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, 2022
Gateway
Garage Partners LLC
181
High Street LLC
(Exact
name of registrant as specified in its charter)
Commission
File Number: 024-11344
Delaware
(State
or other jurisdiction of
incorporation
or organization) |
|
85-1031420
(I.R.S.
Employer
Identification
No.) |
Maine
(State
or other jurisdiction of
incorporation
or organization) |
|
26-2224584
(I.R.S.
Employer
identification
No.) |
6
West 20th Street, 5th Floor
New
York, New York
(Address
of principal executive offices) |
|
10011
(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, 2022.
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”). OpCo’s sole asset is a parking garage (the “Property”) located in Portland, Maine.
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. As of June 30, 2022, the Company has received an aggregate of $7,179 in distributions from OpCo.
Liquidity
and Capital Resources
The
Company’s sole source of revenue is distributions received from OpCo relating to the Interest. As of August 31, 2022, OpCo had
paid an aggregate of $7,179 of 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 June 30, 2022, OpCo was not in compliance
with the pre-distribution ratio. Therefore, in order to achieve compliance with its debt service coverage ratio for the 2022 fiscal year,
OpCo does not anticipate making any cash distributions to its members, including the Company, for the remainder of 2022. 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.
Post
the coronavirus (“COVID-19”) pandemic, Property operations continue to improve during 2022. From March 2022 through August
2022, average revenues have approached approximately 90% of average revenues pre-COVID-19. OpCo is engaged in an active digital marketing
campaign to attract transient users and has employed local promotional campaigns and direct email programs to increase monthly parkers.
In the second quarter of 2022, Standard Parking, OpCo’s property operations manager, began providing the valet parking services
for the Eastland Park Hotel and has entered into a contract with OpCo to provide the parking spaces for the valet service. In the third
quarter of 2022, Standard Parking, on behalf of OpCo, entered into an advertising and sponsorship agreement (the “Agreement”)
with Portland Hockey, LLC, a member of the East Coast Hockey League (hereinafter referred to as “Maine Mariners”). The term
of this Agreement with Maine Mariners is for three seasons, which shall commence on October 1, 2022, and continue through to May 1, 2025.
Effective
August 1, 2022, C.J. Follini contributed (the “Contribution”) his 90% ownership interest in OpCo to Noyack Logistics Income
REIT, Inc. (“NLI”) in exchange for units of limited partnership interest in NLI’s operating partnership subsidiary,
NL REIT OP, LP. NLI was formed by Noyack Capital LLC, an affiliate of Mr. Follini, in October 2021 for the purpose of acquiring, owning
and operating a diversified portfolio of commercial real estate properties that encompass the supply chain and logistics infrastructure
of North America, including dry warehouses, cold storage warehouses, life science buildings, and structured parking garages. As a result
of the Contribution, NLI indirectly owns 90% of the Property.
NLI intends to elect to be qualified as a
real estate investment trust (“REIT”) for its taxable year ending December 31, 2022. In order to be able to qualify as a
REIT, NLI must meet certain income and asset tests, including the requirement that 75% of its income must be generated from, among other
things, rents from real property. In order for the revenue generated by the Property owned by OpCo to qualify as rents from real property,
the property management agreement between Standard Parking and OpCo, under which Standard Parking operated and directed the operations
of the Property (the “Property Management Agreement”), needed to be replaced by a master lease agreement between Standard
Parking and OpCo (the “Master Lease”). Under the Master Lease, which has been entered into as of September 21, 2022, and
is effective October 1, 2022, OpCo will lease the Property to Standard Parking, the tenant of the Property. The Master Lease has an initial
term of three months with successive automatic three-month extensions, unless terminated by OpCo or Standard Parking pursuant to the
terms hereof. The Master Lease requires Standard Parking to pay base rent and percentage rent to the OpCo on a monthly basis in an aggregate
amount that approximates the operating economics generated by the Property that was distributed to OpCo under the terms of the Property
Management Agreement.
The extent of the impact of COVID-19 on the operational
and financial performance of the Property will depend on future developments, including the duration of any future outbreak(s) and the
impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the
financial markets and/or the overall economy continue to remain impacted for an extended period, OpCo’s results may be materially
adversely affected. As of August 31, 2022, COVID-19 has not had a material impact to OpCo’s operations or financial performance
as OpCo 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.
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, 2022, the Company had not paid the platform fee.
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, 2022 and 2021
(Unaudited)
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
INDEX
TO FINANCIAL STATEMENTS
June
30, 2022 and 2021
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Balance
Sheets
June
30, 2022 and December 31, 2021
| |
June
30, 2022 | | |
December
31, 2021 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | | |
| | |
Cash | |
$ | 59,402 | | |
$ | 59,430 | |
Investment in 181 High Street
LLC | |
| 961,154 | | |
| 980,729 | |
| |
| | | |
| | |
Total assets | |
$ | 1,020,556 | | |
$ | 1,040,159 | |
| |
| | | |
| | |
Liabilities and members’
equity | |
| | | |
| | |
| |
| | | |
| | |
Liabilities: | |
| | | |
| | |
Contribution payable to 181
High Street LLC | |
$ | 60,000 | | |
$ | 60,000 | |
Accrued expenses | |
| 13,392 | | |
| 8,298 | |
| |
| | | |
| | |
Total liabilities | |
| 73,392 | | |
| 68,298 | |
| |
| | | |
| | |
Members’ equity: | |
| | | |
| | |
Common units, 4,001 units
issued and outstanding as of June 30, 2022 and December 31, 2021 | |
| 947,164 | | |
| 971,861 | |
| |
| | | |
| | |
Total liabilities and members’
equity | |
$ | 1,020,556 | | |
$ | 1,040,159 | |
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, 2022 and 2021
| |
Six
Months Ended June 30, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Revenues: | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Expenses: | |
| | | |
| | |
Platform fee | |
| 4,964 | | |
| 3,158 | |
General and administrative
expenses | |
| 28 | | |
| 120 | |
Interest expense | |
| 130 | | |
| 20 | |
| |
| | | |
| | |
Total expenses | |
| 5,122 | | |
| 3,298 | |
| |
| | | |
| | |
Other expenses: | |
| | | |
| | |
Loss from 181 High Street
LLC | |
| (17,397 | ) | |
| - | |
| |
| | | |
| | |
Net loss | |
$ | (22,519 | ) | |
$ | (3,298 | ) |
See notes to financial statements.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Unaudited
Statements of Members’ Equity
For
the Six Months Ended June 30, 2022
Members’ equity - January
1, 2022 | |
$ | 971,861 | |
| |
| | |
Distributions | |
| (2,178 | ) |
| |
| | |
Net loss | |
| (22,519 | ) |
| |
| | |
Members’ equity - June 30, 2022 | |
$ | 947,164 | |
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, 2022 and 2021
| |
Six
Months Ended June 30, | |
| |
2022 | | |
2021 | |
Cash flows
from operating activities: | |
| | | |
| | |
Net loss | |
$ | (22,519 | ) | |
$ | (3,298 | ) |
Adjustments to reconcile net
loss to net cash used in operating activities: | |
| | | |
| | |
Loss from 181 High Street
LLC | |
| 17,397 | | |
| - | |
Change in operating assets
and liabilities: | |
| | | |
| | |
Accrued expenses | |
| 5,094 | | |
| 3,178 | |
Net cash used in operating
activities | |
| (28 | ) | |
| (120 | ) |
| |
| | | |
| | |
Cash flows
from investing activities: | |
| | | |
| | |
Investment in 181 High Street
LLC | |
| - | | |
| (940,000 | ) |
Distribution received from
181 High Street LLC | |
| 2,178 | | |
| - | |
Net cash provided by (used
in) investing activities | |
| 2,178 | | |
| (940,000 | ) |
| |
| | | |
| | |
Cash flows
from financing activities: | |
| | | |
| | |
Cash contributions | |
| - | | |
| 1,000,000 | |
Cash distributions | |
| (2,178 | ) | |
| - | |
Net cash (used in) provided
by financing activities | |
| (2,178 | ) | |
| 1,000,000 | |
| |
| | | |
| | |
Net (decrease)
increase in cash | |
| (28 | ) | |
| 59,880 | |
| |
| | | |
| | |
Cash at beginning of period | |
| 59,430 | | |
| 65 | |
| |
| | | |
| | |
Cash at end of period | |
$ | 59,402 | | |
$ | 59,945 | |
| |
| | | |
| | |
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 Unaudited Financial Statements
June
30, 2022 and 2021
NOTE
1 – ORGANIZATION AND NATURE OF OPERATIONS
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 U.S. 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. On March
8, 2021, the Company amended and restated its Limited Liability Operating Agreement (the “Operating Agreement”). As of December
31, 2021 and 2020, the Company had issued one Unit to the Manager, for a purchase price of $100. During the year ending December 31,
2021, the Company issued 4,000 units for $1,000,000 in the aggregate. The Company will remain in existence until liquidated in accordance
with the terms of 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 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
and Article 8 of Regulation S-X of the rules and regulations of the SEC. 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
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 financial and/or cash management risk.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investment
Investee
companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method
of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several
factors including, among others, representation on the Investee company’s board of directors and ownership level. Under the equity
method of accounting, an Investee company’s accounts are not reflected within the Company’s balance sheets and statements
of operations; however, the Company’s share of the earnings or losses of the Investee company are recorded.
When
the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s
financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the
Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its
share of losses not previously recognized.
Organizational
and Offering Costs
Organizational
and offering costs of the Company were paid by LEX Markets Corp. (“LEX”), which will be reimbursed by SDDco Brokerage Advisors
LLC (the “Placement Agents”) up to the extent of the 4% placement fee received. LEX 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 include 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. LEX and its subsidiary,
as described below, provide an alternative trading system, and also provide support services to the Company as outlined in an underlying
agreement.
The
Offering was made on a “best efforts” basis, which means that no one was committed to purchasing any shares in the Offering.
OpCo engaged the Placement Agents to act as the exclusive placement agent in connection with the Offering. The Placement Agents were
not obligated to purchase any shares or sell a specific number of Units, but used its commercially reasonable “best efforts”
to solicit purchases of the Units.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Trading
Market
In
connection with the Offering, the Company admitted its Units to trading on an “alternative trading system” or, ATS, maintained
by LEX (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.
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 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, 2022, the Company incurred Platform Fees of $4,964, which has been accrued with interest of $130 as of
June 30, 2022.
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, gains 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.
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 – INVESTMENT
The
Company’s 10% interest in OpCo is accounted for under the equity method of accounting due to the fact that the Company has the
ability to exercise significant influence. The Company records its share of losses from OpCo. The Company’s investment is carried
at an amount different than the net assets of OpCo due to an initial basis adjustment between the net assets of the Company and the fair
value of its net assets at the time of the Company’s investment. During the six months ended June 30, 2022, the Company received
$2,178 in distributions from OpCo which reduced the carrying value of its investment.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
3 – INVESTMENT (Continued)
The
combined results of operations and financial position of the Company’s equity basis investment in OpCo are summarized below for
the period ended June 30, 2022:
Condensed
income statement information: | |
| | |
Revenues | |
$ | 955,673 | |
Expenses | |
$ | 929,832 | |
Net
income | |
$ | 25,841 | |
| |
| | |
Condensed
balance sheet information: | |
| | |
Total
assets | |
$ | 7,820,478 | |
Total
liabilities | |
$ | 13,530,045 | |
Members’
deficit | |
$ | (5,709,567 | ) |
A
reconciliation of the Company’s loss from OpCo is as follows:
10%
of OpCo net income | |
$ | 2,584 | |
Adjustment
for basis adjustment | |
| (19,981 | ) |
Loss
from OpCo | |
$ | (17,397 | ) |
NOTE
4 – 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.
Gateway
Garage Partners LLC
(A
Delaware Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
4 – RELATED PARTY TRANSACTIONS (Continued)
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 has 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 possesses 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
5 – SUBSEQUENT EVENTS
Effective
August 1, 2022, C.J. Follini contributed (the “Contribution”) his 90% ownership interest in OpCo to Noyack Logistics Income
REIT, Inc. (“NLI”) in exchange for units of limited partnership interest in NLI’s operating partnership subsidiary,
NL REIT OP, LP. NLI was formed by Noyack Capital LLC, an affiliate of Mr. Follini, in October 2021 for the purpose of acquiring, owning
and operating a diversified portfolio of commercial real estate properties that encompass the supply chain and logistics infrastructure
of North America, including dry warehouses, cold storage warehouses, life science buildings, and structured parking garages. As a result
of the Contribution, NLI indirectly owns 90% of OpCo.
The
Company has evaluated subsequent events through September 29, 2022, 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, 2022 and 2021
(Unaudited)
181
High Street LLC
(A
Maine Limited Liability Company)
INDEX
TO FINANCIAL STATEMENTS
June
30, 2022 and 2021
181
High Street LLC
(A
Maine Limited Liability Company)
Balance
Sheets
June
30, 2022 and December 31, 2021
| |
June 30,
2022 | | |
December 31,
2021 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | | |
| | |
Real
estate, net | |
$ | 7,315,624 | | |
$ | 7,517,478 | |
Cash | |
| 143,700 | | |
| 304,558 | |
Restricted
cash | |
| 129,356 | | |
| 62,172 | |
Accounts
receivable and other assets | |
| 148,021 | | |
| 74,986 | |
Deferred
parking receivable | |
| 21,727 | | |
| 26,499 | |
Contribution
receivable from Gateway Garage Partners LLC | |
| 60,000 | | |
| 60,000 | |
Due
from affiliates | |
| 2,050 | | |
| 5,050 | |
| |
| | | |
| | |
Total
assets | |
$ | 7,820,478 | | |
$ | 8,050,743 | |
| |
| | | |
| | |
Liabilities and members’
deficit | |
| | | |
| | |
| |
| | | |
| | |
Liabilities: | |
| | | |
| | |
Mortgage
note payable, net | |
$ | 13,136,521 | | |
$ | 13,338,399 | |
Accounts
payable, accrued expenses and other liabilities | |
| 30,096 | | |
| 62,694 | |
Accrued
interest | |
| 32,815 | | |
| 34,861 | |
Due to
affiliates | |
| 20,303 | | |
| 14,103 | |
Deferred
parking rental income | |
| 310,310 | | |
| 314,314 | |
| |
| | | |
| | |
Total
liabilities | |
| 13,530,045 | | |
| 13,764,371 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Members’
deficit | |
| (5,709,567 | ) | |
| (5,713,628 | ) |
| |
| | | |
| | |
Total
liabilities and members’ deficit | |
$ | 7,820,478 | | |
$ | 8,050,743 | |
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, 2022 and 2021
| |
Six
Months Ended June 30, | |
| |
| 2022 | | |
| 2021 | |
Revenues: | |
| | | |
| | |
Parking
rental income | |
$ | 955,645 | | |
$ | 911,507 | |
Interest
income | |
| 28 | | |
| 22 | |
| |
| | | |
| | |
Total
revenues | |
| 955,673 | | |
| 911,529 | |
| |
| | | |
| | |
Expenses: | |
| | | |
| | |
Interest
expense | |
| 283,485 | | |
| 292,136 | |
Depreciation | |
| 201,853 | | |
| 201,853 | |
Payroll | |
| 124,297 | | |
| 93,347 | |
Property
taxes | |
| 120,474 | | |
| 96,846 | |
Other
operating expenses | |
| 52,436 | | |
| 24,713 | |
Management
fees | |
| 47,784 | | |
| 52,394 | |
Repairs
and maintenance | |
| 39,562 | | |
| 23,204 | |
General
and administrative expenses | |
| 29,673 | | |
| 21,401 | |
Insurance | |
| 17,951 | | |
| 17,095 | |
Utilities | |
| 12,317 | | |
| 8,115 | |
| |
| | | |
| | |
Total
expenses | |
| 929,832 | | |
| 831,104 | |
| |
| | | |
| | |
Net
income | |
$ | 25,841 | | |
$ | 80,425 | |
See notes to financial statements.
181
High Street LLC
(A
Maine Limited Liability Company)
Unaudited
Statements of Members’ (Deficit) Equity
For
the Six Months Ended June 30, 2022
| |
| | |
Gateway
Garage | | |
| |
| |
C.J.
Follini | | |
Partners
LLC | | |
Total | |
Members’ (deficit) equity
- January 1, 2022 | |
$ | (6,727,154 | ) | |
$ | 1,013,526 | | |
$ | (5,713,628 | ) |
| |
| | | |
| | | |
| | |
Distributions | |
| (19,602 | ) | |
| (2,178 | ) | |
| (21,780 | ) |
| |
| | | |
| | | |
| | |
Net
income | |
| 23,257 | | |
| 2,584 | | |
| 25,841 | |
| |
| | | |
| | | |
| | |
Members’ (deficit)
equity - June 30, 2022 | |
$ | (6,723,499 | ) | |
$ | 1,013,932 | | |
$ | (5,709,567 | ) |
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, 2022 and 2021
| |
Six
Months Ended June 30, | |
| |
2022 | | |
2021 | |
Cash flows
from operating activities: | |
| | | |
| | |
Net
income | |
$ | 25,841 | | |
$ | 80,425 | |
Adjustments
to reconcile net income 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 | |
| 768 | | |
| (3,191 | ) |
Change
in operating assets and liabilities: | |
| | | |
| | |
Accounts
receivable and other assets | |
| (73,035 | ) | |
| (72,794 | ) |
Due from
affiliates | |
| 3,000 | | |
| - | |
Accounts
payable, accrued expenses and other liabilities | |
| (32,598 | ) | |
| (2,944 | ) |
Accrued
interest | |
| (2,046 | ) | |
| (1,874 | ) |
Due
to affiliates | |
| 6,200 | | |
| - | |
Net
cash provided by operating activities | |
| 141,518 | | |
| 213,010 | |
| |
| | | |
| | |
Cash flows
from financing activities: | |
| | | |
| | |
Principal
repayments of mortgage notes payable | |
| (213,412 | ) | |
| (204,935 | ) |
Cash contributions | |
| - | | |
| 940,000 | |
Offering
costs | |
| - | | |
| (40,000 | ) |
Distributions | |
| (21,780 | ) | |
| (1,025,206 | ) |
Net
cash used in financing activities | |
| (235,192 | ) | |
| (330,141 | ) |
| |
| | | |
| | |
Net decrease
in cash and restricted cash | |
| (93,674 | ) | |
| (117,131 | ) |
| |
| | | |
| | |
Cash
and restricted cash at beginning of period | |
| 366,730 | | |
| 359,398 | |
| |
| | | |
| | |
Cash
and restricted cash at end of period | |
$ | 273,056 | | |
$ | 242,267 | |
| |
| | | |
| | |
Supplemental
disclosures of cash flows information: | |
| | | |
| | |
Cash
paid for interest | |
$ | 273,994 | | |
$ | 282,475 | |
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, 2022 and 2021
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 Company’s
Limited Liability Company agreement (“LLC Agreement”).
The
purpose of the Company is to own and operate a parking facility 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 (“Gateway”) acquired a 10% interest in the Company for a contribution of $1,000,000
pursuant to a Contribution Agreement (the “Contribution Agreement”). As outlined in the Contribution Agreement, if an event
of default is not cured, or is incapable of being cured, within 30 days’ written notice by Gateway, then Gateway shall have the
right for a 60-day period, commencing at the end of the 30-day notice period, to cause the Company to purchase Gateway’s interest
at a price equal to the purchase price plus any accrued and unpaid distributions.
In
addition, on March 8, 2021 the Company amended and restated its LLC Agreement (“Amended LLC Agreement”). In accordance with
the Amended LLC Agreement, income, losses and distributions from the Company are allocated to the members pro rata according to each
member’s percentage interest in the Company. Noyack Medical Partners LLC (“NOYACK”) is the Manager of the Company.
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.
Management has prepared cash flow projections for a period defined to include one year beyond the date the accompanying financial statements
were available to be issued (the “Evaluation Period”), through approximately April 2023. Management’s projections include
certain assumptions about parking volume, parking rates, and the level of expenses necessary to support projected revenues. Management
has concluded that existing working capital when combined with the projections will be sufficient to allow the Company to meet its cash
flow requirements at least through the end of the Evaluation Period without the need for additional funding. In the event management
is unable to successfully execute its business plan, the Company will utilize its available investor liquidity to fund any cash flow
obligations, as necessary, through at least April 26, 2023.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
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 financial and/or cash management risk.
Restricted
cash consists of monies restricted for the benefit of the Company’s lender under the terms of the mortgage loan 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.
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 as of:
| |
June
30, 2022 | | |
December
31,
2021 | | |
December
31,
2020 | |
| |
| | |
| | |
| |
Cash | |
$ | 143,700 | | |
$ | 304,558 | | |
$ | 43,439 | |
Restricted
cash | |
| 129,356 | | |
| 62,172 | | |
| 315,959 | |
Cash
and restricted cash | |
$ | 273,056 | | |
$ | 366,730 | | |
$ | 359,398 | |
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, 2022 and December 31, 2021, the Company considers accounts
receivable to be fully collectible.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 |
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, 2022, and the
year ended December 31, 2021.
Deferred
Financing 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.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising
Advertising
and promotion costs are expensed as incurred. Total advertising and promotion expense for the six months ended June 30, 2022 and 2021
were $5,849 and $778, respectively, and are recognized as a component of other operating expenses on the statements of operations.
Offering
Costs
Costs
incurred in connection with raising capital are recorded as reductions of the related equity proceeds. No offering costs were incurred
for the six months ended June 30, 2022. For the year ended December 31, 2021, the Company recorded $40,000 as a reduction of equity contributed
to the Company, which represents a placement fee equal to 4.0% 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, each 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 (50%) 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 Accounting Standards Update (“ASU”)
2016-02, as amended, Leases (Topic 842). 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.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
3 – REAL ESTATE, NET
Real
estate, net consisted of the following as of:
| |
June
30, 2022 | | |
December
31,
2021 | |
| |
| | |
| |
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 | |
| (4,327,622 | ) | |
| (4,125,768 | ) |
| |
| | | |
| | |
Real
estate, net | |
$ | 7,315,624 | | |
$ | 7,517,478 | |
Depreciation
expense for the six months ended June 30, 2022 and 2021 was $201,853.
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 is to be tested on an annual basis. As of June 30, 2022 and December 31, 2021, the Company believes it
may not be in compliance with its debt service coverage ratios, which would give the lender the right to call the Mortgage. Management
believes that, if necessary, it has the ability to refinance the Mortgage, with terms subject to any future negotiation.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(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, | |
| |
| |
| |
2022
(remainder of the year) | |
$ | 216,923 | |
2023 | |
| 448,342 | |
2024 | |
| 465,652 | |
2025 | |
| 486,587 | |
2026 | |
| 506,948 | |
Thereafter | |
| 11,122,605 | |
| |
| | |
| |
$ | 13,247,057 | |
The
components of deferred financing costs as of June 30, 2022, and December 31, 2021 are summarized as follows and are presented as deductions
from the loan payable:
| |
June
30,
2022 | | |
December
31, 2021 | |
Deferred financing
costs | |
$ | 228,762 | | |
$ | 228,762 | |
Less
accumulated amortization | |
| (118,226 | ) | |
| (106,692 | ) |
| |
| | | |
| | |
Deferred
financing costs, net | |
$ | 110,536 | | |
$ | 122,070 | |
Amortization
expense totaled $11,535 for the six months ended June 30, 2022 and 2021.
NOTE
5 – LEASES
Future
minimum rentals to be received under non-cancelable operating leases in effect at December 31, 2022 for each of the succeeding five years
and thereafter are as follows:
Year
ending December 31, | |
| |
| |
| |
2022
(remainder of the year) | |
$ | 176,058 | |
2023 | |
| 327,721 | |
2024 | |
| 120,000 | |
2025 | |
| 120,000 | |
2026 | |
| 120,000 | |
Thereafter | |
| 4,110,000 | |
| |
$ | 4,973,779 | |
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, 2022 and 2021
(Continued)
NOTE
5 – 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, 2022 and 2021.
| |
Six
Months Ended June 30, | | |
|
| |
2022 | | |
2021 | | |
Lease |
Lessee | |
| Dollars
| | |
| Percent
| | |
| Dollars
| | |
| Percent
| | |
Termination
Date |
Standard Parking | |
$ | 511,977 | | |
| 54 | % | |
$ | 207,338 | | |
| 23 | % | |
See Note 7 |
Maine Medical Center | |
| - | | |
| 0 | % | |
| 406,000 | | |
| 45 | % | |
September 30, 2021 |
Westin Hotel | |
| 329,231 | | |
| 34 | % | |
| 187,690 | | |
| 21 | % | |
March 31, 2061 |
NOTE
6 – RELATED PARTY TRANSACTIONS
As
of June 30, 2022 and December 31, 2021, $2,050 and $5,050, respectively, was due from various affiliates. Such amounts are non-interest
bearing and due on demand.
As
of June 30, 2022 and December 31, 2021, $20,303 and $11,611, respectively, was due to various affiliates. Such amounts are non-interest
bearing and due on demand.
Asset
Management Fees
The
Company engaged 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 Corporation (“Standard Parking”) (see Note 7). For the six months
ended June 30, 2022 and 2021, the Company incurred Asset Management Fees of $13,052 and $17,662, respectively. Unpaid Asset Management
Fees amounted to $10,170 and $2,492 as of June 30, 2022 and December 31, 2021, respectively, and are included in due to affiliates on
the balance sheets.
NOTE
7 – COMMITMENTS AND CONTINGENCIES
The
Company engaged Standard Parking as operator and manager of the Property. Standard Parking earns a monthly management fee of $5,874 as
of June 30, 2022 which automatically renews each April and increases by 3%, as provided. The Company and Standard Parking agreed to no
such increase during 2021. For the six months ended June 30, 2022 and 2021, the Company incurred management fees of $34,732.
181
High Street LLC
(A
Maine Limited Liability Company)
Notes
to Unaudited Financial Statements
June
30, 2022 and 2021
(Continued)
NOTE
7 – 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
8 – SUBSEQUENT EVENTS
Effective
August 1, 2022, C.J. Follini contributed (the “Contribution”) his 90% ownership interest in the Company to Noyack Logistics
Income REIT, Inc. (“NLI”) in exchange for units of limited partnership interest in NLI’s operating partnership subsidiary,
NL REIT OP, LP. NLI was formed by Noyack Capital LLC, an affiliate of Mr. Follini, in October 2021 for the purpose of acquiring, owning
and operating a diversified portfolio of commercial real estate properties that encompass the supply chain and logistics infrastructure
of North America, including dry warehouses, cold storage warehouses, life science buildings, and structured parking garages. As a result
of the Contribution, NLI indirectly owns 90% of the Property.
NLI
intends to elect to be qualified as a real estate investment trust (“REIT”) for its taxable year ending December 31, 2022.
In order to be able to qualify as a REIT, NLI must meet certain income and asset tests, including the requirement that 75% of its income
must be generated from, among other things, rents from real property. In order for the revenue generated by the Property owned by the
Company to qualify as rents from real property, the property management agreement between Standard Parking and the Company, under which
Standard Parking operated and directed the operations of the Property (the “Property Management Agreement”), needed to be
replaced by a master lease agreement between Standard Parking and the Company (the “Master Lease”). Under the Master Lease,
which has been entered into as of September 21, 2022, and is effective October 1, 2022, the Company will lease the Property to Standard
Parking, the tenant of the Property. The Master Lease has an initial term of three months with successive automatic three-month extensions,
unless terminated by the Company or Standard Parking pursuant to the terms thereof. The Master Lease requires Standard Parking to pay
base rent and percentage rent to the Company on a monthly basis in an aggregate amount that approximates the operating economics generated
by the Property that was distributed to OpCo under the terms of the Property Management Agreement.
The
Company has evaluated subsequent events through September 29, 2022, the date the financial statements were available to be issued.
*
Filed herewith.
SIGNATURES
Pursuant
to the requirements of Regulation A, the issuer has duly caused this 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, 2022.
|
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, 2022 |
Charles
J. Follini |
|
(Principal
Executive Officer) |
|
|
Gateway Garage Partners ... (CE) (USOTC:GWYGU)
Historical Stock Chart
From Jun 2024 to Jul 2024
Gateway Garage Partners ... (CE) (USOTC:GWYGU)
Historical Stock Chart
From Jul 2023 to Jul 2024