,468

 

Liabilities and Equity

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Loan participations sold

$

16,907,029

 

 

$

21,023,435

 

Due to related party

 

210,425

 

 

 

151,621

 

Accrued interest payable

 

90,677

 

 

 

136,057

 

Distributions payable

 

46,931

 

 

 

22,214

 

Accounts payable and accrued expenses

 

22,205

 

 

 

22,384

 

Total liabilities

 

17,277,267

 

 

 

21,355,711

 

Stockholders' equity

 

 

 

 

 

 

 

Controlling interest

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 50,000,000 shares authorized,

  and 0 issued and outstanding at June 30, 2019 and

  December 31, 2018, respectively

 

 

 

 

 

Class A common stock, $0.01 par value per share, 160,000,000 shares authorized,

   and 266,544 and 82,309 issued and outstanding at June 30, 2019 and

   December 31, 2018, respectively

 

2,665

 

 

 

823

 

Class T common stock, $0.01 par value per share, 200,000,000 shares

  authorized, and 8,480 and 0 issued and outstanding at June 30, 2019 and

  December 31, 2018, respectively

 

85

 

 

 

 

Class I common stock, $0.01 par value per share, 50,000,000 shares

   authorized, and 94,914 and 87,139 issued and outstanding at June 30, 2019 and

   December 31, 2018, respectively

 

949

 

 

 

871

 

Additional paid-in capital

 

8,663,829

 

 

 

4,060,151

 

Accumulated deficit and cumulative distributions

 

(106,278

)

 

 

(163,088

)

Total controlling interest

 

8,561,250

 

 

 

3,898,757

 

Non-controlling interests in subsidiaries

 

1,000

 

 

 

1,000

 

Total stockholders' equity

 

8,562,250

 

 

 

3,899,757

 

Total liabilities and stockholders' equity

$

25,839,517

 

 

$

25,255,468

 

See accompanying notes to consolidated financial statements

3


RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

For the Three Months

 

 

For the Six Months

 

 

Ended June 30,

 

 

Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

628,383

 

 

$

 

 

$

1,244,303

 

 

$

 

Less: Interest income related to loan participations sold

 

(420,955

)

 

 

 

 

 

(881,925

)

 

 

 

Total interest income, net

 

207,428

 

 

 

 

 

 

362,378

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

2,193

 

 

 

114,448

 

 

 

37,839

 

 

 

119,671

 

Management fees

 

22,786

 

 

 

 

 

 

40,208

 

 

 

 

Total operating expenses

 

24,979

 

 

 

114,448

 

 

 

78,047

 

 

 

119,671

 

Net income (loss)

$

182,449

 

 

$

(114,448

)

 

$

284,331

 

 

$

(119,671

)

Weighted average shares outstanding

 

328,742

 

 

 

10,827

 

 

 

289,061

 

 

 

9,471

 

Net income (loss) per common share - basic and diluted

$

0.55

 

 

$

(10.57

)

 

$

0.98

 

 

$

(12.64

)

See accompanying notes to consolidated financial statements

4


 

RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Deficit and

 

 

Non-

 

 

 

 

 

 

Class A

 

 

Class T

 

 

Class I

 

 

Paid-In

 

 

Cumulative

 

 

controlling

 

 

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Distributions

 

 

interest

 

 

Equity

 

Balance as of January 1, 2018

 

8,180

 

 

$

82

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

199,919

 

 

$

 

 

$

1,000

 

 

$

201,001

 

Common stock issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution reinvestment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,223

)

 

 

 

 

 

(5,223

)

Distributions declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2018

 

8,180

 

 

$

82

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

199,919

 

 

$

(5,223

)

 

$

1,000

 

 

$

195,778

 

Common stock issued

 

 

 

 

 

 

 

 

 

 

 

 

 

80,000

 

 

 

800

 

 

 

1,999,200

 

 

 

 

 

 

 

 

 

2,000,000

 

Distribution reinvestment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,683

)

 

 

 

 

 

 

 

 

(19,683

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(114,448

)

 

 

 

 

 

(114,448

)

Distributions declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2018

 

8,180

 

 

$

82

 

 

 

 

 

$

 

 

 

80,000

 

 

$

800

 

 

$

2,179,436

 

 

$

(119,671

)

 

$

1,000

 

 

$

2,061,647

 

See accompanying notes to consolidated financial statements

5


 

RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Deficit and

 

 

Non-

 

 

 

 

 

 

Class A

 

 

Class T

 

 

Class I

 

 

Paid-In

 

 

Cumulative

 

 

controlling

 

 

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Distributions

 

 

interest

 

 

Equity

 

Balance as of January 1, 2019

 

82,309

 

 

$

823

 

 

 

 

 

$

 

 

 

87,139

 

 

$

871

 

 

$

4,060,151

 

 

$

(163,088

)

 

$

1,000

 

 

$

3,899,757

 

Common stock issued

 

115,947

 

 

 

1,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,694,615

 

 

 

 

 

 

 

 

 

2,695,774

 

Distribution reinvestment

 

279

 

 

 

3

 

 

 

 

 

 

 

 

 

115

 

 

 

1

 

 

 

9,150

 

 

 

 

 

 

 

 

 

9,154

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,827

)

 

 

 

 

 

 

 

 

(27,827

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101,882

 

 

 

 

 

 

101,882

 

Distributions declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(97,613

)

 

 

 

 

 

(97,613

)

Balance as of March 31, 2019

 

198,535

 

 

$

1,985

 

 

 

 

 

$

 

 

 

87,254

 

 

$

872

 

 

$

6,736,089

 

 

$

(158,819

)

 

$

1,000

 

 

$

6,581,127

 

Common stock issued

 

67,641

 

 

 

676

 

 

 

8,480

 

 

 

85

 

 

 

7,524

 

 

 

76

 

 

 

1,936,288

 

 

 

 

 

 

 

 

 

1,937,125

 

Distribution reinvestment

 

368

 

 

 

4

 

 

 

 

 

 

 

 

 

136

 

 

 

1

 

 

 

11,719

 

 

 

 

 

 

 

 

 

11,724

 

Offering costs, commissions and fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,267

)

 

 

 

 

 

 

 

 

(20,267

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

182,449

 

 

 

 

 

 

182,449

 

Distributions declared on common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(129,908

)

 

 

 

 

 

(129,908

)

Balance as of June 30, 2019

 

266,544

 

 

$

2,665

 

 

 

8,480

 

 

$

85

 

 

 

94,914

 

 

$

949

 

 

$

8,663,829

 

 

$

(106,278

)

 

$

1,000

 

 

$

8,562,250

 

See accompanying notes to consolidated financial statements

6


RODIN INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the Six Months

 

 

Ended June 30,

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

284,331

 

 

$

(119,671

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

Decrease in accrued interest receivable

 

3,077

 

 

 

 

(Increase) in prepaid expenses

 

(17,866

)

 

 

(23,809

)

Decrease in due from related party

 

8,013

 

 

 

 

Increase in due to related party

 

10,761

 

 

 

118,636

 

(Decrease) in accrued interest payable

 

(45,380

)

 

 

 

(Decrease) in accounts payable and accrued expenses

 

(179

)

 

 

 

Net cash provided by/(used in) operating activities

 

242,757

 

 

 

(24,844

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Repurchases of loan participation interest

 

(4,250,000

)

 

 

 

Fundings of commercial mortgage loans, held for investment

 

(282,232

)

 

 

 

Cash used in investing activities

 

(4,532,232

)

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net

 

4,587,444

 

 

 

2,000,317

 

Distributions

 

(181,926

)

 

 

 

Net cash provided by financing activities

 

4,405,518

 

 

 

2,000,317

 

Net increase in cash and cash equivalents

 

116,043

 

 

 

1,975,473

 

Cash and cash equivalents, at beginning of period

$

179,251

 

 

$

201,001

 

Cash and cash equivalents, at end of period

$

295,294

 

 

$

2,176,474

 

Non-cash financing activities:

 

 

 

 

 

 

 

Distributions payable

$

24,717

 

 

$

 

Distribution reinvestment

$

20,878

 

 

$

 

See accompanying notes to consolidated financial statements

7


 

RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and Business Purpose

Rodin Income Trust, Inc. (the “Company”) was formed on January 19, 2016 as a Maryland corporation that intends to qualify as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes, commencing with its 2019 tax year. The Company’s consolidated financial statements include Rodin Income Trust Operating Partnership, L.P. (the “Operating Partnership”), RIT REIT Sub I, Inc. (“RIT REIT Sub I”), and RIT Lending, Inc. (“RIT Lending”). Both RIT REIT Sub I and RIT Lending are indirect wholly owned subsidiaries of the Company. Substantially all of the Company’s business is expected to be conducted through the Operating Partnership, a Delaware partnership formed on January 19, 2016. The Company is the sole general and a limited partner of the Operating Partnership. Unless the context otherwise requires, the “Company” refers to the Company and the Operating Partnership. The Company currently operates its business in one reportable segment, which focuses on originating mortgage or mezzanine loans, secured mainly by commercial real estate, and investing in participations of such loans.

On January 22, 2016, the Company was capitalized with a $200,001 investment by its sponsor, Cantor Fitzgerald Investors, LLC (“CFI”), through the purchase of 8,180 Class A shares of common stock. In addition, an indirect wholly owned subsidiary of CFI, Rodin Income Trust OP Holdings, LLC (the “Special Unit Holder”), has invested $1,000 in the Operating Partnership and has been issued a special class of limited partnership units, which is recorded as a non-controlling interest on the consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively. On June 28, 2018, the Company satisfied the minimum offering requirement for the Offering (the “Minimum Offering Requirement”) as a result of CFI’s purchase of $2.0 million in Class I shares at $25.00 per share.

The Company focuses on originating mortgage and mezzanine loans secured mainly by commercial real estate located primarily in the U.S., United Kingdom, and other European Countries. The Company may also invest in commercial real estate securities and properties. Commercial real estate investments may include mortgage loans, subordinated mortgage and non-mortgage interests, including preferred equity investments and mezzanine loans, and participations in such instruments. Commercial real estate securities may include commercial mortgage-backed securities (“CMBS”), unsecured debt of publicly traded REITs, debt or equity securities of publicly traded real estate companies and structured notes.

As of June 30, 2019, the Company had made the following investments (collectively, the “Investments”):

 

The Company originated, through RIT Lending, an $18 million fixed rate mezzanine loan (the “Delshah Loan”) to DS Brooklyn Portfolio Mezz LLC (the “Mezzanine Borrower”), an affiliate of Delshah Capital Limited (“Delshah”) for the acquisition of a 28-property multifamily portfolio by Delshah located in Brooklyn and Manhattan, NY (each a “Property” and collectively the “Portfolio”). (See Note 3)

 

The Company also originated, through RIT lending, an $8.99 million floating-rate mezzanine loan (the “East 12th Street Loan”), to DS 531 E. 12th Mezz LLC (the “East 12th Street Mezzanine Borrower”), an affiliate of Delshah, for the acquisition of a multifamily property by Delshah located in Manhattan, NY (the “East 12th Street Property”). Approximately $6.83 million of the East 12th Street Loan was funded at closing. As of June 30, 2019, approximately $7.30 million of the East 12th Street Loan has been funded. (See Note 3)

The Company is externally managed by Rodin Income Advisors, LLC (the “Advisor”), a Delaware limited liability company and a wholly owned subsidiary of CFI. CFI is a wholly owned subsidiary of CFIM Holdings, LLC, which is a wholly owned subsidiary of Cantor Fitzgerald, L.P. (“CFLP”).

Note 2 Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with U.S. GAAP.

8


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet. Management believes that the estimates utilized in preparing the consolidated financial statements are reasonable. As such, actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the Operating Partnership and any single member limited liability companies or other entities which are consolidated in accordance with U.S. GAAP. The Company consolidates variable interest entities (“VIEs”) where it is the primary beneficiary and voting interest entities which are generally majority owned or otherwise controlled by the Company. All intercompany balances are eliminated in consolidation.

Variable Interest Entities

The Company determines if an entity is a VIE in accordance with guidance in Accounting Standards Codification (“ASC”) Topic 810, Consolidation. For an entity in which the Company has acquired an interest, the entity will be considered a VIE if both of the following characteristics are not met: 1) the equity investors in the entity have the characteristics of a controlling financial interest and 2) the equity investors’ total investment at risk is sufficient to finance the entity’s activities without additional subordinated financial support. The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, then a quantitative analysis, if necessary. A qualitative analysis is generally based on a review of the design of the entity, including its control structure and decision-making abilities, and also its financial structure. In a quantitative analysis, the Company would incorporate various estimates, including estimated future cash flows, assumed hold periods and capitalization or discount rates.

If an entity is determined to be a VIE, the Company then determines whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity.

The Company evaluates all of its significant investments to determine if they are VIEs utilizing judgments and estimates that are inherently subjective. If different judgments or estimates were used for these evaluations, it could result in differing conclusions as to whether or not an entity is a VIE and whether or not to consolidate such entity. As of June 30, 2019, the Company concluded that it did not have any investments in VIEs.

Voting Interest Entities

A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company will not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party. The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and vice versa.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less.

Prepaid Expenses

Prepaid expenses consist of prepaid insurance.

9


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Commercial Mortgage Loans, Held for Investment

Commercial mortgage loans are generally intended to be held for investment and, accordingly, are carried at cost, net of unamortized loan fees, premium, discount and unfunded commitments. Commercial mortgage loans, held for investment that are deemed to be impaired are carried at amortized cost less a loan loss reserve, if deemed appropriate. Commercial mortgage loans where the Company does not have the intent to hold the loan for the foreseeable future or until its expected payoff are classified as held for sale and recorded at the lower of cost or estimated value. As of June 30, 2019, the Company has originated two mezzanine loans.

Mezzanine Loans

The Company has originated mezzanine loans to entities that are members of commercial real estate property owners. The mezzanine loans are secured by a pledge against the borrower’s equity in the property owner and are subordinate to senior debt. The mezzanine loans are senior to any preferred equity or common equity in the property (see Note 3 for further information on Commercial Mortgage Loans, Held for Investment).

Loan Participations Sold

The Company has partially financed its Commercial mortgage loans, held for investment through the sale of participating mezzanine loan interests to CFI. To the extent that U.S. GAAP does not recognize a sale resulting from the loan participation interests sold, the Company does not derecognize the participation in the loan that it sold. Instead, the Company recognizes a loan participation sold liability in an amount equal to the principal of the loan participation sold. The Company continues to recognize interest income on the entire loan, including the interest attributable to the loan participations sold (see Note 4 for further information on the Loan Participations Sold).

Revenue Recognition

Interest income is recognized when earned and accrued based on the outstanding accrual balance and any related premium, discount, origination costs and fees are amortized over the term of the loan on a straight-line basis, which approximates the effective interest method. The amortization is reflected as an adjustment to interest income in earnings. The amortization of a premium or accretion of a discount is discontinued if such loan is reclassified to held for sale.

Credit Losses and Impairment on Investments

Loans are considered impaired when, based on current information and events, it is probable that the Company will not be able to collect principal and interest amounts due according to the contractual terms. The Company assesses the credit quality of the portfolio and adequacy of loan loss reserves on a periodic basis. Significant judgment of management is required in this analysis. The Company considers the estimated net recoverable value of the loan as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the quality and financial condition of the borrower and the competitive situation of the area where the underlying collateral is located. Because this determination is based on projections of future economic events, which are inherently subjective, the amount ultimately realized may differ materially from the carrying value as of the balance sheet date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the loan, a loan loss reserve is recorded with a corresponding charge to provision for loan losses. The loan loss reserve for each loan is maintained at a level that is determined to be adequate by management to absorb probable losses.

Income recognition is suspended for a loan at the earlier of the date at which payments become 90-days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. When the ultimate collectability of the principal of an impaired loan is in doubt, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the principal of an impaired loan is not in doubt, contractual interest is recorded as interest income when received, under the cash basis method until an accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. A loan is written off when it is no longer realizable and/or legally discharged. As of June 30, 2019, no impairment has been identified.

10


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents. At times, balances with any one financial institution may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company believes it mitigates this risk by investing its cash with high-credit quality financial institutions.

Stock Subscriptions Receivable

As prescribed by ASC Topic 505, Equity, Stock subscriptions receivable represent the purchase of common stock for which the Company has not yet received payment from the purchaser. As of June 30, 2019 and December 31, 2018, the amount of stock subscriptions receivable was $45,404 and $0, respectively. The amount outstanding as of June 30, 2019 was received by the Company during July 2019.

Due from Related Party

Due from related party includes amounts owed to the Company by CFI pursuant to the terms of the Sponsor Support Agreement for the reimbursement of selling commissions and dealer manager fees, which at June 30, 2019 and December 31, 2018 was $1,999 and $10,012, respectively. The amounts of Sponsor Support outstanding at June 30, 2019 and December 31, 2018 were received by the Company during July 2019 and January 2019, respectively.

Due to Related Party

Due to related party is comprised of amounts contractually owed by the Company for various services provided to the Company from a related party, which at June 30, 2019 and December 31, 2018 was $210,425 and $151,621, respectively.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses is comprised of amounts owed by the Company for compensation to the Company’s independent board of directors relating to pro-rated annual compensation as well as attendance at meetings of the board of directors, which at June 30, 2019 and December 31, 2018, was $22,205 and $22,384, respectively.

Organization and Offering Costs

The Advisor has agreed to pay, on behalf of the Company, all organizational and offering costs (including legal, accounting, and other costs attributable to the Company’s organization and offering, but excluding upfront selling commissions, dealer manager fees and distribution fees) (“O&O Costs”) through the first anniversary of the date on which the Company satisfied the Minimum Offering Requirement, which was June 28, 2019 (the “Escrow Break Anniversary”). After the Escrow Break Anniversary, the Advisor, in its sole discretion, may pay some or all of the additional O&O Costs incurred, but it is not required to do so. Following the Escrow Break Anniversary, the Company began reimbursing the Advisor for payment of the O&O Costs ratably over a 36-month period; provided, however, that the Company shall not be obligated to pay any amounts that as a result of such payment would cause the aggregate payments for O&O Costs (less selling commissions, dealer manager fees and distribution fees) paid to the Advisor to exceed 1% of gross proceeds of the Offering (the “1% Cap”), as of such payment date. To the extent the Advisor pays such additional O&O Costs, the Company will be obligated to reimburse the Advisor subject to the 1% Cap. Any amounts not reimbursed in any period shall be included in determining any reimbursement liability for a subsequent period. As of June 30, 2019, the Advisor has continued to pay all O&O Costs on behalf of the Company.

As of June 30, 2019 and December 31, 2018, the Advisor has incurred $5,496,735 and $4,587,373, respectively, of O&O Costs on the Company’s behalf. The Company’s obligation is limited to the 1% Cap, less any reimbursement payments made by the Company to the Advisor for O&O costs incurred, which at June 30, 2019 and December 31, 2018 was $85,613 and $39,406, respectively, and is included within Due to related parties in the accompanying consolidated balance sheets. As of June 30, 2019 and December 31, 2018, organizational costs of $846 and $449, respectively, were expensed and included within general and administrative expenses, and offering costs of $87,051 and $38,957, respectively, were charged to stockholders’ equity. As of June 30, 2019 and December 31, 2018, the Company has made reimbursement payments of $2,284 and $0, respectively, to the Advisor for O&O Costs incurred.

11


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Income Taxes

For tax years beginning after December 31, 2018, the Company intends to elect to be taxed as a REIT and to comply with the related provisions under the Internal Revenue Code of 1986, as amended. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income, share ownership, minimum distribution and other requirements are met. The Company expects to have little or no taxable income prior to electing REIT status. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its stockholders and meet certain other requirements. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company may also be subject to certain state, local and franchise taxes. If the Company fails to meet these requirements, it will be subject to U.S. federal income tax, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders.

The Company provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Because assumptions are used in determining whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from the Company’s estimates under different assumptions or conditions.

Earnings Per Share

Basic net income (loss) per share of common stock is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. All classes of common stock are allocated net income (loss) at the same rate per share.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The ASU replaced certain previously existing revenue recognition guidance. Beginning January 1, 2018, companies are required to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also includes additional disclosure requirements. The new revenue recognition guidance does not apply to revenues associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP, and as a result, it did not have an impact on the elements of the Company’s consolidated statements of operations most closely associated with financial instruments, including revenues from Interest income. The new standard could have been adopted either retrospectively to prior reporting periods presented or as a cumulative effect adjustment as of the date of adoption. The Company adopted the new guidance on its required effective date of January 1, 2018 using the modified retrospective transition method applied to contracts that were not completed as of the adoption date. Accordingly, the new revenue standard is applied prospectively in the Company’s financial statements from January 1, 2018 onward and reported financial information for historical comparable periods is not revised and continues to be reported under the accounting standards in effect during those historical periods. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which makes changes to how cash receipts and cash payments are presented and classified in the Company’s consolidated statements of cash flows. The new standard became effective for the Company beginning January 1, 2018 and required adoption on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated statements of cash flows.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statements of cash flows present the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The new standard became effective for the Company beginning January 1, 2018 and required adoption on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated statements of cash flows.

12


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of providing additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard became effective for the Company beginning January 1, 2018 and is applied on a prospective basis. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires lessees to recognize a right-of-use (“ROU”) asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on the classification of a lease as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures. Accounting guidance for lessors is mostly unchanged. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other issues. In addition, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an additional (and optional) transition method to adopt the new leases standard. Under the new transition method, a reporting entity would initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption; continue to report comparative periods presented in the financial statements in the period of adoption in accordance with previous U.S. GAAP (i.e., ASC 840, Leases); and provide the required disclosures required by ASC 840 for all periods presented under that standard. Further, ASU No. 2018-11 contains a new practical expedient that allows lessors to avoid separating lease and associated non-lease components within a contract if certain criteria are met. In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors, to clarify guidance for lessors on sales taxes and other similar taxes collected from lessees, certain lessor costs and recognition of variable payments for contracts with lease and non-lease components. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842), Codification Improvements, to clarify certain application and transitional disclosure aspects of the new leases standard. The amendments address determination of the fair value of the underlying asset by lessors that are not manufacturers or dealers and clarify interim period transition disclosure requirements, among other issues. The guidance in ASUs 2016-02, 2018-10, 2018-11 and 2018-20 is effective beginning January 1, 2019, with early adoption permitted; whereas the guidance in ASU 2019-01 is effective beginning January 1, 2020, with early adoption permitted. The Company adopted the abovementioned standards on January 1, 2019 using the effective date as the date of initial application. Therefore, pursuant to this transition method financial information was not updated and the disclosures required under the new leases standards were not provided for dates and periods before January 1, 2019. The adoption of this guidance did not have an impact on the Company’s unaudited consolidated financial statements.

13


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

New Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires financial assets that are measured at amortized cost to be presented, net of an allowance for credit losses, at the amount expected to be collected over their estimated life. Expected credit losses for newly recognized financial assets, as well as changes to credit losses during the period, are recognized in earnings. For certain purchased financial assets with deterioration in credit quality since origination, the initial allowance for expected credit losses will be recorded as an increase to the purchase price. Expected credit losses, including losses on off-balance-sheet exposures such as lending commitments, will be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Further, based on the amended guidance for available-for-sale debt securities, the Company will be required to use an allowance approach to recognize credit impairment, with the allowance to be limited to the amount by which the security’s fair value is less than its amortized cost basis; the Company may not consider the length of time fair value has been below amortized cost; and may not consider recoveries of fair value after the balance sheet date when assessing whether a credit loss exists. The new standard will become effective for the Company beginning January 1, 2020, under a modified retrospective approach, and early adoption is permitted. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, to clarify that operating lease receivables accounted for under ASC 842, Leases, are not in the scope of the new credit losses guidance, and, instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The ASU makes changes to the guidance introduced or amended by ASU No. 2016-13 to clarify the scope of the credit losses standard and address guidance related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other issues. In addition, in May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. The amendments in this ASU allow entities, upon adoption of ASU No. 2016-13, to irrevocably elect the fair value option for financial instruments that were previously carried at amortized cost and are eligible for the fair value option under ASC 825-10, Financial Instruments: Overall. The amendments in ASUs No. 2018-19, 2019-04 and 2019-05 are required to be adopted concurrently with the guidance in ASU No. 2016-13. The Company plans to adopt the standards on their required effective date. Management is evaluating and planning for adoption and implementation of the new credit losses guidance, including forming an implementation team and continuing its assessment of the impact of the new guidance on the Company’s consolidated financial statements. Given the objective of the new standard, it is generally expected allowances for credit losses for the financial instruments within its scope would increase, however, the amount of any change will be dependent on the composition and quality of the Company’s portfolios at the adoption date as well as economic conditions and forecasts at that time.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The guidance is part of the FASB’s disclosure framework project, whose objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements. The ASU eliminates, amends and adds certain disclosure requirements for fair value measurements. The FASB concluded that these changes improve the overall usefulness of the footnote disclosures for financial statement users and reduce costs for preparers. The new standard will become effective for the Company beginning January 1, 2020 and early adoption is permitted for eliminated and modified fair value measurement disclosures. Certain disclosures are required to be applied prospectively and other disclosures need to be adopted retrospectively in the period of adoption. As permitted by the transition guidance in the ASU, the Company early adopted eliminated and modified disclosure requirements as of September 30, 2018 and plans to adopt the remaining disclosure requirements effective January 1, 2020. The adoption of this standard did not impact the Company’s consolidated financial statements. See Note 9 — Fair Value Measurements for additional information.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The guidance was issued in response to stakeholders’ observations that Topic 810, Consolidation, could be improved in the areas of applying the VIE guidance to private companies under common control and in considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. The new standard will become effective for the Company beginning January 1, 2020, with early adoption permitted, and must be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

14


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 3 – Commercial Mortgage Loans, Held for Investment

NYC Multi-family Portfolio Mezzanine Loan

On September 21, 2018, the Company originated, through RIT Lending, the Delshah Loan to the Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the Portfolio. The fee simple interest in the Portfolio is held by DS Brooklyn Portfolio Owner LLC, a single purpose limited liability company (the “Senior Borrower”) of which the Mezzanine Borrower owns 100% of the membership interests.

The Portfolio is comprised of 207 residential units and 19 commercial units that encompass 167,499 square feet.

The following table provides certain information about the Delshah Loan:

Loan Type

 

Loan Amount

 

 

Loan Term

 

Fixed Rate Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

18,000,000

 

 

10 years

 

9.10% subject to a potential increase on September 22, 2023

 

Interest only

 

83.14%

 

Note: (1) Loan-to-Value is calculated as of the date the Delshah Loan was originated.

The interest rate for the Delshah Loan for years one through five is 9.10%. Beginning on September 22, 2023, the interest rate for the Delshah Loan shall change to the greater of (i) 9.10% or (ii) 275 basis points over the then existing five year U.S. Treasury Note Yield (the “Mortgage Loan Interest Rate”). However, in the event certain conditions described in the Delshah Loan mezzanine loan agreement are not satisfied at the end of year five, the interest rate for the Delshah Loan shall increase to the greater of (i) 10.10% or (ii) 565 basis points over the Mortgage Loan Interest Rate in effect at the beginning of year six.

The Delshah Loan is secured by a pledge of 100% of the equity interests in the Senior Borrower. The Delshah Loan may be prepaid in its entirety, but not in part, subject to RIT Lending’s receipt of eighteen months of minimum interest. The term of the Delshah Loan is ten years, with no option to extend. The Portfolio is managed by an affiliate of the Borrower.

In connection with the origination of the Delshah Loan, RIT Lending entered into a participation agreement (the “Delshah Loan Participation Agreement”) with CFI. RIT Lending originated the Delshah Loan with (i) cash from the Offering (as defined below) equivalent to a 5% participation interest in the amount of $900,000 in the Delshah Loan and (ii) proceeds from the sale to CFI of a 95% participation interest in the amount of $17,100,000 in the Delshah Loan. 

As of June 30, 2019 and December 31, 2018, the Company had repurchased participation interests in the Delshah Loan from CFI totaling $400,000, increasing the Company’s total interest to $1,300,000 and representing a 7.22% ownership interest in the Delshah Loan.

During the three months ended June 30, 2019 and June 30, 2018, the Company earned interest income, net of $29,904 and $0, respectively, on the Delshah Loan, consisting of $414,050 and $0, respectively, of total interest less $384,146 and $0, respectively, of interest income related to loan participations sold.

During the six months ended June 30, 2019 and June 30, 2018, the Company earned interest income, net of $59,479 and $0, respectively, on the Delshah Loan, consisting of $823,550 and $0, respectively, of total interest less $764,071 and $0, respectively, of interest income related to loan participations sold.

533 East 12th Street, New York, NY

On November 1, 2018, the Company, through RIT Lending, originated the East 12th Street Loan to the East 12th Street Mezzanine Borrower, an affiliate of Delshah, for the acquisition of the East 12th Street Property. The fee simple interest in the East 12th Street Property is held by DS 531 E. 12th Owner LLC, a single purpose limited liability company (the “East 12th Street Senior Borrower”) of which the East 12th Street Mezzanine Borrower owns 100% of the membership interests.

15


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table provides certain information about the East 12th Street Loan:

Loan Type

 

Loan Amount

 

 

Initial Funding

 

 

Loan Term

 

Floating Rate Coupon

 

Amortization

 

Loan-to-Value(1)

 

Mezzanine Loan

 

$

8,990,000

 

 

$

6,830,000

 

 

3 years with two, 1-year extension options

 

LIBOR +9.25%

 

Interest only

 

84.28%

 

Note: (1) Loan-to-Value is calculated as of the date the East 12th Street Loan was originated and only includes amounts funded on the date of origination.

The East 12th Street Loan is secured by a pledge of 100% of the equity interests in the East 12th Street Senior Borrower. The East 12th Street Loan may be prepaid in its entirety or in part in connection with sales of condominium units, subject in each case to RIT Lending’s receipt of eighteen months of minimum interest. The term of the East 12th Street Loan is three years, with two 1-year options to extend.

$6,830,000 of the East 12th Street Loan was funded at closing. $1,660,000 of the East 12th Street Loan was withheld and will be advanced to the extent the East 12th Street Property generates insufficient cash flow to fully cover payment of interest on the East 12th Street Loan. The remaining portion of the East 12th Street Loan, $500,000, shall remain unfunded and will be advanced to pay for capital expenditure, broker commissions and tenant improvements associated with the East 12th Street Property as approved by RIT Lending. No interest will accrue on the unfunded amounts.

In connection with originating the East 12th Street Loan, RIT Lending entered into a participation agreement (the “East 12th Street Loan Participation Agreement”) with CFI. RIT Lending originated the East 12th Street Loan with (i) cash from the Offering equivalent to a 20.42% participation interest in the East 12th Street Loan and (ii) proceeds from the sale to CFI of a 79.58% participation interest in the East 12th Street Loan. The East 12th Street Loan Participation Agreement provides that participation certificates sold to CFI represent an undivided beneficial ownership interest in the East 12th Street Loan.

Subsequent to the date the East 12th Street Loan was originated, the Company and CFI have advanced $472,770 to cover interest shortfalls, reducing the amount withheld to fully cover payment of interest on the East 12th Street Loan to $1,187,230. At June 30, 2019, the total funded amount for the East 12th Street Loan was $7,302,770, and the portion of the East 12th Street Loan withheld for capital expenditure, broker commissions and tenant improvements was unchanged from the initial balance of $500,000.

As of June 30, 2019 and December 31, 2018, the Company had repurchased participation interests in the East 12th Street Loan from CFI in the amount of $5,400,000 and $1,150,000, respectively, increasing the Company’s total interest in the East 12th Street Loan to 97.17% and 37.22%, respectively.

During the three months ended June 30, 2019 and June 30, 2018, the Company earned interest income, net of $177,524 and $0, respectively, on the East 12th Street Loan, consisting of $214,333 and $0, respectively, of total interest less $36,809 and $0, respectively, of interest income related to loan participations sold.

During the six months ended June 30, 2019 and June 30, 2018, the Company earned interest income, net of $302,899 and $0, respectively, on the East 12th Street Loan, consisting of $420,753 and $0, respectively, of total interest less $117,854 and $0, respectively, of interest income related to loan participations sold.

16


RODIN INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table summarizes the activity on the loans at June 30, 2019.

Activity

 

Delshah Loan

 

 

RIT Participation Interest %

 

 

Total Delshah

Loan

 

 

East 12th Street

Loan

 

 

RIT Participation Interest %

 

 

Total East 12th

Street Loan

 

 

Total Loans

 

Total Loan Amount

 

$

18,000,000

 

 

 

 

 

 

$

18,000,000

 

 

$

8,990,000

 

 

 

 

 

 

$

8,990,000

 

 

$

26,990,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Funding

 

 

18,000,000

 

 

 

100.00

%

 

 

18,000,000

 

 

 

6,830,000

 

 

 

100.00

%

 

 

6,830,000

 

 

 

24,830,000

 

Interest Participation

   Sale

 

 

(17,100,000

)

 

 

-95.00

%

 

 

 

 

 

(5,435,000

)

 

 

-79.58

%

 

 

 

 

 

 

Ownership

 

 

900,000

 

 

 

5.00

%

 

 

18,000,000

 

 

 

1,395,000

 

 

 

20.42

%