UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
1-SA
☒
SEMIANNUAL REPORT PURSUANT TO REGULATION A
☐ SPECIAL
FINANCIAL REPORT PURSUANT TO REGULATION A
For
the Fiscal Semiannual Period Ended June 30, 2021
Gateway
Garage Partners LLC
181
High Street LLC
(Exact
name of registrant as specified in its charter)
Commission
File Number: 024-11344
Delaware
|
|
85-1031420
|
(State
or other jurisdiction of
incorporation or organization)
|
|
(I.R.S.
Employer
Identification No.)
|
|
|
|
Maine
|
|
26-2224584
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
identification
No.)
|
|
|
|
6
West 20th Street, 5th Floor
New York, New York
|
|
10011
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
(813)
438-6542
Registrant’s telephone number, including area code
Units
of LLC Interest
(Title of each class of securities issued pursuant to Regulation A)
Item
1.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
|
The
following discussion contains forward-looking statements that involve risk and uncertainties. Our actual results could differ materially
from those expressed or implied in forward-looking statements for many reasons, including the risks described elsewhere in this Semiannual
Filing.
The
following discussion and analysis are based on, and should be read in conjunction with, our unaudited financial statements and notes
thereto as of June 30, 2021.
Overview
Gateway
Garage Partners LLC (the “Company”) was formed on May 12, 2020 and has conducted no operations other than those related to
its organization, the completion of the offering (the “Offering”) of its units of limited liability company interest (the
“Units”) and the use of the proceeds of the Offering to acquire a 10% interest (the “Interest”) in 181 High Street
LLC (“OpCo”).
Operating
Results
The
Company issued 4,000 Units in the Offering for net proceeds of $1,000,000. The Offering was closed on March 8, 2021 and the Interest
was acquired on the same date.
Liquidity
and Capital Resources
The
Company’s sole source of revenue is distributions received from OpCo relating to the Interest. As of August 31, 2021, OpCo had
not paid any distributions on the Interest. OpCo’s mortgage loan contains certain financial covenants, including the requirement
that OpCo maintain a minimum debt service coverage ratio of not less than 1.25:1 prior to any distributions and not less than 1.10:1
following any distribution. Compliance with this covenant is tested annually, and as of December 31, 2020 and June 30, 2021, OpCo was
in compliance with the pre-distribution ratio, but any distribution in excess of a nominal amount per Unit would have resulted in a breach
of the post-distribution ratio. As the debt service coverage ratio is calculated based largely on OpCo’s net income, the timing
and amount of any distributions by OpCo to the Company will be dependent upon increased levels of OpCo’s net income.
The
Company’s liquidity requirements consist primarily of funds required to pay an annual platform fee to LEX Markets LLC in an amount
equal to 1% of the value of the public float of the Units. The value of the public float is based on the average price per Unit for the
last 90 days of the immediately preceding calendar year or the Offering price ($250.00 per Unit) for 2021. The platform fee accrues at
an annualized rate equal to the secured overnight financing rate (SOFR) plus 3%, if the Company is unable to make the quarterly payment.
As of June 30, 2021, the Company had not paid the platform fee.
Investor
Call
The
Company will host an investor call on October 8, 2021 at noon Eastern Time, which will be open for the general public to hear. The Company
will be issuing a press release and filing a Form 1-U with the Securities and Exchange Commission setting forth the details of the call.
Item
2.
|
Other
Information
|
None
Item
3.
|
Financial
Statements
|
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Financial
Statements
For
the Six Months Ended June 30, 2021 and the
Period
from May 21, 2020 through June 30, 2020
(Unaudited)
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Table
of Contents
June
30, 2021
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Balance
Sheets
June
30, 2021 and December 31, 2020
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
59,945
|
|
|
$
|
65
|
|
Investment in 181 High Street LLC
|
|
|
1,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,059,945
|
|
|
$
|
65
|
|
|
|
|
|
|
|
|
|
|
Liabilities and member’s equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Contribution payable to 181 High Street LLC
|
|
$
|
60,000
|
|
|
$
|
-
|
|
Accrued expenses
|
|
|
3,178
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
63,178
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Member’s Equity
|
|
|
|
|
|
|
|
|
Common units; unlimited units authorized; 4,001 and 1 units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
|
|
|
996,767
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and member’s equity
|
|
$
|
1,059,945
|
|
|
$
|
65
|
|
See
notes to financial statements.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Unaudited
Statements of Operations
For
the Six Months Ended June 30, 2021 and the Period from May 21, 2020 through June 30, 2020
|
|
Period Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Expenses:
|
|
|
|
|
|
|
Platform fee
|
|
$
|
3,158
|
|
|
$
|
-
|
|
General and administrative expenses
|
|
|
120
|
|
|
|
5
|
|
Interest expense
|
|
|
20
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
3,298
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Loss
|
|
$
|
(3,298
|
)
|
|
$
|
(5
|
)
|
See
notes to financial statements.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Unaudited
Statement of Member’s Equity
For
the Six Months Ended June 30, 2021
Member’s equity - January 1, 2021
|
|
$
|
65
|
|
|
|
|
|
|
Contributions
|
|
|
1,000,000
|
|
|
|
|
|
|
Loss
|
|
|
(3,298
|
)
|
|
|
|
|
|
Member’s equity - June 30, 2021
|
|
$
|
996,767
|
|
See
notes to financial statements.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Unaudited
Statements of Cash Flows
For
the Six Months Ended June 30, 2021 and the Period from May 21, 2020 through June 30, 2020
|
|
Period Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Loss
|
|
$
|
(3,298
|
)
|
|
$
|
(5
|
)
|
Change in operating assets and liabilities Accrued expenses
|
|
|
3,178
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(120
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Investment in 181 High Street LLC
|
|
|
(940,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities
|
|
|
(940,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
59,880
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
65
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
59,945
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
|
|
|
Contribution payable to 181 High Street LLC
|
|
$
|
60,000
|
|
|
$
|
-
|
|
See
notes to financial statements.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Financial Statements
December
31, 2020
NOTE
1 – FORMATION AND ORGANIZATION
Gateway
Garage Partners LLC (the “Company”) was formed on May 12, 2020 as a Delaware Limited Liability Company and is a partnership
for U.S. federal income tax purposes. The Company was organized for the sole purpose of acquiring a membership interest in 181 High Street
LLC, a Maine limited liability company (“OpCo”). OpCo’s sole asset is a 208,375 square foot parking garage containing
approximately 600 parking spaces located at 181 High Street, Portland, Maine, (the “Property”). The Company is managed by
Noyack Medical Partners LLC (the “Manager”), which is also the manager of OpCo.
The
Company received its initial capital contribution on May 21, 2020.
The
Company filed an offering statement on February 16, 2021 on Form 1-A with the US Securities and Exchange Commission (“SEC”)
with respect to an offering (the “Offering”) of limited liability company units (“Units”) for an initial offering
price of $250.00 per Unit. The maximum of $1,000,000 of Units was sold to the public in the initial offering on March 8, 2021. As of
December 31, 2020, the Company had issued one Unit to the Manager, for a purchase price of $100. The Company will remain in existence
until liquidated in accordance with the terms of its Limited Liability Company Agreement (the “Operating Agreement”).
The
Offering qualified as a “Tier 2” offering pursuant to Regulation A promulgated under the Securities Act of 1933, as amended,
or the Securities Act.
The
Company’s fiscal year end is December 31st.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements and related notes of the Company have been prepared on the accrual basis of accounting and conform
to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Article 8 of Regulation S-X
of the rules and regulations of the SEC.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Financial Statements
December
31, 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates
The
preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual results could materially differ from those estimates.
Cash
Cash
may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company has not
experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.
Investment
The
Company accounts for equity securities without readily determinable fair value at cost less impairments, if any, plus or minus changes
resulting from observable price changes in orderly transactions for identical or similar securities. The company purchased a 10% interest
in OpCo that does not have a readily determinable fair value. Dividends received from OpCo will be recognized as dividend income.
Organizational
and Offering Costs
Organizational
and offering costs of the Company were paid by LEX Markets Corp., which will be reimbursed by SDDco Brokerage Advisors LLC (the “Placement
Agents”) up to the extent of the 4% placement fee received. LEX Markets Corp. is responsible for any expenses in excess of the
total placement fee. These organizational and offering costs include all expenses to be paid by the Company in connection with the formation
of the Company and the qualification of the Offering. The offering expenses also includes the distribution of Units, including, without
limitation, expenses for printing, and amending offering statements or supplementing offering circulars, mailing and distributing costs,
telephones, internet and other telecommunications costs, charges of experts and fees, expenses and taxes related to the filing and qualification
of the sale of shares under U.S. federal and state laws, including taxes and fees and accountants’ and attorneys’ fees. OpCo
paid the Placement Agents a fee equal to 4% of the gross proceeds of the Units sold in the Offering.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Financial Statements
December
31, 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organizational
and Offering Costs (Continued)
The
Offering is being made on a “best efforts” basis, which means that no one is committed to purchasing any shares in the Offering.
OpCo has engaged the Placement Agents to act as the exclusive placement agent in connection with the Offering. The Placement Agents are
not obligated to purchase any shares or sell a specific number of Units, but will use its commercially reasonable “best efforts”
to solicit purchases of the Units.
Trading
Market
In
connection with the Offering, the Company admitted its Units to trading on an “alternative trading system” or, ATS, maintained
by LEX Markets Corp. (the “Platform”). However, there can be no assurance that an active trading market for the Units will
be established or, if established, maintained. As a result, the liquidity of the Units may be limited.
LEX
Markets Corp. and its subsidiary broker dealer LEX Markets LLC through the Platform located at www.LEXMarkets.com seek to provide an
opportunity to investors to become equity holders in companies that own real estate properties. Through the Platform, investors can browse
and screen potential property investments, view details of an investment and indicate interests in Units online. The Offering is being
conducted through the facilities of the Platform, whereby investors will receive, review, execute and deliver subscription agreements
electronically. The Company will pay LEX Markets an annual platform fee equal to 1.0% of the value of the public float of Units, based
on the average price per share over the last 90 calendar days of the immediately preceding calendar year (the “Platform Fee”).
The Platform Fee is paid out of Company dividends, and if no dividends are declared, interest will accrue at the secured overnight financing
rate (“SOFR”) plus 3%, compounded quarterly, and paid out of subsequent dividends. This may cause a liability to the Company.
For the six months ended June 30, 2021, the Company incurred Platform Fees of $3,158, which has been accrued with interest of $20 as
of June 30, 2021.
Taxable
Income
Section
7704 of the Internal Revenue Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However,
an exception, referred to as the “Qualifying Income Exception,” exists with respect to publicly traded partnerships of which
90% or more of the gross income for every taxable year consists of “qualifying income.” Qualifying income includes dividends,
interest (other than from a financial business), real property rents, gain from the sale of real property and gains from the sale or
other disposition of capital assets held for the production of income that otherwise constitutes qualifying income.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Financial Statements
December
31, 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Taxable
Income (Continued)
The
Company intends to operate such that it will meet the Qualifying Income Exception in each taxable year and expects not to pay any U.S.
federal income tax.
NOTE
3 – RELATED PARTY TRANSACTIONS
Ownership
As
of December 31, 2020, C.J. Follini was the sole member of each of OpCo and the Manager. On March 8, 2021, the Company issued 4,000 common
units for net proceeds of $1,000,000, which has been used to acquire a 10% interest in OpCo.
Management
The
Company is organized as a limited liability company that does not have a board of directors. The Manager performs the function of a board
of directors. Pursuant to the Operating Agreement, the Manager will have complete and exclusive discretion in the management and control
of the Company’s affairs and business, subject to the requirement to obtain consent for certain actions, and shall possess all
powers necessary, convenient or appropriate to carrying out the Company’s purposes and business, including doing all things and
taking all actions necessary to carry out the terms and provisions of each of the foregoing agreements.
The
Manager will not receive any compensation for its services as the managing member of the Company. However, upon successful closing of
the Offering, OpCo entered into an agreement with the Manager to perform asset management duties for OpCo (the “OpCo Manager”).
OpCo pays the OpCo Manager an asset management fee equal to 5.0% of the annual gross income of OpCo, as provided, less annual fees payable
on all service contracts including the property manager of OpCo.
NOTE
4 – SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through September 29, 2021, the date the financial statements were available to be issued.
181
High Street LLC
(A
Maine Limited Liability Company)
Financial
Statements
For
the Six Months Ended June 30, 2021 and 2020
(Unaudited)
181
High Street LLC
(A
Maine Limited Liability Company)
Table
of Contents
June
30, 2021 and 2020
181
High Street LLC
(A
Maine Limited Liability Company)
Balance
Sheets
June
30, 2021 and December 31, 2020
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Real
estate, net
|
|
$
|
7,719,331
|
|
|
$
|
7,921,184
|
|
Cash
|
|
|
121,598
|
|
|
|
43,439
|
|
Restricted
cash
|
|
|
120,669
|
|
|
|
315,959
|
|
Accounts
receivable and other assets
|
|
|
144,778
|
|
|
|
71,984
|
|
Deferred
parking receivable
|
|
|
28,179
|
|
|
|
28,992
|
|
Contribution
receivable from Gateway Garage Partners LLC
|
|
|
60,000
|
|
|
|
-
|
|
Due
from affiliate
|
|
|
2,050
|
|
|
|
2,050
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
8,196,605
|
|
|
$
|
8,383,608
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and members’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Mortgage
note payable, net
|
|
$
|
13,534,489
|
|
|
$
|
13,727,889
|
|
Note
payable
|
|
|
54,700
|
|
|
|
54,700
|
|
Accounts
payable, accrued expenses and other liabilities
|
|
|
46,253
|
|
|
|
49,197
|
|
Accrued
interest
|
|
|
34,439
|
|
|
|
36,313
|
|
Deferred
parking rental income
|
|
|
318,318
|
|
|
|
322,322
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
13,988,199
|
|
|
|
14,190,421
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’
deficit
|
|
|
(5,791,594
|
)
|
|
|
(5,806,813
|
)
|
|
|
|
|
|
|
|
|
|
Total
liabilities and members’ deficit
|
|
$
|
8,196,605
|
|
|
$
|
8,383,608
|
|
See
notes to financial statements.
181
High Street LLC
(A
Maine Limited Liability Company)
Unaudited
Statements of Operations
For
the Six Months Ended June 30, 2021 and 2020
|
|
Six
Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Parking
rental income
|
|
$
|
911,507
|
|
|
$
|
1,031,864
|
|
Interest
income
|
|
|
22
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
911,529
|
|
|
|
1,032,132
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
292,136
|
|
|
|
302,006
|
|
Depreciation
|
|
|
201,853
|
|
|
|
201,853
|
|
Property
taxes
|
|
|
96,846
|
|
|
|
96,846
|
|
Payroll
|
|
|
93,347
|
|
|
|
145,834
|
|
Management
fees
|
|
|
52,394
|
|
|
|
54,760
|
|
Other
operating expenses
|
|
|
24,713
|
|
|
|
29,212
|
|
Repairs
and maintenance
|
|
|
23,204
|
|
|
|
187,531
|
|
General
and administrative expenses
|
|
|
21,401
|
|
|
|
34,535
|
|
Insurance
|
|
|
17,095
|
|
|
|
20,746
|
|
Utilities
|
|
|
8,115
|
|
|
|
8,647
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
|
831,104
|
|
|
|
1,081,970
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
80,425
|
|
|
$
|
(49,838
|
)
|
See
notes to financial statements.
181
High Street LLC
(A
Maine Limited Liability Company)
Unaudited
Statements of Members’ Deficit
For
the Six Months Ended June 30, 2021
Member’s
deficit - January 1, 2021
|
|
$
|
(5,806,813
|
)
|
|
|
|
|
|
Contributions,
net of offering costs
|
|
|
960,000
|
|
|
|
|
|
|
Distributions
|
|
|
(1,025,206
|
)
|
|
|
|
|
|
Net
income
|
|
|
80,425
|
|
|
|
|
|
|
Members’
deficit - June 30, 2021
|
|
$
|
(5,791,594
|
)
|
See
notes to financial statements.
181
High Street LLC
(A
Maine Limited Liability Company)
Unaudited
Statements of Cash Flows
For
the Six Months Ended June 30, 2021 and 2020
|
|
For
the Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
80,425
|
|
|
$
|
(49,838
|
)
|
Adjustments
to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
201,853
|
|
|
|
201,853
|
|
Amortization
of loan financing fees
|
|
|
11,535
|
|
|
|
11,535
|
|
Deferred
parking rental income
|
|
|
(3,191
|
)
|
|
|
(4,853
|
)
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable and other assets
|
|
|
(72,794
|
)
|
|
|
22,348
|
|
Accounts
payable, accrued expenses and other liabilities
|
|
|
(2,944
|
)
|
|
|
(18,244
|
)
|
Accrued
interest
|
|
|
(1,874
|
)
|
|
|
(5,267
|
)
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
213,010
|
|
|
|
157,534
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Repayment
of mortgage note payable
|
|
|
(204,935
|
)
|
|
|
(214,426
|
)
|
Proceeds
from note payable
|
|
|
-
|
|
|
|
54,700
|
|
Contributions
|
|
|
940,000
|
|
|
|
20,000
|
|
Offering
costs
|
|
|
(40,000
|
)
|
|
|
-
|
|
Distributions
|
|
|
(1,025,206
|
)
|
|
|
(68,960
|
)
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
|
(330,141
|
)
|
|
|
(208,686
|
)
|
|
|
|
|
|
|
|
|
|
Net
change in cash and restricted cash
|
|
|
(117,131
|
)
|
|
|
(51,152
|
)
|
|
|
|
|
|
|
|
|
|
Cash
and restricted cash at beginning of period
|
|
|
359,398
|
|
|
|
208,503--
|
|
|
|
|
|
|
|
|
|
|
Cash
and restricted cash at end of period
|
|
$
|
242,267
|
|
|
$
|
157,351--
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
282,475
|
|
|
$
|
295,739
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
|
|
|
|
|
|
Contribution
receivable from Gateway Garage Partners LLC
|
|
$
|
60,000
|
|
|
$
|
-
|
|
See
notes to financial statements.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
NOTE
1 – ORGANIZATION AND NATURE OF OPERATIONS
181
High Street LLC (the “Company”) was formed on February 15, 2008 as a Maine limited liability company. The term of the Company
shall continue indefinitely, unless the Company is earlier dissolved by the occurrence of events more fully described in the agreement.
The
purpose of the Company is to acquire and operate a garage located at 181 High Street, Portland Maine (the “Property”). The
Property is a five-story parking garage containing approximately 600 parking spaces.
On
March 8, 2021, Gateway Garage Partners LLC acquired a 10% interest in the Company for a contribution of $1,000,000. Income, losses and
distributions from the Company are allocated to the members pro rata.
A
member of a limited liability company is not liable for debts, obligations, or other liabilities of the limited liability company by
reason of being such a member.
The
Company’s operations and financial performance are subject to certain business risks and uncertainties that include changes in
economic conditions, rapid changes in the real estate market, and competition for parking garages in the local marketplace, among others.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Application of these estimates and assumptions requires the
exercise of judgment as to future uncertainties and, as a result, actual results could differ from those estimates.
Cash
and Restricted Cash
At
various times during the year, the Company has maintained cash balances in excess of federally insured limits. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash.
Restricted
cash consists of monies restricted for the benefit of the Company’s lender under the terms of the debt agreement. Such reserves
are for capital expenditures and real estate taxes. In addition, certain cash from the operation of the Property must be directed to
accounts controlled by the lender.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash
and Restricted Cash (Continued)
The
following table provides a reconciliation of cash and restricted cash within the balance sheets to the sum of the corresponding amounts
within the statements of cash flows reported:
|
|
2021
|
|
|
2020
|
|
As
of January 1,
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
43,439
|
|
|
$
|
123,674
|
|
Restricted
cash
|
|
|
315,959
|
|
|
|
84,829
|
|
Cash
and restricted cash
|
|
$
|
359,398
|
|
|
$
|
208,503
|
|
|
|
|
|
|
|
|
|
|
As
of June 30,
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
121,598
|
|
|
$
|
26,006
|
|
Restricted
cash
|
|
|
120,669
|
|
|
|
131,345
|
|
Cash
and restricted cash
|
|
$
|
242,267
|
|
|
$
|
157,351
|
|
Accounts
Receivable
Accounts
receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible
amounts through a charge to earnings and a credit to an allowance for doubtful accounts based on its assessment of the current status
of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written-off through
a charge to the allowance and a credit to accounts receivable. At June 30, 2021 and December 31, 2020, the Company considers accounts
receivable to be fully collectible.
Accounting
for Real Estate
Real
estate is recognized at cost less accumulated depreciation. Betterments, major renovations and certain costs directly related to the
improvement of real estate are capitalized. Maintenance and repair expenses are charged to expense as incurred.
Depreciation
of an asset begins when it is available for use and is calculated using the straight-line method over the estimated useful lives. Range
of useful lives for depreciable assets are as follows:
Category
|
|
|
Term
|
|
Building
|
|
|
39
years
|
|
Building
improvements
|
|
|
7
- 15 years
|
|
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting
for Real Estate (Continued)
The
Company reviews its owned real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. If impairment indicators are present, the evaluation may include estimating and reviewing anticipated
future undiscounted cash flows to be derived from the asset. Estimating future cash flows is highly subjective and includes an evaluation
of factors such as the anticipated cash flows from the Property, which may include parking rental income from current leases in-place
and projected future leases, estimated capital expenditures, and an estimate of proceeds to be realized upon sale of the Property. If
such cash flows are less than the asset’s net carrying value, an impairment charge is recognized to earnings to the extent by which
the asset’s carrying value exceeds the estimated fair value. The Company’s estimates could differ materially from actual
results. The Company did not recognize any impairment losses on long lived assets during the six months ended June 30, 2021 and 2020.
Deferred
Costs
The
Company defers costs incurred associated with the issuance of its debt obligations. Deferred financing costs are presented as deductions
from the carrying value of the related debt obligation in the balance sheets and are amortized as a component of interest expense using
the straight-line method, which approximates the effective interest method, over the terms of the respective financing agreements.
Revenue
Recognition
The
Company’s revenues are primarily derived from parking rental income, including long-term leases, monthly rentals, and transient
customers, which fall under the scope of Leases (Topic 840). The Company recognizes the effects of any scheduled rent increases,
rent abatements and prepayments on a straight-line basis over the term of the lease. This requires that parking rental income be recognized
in equal annual amounts over the term of the lease. Deferred parking receivable and deferred parking rental income represent the cumulative
effect of straight-lining leases and are computed as the difference between income accrued on a straight-line basis and contractual parking
rental payments.
Advertising
Advertising
and promotion costs are expensed as incurred. Total advertising and promotion expense for the six months ended June 30, 2021 and 2020
were $778 and $379, respectively, and are recognized as a component of other operating expenses on the statements of operations.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Offering
Costs
Costs
incurred in connection with raising capital are recorded as reductions of the related equity proceeds. For the six months ended June
30, 2021, the Company recorded $40,000 as a reduction of contributions which represents a placement fee equal to 4% of gross proceeds.
Income
Taxes
No
provision or benefit for income tax has been included in these financial statements because taxable income or loss passes through to,
and is reportable by, the member.
The
tax positions of the Company are assessed to determine whether a tax position is more-likely-than-not to be sustained upon examination,
including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions
meeting the more-likely-than-not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit with
a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company has
assessed the federal and state tax positions and has concluded that there are no material uncertain tax liabilities to be recognized
or disclosed.
New
Accounting Pronouncement
In
February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, as amended, Leases (Topic 842).
Accounting Standards Update (“ASU”) 2016-02 requires all lessees to record a lease liability at lease inception, with a corresponding
right of use asset, except for short-term leases. Lessor accounting will not be fundamentally changed. Additionally, ASU 2016-02 requires
that the Company capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. ASU 2016-02
is effective for the Company’s financial statements for the year ending December 31, 2022. The Company is currently evaluating
the impact of Topic 842 on its financial statements.
Reclassifications
Certain
amounts from the prior year financial statements have been reclassified to conform to the current year presentation.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
3 – REAL ESTATE
Real
estate, net consisted of the following as of June 30, 2021 and December 31, 2020:
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
1,001,912
|
|
|
$
|
1,001,912
|
|
Building
|
|
|
9,017,220
|
|
|
|
9,017,220
|
|
Building
improvements
|
|
|
1,624,114
|
|
|
|
1,624,114
|
|
|
|
|
|
|
|
|
|
|
Total
real estate
|
|
|
11,643,246
|
|
|
|
11,643,246
|
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation
|
|
|
(3,923,915
|
)
|
|
|
(3,722,062
|
)
|
|
|
|
|
|
|
|
|
|
Real
estate, net
|
|
$
|
7,719,331
|
|
|
$
|
7,921,184
|
|
Depreciation
expense totaled $201,853 for each of the six months ended June 30, 2021 and 2020.
NOTE
4 – MORTGAGE NOTE PAYABLE
On
May 17, 2017 the Company obtained a mortgage loan in the amount of $15,000,000 (the “Mortgage”) which matures on May 17,
2027 (the “Maturity Date”). The Mortgage bears interest at 4.05% per annum calculated on a 360-day year through April 30,
2024. Beginning on May 1, 2024 until the Maturity Date, interest on the principal balance shall accrue at a variable rate equal to the
Prime Rate, as defined, adjusting on the first day of each month. The Mortgage required monthly payments of interest-only through May
2018 and then monthly payments of principal and interest in an amount sufficient to amortize the principal balance over 300 months through
April 17, 2027, with all remaining unpaid principal and interest due on the Maturity Date. The Mortgage is secured by the Property. The
Company may prepay the Mortgage, in whole or in part, subject to certain prepayment penalties as defined by the Mortgage. The Company
is subject to certain covenants in accordance with the Mortgage, including the maintenance of minimum pre- and post-distribution debt
service coverage ratios, which the Company was in compliance with as of June 30, 2021.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
4 – MORTGAGE NOTE PAYABLE (Continued)
The
annual estimated principal payments required by the Mortgage for each of the next five years and in the aggregate thereafter are as follows:
Year
Ending December 31,
|
|
|
|
|
|
|
|
2021
(remainder of the year)
|
|
$
|
210,851
|
|
2022
|
|
|
430,335
|
|
2023
|
|
|
448,342
|
|
2024
|
|
|
465,652
|
|
2025
|
|
|
486,587
|
|
Thereafter
|
|
|
11,626,327
|
|
|
|
$
|
13,668,094
|
|
The
components of deferred financing costs as of June 30, 2021 and December 31, 2020 are summarized as follows and are presented as deductions
from the loan payable:
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Deferred
financing costs
|
|
$
|
228,762
|
|
|
$
|
228,762
|
|
Less
accumulated amortization
|
|
|
(95,157
|
)
|
|
|
(83,622
|
)
|
|
|
|
|
|
|
|
|
|
Deferred
financing costs, net
|
|
$
|
133,605
|
|
|
$
|
145,140
|
|
Amortization
expense totaled $11,535 for each of the six months ended June 30, 2021 and 2020.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
5 – NOTE PAYABLE (Continued)
During
April 2020, the Company received loan proceeds in the amount of $54,700 under the Paycheck Protection Program (“PPP”). The
PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which provides for loans
to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and
accrued interest may be forgivable to the extent the Company uses the loan proceeds for eligible purposes, including payroll, benefits,
rent and utilities, and maintains its payroll levels. The amount of loan forgiveness may be reduced if the borrower terminates employees
or reduces salaries during the eligible period. The unforgiven portion of the PPP loan is payable over two years at an interest rate
of 1%, with a deferral of payments until a forgiveness application has been accepted and reviewed by the Small Business Administration
(“SBA”), and the SBA has provided the lender with the loan forgiveness amount or, if the borrower does not apply for forgiveness,
ten months after the end of the eligible period. For the six months ended June 30, 2021 and 2020 the Company incurred interest expense
of approximately $193 and $104, respectively. As of June 30, 2021 there was an outstanding balance on the PPP note payable of $54,700.
On August 2, 2021, the entire loan balance along with the accrued interest expense was forgiven.
NOTE
6 – LEASES
Future
minimum rentals to be received under non-cancelable operating leases in effect at June 30, 2021 for each of the succeeding five years
and thereafter are as follows:
Year
ending December 31,
|
|
|
|
2021
(Remainder of the year)
|
|
$
|
340,797
|
|
2022
|
|
|
355,673
|
|
2023
|
|
|
332,349
|
|
2024
|
|
|
120,000
|
|
2025
|
|
|
120,000
|
|
Thereafter
|
|
|
4,230,000
|
|
|
|
$
|
5,498,819
|
|
The
preceding future minimum rental payments do not include option or renewal periods.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
6 – LEASES (Continued)
The
table below summarizes parking rental income from lessees each accounting for more than 10% of total parking rental income for the six
months ended June 30, 2021 and 2020.
|
|
Six
Months Ended June 30,
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Lease
|
Lessee
|
|
Dollars
|
|
|
Percent
|
|
|
Dollars
|
|
|
Percent
|
|
|
Termination
Date
|
Standard
Parking
|
|
$
|
207,338
|
|
|
|
23
|
%
|
|
$
|
263,575
|
|
|
|
26
|
%
|
|
See
Note 8
|
Maine
Medical Center
|
|
|
406,000
|
|
|
|
45
|
%
|
|
|
520,000
|
|
|
|
51
|
%
|
|
March
31, 2061
|
Westin
Hotel
|
|
|
187,690
|
|
|
|
21
|
%
|
|
|
189,537
|
|
|
|
18
|
%
|
|
September
30, 2021
|
NOTE
7 – RELATED PARTY TRANSACTIONS
Asset
Management Fees
The
Company engaged Noyack Medical Partners, LLC (“Noyack”), a related party affiliated through common ownership, to provide
asset management services and consulting services with respect to the oversight of the Property. Effective January 1, 2020, the Company
and Noyack entered into a new asset management agreement, whereby Noyack will earn an asset management fee equal to 2% of annual gross
income, as provided (the “Asset Management Fee”). On March 8, 2021, the Asset Management Fee was amended to equal 5% of annual
gross income, as provided, less annual fees payable on all service contracts including Standard Parking (see note 8). For each of the
six months ended June 30, 2021 and 2020, the Company incurred asset management fees of $17,662 and $21,040, respectively. Unpaid Asset
Management Fees amounted to $17,662 and $0 as of June 30, 2021 and December 31, 2020, respectively, and are included in accounts payable,
accrued expenses and other liabilities on the balance sheets.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
The
Company engaged Standard Parking Corporation (“Standard Parking”) as operator and manager of the Property. Standard Parking
earns a monthly management fee of $5,874 as of June 30, 2021, which automatically renews each April and increases by 3%, as provided.
For the six months ended June 30, 2021 and 2020, the Company incurred management fees of $34,732 and 33,720, respectively.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2021 and 2020
(Continued)
NOTE
8 – COMMITMENTS AND CONTINGENCIES (Continued)
The
extent of the impact of the coronavirus (“COVID-19”) outbreak on the operational and financial performance of the Company’s
parking garage will depend on future developments, including the duration of the outbreak and the impact of COVID-19 on the financial
markets and the overall economy, all of which are still highly uncertain and cannot be predicted. If the financial markets and/or the
overall economy continue to remain impacted for an extended period, the Company’s results may be materially adversely affected.
As of the date of this report, COVID-19 has not had a material impact to the Company’s operations or financial performance as the
Company has not experienced any material tenant defaults, early terminations or collection issues, however, any future impacts of COVID-19
are highly uncertain and cannot be predicted.
NOTE
9 – SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through September 29, 2021, the date the financial statements were available to be issued.
SIGNATURES
Pursuant
to the requirements of Regulation A, the issuer has duly caused this special financial report on Form 1-SA to be signed on its behalf
by the undersigned, thereunto duly authorized, in New York, New York on September 30, 2021.
|
GATEWAY
GARAGE PARTNERS LLC
|
|
|
|
|
By:
|
/s/
Charles J. Follini
|
|
Name:
|
Charles J. Follini
|
|
Title:
|
President
|
|
181
HIGH STREET LLC
|
|
|
|
By:
|
/s/
Charles J. Follini
|
|
Name:
|
Charles
J. Follini
|
|
Title:
|
President
|
Pursuant
to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer in the capacities
and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Charles J. Follini
|
|
President
|
|
September
30, 2021
|
Charles
J. Follini
|
|
(Principal
Executive Officer)
|
|
|
Gateway Garage Partners ... (CE) (USOTC:GWYGU)
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