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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 814-00659 
PROSPECT CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland43-2048643
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
10 East 40th Street, 42nd Floor
New York, New York 10016
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (212) 448-0702
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common Stock, par value $0.001 per sharePSECNASDAQ Global Select Market
5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001PSEC PRANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
5.50% Series A1 Preferred Stock, par value $0.001
5.50% Series AA1 Preferred Stock, par value $0.001
5.50% Series MM1 Preferred Stock, par value $0.001
5.50% Series M1 Preferred Stock, par value $0.001
5.50% Series M2 Preferred Stock, par value $0.001
5.50% Series A2 Preferred Stock, par value $0.001
6.50% Series A3 Preferred Stock, par value $0.001
6.50% Series M3 Preferred Stock, par value $0.001
6.50% Series AA2 Preferred Stock, par value $0.001
6.50% Series MM2 Preferred Stock, par value $0.001
Floating Rate Series A4 Preferred Stock, par value $0.001
Floating Rate Series M4 Preferred Stock, par value $0.001
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý    No o


Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated fileroNon-accelerated fileroSmaller reporting companyoEmerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ☒
The aggregate market value of the common equity held by non-affiliates of the Registrant as of December 29, 2023 was $1.809 billion (based on the closing price on that date of $5.99 on the NASDAQ Global Select Market). For the purposes of calculating this amount only, all executive officers and Directors are “affiliates” of the Registrant.
As of August 27, 2024, there were 428,988,217 shares of the Registrant’s common stock outstanding.
Documents Incorporated by Reference
Portions of the Registrant’s definitive Proxy Statement relating to the 2024 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission, are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent described therein.



EXPLANATORY NOTE
The Registrant is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, which was filed on August 28, 2024 (the “Form 10-K”), solely to amend the format of the audited financial statements of National Property REIT Corp. (“NPRC”), being filed as Exhibits 99.1 and 99.2 herewith, in accordance with Rule 304(e) of Regulation S-T. The Registrant previously determined that NPRC met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for which the Registrant is required, pursuant to Rule 3-09 of Regulation S-X, to attach separate audited financial statements as an exhibit to its Form 10-K as of and for the years ended December 31, 2023, 2022 and 2021.
Except as otherwise expressly noted, this Amendment does not modify or update in any way (i) the consolidated financial position, the results of operations or cash flows of the Company, or (ii) the disclosures in or exhibits to the Form 10-K; nor does it reflect events occurring after the filing of the Form 10-K. Among other things, forward-looking statements made in the Form 10-K have not been revised to reflect events that occurred or facts that became known to us after the filing of the Form 10-K, and such forward-looking statements should be read in their historical context. Furthermore, this Amendment should be read in conjunction with the Form 10-K and any subsequent filings with the U.S. Securities and Exchange Commission.


PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this Annual Report:
1.Financial Statements – See the Index to Consolidated Financial Statements in Item 8 of the Annual Report on Form 10-K filed with the SEC on August 28, 2024.
2.Financial Statement Schedules – The financial statements of National Property REIT Corp. required by Rule 3-09 of Regulation S-X will be provided as Exhibit 99.1 and Exhibit 99.2 to this report.
3.Exhibits – The following exhibits are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
Exhibit No.
23.3
23.4
31.3
31.4
32.3
32.4
99.1
99.2

*
Filed herewith.


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on December 13, 2024.
PROSPECT CAPITAL CORPORATION
 
By:/s/ JOHN F. BARRY III
 John F. Barry III
 Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ JOHN F. BARRY III/s/ ANDREW C. COOPER
John F. Barry IIIAndrew C. Cooper
Chairman of the Board, Chief Executive Officer and DirectorDirector
December 13, 2024December 13, 2024
/s/ KRISTIN L. VAN DASK/s/ WILLIAM J. GREMP
Kristin L. Van DaskWilliam J. Gremp
Chief Financial OfficerDirector
December 13, 2024December 13, 2024
/s/ M. GRIER ELIASEK/s/ EUGENE S. STARK
M. Grier EliasekEugene S. Stark
President, Chief Operating Officer and DirectorDirector
December 13, 2024December 13, 2024


EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the Registration Statement on Form N-2 (File No. 333-269714) of Prospect Capital Corporation of our report dated August 9, 2024, relating to the combined consolidated financial statements of National Property REIT Corp. as of December 31, 2023 and for the year then ended, appearing in this Amendment No. 1 to the Annual Report on Form 10-K of Prospect Capital Corporation for the year ended June 30, 2024.

/s/ DELOITTE & TOUCHE LLP

Stamford, Connecticut
December 13, 2024



EXHIBIT 23.4

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the registration statement on Form N-2 (File No. 333-269714) of Prospect Capital Corporation of our report dated August 10, 2023, on our audits of the combined consolidated financial statements of National Property REIT Corp. as of December 31, 2022 and 2021 and for the years then ended, which report is included in this Amendment No. 1 to the Annual Report on Form 10-K of Prospect Capital Corporation for the year ended June 30, 2024.

/s/ CohnReznick LLP

New York, New York
December 13, 2024




EXHIBIT 31.3
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a)
I, John F. Barry III, Chairman of the Board and Chief Executive Officer of Prospect Capital Corporation, certify that:
1.I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Prospect Capital Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
December 13, 2024
 
/s/ JOHN F. BARRY III
John F. Barry III
Chairman of the Board and Chief Executive Officer



EXHIBIT 31.4
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a)
I, Kristin L. Van Dask, Chief Financial Officer and Treasurer of Prospect Capital Corporation, certify that:
1.I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Prospect Capital Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
December 13, 2024
 
/s/ KRISTIN L. VAN DASK
Kristin L. Van Dask
Chief Financial Officer



EXHIBIT 32.3
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
In connection with this Amendment No. 1 to the Annual Report on Form 10-K for the year ended June 30, 2024 (the “Report”) of Prospect Capital Corporation (the “Registrant”), as filed with the Securities and Commission on the date hereof, I, John F. Barry III, Chairman of the Board and Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date:
December 13, 2024
 
/s/ JOHN F. BARRY III
John F. Barry III
Chairman of the Board and Chief Executive Officer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Prospect Capital Corporation and will be retained by Prospect Capital Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. ss. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


EXHIBIT 32.4
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
In connection with this Amendment No. 1 to the Annual Report on Form 10-K for the year ended June 30, 2024 (the “Report”) of Prospect Capital Corporation (the “Registrant”), as filed with the Securities and Commission on the date hereof, I, Kristin L. Van Dask, Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date:
December 13, 2024
 
/s/ KRISTIN L. VAN DASK
Kristin L. Van Dask
Chief Financial Officer
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Prospect Capital Corporation and will be retained by Prospect Capital Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. ss. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT 99.1





National Property REIT Corp.
Combined Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(With Independent Auditor's Report Thereon)






National Property REIT Corp.
Combined Consolidated Financial Statements
Table of Contents
Page
Independent Auditor's Report
Combined Consolidated Balance Sheets as of December 31, 2023 and 2022
3
Combined Consolidated Statements of Operations for the years ended December 31, 2023 and 2022
4
Combined Consolidated Statements of Changes in (Deficit) Equity for the years ended December 31, 2023 and 2022
5
Combined Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022
6
Notes to Combined Consolidated Financial Statements
8




Independent Auditor's Report
To the Board of Directors
National Property REIT Corp.


Opinion

We have audited the combined consolidated financial statements of National Property REIT Corp. (the "Company"), which comprise the combined consolidated balance sheet as of December 31, 2023, and the related combined consolidated statements of operations, changes in (deficit) equity and cash flows for the year then ended, and the related notes to the combined consolidated financial statements (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Predecessor Auditor’s Opinion on 2022 Financial Statements

The financial statements of the Company as of and for the year ended December 31, 2022 were audited by other auditors whose report, dated August 10, 2023, expressed an unmodified opinion on those statements.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.





1



In performing an audit in accordance with GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.

•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.


/s/ Deloitte & Touche, LLP
Stamford, Connecticut
August 9, 2024

2

National Property REIT Corp.
Combined Consolidated Balance Sheets
December 31,
20232022
ASSETS
Real estate assets
  Land$239,500,846 $252,884,617 
  Building and improvements
2,270,308,784 2,314,165,808 
  Furniture, fixtures, and equipment
189,100,296 154,762,761 
Total real estate assets held for investment
2,698,909,926 2,721,813,186 
  Less: accumulated depreciation
(459,534,036)(380,314,083)
Net real estate assets held for investment
2,239,375,890 2,341,499,103 
  Real estate assets held for sale, net
30,985,546 — 
Total real estate assets, net
2,270,361,436 2,341,499,103 
  Cash and cash equivalents
66,567,915 35,212,438 
  Restricted cash36,248,212 37,869,284 
  Accounts receivable, net
19,211,544 22,573,685 
  Interest receivable909 8,075 
  Due from LendingClub Corporation1,202 20,756 
  Due from affiliates
124,676 1,053,834 
  Preferred equity investments14,018,973 13,073,865 
  Prepaid expenses and other assets17,599,068 11,467,721 
  Collateralized loan obligations at fair value418,761,852 424,746,173 
  Unsecured consumer loans at fair value79,499 520,946 
  Residual interests in securitizations at fair value2,725,658 8,540,118 
  Corporate bonds at fair value16,484,131 11,616,950 
  Interest rate caps at fair value20,203,768 25,724,128 
  Deferred leasing costs, net44,263 111,596 
  Lease intangibles, net15,426,122 15,790,350 
  Right-of-use assets22,373,922 24,886,491 
TOTAL ASSETS$2,920,233,150 $2,974,715,513 
LIABILITIES AND DEFICIT
Liabilities
  Mortgages payable, net of unamortized discount and debt issuance costs$2,121,615,056 $2,182,132,581 
  Mortgages payable related to real estate assets held for sale, net of unamortized discount and debt issuance costs
24,616,427 — 
  Reverse repurchase facilities, at fair value, net of unamortized debt issuance costs196,336,000 196,118,000 
  Senior secured term loans, net of debt issuance costs1,002,848,924 874,897,855 
  Accounts payable and accrued expenses48,259,315 42,763,943 
  Security deposits7,599,324 6,594,854 
  Due to affiliates13,856,523 11,175,146 
  Prepaid rent and other liabilities7,629,080 8,332,467 
  Lease liabilities27,556,286 27,500,110 
Total liabilities3,450,316,935 3,349,514,956 
Commitments and contingencies (Note 20)
Deficit
  Preferred stock, $0.001 par value, Series A Cumulative Non-Voting, 12.5%; $125,000 liquidation preference, 125 shares authorized, issued and outstanding
109,950 109,950 
  Common stock, $0.001 par value; 100,000,000 common shares authorized, 3,350,519 and 3,275,011 issued and outstanding, respectively3,375 3,351 
  Additional paid-in-capital19,819,881 15,219,904 
  Accumulated deficit(545,958,649)(392,654,099)
  Non-controlling interest(4,058,342)2,521,451 
Total deficit(530,083,785)(374,799,443)
TOTAL LIABILITIES AND DEFICIT$2,920,233,150 $2,974,715,513 
See Notes to Combined Consolidated Financial Statements.
3

National Property REIT Corp.
Combined Consolidated Statements of Operations
Years Ended December 31,
20232022
Income
  Rental income$305,463,927 $280,675,103 
  Interest income62,971,464 39,717,233 
  Other tenant income56,366,764 49,581,397 
Total income424,802,155 369,973,733 
Costs and expenses
  Property operating expenses172,561,141 153,617,314 
  Management fees15,192,515 13,710,008 
  Depreciation and amortization105,903,894 120,495,413 
  General and administrative expenses30,666,091 28,743,890 
Total costs and expenses
324,323,641 316,566,625 
Other income (expense)
  Interest and debt expense(275,297,786)(259,241,778)
  Fair value adjustments(11,724,724)3,935,656 
  Gain on sale of real estate assets43,417,987 20,956,684 
  Gain on involuntary conversions— 1,531,629 
Total other income (expense), net(243,604,523)(232,817,809)
Loss before income tax(143,126,009)(179,410,701)
  Income tax expense(3,573)(11,380)
Net loss(143,129,582)(179,422,081)
  Income attributable to non-controlling interest(10,159,343)(3,095,627)
  Dividends attributable to preferred shares(15,625)(15,625)
Net loss attributable to common shares$(153,304,550)$(182,533,333)

See Notes to Combined Consolidated Financial Statements.


4


National Property REIT Corp.
Combined Consolidated Statements of Changes in (Deficit) Equity

Preferred SharesCommon SharesAdditional Paid-in-CapitalAccumulated DeficitTotal Stockholders'
(Deficit)		Non-Controlling InterestTotal (Deficit)
Balance at December 31, 2021$109,950 $3,275 $3,199,980 $(210,120,766)$(206,807,561)$8,711,960 $(198,095,601)
Issuance of common shares— 76 16,019,924 — 16,020,000 — 16,020,000 
Contribution from non-controlling interest— — — — — 9,567,328 9,567,328 
Dividends on common shares— — (4,000,000)— (4,000,000)— (4,000,000)
Dividends on preferred shares— — — (15,625)(15,625)— (15,625)
Distributions to non-controlling interest— — — — — (18,853,464)(18,853,464)
Net loss— — — (182,517,708)(182,517,708)3,095,627 (179,422,081)
Balance at December 31, 2022109,950 3,351 15,219,904 (392,654,099)(377,320,894)2,521,451 (374,799,443)
Issuance of common shares— 24 4,599,977 — 4,600,001 — 4,600,001 
Contribution from non-controlling interest— — — — — 7,052,476 7,052,476 
Dividends on common shares— — — — — — — 
Dividends on preferred shares— — — (15,625)(15,625)— (15,625)
Distributions to non-controlling interest— — — — — (23,791,612)(23,791,612)
Net loss— — — (153,288,925)(153,288,925)10,159,343 (143,129,582)
Balance at December 31, 2023$109,950 $3,375 $19,819,881 $(545,958,649)$(526,025,443)$(4,058,342)$(530,083,785)

See Notes to Combined Consolidated Financial Statements.




5

National Property REIT Corp.
Combined Consolidated Statements of Cash Flows
Years Ended December 31,
20232022
Cash flows from operating activities:
Net loss$(143,129,582)$(179,422,081)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation105,409,244 96,897,855 
Amortization of in-place leases95,686 23,160,600 
Amortization of leasing commissions129,176 153,421 
Amortization of other deferred leasing costs1,246 1,246 
Amortization of above market leases268,542 282,291 
Amortization of right-of-use assets2,512,569 8,045,707 
Amortization of debt issuance costs and debt discounts and premiums8,240,872 7,440,085 
Amortization of corporate bonds(81,326)— 
Amortization of discount on collateralized loan obligations(3,590,031)(2,374,186)
Accretion of PIK on collateralized loan obligations(1,155,562)— 
Fair value adjustments of collateralized loan obligations9,032,496 1,322,497 
Fair value adjustments of unsecured consumer loans(533,648)(807,032)
Fair value adjustments of residual interests in securitizations1,520,787 2,995,389 
Fair value adjustments of corporate bonds(4,785,855)6,621,180 
Fair value adjustments of interest rate caps7,684,262 (14,067,690)
Purchases of interest rate caps(2,163,902)— 
Realized gain/loss on collateralized loan obligations(1,193,318)— 
Gain on sale of real estate assets(43,417,987)(20,956,684)
Gain on involuntary conversions— (1,531,629)
Gain/loss on early extinguishment of debt(245,147)503,896 
Income from accretion on residual interests in securitizations608,759 (1,109,048)
Income from accretion on preferred equity investments(945,108)(42,486)
Changes in operating assets and liabilities:
Accounts receivable3,362,141 (7,039,912)
Interest receivable7,166 10,874 
Due to affiliates929,158 2,230,170 
Due from affiliates2,681,377 (883,953)
Prepaid expenses and other assets(6,131,347)(1,204,074)
Accounts payable and accrued expenses4,974,282 9,263,946 
Security deposits1,004,470 1,214,225 
Prepaid rent and other liabilities(703,387)997,125 
Deferred leasing costs(63,089)(193,335)
Lease liabilities56,176 435,911 
Net cash used by operating activities(59,620,880)(68,055,692)
Cash flows from investing activities:
Acquisition of real estate assets— (333,890,228)
Additions to real estate assets(78,753,021)(55,039,076)
Additions to lease intangibles— (19,876,824)
Proceeds from disposition of real estate assets88,420,521 33,693,591 
Proceeds from involuntary conversion— 3,117,599 
Purchases of collateralized loan obligations(14,876,274)(186,569,431)
Principal payments received on collateralized loan obligations5,187,500 — 
Proceeds from disposition of collateralized loan obligations12,579,510 — 
Principal payments received on unsecured consumer loans975,095 3,043,954 
Proceeds from recoveries and sales of charged-off loans— 463,251 
Purchase of preferred equity investments— (13,031,379)
Purchase of corporate bonds— (10,206,130)
Purchases of equity securitizations— (20,668,884)
Principal payments received on securitized residual interests3,684,914 11,591,269 
6

National Property REIT Corp.
Combined Consolidated Statements of Cash Flows

Years Ended December 31,
20232022
Decrease in due from LendingClub Corporation19,554 5,659 
Net cash provided by (used in) investing activities17,237,799 (587,366,629)
Cash flows from financing activities:
Proceeds from mortgages payable18,278,148 296,524,430 
Repayments of mortgages payable(57,831,277)(22,401,909)
Proceeds from reverse repurchase facilities828,000 87,315,000 
Repayments of reverse repurchase facilities(610,000)(1,247,000)
Proceeds from senior secured term loan225,646,619 387,580,238 
Repayments of senior secured term loan(86,950,000)(94,351,510)
Purchases of interest rate caps— (8,345,348)
Payment of debt issuance costs(15,475,530)(3,909,916)
Payment of debt extinguishment costs386,286 (184,100)
Proceeds from issuance of common stock4,600,001 16,020,000 
Dividends on common shares— (4,000,000)
Dividends on preferred shares(15,625)(15,625)
Contributions from non-controlling interest7,052,476 9,567,328 
Distributions to non-controlling interests(23,791,612)(18,853,464)
Net cash provided by financing activities72,117,486 643,698,124 
Net increase in cash, cash equivalents, and restricted cash29,734,405 (11,724,197)
Cash, cash equivalents, and restricted cash, beginning of year73,081,722 84,805,919 
Cash, cash equivalents, and restriced cash, end of year$102,816,127 $73,081,722 

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest expense$267,042,352 $249,486,382 
Income taxes$3,573 $11,380 
Non-cash investing and financing activities:
Accrued additions to real estate assets$4,378,292 $3,857,202 

        See Notes to Combined Consolidated Financial Statements.
7
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
1.Organization
References herein to the "Company," "we," "us," or "our" refer to National Property REIT Corp. ("NPRC"), formerly known as National Property Holdings Corp., unless the context specifically requires otherwise.
The Company is a Maryland corporation and is a real estate investment trust ("REIT") for U.S. federal income tax purposes. The Company was formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets and engage in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. The Company intends to acquire real estate assets, including, but not limited to, industrial, commercial, student housing, self-storage, and multi-family properties. The Company commenced operations on December 31, 2013.
NPH Property Holdings, LLC ("NPH"), a Delaware limited liability company, owns all of the outstanding common stock of the Company. NPH is a wholly-owned subsidiary of Prospect Capital Corporation ("PSEC"). On December 31, 2013, PSEC contributed to the Company, through NPH, ownership interests in entities that own real estate properties. In exchange for the contribution of assets, NPH received shares of the Company’s common stock. These entities were NPH McDowell, LLC ("Oxford"), APH Carroll 41, LLC ("Bexley"), and 146 Forest Parkway, LLC ("146 FP"). On October 23, 2014, United Property REIT Corp. ("UPRC"), an affiliated entity indirectly owned by PSEC, contributed to the Company ownership interest in Michigan Storage, LLC ("Michigan"), an entity that owned a portfolio of self-storage real estate properties. UPH Property Holdings, LLC ("UPH"), a Delaware limited liability company, owned all of the outstanding common stock of UPRC. UPH was a wholly-owned subsidiary of PSEC. On November 26, 2014, American Property REIT Corp. ("APRC"), an affiliated entity indirectly owned by PSEC, contributed to the Company, ownership interest in APH Carroll Resort, LLC (the "Resort"), an entity that owned a multi-family real estate property. On May 1, 2015, APRC contributed to the Company ownership interest in 5100 Live Oaks Blvd, LLC ("Amberly"), an entity that owned a multi-family real estate property. APH Property Holdings, LLC ("APH"), a Delaware limited liability company, owned all of the outstanding common stock of APRC. APH was a wholly-owned subsidiary of PSEC. These entity contribution transactions are collectively referred to as the "Common Control Transfer."
On May 23, 2016, APRC and UPRC (collectively referred to as the "Affiliated REITs") were merged ("Merger") with and into the Company, with the Company continuing as the surviving corporation. The Affiliated REITs were formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets. At the date of Merger, the Affiliated REITs held an investment portfolio of real estate assets owned directly or through joint ventures by making a majority equity investment in property-owning entities. The real estate investments acquired during the Merger are collectively known as the "Merger Investments."
In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805, Business Combinations, the Merger and Common Control Transfer transactions noted above were executed between entities under common control. The assets and liabilities of each of the entities acquired through these transactions were recorded at their historical carrying amounts, and the results of operations of these entities have been recognized in the accompanying combined consolidated statements of operations for all periods presented. Subsequent to the Merger during 2016, NPRC's combined consolidated balance sheets reflect the historical carryover basis in the assets and liabilities acquired. The Company has also retrospectively adjusted its financial statements to combine the operating results of the Company and the entities acquired from the date common control began.
National Marketplace Finance, LLC (formerly known as Prospect Finance Company, LLC) ("NMF") is a subsidiary of the Company, and currently owns the online originated unsecured consumer loan portfolio and residual interests in securitizations. NMF holds the interests in ACL Loan Holdings, Inc. ("ACLLH") and American Consumer Lending Limited ("ACLL").
ACLLH was formed to hold the indirect interest in ACL Consumer Loan Trust ("ACL Trust"), which was contributed to ACLLH on June 30, 2014 by the Company, its initial sole member. ACL Trust and American Consumer Lending (Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust, referred to as the "ACL Subsidiaries"), hold unsecured consumer loans purchased from Prosper Funding LLC ("Prosper").
ACL Consumer Loan Trust III ("ACL Trust III"), a subsidiary of ACLLH, formed on June 10, 2014, and American Consumer Lending III (Near-Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust III, referred to as the "ACL III Subsidiaries"), formed on June 13, 2014, hold unsecured consumer loans purchased from LendingClub Corporation. ACL Consumer Loan Trust IV ("ACL Trust IV"), a subsidiary of ACLLH, formed on March 23, 2015, and American Consumer Lending IV (Near-Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust IV, referred to as the "ACL IV Subsidiaries"), formed on January 15, 2015, hold unsecured consumer loans originated by and purchased from LendingClub Corporation. ACL Patient Solutions Trust ("ACL PS"), a subsidiary of ACLLH, formed on October 14, 2015, and ACL Patient Solutions Holdings, LLC, a subsidiary of ACLL, formed on October
8
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
5, 2015, hold unsecured consumer loans from NBT Bank, National Association ("NBT"). From October 20, 2015 to December 31, 2018 ACL PS acquired and held unsecured consumer loans as part of a loan purchase and sale agreement between ACL PS, NBT and Springstone Financial, LLC ("Springstone"), a wholly-owned subsidiary of LendingClub Corporation. ACL Consumer Loan Trust V ("ACL Trust V"), a subsidiary of ACLL, formed on October 16, 2015, holds unsecured consumer loans purchased from Avant II, LLC ("Avant") for the period November 17, 2015 to December 31, 2018. ACL Consumer Loan Trust VI ("ACL Trust VI"), a subsidiary of ACLLH, formed on April 27, 2016, and American Consumer Lending VI, LLC, a subsidiary of ACLL, (collectively with ACL Trust VI, referred to as the "ACL VI Subsidiaries"), formed on November 30, 2015, hold unsecured consumer loans purchased from LendingClub Corporation for the period May 1, 2016 to December 31, 2018. Murray Hill Securitization Holdings Limited ("Murray Hill"), a subsidiary of ACLL, formed on July 24, 2015, holds interest in Murray Hill Marketplace Trust 2016-LC1, a securitization of unsecured consumer loans purchased from LendingClub Corporation for the period October 13, 2016 to December 31, 2018. Murray Hill also holds residual interests in securitizations. LendingClub Corporation and Springstone are hereafter collectively referred to as "LendingClub". American Consumer Lending VII, LLC, a subsidiary of ACLL, formed on October 5, 2017, holds unsecured consumer loans purchased from Prosper and NBT during the period July 28, 2015 to December 31, 2018.
NPH Guarantor, LLC was contributed to NMF on January 13, 2015 by the Company, its initial sole member. NPH Guarantor, LLC is the indemnitor of the ACL III Subsidiaries and ACL PS revolving credit facilities. There was no activity in NPH Guarantor, LLC from inception through December 31, 2018.
National General Lending Limited ("NGL"), a wholly-owned entity of the Company, was formed on May 23, 2019 to own various debt tranches in collateralized loan obligations (“CLOs”). NGL holds the CLOs in NGL Subsidiary Ltd. ("NGL Limited"), a wholly-owned Cayman Islands limited liability company that was formed August 26, 2019. Operations to buy and sell CLOs commenced on October 30, 2019. In connection with NGL's commencement of operations during 2019, PSEC contributed approximately $12,000,000 in cash and transferred approximately $52,139,000 of CLOs.
2.Significant Accounting Policies
a.Principles of Reporting and Use of Estimates
The accompanying combined consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the combined consolidated financial statements and the reported amounts of revenues and expenses during the reported periods.
Management makes significant estimates regarding the allocation of a property’s purchase price to the tangible and intangible assets and liabilities acquired, revenue recognition, and determining whether an asset is impaired. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates.
b.Basis of Consolidation and Transfers of Financial Assets
The accompanying combined consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. All intercompany balances and transactions have been eliminated. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity in a subsidiary not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the combined consolidated balance sheets and the presentation of net income (loss) is modified to present the net income (loss) attributed to controlling and non-controlling interests.
9
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
For a variable interest entity ("VIE"), an entity is subject to consolidation if the equity investors either do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support, are unable to direct the entity’s activities or are not exposed to the entity’s losses or entitled to its residual returns. VIEs that meet certain scope characteristics are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE is determined to be the party that has both the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. This determination can sometimes involve complex and subjective analysis. We are required on an ongoing basis to assess whether we are the primary beneficiary of a VIE.
We may periodically enter into transactions in which we sell financial assets. Upon a transfer of financial assets, we may retain or acquire senior or subordinated interests in the related assets. In connection with such transactions, a determination must be made as to whether we, as the transferor, have surrendered control over transferred financial assets. That determination must consider our continuing involvement in the transferred financial assets, including all arrangements or agreements made contemporaneously with, or in contemplation of, the transfer, even if they were not entered into at the time of the transfer. The financial components approach under applicable GAAP limits the circumstances in which a financial asset, or portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented and/or when the transferor has continuing involvement with the transferred financial asset. It defines the term “participating interest” to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale.
From time to time, we may securitize unsecured consumer loans we hold if such securitization allows us access to better financing terms. Depending upon the structure of the securitization transaction, these transactions will be accounted for as either a "sale" and the loans will be removed from the combined consolidated balance sheets or as a "financing" with the loans and financing reported on our combined consolidated balance sheets. Significant judgment may be exercised by us in determining whether a transaction should be recorded as a "sale" or a "financing."
In determining the accounting treatment to be applied to securitization transactions, we evaluate whether the entity used to facilitate the transactions was a VIE and, if so, whether the VIE should be consolidated. Based on our evaluations, we have concluded that one of our securitizations is a VIE that should be consolidated. The Company has determined that the other securitizations that we participated in should not be consolidated since, among other things, we concluded that the transfer of the underlying assets qualified as a sale.
c.Purchase Accounting and Acquisitions of Real Estate
Prior to the Company's adoption of Accounting Standards Update ("ASU") 2017-01 in January 2018, the Company recorded the acquisition of real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination were measured at their acquisition date fair values. Acquisition costs were expensed as incurred. Upon adoption of ASU 2017-01, the Company records the acquisition of real estate that will be used for the production of income as an asset acquisition, with all assets acquired and liabilities assumed recorded at their acquisition date fair values. Acquisition costs are capitalized and allocated to the acquired tangible assets, consisting of land, building and improvements, furniture, fixtures and equipment. The Company assesses the acquisition date fair values of all tangible assets, and identified lease intangibles, consisting of in-place leases, tenant relationships, deferred leasing costs, and above-market and below-market leases.
Real estate assets, including land, building and improvements, and furniture, fixtures and equipment are stated at historical cost less accumulated depreciation. Costs associated with the development, construction and improvement of the Company’s real estate assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred, while major replacements and betterments, which improve or extend the useful life of the asset, are capitalized and depreciated over the estimated useful lives.
10
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The Company records depreciation expense using the straight-line method over the useful lives of the respective assets. The estimated useful lives are as follows:
CategoryTerm
Building15 to 54 years
Improvements2 to 14 years
Furniture, fixtures, and equipment2 to 14 years
Depreciation expense for the years ended December 31, 2023 and 2022 was $105,409,244 and $96,897,855, respectively, and is included in depreciation and amortization expense in the accompanying combined consolidated statements of operations.
The value of acquired land, buildings and improvements is estimated by formal appraisals, observed comparable sales transactions and information gathered during pre-acquisition due diligence activities. The valuation approach considers the value of the property as if it were vacant. The values of furniture, fixtures and equipment are estimated by calculating their replacement cost and reducing that value by factors based upon estimates of their remaining useful lives.
The value allocated to acquired lease intangibles is based on management’s evaluation of the specific characteristics of each tenant’s lease. Characteristics considered by management in allocating these values include the nature and extent of the existing business relationships with the tenant, growth prospects for developing new business with the tenant, the remaining term of the lease and the tenant’s credit quality, among other factors.
The value of in-place leases and deferred leasing costs are amortized to expense over the remaining term of the respective leases, which range from less than a year to seventeen years. The amount allocated to acquire in-place leases is determined by calculating the estimated time to fill a hypothetically empty property to its stabilization level based on historical observed move-in rates for each property. The intangible assets are calculated by estimating the net cash flows of the in-place leases to be realized, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. The amount allocated to deferred leasing costs is determined by what the Company would have paid to a third-party to secure a new tenant reduced by the expired term of the respective lease. The value of tenant relationships is amortized over the remaining initial lease term and expected renewals, which is thirty seven years. The amount allocated to tenant relationships is the benefit resulting from the likelihood of a tenant renewing its lease. Acquired intangible assets generally have no residual value. Amortization expense related to these assets was $494,650 and $23,597,558 for the years ended December 31, 2023 and 2022, respectively.
d.Impairment of Real Estate
The Company reviews the carrying value of its real estate assets and intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such reviews indicate that the asset may be impaired, given that the carrying amount of an asset exceeds the sum of its expected future cash flows, on an undiscounted basis, the asset’s carrying amount is written down to its fair value. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. For the years ended December 31, 2023 and 2022, the Company did not record any impairment charges related to real estate assets.
e.Assets Held for Sale and Discontinued Operations
The Company classifies certain real estate assets as held for sale on the combined consolidated balance sheets once the criteria, as defined by GAAP, have been met. Real estate assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated. The Company reports discontinued operations when the disposal of real estate assets represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. No disposal met the definition of discontinued operations as of December 31, 2023 and 2022.
f.Environmental Matters
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was
11
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
responsible for, the presence or disposal of such substances. The Company recognizes a liability for environmental matters if it is probable a liability has been incurred and the amount of loss can be reasonably estimated. As of December 31, 2023 and 2022, the Company is not aware of any environmental matters that would have an impact on the combined consolidated financial statements.
g.Fair Value Measurements
In accordance with ASC Topic 820, Fair Value Measurement ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, in the principal or most advantageous market considering the highest and best use of an asset or nonperformance risk related to a liability, at the measurement date. The Company uses the most observable inputs that are available to measure fair value. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s views about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
•Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities;
•Level 2 - observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and
•Level 3 - unobservable inputs that are used when little or no market data is available.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk, where applicable, in the Company’s assessment of fair value.
The Company carries its mortgages payable, debt related to consolidated VIE, preferred equity investment, and senior secured term loan at cost, net of unamortized discount, debt issuance costs, and associated amortization, on the accompanying combined consolidated balance sheets.
h.Fair Value of Financial Instruments
Pursuant to ASC Topic 825, Financial Instruments ("ASC 825"), which provides entities with an option to report selected financial assets and liabilities at fair value, the Company has made an election to measure its unsecured consumer loans, residual interest in securitizations, CLOs, corporate bonds, interest rate caps, and reverse repurchase facilities at fair value on the combined consolidated balance sheets. We elected to use the fair value option to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Under this election, (a) unsecured consumer loans charged off, recoveries, and realized gains (losses), and (b) net increase or decrease in unrealized appreciation (depreciation) of the unsecured consumer loans, residual interest in securitizations, CLOs, corporate bonds, interest rate caps, and reverse repurchase facilities are recorded as fair value adjustments on the combined consolidated statements of operations.
i.Revenue Recognition
Rental revenues from residential, student housing, and self-storage tenants are recognized on a contractual basis, as lease periods for these investments are short‑term in nature. Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue. The Company recognizes reimbursement for utilities and other expenses recoveries as other revenue when earned. Rental revenues from industrial and commercial tenants are recognized on a straight-line basis over the term of the lease. The industrial and commercial leases contain rental increases at specified intervals. The Company records as an asset, and includes in rental revenues, deferred rent receivable that will be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Deferred rent receivable in the accompanying combined consolidated balance sheets includes the cumulative difference between rental revenue recorded on a straight-line basis and rents received from the tenants in accordance with the respective lease terms.
12
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
Rental income can be comprised of fixed and variable lease payments. The following table shows the details of rental income for the year ended December 31, 2023:
Fixed rent$318,320,196 
Less: write-off of tenant receivables(12,856,269)
Total rental income$305,463,927 
Minimum future rental receipts under the noncancelable portion of commercial and industrial tenant leases, assuming no new or renegotiated leases, for the next five years and thereafter are as follows:
YearRental Receipts
2024$556,468 
2025209,968 
2026209,968 
2027209,968 
2028209,968 
Thereafter$86,911 
Interest income is recognized on an accrual basis, in accordance with the terms of the loan agreement, to the extent that such amounts are expected to be collected. Generally, our unsecured consumer loans are placed on non-accrual status when the loan is greater than 60 days contractually delinquent or charged off, which may occur if a borrower were to declare bankruptcy prior to a loan being 60 days delinquent, at which point the associated interest receivable balance is reversed against the interest income on the combined consolidated statements of operations. For residual interests in securitizations, interest income is recognized using the effective interest method. Under this method, we recognize as interest income, over the life of the securities, the excess of the cash flows expected to be collected over the securities' carrying value. We update our estimates of expected cash flows quarterly and recognize changes in the calculated effective interest rate on a prospective basis. For certain investments held by the Company, cash not received for interest may be recorded through a payment-in-kind ("PIK"). Interest income recorded as PIK is recognized as income in the period earned.
Gains and losses on the sale of real estate are recognized pursuant to ASC 610, Gains and Losses from the Derecognition of Nonfinancial Assets. Any gain or loss on sale is measured based on the difference between the amount of consideration received and the carrying amount of the sold real estate asset, less costs to sell. For a partial sale of real estate resulting in a transfer of control, the Company measures any non-controlling interest retained at fair value, and recognizes a gain or loss on the difference between the fair value and the carrying amount of the real estate assets retained.
j.Cash and Cash Equivalents
The Company considers all highly-liquid instruments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents includes funds deposited with financial institutions and short-term, highly-liquid overnight investment in money market funds. As of December 31, 2023 and 2022, the Company had cash and cash equivalents of $66,567,915 and $35,212,438, respectively. As of December 31, 2023 and 2022, $19,072,596 and $69,524 of the cash and cash equivalents, respectively, disclosed on the combined consolidated balance sheets represent investments in money market funds, with the remainder held in deposit accounts, substantially all of which exceeded applicable insurance limits.
k.Restricted Cash
Restricted cash consists of cash escrowed under the operating agreements and mortgage agreements for debt service, real estate taxes, property insurance, and capital improvements and other restricted deposits. The Company had restricted cash of $36,248,212 and $37,869,284 as of December 31, 2023 and 2022, respectively. Total cash and cash equivalents, and restricted cash was $102,816,127 and $73,081,722 as of December 31, 2023 and 2022, respectively.
l.Unsecured Consumer Loans
Unsecured consumer loans consist of individual loans purchased from various originators of unsecured consumer loans ("Lending Platforms") under terms of the Company’s agreement with the respective platforms, who are sellers of the unsecured consumer loans that continue to service such loans. Unsecured consumer
13
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
loans made through the Lending Platforms are issued by WebBank, an FDIC-insured, Utah chartered industrial bank, except for loans issued by NBT. After funding a loan, WebBank sells the loan to the Lending Platform, without recourse, in exchange for the principal amount of the loan. Loans issued by NBT are purchased by the Company as part of a loan purchase and sale agreement between ACL PS, NBT and Springstone. All loans purchased are unsecured obligations of individual borrowers with a fixed interest rate and loan terms set between 12 and 84 months. Unsecured consumer loans are recorded on the date purchased by the Company, which is generally at least fifteen days after origination. Unsecured consumer loans are charged off in the month that the loan becomes greater than 120 days contractually delinquent or in the month that the borrower has entered bankruptcy, at which point the outstanding principal amount is written off against the total balance of the unsecured consumer loans on the combined consolidated balance sheets. This results in a fair value adjustment on the combined consolidated statements of operations. Recoveries on charged off loans and sales of charged off loans to third-parties are recorded as received, net of fees.
m.Due from Lending Platforms
LendingClub is an online marketplace lending platform from which we purchase unsecured consumer loans. The Due from LendingClub Corporation amounts presented on the combined consolidated balance sheets represent cash deposited at LendingClub.
n.Accounts Receivable Deemed Uncollectible
The Company monitors its accounts receivable on a tenant-by-tenant basis and if cash collection is deemed not probable, the Company establishes a full reserve for the individual tenant's outstanding balance. For the remaining receivable balance, the Company establishes and maintains a general reserve reflecting the Company's expectation that a portion of the operating receivables will not be collected. As of December 31, 2023 and 2022, $5,172,932 and $3,129,901, respectively, was deemed uncollectible and is included as accounts receivable within the combined consolidated balance sheets.
o.Asset Management and Management Services
Management fee expenses are recognized when incurred in accordance with the terms of each respective management agreement.
p.Debt Issuance Costs and Unamortized Debt Discounts
The Company defers costs incurred in connection with obtaining financing and amortizes the costs using the straight‑line method, which approximates the effective interest rate method, over the terms of the related debt as a component of interest expense. The Company also recognizes a debt discount or premium in connection with mortgages assumed at fair value in accordance with ASC 805. Debt issuance costs and unamortized debt discounts have been presented as a direct deduction to our mortgages payable, mortgages payable related to real estate assets held for sale, debt related to consolidated VIE, and senior secured term loans in the accompanying combined consolidated balance sheets.
At December 31, 2023 and 2022, the Company had net debt issuance costs and debt discounts of $26,351,634 and $19,258,121, respectively. Amortization of debt issuance costs and debt discounts of $8,240,872 and $7,440,085 is included in interest expense in the combined consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.
q.Non-controlling Interests
Non-controlling interests are comprised of the Company’s joint venture partners’ interests in the joint ventures in real estate properties that the Company consolidates. The Company reports its joint venture partners’ interests in its consolidated real estate joint ventures and other subsidiary interests held by third-parties as non-controlling interests. The Company records these non-controlling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investments’ net income or loss and equity contributions and distributions. These non-controlling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are generally allocated pro rata based on the respective ownership percentages until the venture reaches certain performance measures, at which time the other venture party will be entitled to preferred distributions (profit interests).
r.Income Taxes
The Company elected to be taxed as a REIT for U.S. federal income tax purposes, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). The Company believes it operates in such a manner as to qualify for treatment as a REIT for federal income tax purposes. Accordingly, the Company
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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
generally will not be subject to federal income tax, provided that distributions to its stockholders equal at least the amount of its taxable income. A REIT is subject to a number of organizational and operational requirements, including, among others, a requirement that it currently distributes at least 90% of its taxable income to stockholders, subject to certain adjustments. If the Company fails to qualify as a REIT in any taxable year without the benefit of certain relief provisions, it will be subject to federal and state income taxes on its taxable income at regular corporate income tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state or local taxes on its income, property or net worth and federal taxes and excise taxes on its undistributed income. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiaries ("TRS") will be fully subject to federal, state and local income taxes.
The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, Income Taxes. Under the liability method, deferred income taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS income, assets and liabilities. For the years ended December 31, 2023 and 2022, several of the Company's subsidiaries were considered taxable corporations for U.S. federal and state income tax purposes. The taxable U.S. corporate subsidiaries are subject to corporate level U.S. federal, state and local income tax on their net taxable income.
ASC 740, Income Taxes ("ASC 740") provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the combined consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of December 31, 2023 and 2022, we did not have a liability for any unrecognized tax benefits. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof. We file tax returns for U.S. federal, various states and foreign jurisdictions. The statute of limitation is open for all jurisdictions for tax years beginning in 2018.
The Company’s policy is to classify interest and penalties on tax positions, if any, as expenses. For the years ended December 31, 2023 and 2022, no interest and penalties have been accrued.
s.Concentration of Counterparty Risk and Credit Risk
In the normal course of its business, the Company encounters counterparty risk and credit risk. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, principal and interest outstanding on unsecured consumer loans, and amounts deposited with each of the Company's Lending Platforms. Counterparty risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.
t.Servicing, Collection and Upfront Fees
The Company incurs a monthly servicing fee for each outstanding unsecured consumer loan, which is payable to the Lending Platforms for managing payments from borrowers and maintaining loan account portfolios. The Company incurs collection fees on amounts recovered from delinquent loans, which is payable to the Lending Platforms. The Company incurs an upfront fee on unsecured consumer loans purchased from Avant. All servicing, collection and upfront fees are expensed as incurred.
u.Collateralized Loan Obligations ("CLOs")
The Company holds investments in CLOs which are subordinated debt interests in syndicated loans managed by third-party collateral managers with industry experience. The outstanding investments range in expected maturity from October 2026 to April 2032 and pays interest based on the three-month SOFR (“3MS”) plus 5.20% to 9.23%.
CLOs purchased are recorded on the trade date. Primary CLOs purchased either from the collateral manager or the broker are recorded on the settled date, to reflect the potential changes, updates or resizing of the position, due to the long-term nature of settlement. The typical settlement time for Depository Trust Company bonds is three days. Amortization of an original issue discount is calculated to expected maturity date, based on projected cash flows at the time of purchase, and recorded over the expected life of the bond.
Gains or losses from the sale of CLOs are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale. Restructured or permanently impaired CLOs are recorded in the period of measurement and recorded on the combined consolidated statements of operations as
15
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
a realized gain or loss and amortized to expected maturity based on the available cash flows at the time of measurement. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
v.Corporate bonds
The Company holds corporate bonds comprised of investment grade and high yield corporate bonds including performing credit strategies focused on income-oriented, senior loan and bond investment strategies targeting U.S. issuers.
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. Gains or losses from the sale of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
w.Interest rate caps
In order to manage the risks associated with the variable rate financing of the mortgage, the Company may enter into various interest rate cap agreements. The cap agreements have initial notional values equal to the original loan amount of the related mortgages.
Derivative instruments not meeting the criteria for hedge accounting are recorded at fair value on the combined consolidated balance sheets with any change in fair value reflected in the combined consolidated statement of operations in the period of change. The fair value of the interest rate caps as of December 31, 2023 and 2022 was $20,203,768 and $25,724,128, respectively. For the year ended December 31, 2023 and 2022, there was loss of $7,684,262 and gain of $14,067,690, respectively, recorded for the fair value of the interest rate caps.
x.Recent accounting pronouncements
In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016-13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current GAAP. In November 2018, the FASB issued ASU 2018-19, which clarified that receivables arising from operating leases are not within the scope of ASC Topic 326, and instead, impairment of receivables arising from operating leases should be accounted for under the scope of ASC Topic 842, Leases. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. The Company adopted the provisions of ASU 2016-13 on January 1, 2022. This adoption did not have a material impact on the combined consolidated financial statements.
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04 establishing Accounting Standards Codification ("ASC") Topic 848, Reference Rate Reform, and in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, "ASC 848"). ASC 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of ASC 848 to December 31, 2024. As of December 31, 2023, the Company has transitioned LIBOR- indexed debt and derivatives to SOFR.
3.Recent Real Estate Transactions
Acquisition of Real Estate Assets Held for Investment
During 2023, the Company did not acquire any properties.
During 2022, the Company acquired the following properties
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Kokomo, a multi-family property located in Kokomo, IN for an aggregate purchase price of $20,500,000 exclusive of acquisition and closing costs.
16
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
For the purchase of this property, the Company obtained bank financing of $12,753,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $911,917.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Stillwater, a multi-family property located in Stillwater, OK for an aggregate purchase price of $26,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $15,328,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,244,358.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Pueblo, a multi-family property located in Pueblo, CO for an aggregate purchase price of $31,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $20,166,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,307,918.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Cheyenne, a multi-family property located in Cheyenne, WY for an aggregate purchase price of $27,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $17,656,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,158,374.
▪On March 29, 2022, the Company, together with a joint venture partner, acquired Southport Crossing, a multi-family property located in Indianapolis, IN for an aggregate purchase price of $48,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $35,600,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,141,881.
▪On March 18, 2022, the Company acquired Rutland Place, a multi-family property located in Macon, GA for an aggregate purchase price of $29,750,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $22,500,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Lancaster Place, a multi-family property located in Calera, AL for an aggregate purchase price of $37,550,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $28,350,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Twin Oaks, a multi-family property located in Hattiesburg, MS for an aggregate purchase price of $44,850,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $33,830,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Enclave at Wolfchase, a multi-family property located in Cordova, TN for an aggregate purchase price of $82,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $60,000,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
The below listed 2022 acquisitions have been accounted for as asset acquisitions. The purchase price was allocated to the acquired assets and liabilities based on their estimated fair values at the date of acquisition. The Company allocated the purchase price, plus capitalized acquisition costs, of the properties acquired during 2022 as follows:
PropertyLandBuildingImprovementsFF&ELease IntangiblesTotal Purchase Price
2022 Acquisitions:
Enclave at Wolfchase$4,284,151 $73,000,327 $1,627,778 $520,290 $3,496,227 $82,928,773 
Twin Oaks1,631,277 40,379,141 1,235,591 309,137 1,875,969 45,431,115 
Lancaster Place2,106,551 33,038,965 951,016 249,514 1,625,929 37,971,975 
Rutland Place1,852,142 26,142,545 607,972 234,807 1,343,056 30,180,522 
Southport Crossing2,660,957 42,356,055 617,900 1,008,572 2,070,961 48,714,445 
Cheyenne1,371,052 25,432,206 203,431 316,397 949,190 28,272,276 
Pueblo1,532,088 29,211,806 — 408,557 1,021,392 32,173,843 
Stillwater3,720,206 21,896,069 — 318,876 850,332 26,785,483 
Kokomo389,928 19,671,250 58,809 292,446 779,856 21,192,289 
Total 2022:$19,548,352 $311,128,364 $5,302,497 $3,658,596 $14,012,912 $353,650,721 
17
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The weighted average amortization period of acquired in-place leases was approximately six months for the year ended December 31, 2022.
Summarized information regarding properties sold during the years ended December 31, 2023 and 2022 is set forth in the table below:
PropertyDisposition DateAsset TypeGross Sale PriceGain on Sale
2022 Dispositions:
Verandas at Rocky Ridge2/1/2022Multi-Family$34,670,000 $20,956,684 
Total 2022:$34,670,000 $20,956,684 
2023 Dispositions:
West 2210/27/2023Student Housing$89,000,000 $43,417,987 
Total 2023:$89,000,000 $43,417,987 
4.Real Estate Assets
The Company’s ownership interests in real estate properties range from 67% to 100% via either direct ownership or ownership of a property owning entity. Through its ownership interests, the Company controls and therefore consolidates the properties and property owning entities. The interest owned by the other joint venture partner is reflected as non-controlling interest in these combined consolidated financial statements.
The Company’s real estate assets consisted of the following as of December 31, 2023 and 2022:
PropertyAcquisition DateOwnership PercentageAsset TypeLocationReal Estate Assets, Net of Accumulated Depreciation
20232022
Filet of Chicken*10/24/2012100.0%IndustrialForest Park, GA$3,904,473 $4,064,982 
Arlington Park5/8/201393.3%Multi-FamilyMarietta, GA9,139,353 8,616,016 
Taco Bell, OK6/4/2014100.0%CommercialYukon, OK1,027,561 1,080,637 
Taco Bell, MO6/4/2014100.0%CommercialMarshall, MO828,274 872,568 
Abbie Lakes9/30/201479.1%Multi-FamilyCanal Winchester, OH9,896,318 10,070,645 
Brooksedge9/30/201479.1%Multi-FamilyReynoldsburg, OH9,319,103 9,574,690 
Reserve at Abbie Lakes9/30/201479.1%Multi-FamilyCanal Winchester, OH21,904,002 22,577,192 
Lake's Edge9/30/201479.1%Multi-FamilyPickerington, OH9,408,695 9,709,282 
Sunbury Ridge9/30/201479.1%Multi-FamilyColumbus OH11,031,109 11,375,360 
Stonebridge9/30/201479.1%Multi-FamilyBlacklick, OH15,647,208 16,284,411 
Jefferson Chase9/30/201479.1%Multi-FamilyBlacklick, OH10,080,770 10,286,606 
Lake Ridge10/29/201479.1%Multi-FamilyHilliard, OH5,394,500 5,647,294 
Orchard Village*11/5/201580.0%Multi-FamilyAurora, IL27,081,074 28,425,777 
Sterling Crimson9/28/201667.0%Student HousingTuscaloosa, AL41,332,877 42,362,222 
Hawks Ridge9/28/201667.0%Student HousingIowa City, IA26,089,935 26,762,353 
Islander Village9/28/201667.0%Student HousingCorpus Christi, TX10,436,617 10,875,899 
Campus Quarters9/28/201667.0%Student HousingCorpus Christi, TX13,943,798 14,277,046 
District on Luther9/28/201667.0%Student HousingCollege Station, TX30,373,105 30,507,794 
West 229/28/201667.0%Student HousingKennesaw, GA— 45,474,999 
Legacy9/28/201667.0%Student HousingStatesboro, GA5,659,634 5,929,116 
University Crossing9/28/201667.0%Student HousingManhattan, KS16,306,972 16,858,191 
Seasons1/30/201792.5%Multi-FamilyLaurel, MD161,985,415 164,652,567 
Villages of Baymeadows10/31/201792.5%Multi-FamilyJacksonville, FL 82,257,521 82,038,859 
Casa del Mar10/31/201792.5%Multi-FamilyJacksonville, FL 13,616,312 13,388,394 
Silver Oaks11/8/201792.5%Multi-FamilySouthfield, MI14,350,028 14,088,499 
Sutton Place11/8/201792.5%Multi-FamilySouthfield, MI45,837,049 43,808,107 
Steeplechase1/9/201892.5%Multi-FamilyLargo, MD39,329,697 40,135,930 
Olentangy Commons6/1/201892.5%Multi-FamilyColumbus, OH102,151,039 103,376,766 
Villages of Wildwood7/20/201892.5%Multi-FamilyFairfield, OH43,375,585 43,465,102 
Falling Creek8/8/201890.0%Multi-FamilyRichmond, VA21,167,327 21,812,770 
Crown Pointe8/30/201880.0%Multi-FamilyDanbury, CT94,814,557 96,754,311 
Lorring Park10/30/201880.0%Multi-FamilyForestville, MD55,243,926 56,642,818 
Hamptons1/9/201992.5%Multi-FamilyBeachwood, OH74,459,472 76,343,120 
The Isle6/28/201992.5%Multi-FamilyOrlando, FL24,016,497 24,524,503 
Druid Hills7/30/201996.3%Multi-FamilyAtlanta, GA75,288,872 76,552,758 
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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
PropertyAcquisition DateOwnership PercentageAsset TypeLocationReal Estate Assets, Net of Accumulated Depreciation
20232022
Parcstone10/15/201988.0%Multi-FamilyFayetteville, NC38,871,852 40,094,024 
Stone Ridge10/15/201988.0%Multi-FamilyFayetteville, NC19,336,157 19,972,653 
Sterling Place10/28/201992.5%Multi-FamilyColumbus, OH40,453,291 40,196,735 
Hampton on Jupiter11/2/202080.0%Multi-FamilyDallas, TX34,175,498 35,123,195 
Palmetto Creek11/10/202090.0%Multi-FamilyNorth Charleston, SC31,094,893 31,299,438 
Valora at Homewood11/19/202090.0%Multi-FamilyHomewood, AL78,484,621 73,413,788 
The Dylan at Fairburn12/14/2020100.0%Multi-FamilyFairburn, GA47,783,160 48,589,466 
The Dylan at Grayson12/14/2020100.0%Multi-FamilyGrayson, GA43,674,038 44,488,009 
Chimneys of Greenville1/27/2021100.0%Multi-FamilyTaylors, SC17,361,445 18,255,507 
The Laurel Apartments2/26/202196.3%Multi-FamilySpartanburg, SC54,727,859 54,304,114 
The Willows Apartments2/26/202196.3%Multi-FamilySpartanburg, SC20,092,408 20,894,148 
The Edge at Clear Lake3/12/202180.0%Multi-FamilyWebster, TX31,762,298 32,889,330 
Pear Orchard6/28/202180.0%Multi-FamilyRidgeland, MS46,840,841 47,662,565 
Lakeshore Landing6/28/202180.0%Multi-FamilyRidgeland, MS20,882,326 20,879,577 
Reflection Pointe6/28/202180.0%Multi-FamilyFlowood, MS38,311,181 38,603,634 
Crosswinds6/28/202180.0%Multi-FamilyPearl, MS40,131,416 41,368,894 
Elliot Norcross11/30/202190.0%Multi-FamilyNorcross, GA127,042,727 125,570,287 
West Vue12/30/202190.0%Multi-FamilyOrlando, FL81,413,379 83,173,770 
Enclave at Wolfchase3/18/2022100.0%Multi-FamilyCordova, TN76,391,342 77,513,083 
Twin Oaks3/18/2022100.0%Multi-FamilyHattiesburg, MS42,968,788 42,954,111 
Lancaster Place3/18/2022100.0%Multi-FamilyCalera, AL35,116,710 35,827,253 
Rutland Place3/18/2022100.0%Multi-FamilyMacon, GA27,745,458 28,208,461 
Southport Crossing3/29/202292.5%Multi-FamilyIndianapolis, IN47,177,090 47,412,735 
Cheyenne5/26/202290.0%Senior LivingCheyenne, WY26,504,526 26,964,513 
Pueblo5/26/202290.0%Senior LivingPueblo, CO30,145,406 30,780,715 
Stillwater5/26/202290.0%Senior LivingStillwater, OK25,406,324 25,693,236 
Kokomo5/26/202290.0%Senior LivingKokomo, IN19,767,727 20,148,278 
Total net real estate assets$2,270,361,436 $2,341,499,103 
*Properties are held for sale and disclosed on the consolidated balance sheets.
5.Lease Intangibles
Lease intangibles consist of the following:
As of December 31, 2023As of December 31, 2022
Lease IntangiblesAccumulated AmortizationLease Intangibles, netLease IntangiblesAccumulated AmortizationLease Intangibles, net
In-place leases$106,347,193 $(106,046,555)$300,638 $109,870,457 $(104,818,996)$5,051,461 
Above-market leases15,689,752 (955,734)14,734,018 10,989,653 (687,180)10,302,473 
Below-market leases— — — — — — 
Tenant relationships239,208 (71,870)167,338 239,208 (65,433)173,775 
Deferred leasing costs635,325 (411,197)224,128 635,325 (372,685)262,640 
     Total$122,911,478 $(107,485,356)$15,426,122 $121,734,643 $(105,944,294)$15,790,349 
Future amortization expense for the Company’s lease intangibles is as follows:
YearAmortization Expense
2024$95,687 
202595,686 
202695,686 
202795,686 
202895,686 
Thereafter$14,947,691 
19
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
6.Real Estate Assets Held for Sale
As of December 31, 2023, the real estate assets held by Filet of Chicken and Orchard Village met the criteria to be classified as held for sale. The Company entered into a purchase and sale agreement with an unrelated third-party on January 26, 2024 and May 13, 2024, respectively. Filet of Chicken sale closed on May 9, 2024, resulting in the recognition of a gain in the amount of $7,370,352. Orchard Village sale closed on May 30, 2024, resulting in the recognition of a gain in the amount of 20,683,786.
As of December 31, 2022, no real estate assets met the criteria to be classified as held for sale.
Below is a summary of the major classes of real estate assets classified as held for sale:    
Real Estate Assets Held for SaleDecember 31, 2023December 31, 2022
Land$5,229,284 $— 
Building and improvements39,088,662 — 
Furniture, fixtures, and equipment1,604,198 — 
Less: accumulated depreciation(14,936,599)— 
Total net real estate assets held for sale$30,985,545 $— 
7.Preferred Equity Investments
On November 14, 2022, the Company, together with a joint venture partner, acquired Terraces at Perkins Rowe, a multi-family property located in Baton Rouge, LA for an aggregate purchase price of $41,400,000. The investment is structured as an investment that incorporates debt-like return metrics. The Company receives SOFR + 2% cash return each month with additional 7% paid-in-kind (PIK) accrued to the Company’s outstanding capital balance. While there is no stated maturity date for this investment, the Company has a put option at the end of 5-year hold period that it intends to exercise. The de facto maturity date is November 14, 2027. During the year ended 2023 and 2022, the Company recognized total interest income of $1,921,054 and $240,425 from preferred equity investment. The Company's preferred equity investment meets the definition of held-to-maturity debt security, which are reported at amortized cost. The Company determined that as of December 31, 2023 and 2022, fair value of the preferred equity investment approximated its cost of $14,018,973 and $13,073,865, respectively.
8.Involuntary Conversions
During 2023, the Company did not record any gain or loss from involuntary conversion of real estate assets.
During 2022, the Company wrote off real estate assets from fire damages. As of December 31, 2022, proceeds of $3,117,599 were received. For the year ended December 31, 2022, a gain from involuntary conversion of $1,531,629 was recorded in relation to the assessed outcome of the damages and is included as gain/loss on involuntary conversions on the combined consolidated statements of operations.
9.Unsecured Consumer Loans
The Company’s portfolio of unsecured consumer loans consists of a large number of small balance homogeneous loans. As of December 31, 2023, the portfolio consisted of 27 loans having an average outstanding principal balance of $3,037 and a maximum balance of $50,000 at the time of origination. As of December 31, 2023, the unsecured consumer loans were issued with stated interest rates ranging from 9.0% to 25.0% with a weighted average interest rate of 15.4% based on outstanding principal of the unsecured consumer loans. As of December 31, 2022, the portfolio consisted of 216 loans having an average outstanding principal balance of $2,430 and maximum balance of $50,000 at the time of origination. As of December 31, 2022, the unsecured consumer loans were issued with stated interest rates ranging from 8.0% to 36.0% with a weighted average interest rate of 18.6% based on outstanding principal of the unsecured consumer loans.
The ability of the borrowers of the unsecured consumer loans to repay the Company are affected by their continuing financial stability. The credit risk of the unsecured consumer loans and the residual interest in securitizations is considered to be higher than for secured loans.
The Lending Platforms classify the unsecured consumer loans into separately identified pools by rating ("Rating"), which indicates the expected level of risk associated with the loan. Each Rating corresponds to an estimated average annualized loss rate range as of the time the Rating is given. The estimated annual loss rate for each loan is based primarily on a proprietary custom risk model developed by each of the Lending Platforms using their respective historical data, borrower specific factors and Fair Isaac Corporation score (“FICO score”) obtained from a credit
20
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
reporting agency. As part of the Rating determination, the Lending Platforms also consider borrower specific factors such as, but not limited to, credit related inquiries in the last six months and debt-to-income ratio.
Ratings are not consistent between Lending Platforms; as such the Company stratifies its unsecured consumer loans into separately identified pools based on the FICO score obtained from a credit reporting agency and as provided by each Lending Platform at origination. The stratified pools are designated "Super Prime," "Prime" or "Near Prime," and defined as follows: Super Prime loans as loans to borrowers with a FICO score of 720 or greater, Prime Loans as loans to borrowers with a FICO score of between 660 and 719 and Near Prime loans as loans to borrowers with a FICO score of between 600 and 659.
The following table summarizes the Company's unsecured consumer loans held as of December 31, 2023:
CategoryOutstanding PrincipalFair ValueInterest Rate RangeWeighted Average Interest Rate*
Super Prime$45,080 $45,098 9.0% - 20.5%13.4%
Prime36,932 34,401 13.5% - 25.0%17.9%
Near Prime— — 0.0% - 0.0%—%
Total Loans$82,012 $79,499 15.4%
* Based on outstanding principal of the unsecured consumer loans.
The following table summarizes the Company's unsecured consumer loans held as of December 31, 2022:
CategoryOutstanding PrincipalFair ValueInterest Rate RangeWeighted Average Interest Rate*
Super Prime$182,638 $182,194 8.0% - 20.5%12.2%
Prime211,193 204,355 12.0% - 25.0%19.1%
Near Prime131,088 134,397 19.5% - 36.0%26.8%
Total Loans$524,919 $520,946 18.6%
* Based on outstanding principal of the unsecured consumer loans.
The following table summarizes the delinquency status of the unsecured consumer loans:
December 31, 2023December 31, 2022
Delinquency StatusOutstanding PrincipalFair Value% of TotalOutstanding PrincipalFair Value% of Total
Current$75,846 $75,693 92.50 %$488,255 $491,804 93.00 %
1 - 30 days3,832 2,541 4.70 %23,907 21,852 4.60 %
31 - 60 days1,385 1,265 1.70 %5,877 4,623 1.10 %
61 - 90 days949 — 1.10 %6,879 2,667 1.30 %
91 - 120 days— — — %— — — %
Total Loans$82,012 $79,499 100.00 %$524,918 $520,946 100.00 %
10.Collateralized Loan Obligations
NGL invests in the junior debt tranches of collateralized loan obligation (“CLO”) vehicles that in turn own pools of Senior Secured Loans. The credit risk of a CLO is dependent on the underlying assets within the portfolio. For “traditional” CLOs, the collateral pool primarily consists of first lien, senior secured broadly syndicated bank loans (usually at least 90% of the total portfolio), and it may include a predetermined allowable portion of other asset types such as second lien bank loans (which are highly leveraged) and unsecured debt, as well as middle market loans.
Some CLOs consist predominantly of middle market loans as the underlying collateral. The average rating of the underlying collateral is typically single-B, and the leveraged bank loans are typically floating rate, based on SOFR.
The securities held at NGL are B or BB rated mezzanine debt that pay a quarterly interest coupon, based on the notional balance held and a fixed spread plus SOFR, which resets after each payment. The principal is returned through the CLO waterfall at the earlier of the call date or maturity. As of December 31, 2023, based on outstanding notional balance, 12.3% of the portfolio was invested in single-B rated tranches and 87.7% of the portfolio in BB rated tranches with a fixed spread plus LIBOR and/or SOFR at the most recent reset date.
21
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
As of December 31, 2023, the outstanding investment of CLOs comprised of 97 investments with a fair value of $418,761,852 and a face value of $447,833,784. The average outstanding note is approximately $4,617,000 with an expected maturity date ranging from October 2026 to April 2032 and a weighted average expected maturity of 6.0 years as of December 31, 2023. Coupons range from three-month SOFR (“3MS”) plus 5.20% to 9.23% with a weighted average coupon of 3MS + 6.63%.
As of December 31, 2022, the outstanding investment of CLOs comprised of 94 investments with a fair value of $424,746,173 and a face value of approximately $448,235,434. The average outstanding note is approximately $4,768,000 with a stated maturity date ranging from April 2026 to October 2033 and a weighted average stated maturity of 6.0 years as of December 31, 2022. Coupons range from three-month LIBOR (“3ML”) plus 5.20% to 9.23% with a weighted average coupon of 3ML + 6.93%.
The Company purchased $14,876,274 and $186,569,431, respectively, of CLOs from various third-party brokers during the year ended December 31, 2023 and 2022, respectively, which are held by the Bank of New York Mellon as custodian.
11.Fair Value of Financial Instruments
The fair value of a financial instrument is defined as the price that we would receive upon selling an asset or pay to transfer a liability in an orderly transaction to an independent buyer in the principal or most advantageous market in which that financial instrument is transacted.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.
Most of our financial instruments measured at fair value on a recurring basis were classified as Level 3 as of December 31, 2023 and 2022. During the year ended December 31, 2022, NGL’s CLO portfolio was transferred from Level 2 to Level 3 at January 1, 2022 due to the volatility of the observable inputs, which were caused primarily by rising interest rates. The net change in unrealized (losses) gains on the investments that use Level 3 inputs was $1,276,630 as of December 31, 2022.
During the year ended December 31, 2023, NGL’s repurchase agreements were transferred from Level 3 to Level 2 at January 1, 2023 and are held at cost.

Unsecured Consumer Loans, Residual Interests in Securitizations and Collateralized Loan Obligations
The unsecured consumer loans, residual interests in securitizations, and collateralized loan obligations do not trade in an active market with readily observable prices. For the unsecured consumer loans and residual interests in securitizations, fair value is estimated by using a discounted cash flow methodology based upon significant unobservable inputs, such as loss adjusted discount rates and projected loss rates. The loss adjusted discount rates are used to discount the estimated future cash flows expected to be received from the underlying unsecured consumer loans, which includes both future principal and interest payments. The projected loss rates are based on the perceived credit risk inherent in each Rating of the unsecured loan portfolio. See Note 9 for details of the unsecured consumer loans.
NGL qualifies as an investment company pursuant to ASC Topic 946, Financial Services-Investment Companies. Accordingly, the underlying CLO investments and repurchase agreements are carried at fair value and were retained in consolidation by the Company.
In determining the range of values for our investments in CLOs, management utilizes an independent valuation firm that uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment.
22
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The significant unobservable input used to value the CLOs is the discount rate applied to the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest payments. Included in the consideration and selection of the discount rate are the following factors: risk of default, comparable investments, and call provisions. An increase or decrease in the discount rate applied to projected cash flows, where all other inputs remain constant, would result in a decrease or increase, respectively, in the fair value measurement.

The interests we have acquired in CLOs are generally thinly traded or have only a limited trading market. CLOs are typically privately offered and sold, even in the secondary market. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLO residual interests carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) our investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO investment or unexpected investment results. Our net asset value may also decline over time if our principal recovery with respect to CLO debt is less than the cost of those investments. Our CLO investments and/or the CLOs’ underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on our value. These investments are classified as Level 3 in the fair value hierarchy.

Corporate Bonds, Interest Rate Caps and Repurchase Agreements
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. The typical settlement time for Depository Trust Company bonds is three days. Gains or losses from the sale or call of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale or call. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
On a recurring basis, the Company measures its interest rate cap at its estimated fair value. In determining the fair value of the Company's derivatives, the Company uses the present value of expected cash flows based on market observable interest rate yield curve commensurate with the term of the instrument. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and that of the respective counterparty in the fair value measurement. The credit valuation adjustments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by either the respective counterparty or the Company. However, the Company determined that as of December 31, 2023, the impact of the credit valuation adjustments were not significant to the overall valuation of the derivatives. As a result, the fair value of the derivative is considered to be based primarily on Level 2 inputs.
Repurchase agreements are collateralized with a portion of the CLO investments and the carrying value of the repurchase agreement approximates fair value as of December 31, 2023.
The following table shows the fair value of our unsecured consumer loans, residual interest in securitizations, CLOs, interest rate caps, corporate bonds, and repurchase agreements, disaggregated into the three levels of the ASC 820 valuation hierarchy as of December 31, 2023.
Level 1Level 2Level 3Total
Assets
Unsecured consumer loans$— $— $79,499 $79,499 
Residual interests in securitizations— — 2,725,658 2,725,658 
Collateralized loan obligations— — 418,761,852 418,761,852 
Corporate bonds— 16,484,131 — 16,484,131 
Interest rate cap— 20,203,768 — 20,203,768 
Total investments at fair value$— $36,687,899 $421,567,009 $458,254,908 
Liabilities
Reverse repurchase facilities$— $196,336,000 $— $196,336,000 
Total liabilities at fair value$— $196,336,000 $— $196,336,000 
23
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
For the year ended December 31, 2023, the Company had charge-offs of $0 and recoveries of $0 to Level 3 unsecured consumer loans. Also, the Company borrowed $828,000 and repaid $(610,000) relating to repurchase agreements during 2023.
The following table shows the fair value of our unsecured consumer loans, residual interest in securitizations, CLOs, interest rate caps, corporate bonds, and repurchase agreements, disaggregated into the three levels of the ASC 820 valuation hierarchy as of December 31, 2022.
Level 1Level 2Level 3Total
Assets
Unsecured consumer loans$— $— 520,946 $520,946 
Residual interests in securitizations— — 8,540,118 8,540,118 
Collateralized loan obligations— — 424,746,173 424,746,173 
Corporate bonds— 11,616,950 — 11,616,950 
Interest rate cap— 25,724,128 — 25,724,128 
Total investments at fair value$— $37,341,078 $433,807,237 $471,148,315 
Liabilities
Reverse repurchase facilities$— $— $196,118,000 $196,118,000 
Total liabilities at fair value$— $— $196,118,000 $196,118,000 
For the year ended December 31, 2022, the Company had charge-offs of $(285,500) and recoveries of $463,304 to Level 3 unsecured consumer loans. In addition, the Company borrowed $87,315,000 and repaid $(1,247,000) relating to repurchase agreements during 2022.
Refer to Note 9 for details of the unsecured consumer loans.
The ranges of unobservable inputs used in the fair value measurement of our Level 3 financial instruments as of December 31, 2023 and 2022 were as follows:
December 31, 2023
Assets/LiabilitiesFair ValueValuation TechniqueUnobservable InputRangeWeighted Average
Unsecured consumer loans$79,499  Discounted cash flow Loss-adjusted discounted rate7.70% - 9.87%8.05%
Projected prepay rate0.0% - 7.46%5.56%
Projected loss rate0.0% - 3.18%2.84%
Recovery rate7.50% - 7.50%7.50%
Residual interests in securitizations$2,725,658  Discounted cash flow Forecasted prepay % of current balance32.28% - 33.32%32.87%
Forecasted default % of current balance14.03% - 15.68%14.75%
Severity92.50% - 92.50%92.50%
Discount rate20.00% - 20.00%20.00%
Collateralized loan obligations$418,761,852 Discounted cash flowDiscount rate11.05% - 24.02%12.93%
Weighted average life2.1 - 4.64.0
24
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
December 31, 2022
Assets/LiabilitiesFair ValueValuation TechniqueUnobservable InputRangeWeighted Average
Unsecured consumer loans$520,946 Discounted cash flowLoss-adjusted discounted rate7.60% - 13.83%8.40%
Projected prepay rate1.24% - 12.09%7.63%
Projected loss rate0.11% - 8.25%5.13%
Recovery rate7.50% - 11.00%8.26%
Residual interests in securitizations$8,540,118 Discounted cash flowForecasted prepay % of current balance5.67% - 30.56%30.14%
Forecasted default % of current balance6.08% - 14.54%14.01%
Severity89.00% - 92.50%92.48%
Discount rate10.00% - 15.00%14.97%
Collateralized loan obligations$424,746,173 Discounted cash flowDiscount rate10.60% - 17.00%12.70%
Weighted average life2.5 - 5.04.3
Reverse repurchase facilities$196,118,000 Cost, which approximates fair value———
12.Corporate Bonds
The Company holds corporate bonds comprised of investment grade and high yield corporate bonds including performing credit strategies focused on income-oriented, senior loan and bond investment strategies targeting U.S. issuers.
The outstanding maturity is November 2026 including a bi-annual fixed interest coupon of 7.00%. Relevant details for the corporate bonds as of December 31, 2023 and 2022 are as follows:
December 31, 2023
Purchase DateSecurityFace Value (Par)PriceNet Purchase PriceMaturityCoupon
12/7/2021WRLD$3,000,000 99.75$2,992,500 11/1/20267.00%
12/16/2021WRLD5,000,000 100.005,000,000 11/1/20267.00%
2/15/2022WRLD7,000,000 94.006,580,000 11/1/20267.00%
3/23/2022WRLD2,572,000 87.752,256,930 11/1/20267.00%
3/30/2022WRLD1,250,000 88.251,103,125 11/1/20267.00%
4/4/2022WRLD310,000 88.25273,575 11/1/20267.00%
$19,132,000 $18,206,130 
December 31, 2022
Purchase DateSecurityFace Value (Par)PriceNet Purchase PriceMaturityCoupon
12/7/2021WRLD$3,000,000 99.75$2,992,500 11/1/20267.00%
12/16/2021WRLD5,000,000 100.005,000,000 11/1/20267.00%
2/15/2022WRLD7,000,000 94.006,580,000 11/1/20267.00%
3/23/2022WRLD2,572,000 87.752,256,930 11/1/20267.00%
3/30/2022WRLD1,250,000 88.251,103,125 11/1/20267.00%
4/4/2022WRLD310,000 88.25273,575 11/1/20267.00%
$19,132,000 $18,206,130 
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. The typical settlement time for Depository Trust Company bonds is three days. Gains or losses from the sale or call of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date
25
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
of sale or call. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
13.Reverse Repurchase Facilities
On October 30, 2019, NGL entered into a Master Repurchase Agreement (the “Repo Agreement”) with Nomura Securities International, Inc. (“Nomura”) to provide a borrowing facility ("Repo") from which NGL could pledge securities as collateral and borrow up to $105,000,000 under agreed upon terms. Under the terms of the Repo Agreement, NGL received cash up to 75% of the market value of securities with an interest charge of a minimum of 1.80% plus SOFR, calculated as T-2 days for the reference rate. The term of the Repo is two years from commencement date subject to eight rolling three-month periods where upon each reset date, the entire Repo is closed and reopened, and borrowed interest is due to Nomura. Securities in the Repo can be purchased back at any time, subject to maintaining the agreed upon minimum draw on the Repo: 60% drawn during the ramp up period, as defined in the Repo Agreement, ending January 31, 2020, (subsequently extended to March 15, 2020 in the January 15, 2020 amended and restated Repo Agreement), and 90% drawn subsequent to the end of the ramp up period. Should the value of the securities drop to a loan to value ("LTV") greater than 77.5%, NGL Limited must contribute cash or securities to Nomura’s collateral account until the combined value is below 70%.
On August 5, 2020, NGL agreed to the amended and restated Repo Agreement lowering the maximum borrowing under the agreement to $80,000,000, lowering the minimum LTV from 60% to 50% and reducing the deleveraging requirement from 77.5% to 60% including a drop in combined LTV from 70% to 50%. On April 27, 2022, NGL amended and restated repurchase agreement to increase the facility maximum to $200,000,000. On October 31, 2023, NGL amended and restated repurchase agreement to extend the scheduled maturity of the facility to November 2, 2026 as well as adjusted the interest rate to 3.30% plus Term SOFR.
Under the terms of the amended and restated Repo Agreement, NGL continues to receive cash up to 60% of the market value of securities. The interest rate at December 31, 2023 was 3MS + 3.30%. For the year ended December 31, 2023 and 2022, the Company paid $15,689,399 and $6,002,989 of interest to Nomura, respectively. Should the value of the securities drop to an LTV greater than 50%, NGL Limited must contribute cash or securities to Nomura’s collateral account until the combined value is below 60%.
The following table presents a summary of our repurchase agreement borrowings and interest as of December 31, 2023 and 2022:
Master Repurchase AgreementDecember 31, 2023December 31, 2022
Beginning Balance$196,118,000 $110,050,000 
Principal Borrowed828,000 87,315,000 
Principal Paid(610,000)(1,247,000)
Amortization of debt issuance cost— — 
Total Outstanding Principal196,336,000 196,118,000 
Less: unamortized debt issuance cost— — 
Total Outstanding Principal, net of unamortized debt issuance cost$196,336,000 $196,118,000 
14.Mortgages Payable
The Company has outstanding mortgages payable that bear interest at either a fixed or variable rate. Each mortgage payable is secured by a respective real estate property and certain cash reserve accounts required by the borrowing agreements, which are included as restricted cash on the accompanying combined consolidated balance sheets. The following table presents a summary of our mortgages payable as of December 31, 2023 and 2022:
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal
12/31/2023		Outstanding Principal 12/31/2022
Abbie Lakes (5)
4.20%10/1/2024Amortizing$9,676,814 $9,872,848 
Brooksedge (5)
4.20%10/1/2024Amortizing10,195,876 10,402,426 
Reserve at Abbie Lakes (5)
4.20%10/1/2024Amortizing18,669,576 19,047,787 
Lakes Edge (5)
4.20%10/1/2024Amortizing9,343,130 9,532,405 
Sunbury Ridge (5)
4.20%10/1/2024Amortizing9,713,889 9,910,675 
Stonebridge (5)
4.20%10/1/2024Amortizing14,348,379 14,639,050 
Jefferson Chase (5)
4.20%10/1/2024Amortizing11,345,230 11,575,063 
Lake Ridge (5)
4.11%10/1/2024Amortizing7,455,363 7,607,986 
26
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal
12/31/2023		Outstanding Principal 12/31/2022
Orchard Village (4)
4.43%12/1/2025Amortizing24,673,727 25,148,946 
Sterling Crimson - Loan 14.20%10/1/2026Amortizing39,746,264 40,457,910 
Hawk's Ridge4.20%10/1/2026Amortizing23,920,024 24,348,306 
Islander Village4.20%10/1/2026Amortizing10,406,295 10,592,616 
Campus Quarters4.20%10/1/2026Amortizing13,658,262 13,902,809 
District on Luther4.20%10/1/2026Amortizing30,889,351 31,442,416 
West 22 - Loan 1 (1)
4.20%10/1/2026Amortizing— 43,868,144 
Legacy4.77%1/1/2029Interest Only7,480,000 7,480,000 
Seasons4.59%2/1/2029Interest Only153,580,000 153,580,000 
Abbie Lakes - Loan 2 (5)
5.82%10/1/2024Amortizing2,473,253 2,510,634 
Brooksedge - Loan 2 (5)
5.82%10/1/2024Amortizing2,366,378 2,402,144 
Reserve at Abbie Lakes - Loan 2 (5)
5.82%10/1/2024Amortizing2,945,204 2,989,719 
Lakes Edge - Loan 2 (5)
5.84%10/1/2024Amortizing4,162,429 4,225,101 
Sunbury Ridge - Loan 2 (5)
5.83%10/1/2024Amortizing3,438,348 3,490,218 
Stonebridge - Loan 2 (5)
5.84%10/1/2024Amortizing2,694,227 2,734,793 
Jefferson Chase - Loan 2 (5)
5.82%10/1/2024Amortizing4,691,141 4,762,044 
Lake Ridge - Loan 2 (5)
5.82%10/1/2024Amortizing1,477,163 1,499,364 
Villages of Baymeadows4.14%11/1/2027Amortizing75,176,450 76,452,417 
Casa del Mar4.14%11/1/2027Amortizing12,018,805 12,222,800 
Sutton Place4.03%12/1/2029Interest Only44,044,000 44,044,000 
Silver Oaks4.03%12/1/2029Interest Only14,185,000 14,185,000 
Steeplechase4.07%2/1/2028Amortizing36,150,558 36,668,000 
West 22 - Loan 2 (1)
6.00%10/1/2026Amortizing— 3,714,149 
Sterling Crimson - Loan 26.04%10/1/2026Amortizing1,734,294 1,762,483 
Olentangy Commons4.43%6/1/2030Interest Only92,876,000 92,876,000 
Villages of Wildwood4.46%8/1/2030Interest Only39,525,000 39,525,000 
Falling Creek4.52%9/1/2030Interest Only19,335,000 19,335,000 
Reserve at Abbie Lakes - Loan 3 (5)
5.88%10/1/2024Amortizing5,329,017 5,415,477 
Sunbury Ridge - Loan 3 (5)
5.94%10/1/2024Amortizing1,161,656 1,180,296 
Abbie Lakes - Loan 3 (5)
5.94%10/1/2024Amortizing1,099,291 1,116,931 
Brooksedge - Loan 3 (5)
5.90%10/1/2024Amortizing2,269,897 2,306,590 
Jefferson Chase - Loan 3 (5)
5.90%10/1/2024Amortizing2,139,657 2,174,244 
Lake Ridge - Loan 3 (5)
5.91%10/1/2024Amortizing2,139,961 2,174,490 
Crown Pointe4.44%9/1/2030Interest Only89,400,000 89,400,000 
Lorring Park4.83%11/1/2030Interest Only47,680,000 47,680,000 
Hamptons Apartments4.61%2/1/2031Interest Only79,520,000 79,520,000 
The Isle3.79%7/1/2031Interest Only21,200,000 21,200,000 
Druid Hills4.26%8/1/2046Interest Only79,104,000 79,104,000 
Abbie Lakes - Loan 4 (5)
4.71%10/1/2024Amortizing1,420,366 1,446,688 
Reserve at Abbie Lakes - Loan 4 (5)
4.65%10/1/2024Amortizing1,348,392 1,373,647 
Lakes Edge - Loan 34.45%10/1/2024Amortizing2,596,679 2,647,053 
Sunbury Ridge - Loan 4 (5)
4.67%10/1/2024Amortizing2,016,584 2,054,221 
Stonebridge - Loan 3 (5)
4.48%10/1/2024Amortizing6,275,646 6,396,752 
Parcstone3.14%11/1/2029Interest Only30,127,000 30,127,000 
Stone Ridge3.14%11/1/2029Interest Only14,662,000 14,662,000 
Sterling Place3.95%11/1/2031Interest Only34,196,000 34,196,000 
West 22 - Loan 3 (1)
4.06%10/1/2026Amortizing— 2,493,507 
University Crossing - Loan 25.04%7/1/2030Interest Only14,679,000 14,679,000 
Arlington Park5.11%11/1/2030Amortizing13,485,208 13,494,000 
Hampton on Jupiter2.90%11/1/2032Interest Only27,590,000 27,590,000 
Palmetto Creek4.57%9/1/2030Interest Only25,865,000 25,865,000 
Valora at Homewood2.80%8/1/2030Interest Only63,844,000 63,844,000 
The Dylan at Fairburn3.10%10/1/2026Interest Only43,900,000 43,900,000 
The Dylan at Grayson3.10%10/1/2026Interest Only40,500,000 40,500,000 
Sutton Place - Loan 24.36%12/1/2029Amortizing10,227,961 10,414,291 
Silver Oaks - Loan 24.36%12/1/2029Amortizing4,604,961 4,688,853 
27
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal
12/31/2023		Outstanding Principal 12/31/2022
Chimneys of Greenville3.10%2/1/2031Interest Only14,075,000 14,075,000 
The Laurel Apartments3.06%3/1/2031Interest Only42,025,000 42,025,000 
The Willows Apartments3.06%3/1/2031Interest Only19,000,000 19,000,000 
The Edge at Clear Lake3.87%4/1/2033Interest Only25,496,000 25,496,000 
Pear Orchard3.20%7/1/2033Interest Only38,175,000 38,175,000 
Lakeshore Landing3.20%7/1/2033Interest Only16,950,000 16,950,000 
Reflection Pointe3.20%7/1/2033Interest Only31,050,000 31,050,000 
Crosswinds3.20%7/1/2033Interest Only33,825,000 33,825,000 
Parcstone4.60%11/1/2029Interest Only12,666,000 12,666,000 
Stone Ridge4.60%11/1/2029Interest Only6,883,000 6,883,000 
Falling Creek4.18%9/1/2030Interest Only6,039,000 6,039,000 
Elliot Norcross (3)
5.60%12/1/2024Interest Only105,494,199 101,123,607 
West Vue (3)
3.50%1/1/2025Interest Only73,000,000 73,000,000 
Enclave at Wolfchase3.67%4/1/2027Interest Only60,000,000 60,000,000 
Twin Oaks (3)
4.15%4/1/2025Interest Only35,273,726 33,960,361 
Lancaster Place (3)
4.15%4/1/2025Interest Only29,154,930 28,535,911 
Rutland Place (3)
4.15%4/1/2025Interest Only23,432,343 22,710,174 
Southport Crossing3.46%4/1/2032Interest Only36,075,000 36,075,000 
Cheyenne4.71%6/1/2032Interest Only17,656,000 17,656,000 
Pueblo4.71%6/1/2032Interest Only20,166,000 20,166,000 
Stillwater4.71%6/1/2032Interest Only15,328,000 15,328,000 
Kokomo4.71%6/1/2032Interest Only12,753,000 12,753,000 
Villages of Wildwood - Loan 26.80%8/1/2030Interest Only18,868,000 18,868,000 
Villages of Baymeadows - Loan 27.19%11/1/2027Amortizing14,071,371 14,196,784 
Casa del Mar - Loan 27.19%11/1/2027Amortizing3,509,920 3,541,202 
Pear Orchard - Loan 24.50%7/1/2033Interest Only4,800,000 4,800,000 
Lakeshore Landing - Loan 24.50%7/1/2033Interest Only1,005,000 1,005,000 
Reflection Pointe - Loan 24.50%7/1/2033Interest Only2,153,000 2,153,000 
Crosswinds - Loan 24.50%7/1/2033Interest Only4,776,000 4,776,000 
Hampton on Jupiter - Loan 26.84%12/1/2032Interest Only11,253,000 — 
Total outstanding principal2,157,731,195 2,197,284,332 
Less: unamortized discount and debt issuance costs(11,499,712)(15,151,751)
Total mortgages payable, net of unamortized discount and debt issuance costs$2,146,231,483 $2,182,132,581 
(1) West 22 was disposed of on October 27, 2023 (Note 3). The mortgage payable was extinguished at date of sale.
(2) Floating interest rates are indexed to the one month USD LIBOR or SOFR. Rates noted are as of December 31, 2023.
(3) The loan includes two one-year extension options beyond the disclosed initial maturity date.
(4)Properties are held for sale and disclosed on the consolidated balance sheets.
(5) The loans were refinanced on June 28, 2024.
On October 27, 2023, in connection with the sale of West 22, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $49,343,602. As a result, the Company recognized a gain on early extinguishment of debt of $245,147, which is included within interest expense on the combined consolidated statements of operations.
On February 1, 2022, in connection with the sale of Verandas at Rocky Ridge, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $18,410,000. As a result, the Company recognized a loss on early extinguishment of debt of $503,896, which is included within interest expense on the combined consolidated statements of operations.
Future scheduled principal payments of mortgage payable are as follows: $105,115,507 (2024), $111,749,382 (2025), $119,988,865 (2026), $124,580,862 (2027), $126,305,510 (2028), and $1,569,991,071 (thereafter).
15.Ground Leases
The Company entered into ground lease agreements through acquisition of Druid Hills and West Vue. If the Company has right to extend the term of a ground lease, such option period has been included within the calculation of the right of use assets and lease liabilities. The Company incurred initial costs of $15,689,752 to acquire the leases, which is included in the intangibles and amortized over the life of the lease. As of December 31, 2023 and 2022, the right-of-use asset were $22,232,919 and $24,311,989, respectively. As of December 31, 2023 and 2022, the lease liability was $27,415,908 and $26,926,303, respectively. During the years ended December 31, 2023 and 2022, the
28
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
lease expense recognized on a straight-line basis was $4,263,995 and $4,263,995, respectively, and is included in property operating expenses on the accompanying combined consolidated statements of operations.
The Company utilized the risk-free rate over the term of each lease as the discount rate to be applied to its future lease payments when accounting for its right of use assets and lease liabilities, which ranged between 4.26% and 7.11%.
The table below presents the summarized quantitative information with regard to lease contracts the Company has entered into as of December 31, 2023:
CategoryTerm
Weighted avg. of remaining term - operating leases (months)947
Weighted avg. of remaining term - operating leases (years)79
Weighted avg. of annual discount rate - operating leases6.04%
The table below presents the summarized quantitative information with regard to lease contracts the Company has entered into as of December 31, 2022:
CategoryTerm
Weighted avg. of remaining term - operating leases (months)956
Weighted avg. of remaining term - operating leases (years)80
Weighted avg. of annual discount rate - operating leases6.04%
The future minimum lease payments to be paid under noncancelable leases in effect as of December 31, 2023 are as follows:
YearPayment
2024$1,432,408 
20251,459,777 
20261,487,692 
20271,516,166 
20281,545,209 
Thereafter373,800,917 
Total balance due381,242,169 
Less: lease discount(353,826,260)
Lease liabilities$27,415,909 
Total cash paid for amounts included in lease liabilities for the years ended December 31, 2023 and 2022 are $1,407,794 and $1,381,446, respectively.
In addition, as of December 31, 2023 and 2022, the Company also has an equipment lease liability of $140,377 and $573,807, respectively.
16.Income Taxes
Income taxes consisted of the following for the years ended:
December 31, 2023December 31, 2022
Current federal tax expense(3,573)(11,380)
Income tax expense$(3,573)$(11,380)
17.Equity
As of December 31, 2023 and 2022, the Company authorized 100,000,000 common shares, par value $0.001. NPH is the Company’s sole common stockholder. As of December 31, 2023 and 2022, the Company paid an aggregate of $876,160,619 and $876,160,619 of dividends on common shares, respectively.
As of December 31, 2023 and 2022, the Company had 125 shares outstanding in connection with a private placement of 12.5% Series A Cumulative Non-Voting Preferred Stock, par value $0.001 per share (Series A Preferred Stock), respectively. In general, holders of Series A Preferred Stock are entitled to receive cumulative dividends semiannually at a per annum rate equal to 12.5% of the total purchase price of $1,000 per share plus accumulated and unpaid dividends. The Series A Preferred Stock is redeemable by the Company for $1,000 per share plus accumulated and unpaid dividends. Upon liquidation and dissolution of the Company, the holders of the Series A Preferred Stock
29
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
are entitled to a liquidation preference in the amount of the share’s purchase price, plus all accumulated and unpaid dividends. Series A Preferred Stock are not convertible or exchangeable for any other property or securities of the Company. As of December 31, 2023 and 2022, the Company paid an aggregate of $282,374 and $266,749 of dividends on Series A preferred shares, respectively.
18.Related Party Transactions
On December 31, 2013, the Company entered into a management assistance agreement with Prospect Administration LLC ("Prospect") to provide significant managerial assistance to the Company on behalf of PSEC.
In accordance with the Investment Company Act of 1940, PSEC must make available "significant managerial assistance" to the Company. Prospect provides assistance with significant guidance and counsel concerning the management, operations, and business objectives and policies to the Company. Services may include arranging financing, managing relationships with financing sources, restructuring existing debt and evaluating acquisition and divestiture opportunities. Prospect also exercises a controlling influence over the policies of the Company. On a quarterly basis, the Company pays a managerial assistance fee to Prospect for time and effort in assisting and providing commercial and mezzanine lending, investment banking, and private equity investing services. The Company incurred managerial assistance fees of $2,575,000 and $2,100,000 for each of the years ended December 31, 2023 and 2022, which are included in management fees in the accompanying combined consolidated statements of operations.
On a quarterly basis, the Company pays Prospect for professional services provided related to legal counsel, taxation, and general accounting. For the years ended December 31, 2023 and 2022, the Company incurred professional service fees of $2,088,611 and $1,773,219, respectively, which are included in general and administrative expenses in the accompanying combined consolidated statements of operations. As of December 31, 2023 and 2022, $595,697 and $651,770, respectively, is due to Prospect and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
As of December 31, 2023, $4,617, $1,221 and $3,307,281 is due to Prospect, Prospect Capital Management ("PCM") and PSEC, respectively, for reimbursement of expenses paid on behalf of the Company and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
As of December 31, 2022, $78,112, $8,738 and $3,323 is due to Prospect, PCM and PSEC, respectively, for reimbursement of expenses paid on behalf of the Company and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
The Company generally incurs a 2.0% to 3.0% structuring fee for the PSEC equity portion of each acquired property. The structuring fee is paid to PSEC for structuring and providing guidance for each purchase transaction. For the years ended December 31, 2023 and 2022, the Company incurred structuring fees of $0 and $2,685,990, respectively.
The Company also entered into property management agreements with the non-controlling interest joint venture partners to manage the operations of the properties. The Company pays a monthly management fee of 2.0% - 5.0% of the gross monthly rents to the property managers. For the years ended December 31, 2023 and 2022, property management fees were $9,685,549 and $8,604,274, respectively, and are included in management fees in the combined consolidated statements of operations.
The Company also pays a monthly asset management fee up to 2.00% of the gross monthly rents to the property managers. For the years ended December 31, 2023 and 2022, asset management fees were $2,858,917 and $2,676,322, respectively. These amounts are included in the management fee line item in the accompanying combined consolidated statements of operations.
As of December 31, 2023 and 2022, $6,127,755 and $5,510,912 of management fees and asset management fees, respectively, were payable to property managers, and is included in due to affiliates in the accompanying combined consolidated balance sheets.
The property management agreements also stipulate that a construction management fee up to 5.0% of project cost is to be paid to the property managers. For the years ended December 31, 2023 and 2022, capitalized construction management fees were $6,919,885 and $4,951,656, respectively, and are included within building and improvements in the accompanying combined consolidated balance sheets.
The Company generally incurs an acquisition fee from 0.5% to 1.0% of the purchase price of each acquired property. The acquisition fee is paid to the Property Managers for services rendered in connection with the investigation, selection, sourcing, due diligence and acquisition of a property or investment. For the years ended December 31, 2023 and 2022, the Company incurred acquisition fees of $0 and $2,013,700, respectively. The amounts related to the
30
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
years ended December 31, 2023 and 2022 have been capitalized and included in real estate assets in the accompanying combined consolidated balance sheets.
In connection with the acquisitions of properties together with non-controlling joint venture partners, the Company will sometimes retain a portion of the partners’ acquisition fees as deferred acquisition fees. These deferred acquisition fees are earned by and payable to the non-controlling joint venture partner upon reaching certain performance measures. During the years ended 2023 and 2022, $528,000 and $0, respectively, were paid to the non-controlling joint venture partners, respectively. As of December 31, 2023 and 2022, $1,877,499 and $2,068,799, respectively, of deferred acquisition fees were retained by the Company and included within due to affiliates on the combined consolidated balance sheets. As of December 31, 2023, $0 and $540,365, respectively, of deferred acquisition fees retained by the Company are included within restricted cash on the combined consolidated balance sheets.
The Company noted that certain expenses are paid for by the property managers and have yet to be reimbursed. As of December 31, 2023 and 2022, unreimbursed advances and other amounts due to related parties were $1,197,781 and $2,848,376, respectively, and are recorded by the Company as due to affiliates on the combined consolidated balance sheets.
19.Senior Secured Term Loans - Related Party
NPRC Credit Agreement
On April 1, 2014, the Company entered into a credit agreement (the "Credit Agreement") with PSEC in the form of a senior secured term loan. As of December 31, 2023 and 2022, the total commitment was $2,700,000,000 and $2,700,000,000, respectively.
On November 9, 2022, the Company amended the Credit Agreement. The amendment resulted in a new tranche of senior secured Term Loan E ("TLE"). Under the amended and restated Credit Agreement, the new TLE incurs cash interest equivalent to three-month USD LIBOR rate with a floor of 5.00%, plus 2.00%, and PIK interest of 7.00%.
On June 30, 2023, the Company amended the Credit Agreement to replace 3M USD LIBOR rate with 3M SOFR.
On September 30, 2023, the Company amended the Credit Agreement to update term loan cash and PIK interest rates, which are summarized in the next page. The maturity date of the senior secured term loans under the amended Credit Agreement is March 31, 2026.
The Credit Agreement does not require payments on the outstanding principal until maturity, with prepayments allowed but may be subject to a prepayment penalty. During the year ended December 31, 2023, the Company has voluntarily pre-paid in aggregate $86,950,000 of the Term Loan A and B and incurred a prepayment penalty of $245,000. During the year ended December 31, 2022, the Company had voluntarily pre-paid in aggregate $94,351,510 of the Term Loan A and B and incurred a prepayment penalty of $98,515.
The Company is required to make payments for Residual Profit Interest equivalent to 8.33% of the residual profit earned during the applicable period. The Company determines the residual profit as all gross receipts from operations received by the Company less the sum of operating expenses, interest expense, structuring fees, M&A fees, and cost basis in connection to the sale of any real estate property during the applicable period.
Cash interest and Residual Profit Interest are payable in cash quarterly. PIK interest due quarterly is added to the outstanding principal balance of the loan or paid in cash, in whole or in part, at the option of the Company.
The Company generally incurs structuring fees from restructuring or refinancing the Credit Agreement, which are deferred and amortized over the life of the senior secured term loan. The structuring fees are capitalized as a direct offset to the term loan balance on the combined consolidated balance sheets. For the years ended December 31, 2023 and 2022, the Company incurred $15,475,530 and $0 of structuring fees for borrowings under the senior secured term loans, respectively. For the years ended December 31, 2023 and 2022, $4,729,980 and $4,106,358 were amortized and recorded within interest expense on the combined consolidated statements of operations, respectively.





31
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The following tables present a summary of our senior secured term loan terms and payable as of December 31, 2023 and 2022:
As of December 31, 2023
Senior Secured Term LoanCash RatePIK RateOutstanding Principal
Term Loan A
3M SOFR(1) + 0.25%
2.00%$589,538,045 
Term Loan B
3M SOFR(2) + 0.26161% + 2.00%
—%20,630,000 
Term Loan C
3M SOFR(3) + 0.26161% + 10.00%
2.25%210,000,000 
Term Loan D
3M SOFR(1) + 0.25%
2.00%183,425,355 
Term Loan E
3M SOFR(4) + 1.50%
7.00%14,107,431 
Total outstanding principal1,017,700,831 
Less: unamortized debt issuance costs(14,851,908)
Total senior secured term loans, net of debt issuance costs$1,002,848,923 
(1) Rates are accrued at minimum SOFR floor of 400 basis points
(2) Rates are accrued at minimum SOFR floor of 300 basis points
(3) Rates are accrued at minimum SOFR floor of 100 basis points
(4) Rates are accrued at minimum SOFR floor of 550 basis points
As of December 31, 2022
Senior Secured Term LoanCash RatePIK RateOutstanding Principal
Term Loan A
3M LIBOR(1) + 1.44%
3.53%$458,747,266 
Term Loan B
3M LIBOR(1) + 2.00%
5.50%23,080,000 
Term Loan C
3M LIBOR(2) + 10.00%
2.25%200,600,000 
Term Loan D
3M LIBOR(1) + 0.50%
2.50%183,425,355 
Term Loan E
3M LIBOR(3) + 2.00%
7.00%13,151,592 
Total outstanding principal879,004,213 
Less: unamortized debt issuance costs(4,106,358)
Total senior secured term loans, net of debt issuance costs$874,897,855 
(1) Rates are accrued at minimum LIBOR floor of 300 basis points
(2) Rates are accrued at minimum LIBOR floor of 100 basis points
(3) Rates are accrued at minimum LIBOR floor of 500 basis points
For the year ended December 31, 2023, the Company incurred $76,247,081, $27,856,774, and $54,042,137 of cash interest, PIK interest, and Residual Profit Interest, respectively. For the year ended December 31, 2023, a total of $27,680,343 of PIK interest was paid in cash on the senior secured term loans. As of December 31, 2023, $568,240 of cash interest and $176,432 of PIK interest is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
For the year ended December 31, 2022, the Company incurred $49,159,031, $25,055,620, and $81,118,070 of cash interest, PIK interest, and Residual Profit Interest, respectively. For the year ended December 31, 2022, a total of $25,050,506 of PIK interest was paid in cash on the senior secured term loans. As of December 31, 2022, $0 of cash interest and $5,115 of PIK interest is recorded by the Company as due to affiliates on the combined consolidated balance sheets.

32
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
20.Commitments and Contingencies
The Company believes that it has complied with the requirements of the mortgage payable by obtaining the requisite third-party insurance coverage for losses that may be incurred at the properties. Losses for amounts below the threshold of the deductible amounts specified in certain of the Company’s insurance policies are self‑insured; however, management does not believe that this exposure will have a material adverse effect on the Company’s combined consolidated financial position or results of operations.
Periodically, the Company may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of business. The Company does not believe that there are any proceedings threatened or pending, if determined adversely, that would have a material adverse effect on the financial position, results of operations, or liquidity of the Company.
The Company may at times issue certain loan guarantees to obtain financing related to the Company’s investments. These guarantees may include but are not limited to repayment guarantees, completion guarantees, and debt ratio guarantees to certain lenders of the Company’s investments in real estate assets. Under certain guarantees, the Company may be liable in the event of fraud, misappropriation, environmental liabilities and other recourse obligations. As of December 31, 2023, the Company has not violated any of these guaranty provisions.
21.Subsequent Events
On January 19, 2024, the Company acquired The Apex Apartments, a multi-family property located in Cincinnati, OH, for an aggregate purchase price of $34,225,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $27,712,000.
On January 19, 2024, the Company acquired The Parkton Apartments, a multi-family property located in Cincinnati, OH, for an aggregate purchase price of $45,775,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $37,090,000.
On May 9, 2024, the Company sold Filet of Chicken to an unaffiliated third party for a gross sales price of $12,000,000. The Company recognized a gain of $7,370,352 in connection with the sale.
On May 30, 2024, the Company sold Orchard Village to an unaffiliated third party for a gross sales price of $48,500,000. The Company recognized a gain of $20,683,786 in connection with the sale.
On June 20, 2024, the Company sold University Crossing to an unaffiliated third party for a gross sales price of $16,000,000. The Company recognized a gain of $57,087 in connection with the sale.
On June 28, 2024, the Company made $35,300,000 preferred equity investment to recapitalize an existing portfolio of multi-family properties located in Columbus, OH. The investment will earn current pay of 8% and paid-in-kind interest of 7%. As a result of this recapitalization, the Company executed a refinance in the amount of $212,107,000. The new debt has a maturity date of July 1, 2029.
The Company has evaluated subsequent events through August 9, 2024, the date of which these combined consolidated financial statements were available to be issued, and has determined that, except for the above, there have not been any additional events that have occurred that would require adjustments to, or disclosures in, the combined consolidated financial statements.
33
EXHIBIT 99.2





National Property REIT Corp.
Combined Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(With Independent Auditor's Report Thereon)






National Property REIT Corp.
Combined Consolidated Financial Statements
Table of Contents
Page
Independent Auditor's Report
Combined Consolidated Balance Sheets as of December 31, 2022 and 2021
3
Combined Consolidated Statements of Operations for the years ended December 31, 2022 and 2021
4
Combined Consolidated Statements of Changes in (Deficit) Equity for the years ended December 31, 2022 and 2021
5
Combined Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
6
Notes to Combined Consolidated Financial Statements
8




Independent Auditor's Report
To the Board of Directors
National Property REIT Corp.

Opinion

We have audited the combined consolidated financial statements of National Property REIT Corp., which comprise the combined consolidated balance sheets as of December 31, 2022 and 2021, and the related combined consolidated statements of operations, changes in (deficit) equity and cash flows for the years then ended, and the related notes to the combined consolidated financial statements.

In our opinion, the accompanying combined consolidated financial statements present fairly, in all material respects, the financial position of National Property REIT Corp. as of December 31, 2022 and 2021, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of National Property REIT Corp. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the combined consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the combined consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about National Property REIT Corp.'s ability to continue as a going concern for one year after the date that the combined consolidated financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the combined consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined consolidated financial statements.








1

In performing an audit in accordance with GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.

•Identify and assess the risks of material misstatement of the combined consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the combined consolidated financial statements.

•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of National Property REIT Corp.'s internal control. Accordingly, no such opinion is expressed.

•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the combined consolidated financial statements.

•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about National Property REIT Corp's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.


/s/ Cohn Reznick, LLP
New York, New York
August 10, 2023

2

National Property REIT Corp.
Combined Consolidated Balance Sheets
December 31,
20222021
ASSETS
Real estate assets
  Land$252,884,617 $228,759,487 
  Building and improvements
2,314,165,808 1,979,291,168 
  Furniture, fixtures, and equipment
154,762,761 125,461,545 
Total real estate assets held for investment
2,721,813,186 2,333,512,200 
  Less: accumulated depreciation
(380,314,083)(284,947,428)
Net real estate assets held for investment
2,341,499,103 2,048,564,772 
  Real estate assets held for sale, net
— 12,790,589 
Total real estate assets, net
2,341,499,103 2,061,355,361 
  Cash and cash equivalents
35,212,438 45,488,636 
  Restricted cash37,869,284 39,317,283 
  Accounts receivable, net
22,573,685 15,533,773 
  Interest receivable8,075 18,949 
  Due from LendingClub Corporation20,756 26,415 
  Due from affiliates
1,053,834 169,881 
  Preferred equity investments13,073,865 — 
  Prepaid expenses and other assets11,467,721 10,263,647 
  Collateralized loan obligations at fair value424,746,173 237,125,053 
  Unsecured consumer loans at fair value520,946 3,221,119 
  Residual interests in securitizations at fair value8,540,118 1,348,844 
  Corporate bonds at fair value11,616,950 8,032,000 
  Interest rate caps at fair value25,724,128 3,311,090 
  Deferred leasing costs, net111,596 72,928 
  Lease intangibles, net15,790,350 19,761,306 
  Right-of-use assets24,886,491 32,527,309 
TOTAL ASSETS$2,974,715,513 $2,477,573,594 
LIABILITIES AND DEFICIT
Liabilities
  Mortgages payable, net of unamortized discount and debt issuance costs$2,182,132,581 $1,890,194,593 
  Mortgages payable related to real estate assets held for sale, net of unamortized discount and debt issuance costs
— 18,071,860 
  Reverse repurchase facilities, at fair value, net of unamortized debt issuance costs196,118,000 110,050,000 
  Senior secured term loans, net of debt issuance costs874,897,855 577,562,769 
  Accounts payable and accrued expenses42,763,943 31,064,827 
  Security deposits6,594,854 5,380,629 
  Due to affiliates11,175,146 8,944,976 
  Prepaid rent and other liabilities8,332,467 7,335,342 
  Lease liabilities27,500,110 27,064,199 
Total liabilities3,349,514,956 2,675,669,195 
Commitments and contingencies (Note 20)
Deficit
  Preferred stock, $0.001 par value, Series A Cumulative Non-Voting, 12.5%; $125,000 liquidation preference, 125 shares authorized, issued and outstanding
109,950 109,950 
  Common stock, $0.001 par value; 100,000,000 common shares authorized, 3,350,519 and 3,275,011 issued and outstanding, respectively3,351 3,275 
  Additional paid-in-capital15,219,904 3,199,980 
  Accumulated deficit(392,654,099)(210,120,766)
  Non-controlling interest2,521,451 8,711,960 
Total deficit(374,799,443)(198,095,601)
TOTAL LIABILITIES AND DEFICIT$2,974,715,513 $2,477,573,594 
See Notes to Combined Consolidated Financial Statements.
3

National Property REIT Corp.
Combined Consolidated Statements of Operations
Years Ended December 31,
20222021
Income
  Rental income$280,675,103 $258,601,791 
  Interest income39,717,233 20,323,440 
  Other income49,581,397 39,943,881 
Total income369,973,733 318,869,112 
Costs and expenses
  Property operating expenses153,617,314 131,839,479 
  Management fees13,710,008 12,480,080 
  Depreciation and amortization120,495,413 116,017,305 
  General and administrative expenses28,743,890 23,297,791 
Total costs and expenses
316,566,625 283,634,655 
Other income (expense)
  Interest expense(259,241,778)(205,125,612)
  Fair value adjustments3,935,656 8,171,152 
  Gain on sale of real estate assets20,956,684 360,338,800 
  Gain on involuntary conversions1,531,629 655,239 
  Gain on litigation settlements— 15,151,362 
Total other income (expense), net(232,817,809)179,190,941 
Income (Loss) before income tax(179,410,701)214,425,398 
  Income tax expense(11,380)(7,219)
Net income (loss)(179,422,081)214,418,179 
  Income attributable to non-controlling interest(3,095,627)(65,378,285)
  Dividends attributable to preferred shares(15,625)(15,625)
Net income (loss) attributable to common shares$(182,533,333)$149,024,269 

See Notes to Combined Consolidated Financial Statements.


4


National Property REIT Corp.
Combined Consolidated Statements of Changes in (Deficit) Equity

Preferred SharesCommon SharesAdditional Paid-in-CapitalAccumulated DeficitTotal Stockholders'
(Deficit)		Non-Controlling InterestTotal (Deficit)
Balance at December 31, 2020$109,950 $3,255 $— $(359,145,035)$(359,031,830)$2,625,607 $(356,406,223)
Issuance of common shares— 20 3,199,980 — 3,200,000 — 3,200,000 
Contribution from non-controlling interest— — — — — 25,447,674 25,447,674 
Dividends on preferred shares— — — (15,625)(15,625)— (15,625)
Distributions to non-controlling interest— — — — — (84,739,606)(84,739,606)
Net income— — — 149,039,894 149,039,894 65,378,285 214,418,179 
Balance at December 31, 2021109,950 3,275 3,199,980 (210,120,766)(206,807,561)8,711,960 (198,095,601)
Issuance of common shares— 76 16,019,924 — 16,020,000 — 16,020,000 
Contribution from non-controlling interest— — — — — 9,567,328 9,567,328 
Dividends on common shares— — (4,000,000)— (4,000,000)— (4,000,000)
Dividends on preferred shares— — — (15,625)(15,625)— (15,625)
Distributions to non-controlling interest— — — — — (18,853,464)(18,853,464)
Net (loss) income— — — (182,517,708)(182,517,708)3,095,627 (179,422,081)
Balance at December 31, 2022$109,950 $3,351 $15,219,904 $(392,654,099)$(377,320,894)$2,521,451 $(374,799,443)

See Notes to Combined Consolidated Financial Statements.




5

National Property REIT Corp.
Combined Consolidated Statements of Cash Flows
Years Ended December 31,
20222021
Cash Flows from Operating Activities:
Net income (loss)$(179,422,081)$214,418,179 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation96,897,855 91,089,441 
Amortization of in-place leases23,160,600 24,695,720 
Amortization of leasing commissions153,421 148,683 
Amortization of other deferred leasing cost1,246 6,519 
Amortization of above market leases282,291 167,540 
Amortization of right-of-use assets8,045,707 58,085 
Amortization of debt issuance costs and debt discounts and premiums7,440,085 6,440,459 
Amortization of discount on collateralized loan obligations(2,374,186)(1,327,196)
Gain on sale of real estate assets(20,956,684)(360,338,800)
Gain on involuntary conversions(1,531,629)(655,239)
Loss on early extinguishment of debt503,896 16,969,517 
Fair value adjustments of collateralized loan obligations1,322,497 (5,856,470)
Fair value adjustments of unsecured consumer loans(807,032)(1,287,136)
Fair value adjustments of residual interests in securitizations2,995,389 (188,325)
Fair value adjustments of corporate bonds6,621,180 — 
Fair value adjustments of interest rate caps(14,067,690)— 
Income from accretion on residual interests in securitizations(1,109,048)(1,075,545)
Income from accretion on preferred equity investments(42,486)— 
  Changes in operating assets and liabilities:
Accounts receivable(7,039,912)(2,749,428)
Interest receivable10,874 59,260 
Due to affiliates, net1,346,217 (1,158,147)
Prepaid expenses and other assets(1,204,074)1,606,803 
Accounts payable and accrued expenses9,263,946 2,745,951 
Security deposits and other liabilities2,211,350 214,429 
Deferred leasing costs(193,335)(124,390)
Right-of-use assets— (639,885)
Lease liabilities435,911 593,131 
 Net cash used in operating activities(68,055,692)(16,186,844)
Cash Flows from Investing Activities:
Acquisition of real estate assets(333,890,228)(491,780,510)
Additions to real estate assets(55,039,076)(49,465,033)
Additions to lease intangibles(19,876,824)(34,394,310)
Proceeds from disposition of real estate assets33,693,591 617,744,613 
Proceeds from involuntary conversion3,117,599 4,019,752 
Purchases of collateralized loan obligations(186,569,431)(44,332,546)
Principal payments received on collateralized loan obligations— 7,391,139 
Decrease in amortized cost of collateralized loan obligations— 165,448 
Principal payments received on unsecured consumer loans3,043,954 10,392,221 
Proceeds from recoveries and sales of charged-off loans463,251 1,324,039 
Purchase of preferred equity investments(13,031,379)— 
Purchase of corporate bonds(10,206,130)(8,032,000)
Purchases of equity securitizations(20,668,884)— 
Principal payments received on securitized residual interests11,591,269 6,464,576 
Decrease in due from LendingClub Corporation5,659 153,177 
Decrease in due from Prosper Funding LLC— 37,587 
Net cash provided by (used in) investing activities(587,366,629)19,688,153 
6

National Property REIT Corp.
Combined Consolidated Statements of Cash Flows

Years Ended December 31,
20222021
Cash Flows from Financing Activities:
Proceeds from mortgages payable296,524,430 491,035,505 
Repayments of mortgages payable(22,401,909)(331,049,878)
Proceeds from reverse repurchase facilities87,315,000 48,969,000 
Repayments of reverse repurchase facilities(1,247,000)(18,919,000)
Proceeds from senior secured term loan387,580,238 207,028,800 
Repayments of senior secured term loan(94,351,510)(315,481,965)
Purchases of interest rate caps(8,345,348)— 
Payment of debt issuance costs(3,909,916)(8,236,102)
Payment of debt extinguishment costs(184,100)(14,364,152)
Proceeds from issuance of common stock16,020,000 3,200,000 
Dividends on common shares(4,000,000)— 
Dividends on preferred shares(15,625)(15,625)
Contributions from non-controlling interest9,567,328 25,447,674 
Distributions to non-controlling interests(18,853,464)(84,739,606)
Net cash provided by financing activities643,698,124 2,874,651 
Net increase (decrease) in cash, cash equivalents, and restricted cash(11,724,197)6,375,960 
Cash, cash equivalents, and restricted cash, beginning of year84,805,919 78,429,959 
Cash, cash equivalents, and restricted cash, end of year$73,081,722 $84,805,919 


Supplemental Disclosures
Cash paid during the year for:
Interest expense$249,486,382 $198,762,427 
Income taxes$11,380 $7,219 
Non-cash investing and financing activities:
Right-of-use assets acquired from assumption of ground lease$— $25,275,984 
Mortgage loan assumed by purchaser upon sale of real estate assets$— $95,317,256 
Accrued additions to real estate assets$3,857,202 $1,422,032 

        See Notes to Combined Consolidated Financial Statements.
7
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
1.Organization
References herein to the "Company," "we," "us," or "our" refer to National Property REIT Corp. ("NPRC"), formerly known as National Property Holdings Corp., unless the context specifically requires otherwise.
The Company is a Maryland corporation and is a real estate investment trust ("REIT") for U.S. federal income tax purposes. The Company was formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets and engage in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. The Company intends to acquire real estate assets, including, but not limited to, industrial, commercial, student housing, self-storage, and multi-family properties. The Company commenced operations on December 31, 2013.
NPH Property Holdings, LLC ("NPH"), a Delaware limited liability company, owns all of the outstanding common stock of the Company. NPH is a wholly-owned subsidiary of Prospect Capital Corporation ("PSEC"). On December 31, 2013, PSEC contributed to the Company, through NPH, ownership interests in entities that own real estate properties. In exchange for the contribution of assets, NPH received shares of the Company’s common stock. These entities were NPH McDowell, LLC ("Oxford"), APH Carroll 41, LLC ("Bexley"), and 146 Forest Parkway, LLC ("146 FP"). On October 23, 2014, United Property REIT Corp. ("UPRC"), an affiliated entity indirectly owned by PSEC, contributed to the Company ownership interest in Michigan Storage, LLC ("Michigan"), an entity that owned a portfolio of self-storage real estate properties. UPH Property Holdings, LLC ("UPH"), a Delaware limited liability company, owned all of the outstanding common stock of UPRC. UPH was a wholly-owned subsidiary of PSEC. On November 26, 2014, American Property REIT Corp. ("APRC"), an affiliated entity indirectly owned by PSEC, contributed to the Company, ownership interest in APH Carroll Resort, LLC (the "Resort"), an entity that owned a multi-family real estate property. On May 1, 2015, APRC contributed to the Company ownership interest in 5100 Live Oaks Blvd, LLC ("Amberly"), an entity that owned a multi-family real estate property. APH Property Holdings, LLC ("APH"), a Delaware limited liability company, owned all of the outstanding common stock of APRC. APH was a wholly-owned subsidiary of PSEC. These entity contribution transactions are collectively referred to as the "Common Control Transfer."
On May 23, 2016, APRC and UPRC (collectively referred to as the "Affiliated REITs") were merged ("Merger") with and into the Company, with the Company continuing as the surviving corporation. The Affiliated REITs were formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets. At the date of Merger, the Affiliated REITs held an investment portfolio of real estate assets owned directly or through joint ventures by making a majority equity investment in property-owning entities. The real estate investments acquired during the Merger are collectively known as the "Merger Investments."
In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805, Business Combinations, the Merger and Common Control Transfer transactions noted above were executed between entities under common control. The assets and liabilities of each of the entities acquired through these transactions were recorded at their historical carrying amounts, and the results of operations of these entities have been recognized in the accompanying combined consolidated statements of operations for all periods presented. Subsequent to the Merger during 2016, NPRC's combined consolidated balance sheets reflect the historical carryover basis in the assets and liabilities acquired. The Company has also retrospectively adjusted its financial statements to combine the operating results of the Company and the entities acquired from the date common control began.
National Marketplace Finance, LLC (formerly known as Prospect Finance Company, LLC) ("NMF") is a subsidiary of the Company, and currently owns the online originated unsecured consumer loan portfolio and residual interests in securitizations. NMF holds the interests in ACL Loan Holdings, Inc. ("ACLLH") and American Consumer Lending Limited ("ACLL").
ACLLH was formed to hold the indirect interest in ACL Consumer Loan Trust ("ACL Trust"), which was contributed to ACLLH on June 30, 2014 by the Company, its initial sole member. ACL Trust and American Consumer Lending (Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust, referred to as the "ACL Subsidiaries"), hold unsecured consumer loans purchased from Prosper Funding LLC ("Prosper").
ACL Consumer Loan Trust III ("ACL Trust III"), a subsidiary of ACLLH, formed on June 10, 2014, and American Consumer Lending III (Near-Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust III, referred to as the "ACL III Subsidiaries"), formed on June 13, 2014, hold unsecured consumer loans purchased from LendingClub Corporation. ACL Consumer Loan Trust IV ("ACL Trust IV"), a subsidiary of ACLLH, formed on March 23, 2015, and American Consumer Lending IV (Near-Prime), LLC, a subsidiary of ACLL, (collectively with ACL Trust IV, referred to as the "ACL IV Subsidiaries"), formed on January 15, 2015, hold unsecured consumer loans originated by and purchased from LendingClub Corporation. ACL Patient Solutions Trust ("ACL PS"), a subsidiary of ACLLH, formed on October 14, 2015, and ACL Patient Solutions Holdings, LLC, a subsidiary of ACLL, formed on October
8
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
5, 2015, hold unsecured consumer loans from NBT Bank, National Association ("NBT"). From October 20, 2015 to December 31, 2018 ACL PS acquired and held unsecured consumer loans as part of a loan purchase and sale agreement between ACL PS, NBT and Springstone Financial, LLC ("Springstone"), a wholly-owned subsidiary of LendingClub Corporation. ACL Consumer Loan Trust V ("ACL Trust V"), a subsidiary of ACLL, formed on October 16, 2015, holds unsecured consumer loans purchased from Avant II, LLC ("Avant") for the period November 17, 2015 to December 31, 2018. ACL Consumer Loan Trust VI ("ACL Trust VI"), a subsidiary of ACLLH, formed on April 27, 2016, and American Consumer Lending VI, LLC, a subsidiary of ACLL, (collectively with ACL Trust VI, referred to as the "ACL VI Subsidiaries"), formed on November 30, 2015, hold unsecured consumer loans purchased from LendingClub Corporation for the period May 1, 2016 to December 31, 2018. Murray Hill Securitization Holdings Limited ("Murray Hill"), a subsidiary of ACLL, formed on July 24, 2015, holds interest in Murray Hill Marketplace Trust 2016-LC1, a securitization of unsecured consumer loans purchased from LendingClub Corporation for the period October 13, 2016 to December 31, 2018. Murray Hill also holds residual interests in securitizations. LendingClub Corporation and Springstone are hereafter collectively referred to as "LendingClub". American Consumer Lending VII, LLC, a subsidiary of ACLL, formed on October 5, 2017, holds unsecured consumer loans purchased from Prosper and NBT during the period July 28, 2015 to December 31, 2018.
NPH Guarantor, LLC was contributed to NMF on January 13, 2015 by the Company, its initial sole member. NPH Guarantor, LLC is the indemnitor of the ACL III Subsidiaries and ACL PS revolving credit facilities. There was no activity in NPH Guarantor, LLC from inception through December 31, 2018.
National General Lending Limited ("NGL"), a wholly-owned entity of the Company, was formed on May 23, 2019 to own various debt tranches in collateralized loan obligations (“CLOs”). NGL holds the CLOs in NGL Subsidiary Ltd. ("NGL Limited"), a wholly-owned Cayman Islands limited liability company that was formed August 26, 2019. Operations to buy and sell CLOs commenced on October 30, 2019. In connection with NGL's commencement of operations during 2019, PSEC contributed approximately $12,000,000 in cash and transferred approximately $52,139,000 of CLOs.
2.Significant Accounting Policies
a.Principles of Reporting and Use of Estimates
The accompanying combined consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the combined consolidated financial statements and the reported amounts of revenues and expenses during the reported periods.
Management makes significant estimates regarding the allocation of a property’s purchase price to the tangible and intangible assets and liabilities acquired, revenue recognition, and determining whether an asset is impaired. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates.
b.Basis of Consolidation and Transfers of Financial Assets
The accompanying combined consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. All intercompany balances and transactions have been eliminated. A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity in a subsidiary not attributable, directly or indirectly, to the Company. Non-controlling interests are required to be presented as a separate component of equity in the combined consolidated balance sheets and the presentation of net income (loss) is modified to present the net income (loss) attributed to controlling and non-controlling interests.
9
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
For a variable interest entity ("VIE"), an entity is subject to consolidation if the equity investors either do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support, are unable to direct the entity’s activities or are not exposed to the entity’s losses or entitled to its residual returns. VIEs that meet certain scope characteristics are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE is determined to be the party that has both the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. This determination can sometimes involve complex and subjective analysis. We are required on an ongoing basis to assess whether we are the primary beneficiary of a VIE.
We may periodically enter into transactions in which we sell financial assets. Upon a transfer of financial assets, we may retain or acquire senior or subordinated interests in the related assets. In connection with such transactions, a determination must be made as to whether we, as the transferor, have surrendered control over transferred financial assets. That determination must consider our continuing involvement in the transferred financial assets, including all arrangements or agreements made contemporaneously with, or in contemplation of, the transfer, even if they were not entered into at the time of the transfer. The financial components approach under applicable GAAP limits the circumstances in which a financial asset, or portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented and/or when the transferor has continuing involvement with the transferred financial asset. It defines the term “participating interest” to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale.
From time to time, we may securitize unsecured consumer loans we hold if such securitization allows us access to better financing terms. Depending upon the structure of the securitization transaction, these transactions will be accounted for as either a "sale" and the loans will be removed from the combined consolidated balance sheets or as a "financing" with the loans and financing reported on our combined consolidated balance sheets. Significant judgment may be exercised by us in determining whether a transaction should be recorded as a "sale" or a "financing."
In determining the accounting treatment to be applied to securitization transactions, we evaluate whether the entity used to facilitate the transactions was a VIE and, if so, whether the VIE should be consolidated. Based on our evaluations, we have concluded that one of our securitizations is a VIE that should be consolidated. The Company has determined that the other securitizations that we participated in should not be consolidated since, among other things, we concluded that the transfer of the underlying assets qualified as a sale.
c.Purchase Accounting and Acquisitions of Real Estate
Prior to the Company's adoption of Accounting Standards Update ("ASU") 2017-01 in January 2018, the Company recorded the acquisition of real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination were measured at their acquisition date fair values. Acquisition costs were expensed as incurred. Upon adoption of ASU 2017-01, the Company records the acquisition of real estate that will be used for the production of income as an asset acquisition, with all assets acquired and liabilities assumed recorded at their acquisition date fair values. Acquisition costs are capitalized and allocated to the acquired tangible assets, consisting of land, building and improvements, furniture, fixtures and equipment. The Company assesses the acquisition date fair values of all tangible assets, and identified lease intangibles, consisting of in-place leases, tenant relationships, deferred leasing costs, and above-market and below-market leases.
Real estate assets, including land, building and improvements, and furniture, fixtures and equipment are stated at historical cost less accumulated depreciation. Costs associated with the development, construction and improvement of the Company’s real estate assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred, while major replacements and betterments, which improve or extend the useful life of the asset, are capitalized and depreciated over the estimated useful lives.
10
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The Company records depreciation expense using the straight-line method over the useful lives of the respective assets. The estimated useful lives are as follows:
CategoryTerm
Building15 to 54 years
Improvements2 to 14 years
Furniture, fixtures, and equipment2 to 14 years
Depreciation expense for the years ended December 31, 2022 and 2021 was $96,897,855 and $91,089,441, respectively, and is included in depreciation and amortization expense in the accompanying combined consolidated statements of operations.
The value of acquired land, buildings and improvements is estimated by formal appraisals, observed comparable sales transactions and information gathered during pre-acquisition due diligence activities. The valuation approach considers the value of the property as if it were vacant. The values of furniture, fixtures and equipment are estimated by calculating their replacement cost and reducing that value by factors based upon estimates of their remaining useful lives.
The value allocated to acquired lease intangibles is based on management’s evaluation of the specific characteristics of each tenant’s lease. Characteristics considered by management in allocating these values include the nature and extent of the existing business relationships with the tenant, growth prospects for developing new business with the tenant, the remaining term of the lease and the tenant’s credit quality, among other factors.
The value of in-place leases and deferred leasing costs are amortized to expense over the remaining term of the respective leases, which range from less than a year to seventeen years. The amount allocated to acquire in-place leases is determined by calculating the estimated time to fill a hypothetically empty property to its stabilization level based on historical observed move-in rates for each property. The intangible assets are calculated by estimating the net cash flows of the in-place leases to be realized, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. The amount allocated to deferred leasing costs is determined by what the Company would have paid to a third-party to secure a new tenant reduced by the expired term of the respective lease. The value of tenant relationships is amortized over the remaining initial lease term and expected renewals, which is thirty seven years. The amount allocated to tenant relationships is the benefit resulting from the likelihood of a tenant renewing its lease. Acquired intangible assets generally have no residual value. Amortization expense related to these assets was $23,597,558 and $24,927,864 for the years ended December 31, 2022 and 2021, respectively.
d.Impairment of Real Estate
The Company reviews the carrying value of its real estate assets and intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such reviews indicate that the asset may be impaired, given that the carrying amount of an asset exceeds the sum of its expected future cash flows, on an undiscounted basis, the asset’s carrying amount is written down to its fair value. Estimating future cash flows and fair values is highly subjective and such estimates could differ materially from actual results. For the years ended December 31, 2022 and 2021, the Company did not record any impairment charges related to real estate assets.
e.Assets Held for Sale and Discontinued Operations
The Company classifies certain real estate assets as held for sale on the combined consolidated balance sheets once the criteria, as defined by GAAP, have been met. Real estate assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell and are no longer depreciated. The Company reports discontinued operations when the disposal of real estate assets represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. No disposal met the definition of discontinued operations as of December 31, 2022 and 2021.
f.Environmental Matters
Under various federal, state and local environmental laws, statutes, ordinances, rules and regulations, an owner of real property may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under such property as well as certain other potential costs relating to hazardous or toxic substances. These liabilities may include government fines and penalties and damages for injuries to persons
11
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
and adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances. The Company recognizes a liability for environmental matters if it is probable a liability has been incurred and the amount of loss can be reasonably estimated. As of December 31, 2022 and 2021, the Company is not aware of any environmental matters that would have an impact on the combined consolidated financial statements.
g.Fair Value Measurements
In accordance with ASC Topic 820, Fair Value Measurement ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, in the principal or most advantageous market considering the highest and best use of an asset or nonperformance risk related to a liability, at the measurement date. The Company uses the most observable inputs that are available to measure fair value. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s views about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
•Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities;
•Level 2 - observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and
•Level 3 - unobservable inputs that are used when little or no market data is available.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considering counterparty credit risk, where applicable, in the Company’s assessment of fair value.
The Company carries its mortgages payable, debt related to consolidated VIE, preferred equity investment, and senior secured term loan at cost, net of unamortized discount, debt issuance costs, and associated amortization, on the accompanying combined consolidated balance sheets.
h.Fair Value of Financial Instruments
Pursuant to ASC Topic 825, Financial Instruments ("ASC 825"), which provides entities with an option to report selected financial assets and liabilities at fair value, the Company has made an election to measure its unsecured consumer loans, residual interest in securitizations, CLOs, corporate bonds, interest rate caps, and reverse repurchase facilities at fair value on the combined consolidated balance sheets. We elected to use the fair value option to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Under this election, (a) unsecured consumer loans charged off, recoveries, and realized gains (losses), and (b) net increase or decrease in unrealized appreciation (depreciation) of the unsecured consumer loans, residual interest in securitizations, CLOs, corporate bonds, interest rate caps, and reverse repurchase facilities are recorded as fair value adjustments on the combined consolidated statements of operations.








12
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
i.Revenue Recognition
Rental revenues from residential, student housing, and self-storage tenants are recognized on a contractual basis, as lease periods for these investments are short‑term in nature. Rental revenues are recorded net of bad debts, which include the change in the reserve for uncollectible receivables. The Company recognizes reimbursement for utilities and other expenses recoveries as other revenue when earned. Rental revenues from industrial and commercial tenants are recognized on a straight-line basis over the term of the lease. The industrial and commercial leases contain rental increases at specified intervals. The Company records as an asset, and includes in rental revenues, deferred rent receivable that will be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Deferred rent receivable in the accompanying combined consolidated balance sheets includes the cumulative difference between rental revenue recorded on a straight-line basis and rents received from the tenants in accordance with the respective lease terms.
Minimum future rental receipts under the noncancelable portion of commercial and industrial tenant leases, assuming no new or renegotiated leases, for the next five years and thereafter are as follows: $1,249,664 (2023), $1,318,339 (2024), $1,318,339 (2025), $1,318,339 (2026), $1,318,339 (2027), and $6,300,557 (thereafter).
Interest income is recognized on an accrual basis, in accordance with the terms of the loan agreement, to the extent that such amounts are expected to be collected. Generally, our unsecured consumer loans are placed on non-accrual status when the loan is greater than 60 days contractually delinquent or charged off, which may occur if a borrower were to declare bankruptcy prior to a loan being 60 days delinquent, at which point the associated interest receivable balance is reversed against the interest income on the combined consolidated statements of operations. For residual interests in securitizations, interest income is recognized using the effective interest method. Under this method, we recognize as interest income, over the life of the securities, the excess of the cash flows expected to be collected over the securities' carrying value. We update our estimates of expected cash flows quarterly and recognize changes in the calculated effective interest rate on a prospective basis. For certain investments held by the Company, cash not received for interest may be recorded through a payment-in-kind ("PIK"). Interest income recorded as PIK is recognized as income in the period earned.
Gains and losses on the sale of real estate are recognized pursuant to ASC 610, Gains and Losses from the Derecognition of Nonfinancial Assets. Any gain or loss on sale is measured based on the difference between the amount of consideration received and the carrying amount of the sold real estate asset, less costs to sell. For a partial sale of real estate resulting in a transfer of control, the Company measures any non-controlling interest retained at fair value, and recognizes a gain or loss on the difference between the fair value and the carrying amount of the real estate assets retained.
j.Cash and Cash Equivalents
The Company considers all highly-liquid instruments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents includes funds deposited with financial institutions and short-term, highly-liquid overnight investment in money market funds. As of December 31, 2022 and 2021, $69,524 and $5,057,364 of the cash and cash equivalents, respectively, disclosed on the combined consolidated balance sheets represent investments in money market funds, with the remainder held in deposit accounts, substantially all of which exceeded applicable insurance limits.
k.Restricted Cash
Restricted cash consists of cash escrowed under the operating agreements and mortgage agreements for debt service, real estate taxes, property insurance, and capital improvements and other restricted deposits.
As of December 31, 2022 and 2021, the Company had cash and cash equivalents of $35,212,438 and $45,488,636, respectively; in addition, the Company had restricted cash of $37,869,284 and $39,317,283 as of December 31, 2022 and 2021, respectively. Total cash and cash equivalents, and restricted cash was $73,081,722 and $84,805,919 as of December 31, 2022 and 2021, respectively.
l.Unsecured Consumer Loans
Unsecured consumer loans consist of individual loans purchased from various originators of unsecured consumer loans ("Lending Platforms") under terms of the Company’s agreement with the respective platforms, who are sellers of the unsecured consumer loans that continue to service such loans. Unsecured consumer loans made through the Lending Platforms are issued by WebBank, an FDIC-insured, Utah chartered industrial
13
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
bank, except for loans issued by NBT. After funding a loan, WebBank sells the loan to the Lending Platform, without recourse, in exchange for the principal amount of the loan. Loans issued by NBT are purchased by the Company as part of a loan purchase and sale agreement between ACL PS, NBT and Springstone. All loans purchased are unsecured obligations of individual borrowers with a fixed interest rate and loan terms set between 12 and 84 months. Unsecured consumer loans are recorded on the date purchased by the Company, which is generally at least fifteen days after origination. Unsecured consumer loans are charged off in the month that the loan becomes greater than 120 days contractually delinquent or in the month that the borrower has entered bankruptcy, at which point the outstanding principal amount is written off against the total balance of the unsecured consumer loans on the combined consolidated balance sheets. This results in a fair value adjustment on the combined consolidated statements of operations. Recoveries on charged off loans and sales of charged off loans to third-parties are recorded as received, net of fees.
m.Due from Lending Platforms
LendingClub and Prosper are online marketplace Lending Platforms from which we purchase unsecured consumer loans. The Due from LendingClub Corporation and Due from Prosper Funding LLC amounts presented on the combined consolidated balance sheets represent cash deposited at LendingClub and Prosper, respectively.
n.Allowance for Doubtful Accounts
The Company monitors its accounts receivable on a tenant-by-tenant basis and if cash collection is deemed not probable, the Company establishes a full reserve for the individual tenant's outstanding balance. For the remaining receivable balance, the Company establishes and maintains a general reserve reflecting the Company's expectation that a portion of the operating receivables will not be collected. As of December 31, 2022 and 2021, allowance for bad debt was $3,129,901 and $4,944,777, respectively, and is included as accounts receivable within the combined consolidated balance sheets.
o.Asset Management and Management Services
Management fee expenses are recognized when incurred in accordance with the terms of each respective management agreement.
p.Debt Issuance Costs and Unamortized Debt Discounts
The Company defers costs incurred in connection with obtaining financing and amortizes the costs using the straight‑line method, which approximates the effective interest rate method, over the terms of the related debt as a component of interest expense. The Company also recognizes a debt discount or premium in connection with mortgages assumed at fair value in accordance with ASC 805. Debt issuance costs and unamortized debt discounts have been presented as a direct deduction to our mortgages payable, mortgages payable related to real estate assets held for sale, debt related to consolidated VIE, and senior secured term loans in the accompanying combined consolidated balance sheets.
At December 31, 2022 and 2021, the Company had net debt issuance costs and debt discounts of $19,258,121 and $23,108,088, respectively. Amortization of debt issuance costs and debt discounts of $7,440,085 and $6,440,459 is included in interest expense in the combined consolidated statements of operations for the years ended December 31, 2022 and 2021, respectively.
q.Non-controlling Interests
Non-controlling interests are comprised of the Company’s joint venture partners’ interests in the joint ventures in real estate properties that the Company consolidates. The Company reports its joint venture partners’ interests in its consolidated real estate joint ventures and other subsidiary interests held by third-parties as non-controlling interests. The Company records these non-controlling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investments’ net income or loss and equity contributions and distributions. These non-controlling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are generally allocated pro rata based on the respective ownership percentages until the venture reaches certain performance measures, at which time the other venture party will be entitled to preferred distributions (profit interests).
r.Income Taxes
The Company elected to be taxed as a REIT for U.S. federal income tax purposes, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). The Company believes it operates in such a manner as to qualify for treatment as a REIT for federal income tax purposes. Accordingly, the Company
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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
generally will not be subject to federal income tax, provided that distributions to its stockholders equal at least the amount of its taxable income. A REIT is subject to a number of organizational and operational requirements, including, among others, a requirement that it currently distributes at least 90% of its taxable income to stockholders, subject to certain adjustments. If the Company fails to qualify as a REIT in any taxable year without the benefit of certain relief provisions, it will be subject to federal and state income taxes on its taxable income at regular corporate income tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state or local taxes on its income, property or net worth and federal taxes and excise taxes on its undistributed income. In addition, taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiaries ("TRS") will be fully subject to federal, state and local income taxes.
The Company accounts for TRS income taxes under the liability method as required by ASC Topic 740, Income Taxes. Under the liability method, deferred income taxes are recognized for the temporary differences between the GAAP basis and tax basis of the TRS income, assets and liabilities. For the years ended December 31, 2022 and 2021, several of the Company's subsidiaries were considered taxable corporations for U.S. federal and state income tax purposes. The taxable U.S. corporate subsidiaries are subject to corporate level U.S. federal, state and local income tax on their net taxable income.
ASC 740, Income Taxes ("ASC 740") provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the combined consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of December 31, 2022 and 2021, we did not have a liability for any unrecognized tax benefits. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof. We file tax returns for U.S. federal, various states and foreign jurisdictions. The statute of limitation is open for all jurisdictions for tax years beginning in 2018.
The Company’s policy is to classify interest and penalties on tax positions, if any, as expenses. For the years ended December 31, 2022 and 2021, no interest and penalties have been accrued.
s.Concentration of Counterparty Risk and Credit Risk
In the normal course of its business, the Company encounters counterparty risk and credit risk. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, principal and interest outstanding on unsecured consumer loans, and amounts deposited with each of the Company's Lending Platforms. Counterparty risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.
t.Servicing, Collection and Upfront Fees
The Company incurs a monthly servicing fee for each outstanding unsecured consumer loan, which is payable to the Lending Platforms for managing payments from borrowers and maintaining loan account portfolios. The Company incurs collection fees on amounts recovered from delinquent loans, which is payable to the Lending Platforms. The Company incurs an upfront fee on unsecured consumer loans purchased from Avant. All servicing, collection and upfront fees are expensed as incurred.
u.Collateralized Loan Obligations ("CLOs")
The Company holds investments in CLOs which are subordinated debt interests in syndicated loans managed by third-party collateral managers with industry experience. The outstanding investments range in expected maturity from April 2026 to October 2033 and pays interest based on the three-month LIBOR (“3ML”) plus 5.20% to 9.23%.
Secondary CLOs purchased from a broker are recorded on the trade date and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt within the first two quarterly payment cycles. The discount to par is amortized over the expected maturity of the CLO debt, which is calculated using estimated cash flows on the date of purchase.
Primary CLOs purchased either from the collateral manager or the broker are recorded on the settled date, to reflect the potential changes, updates or resizing of the position, due to the long-term nature of settlement. The typical settlement time for Depository Trust Company bonds is three days. Amortization of an original issue
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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
discount is calculated to expected maturity date, based on projected cash flows at the time of purchase, and recorded over the expected life of the bond.
Gains or losses from the sale or call of CLOs are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale or call. Restructured or permanently impaired CLOs are recorded in the period of measurement and recorded on the combined consolidated statements of operations as a realized gain or loss and amortized to expected maturity based on the available cash flows at the time of measurement. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
v.Corporate bonds
The Company holds corporate bonds comprised of investment grade and high yield corporate bonds including performing credit strategies focused on income-oriented, senior loan and bond investment strategies targeting U.S. issuers.
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. The typical settlement time for Depository Trust Company bonds is three days. Gains or losses from the sale or call of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale or call. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
w.Interest rate caps
In order to manage the risks associated with the variable rate financing of the mortgage, the Company may enter into various interest rate cap agreements. The cap agreements have initial notional values equal to the original loan amount of the related mortgages.
Derivative instruments not meeting the criteria for hedge accounting are recorded at fair value on the balance sheets with any change in fair value reflected in the combined consolidated statement of operations in the period of change. The fair value of the interest rate caps as of December 31, 2022 and 2021 was $25,724,128 and $3,311,090, respectively. For the year ended December 31, 2022 and 2021, there was $14,067,690 and $0, respectively, of gain recorded for the fair value of the interest rate caps.
x.Reclassifications
Certain amounts in the 2021 combined consolidated financial statements have been reclassified to conform to the 2022 presentation.
y.Recent accounting pronouncements
In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016-13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current GAAP. In November 2018, the FASB issued ASU 2018-19, which clarified that receivables arising from operating leases are not within the scope of ASC Topic 326, and instead, impairment of receivables arising from operating leases should be accounted for under the scope of ASC Topic 842, Leases. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. The Company adopted the provisions of ASU 2016-13 on January 1, 2022. This adoption did not have a material impact on the combined consolidated financial statements.


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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
3.Recent Real Estate Transactions
Acquisition of Real Estate Assets Held for Investment
During 2022 and 2021, the Company acquired the following properties:
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Kokomo, a multi-family property located in Kokomo, IN for an aggregate purchase price of $20,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $12,753,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $911,917.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Stillwater, a multi-family property located in Stillwater, OK for an aggregate purchase price of $26,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $15,328,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,244,358.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Pueblo, a multi-family property located in Pueblo, CO for an aggregate purchase price of $31,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $20,166,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,307,918.
▪On May 26, 2022, the Company, together with a joint venture partner, acquired Cheyenne, a multi-family property located in Cheyenne, WY for an aggregate purchase price of $27,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $17,656,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,158,374.
▪On March 29, 2022, the Company, together with a joint venture partner, acquired Southport Crossing, a multi-family property located in Indianapolis, IN for an aggregate purchase price of $48,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $35,600,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,141,881.
▪On March 18, 2022, the Company acquired Rutland Place, a multi-family property located in Macon, GA for an aggregate purchase price of $29,750,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $22,500,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Lancaster Place, a multi-family property located in Calera, AL for an aggregate purchase price of $37,550,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $28,350,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Twin Oaks, a multi-family property located in Hattiesburg, MS for an aggregate purchase price of $44,850,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $33,830,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On March 18, 2022, the Company acquired Enclave at Wolfchase, a multi-family property located in Cordova, TN for an aggregate purchase price of $82,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $60,000,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.
▪On December 30, 2021, the Company, together with a joint venture partner, acquired West Vue, a multi-family property located in Orlando, FL for an aggregate purchase price of $97,500,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $73,000,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $3,255,556.
▪On November 30, 2021, the Company, together with a joint venture partner, acquired Elliot Norcross, a multi-family property located in Norcross, GA for an aggregate purchase price of $128,000,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $98,800,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $3,530,000.
▪On June 28, 2021, the Company, together with a joint venture partner, acquired Crosswinds, a multi-family property located in Pearl, MS for an aggregate purchase price of $41,400,000 exclusive of acquisition and
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National Property REIT Corp
Notes to Combined Consolidated Financial Statements
closing costs. For the purchase of this property, the Company obtained bank financing of $33,825,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $2,676,334.
▪On June 28, 2021, the Company, together with a joint venture partner, acquired Reflection Pointe, a multi-family property located in Flowood, MS for an aggregate purchase price of $45,100,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $31,050,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $2,906,888.
▪On June 28, 2021, the Company, together with a joint venture partner, acquired Lakeshore Landing, a multi-family property located in Ridgeland, MS for an aggregate purchase price of $22,600,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $16,950,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $1,618,561.
▪On June 28, 2021, the Company, together with a joint venture partner, acquired Pear Orchard, a multi-family property located in Ridgeland, MS for an aggregate purchase price of $50,900,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $38,175,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $3,298,216.
▪On March 12, 2021, the Company, together with a joint venture partner, acquired The Edge at Clear Lake, a multi-family property located in Webster, TX for an aggregate purchase price of $34,000,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $25,496,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $2,879,205.
▪On February 26, 2021, the Company, together with a joint venture partner, acquired The Willows Apartments, a multi-family property located in Spartanburg, SC for an aggregate purchase price of $23,255,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $19,000,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $255,396.
▪On February 26, 2021, the Company, together with a joint venture partner, acquired The Laurel Apartments, a multi-family property located in Spartanburg, SC for an aggregate purchase price of $57,005,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $42,025,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $784,850.
▪On January 27, 2021, the Company acquired Chimneys of Greenville, a multi-family property located in Taylors, SC for an aggregate purchase price of $18,762,000 exclusive of acquisition and closing costs. For the purchase of this property, the Company obtained bank financing of $14,075,000. On the date of acquisition, the fair value of the non-controlling interest in the joint venture was $0.

18
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The below listed 2022 and 2021 acquisitions have been accounted for as asset acquisitions. The purchase price was allocated to the acquired assets and liabilities based on their estimated fair values at the date of acquisition. The Company allocated the purchase price, plus capitalized acquisition costs, of the properties acquired during 2022 and 2021 as follows:
PropertyLandBuildingImprovementsFF&ELease IntangiblesTotal Purchase Price
2022 Acquisitions:
Enclave at Wolfchase$4,284,151 $73,000,327 $1,627,778 $520,290 $3,496,227 $82,928,773 
Twin Oaks1,631,277 40,379,141 1,235,591 309,137 1,875,969 45,431,115 
Lancaster Place2,106,551 33,038,965 951,016 249,514 1,625,929 37,971,975 
Rutland Place1,852,142 26,142,545 607,972 234,807 1,343,056 30,180,522 
Southport Crossing2,660,957 42,356,055 617,900 1,008,572 2,070,961 48,714,445 
Cheyenne1,371,052 25,432,206 203,431 316,397 949,190 28,272,276 
Pueblo1,532,088 29,211,806 — 408,557 1,021,392 32,173,843 
Stillwater3,720,206 21,896,069 — 318,876 850,332 26,785,483 
Kokomo389,928 19,671,250 58,809 292,446 779,856 21,192,289 
Total 2022:$19,548,352 $311,128,364 $5,302,497 $3,658,596 $14,012,912 $353,650,721 
2021 Acquisitions:
Chimneys of Greenville$1,936,290 $15,592,225 $340,242 $174,266 $1,036,424 $19,079,447 
The Laurel Apartments2,354,507 49,394,544 1,943,720 909,741 2,726,218 57,328,730 
The Willows Apartments1,032,581 19,942,980 931,347 314,836 1,255,294 23,477,038 
The Edge at Clear Lake2,226,104 29,274,788 691,210 704,424 1,702,613 34,599,139 
Pear Orchard4,640,967 42,831,836 1,584,471 242,271 2,465,642 51,765,187 
Lakeshore Landing2,129,945 18,899,508 699,982 119,997 1,145,969 22,995,401 
Reflection Pointe4,275,522 34,346,013 1,347,499 183,382 1,953,365 42,105,781 
Crosswinds3,767,644 38,279,260 1,255,882 221,035 2,344,981 45,868,802 
Elliot Norcross14,597,360 105,690,697 2,709,752 1,450,392 5,373,821 129,822,022 
West Vue— 81,507,503 1,950,869 1,284,918 14,399,659 99,142,949 
Total 2021:$36,960,920 $435,759,354 $13,454,974 $5,605,262 $34,403,986 $526,184,496 
The weighted average amortization period of acquired in-place leases was approximately six months for each of the years ended December 31, 2022 and 2021, respectively.
Summarized information regarding properties sold during the years ended December 31, 2022 and 2021 is set forth in the table below:
PropertyDisposition DateAsset TypeGross Sale PriceGain on Sale
2022 Dispositions:
Verandas at Rocky Ridge2/1/2022Multi-family$34,670,000 $20,956,684 
Total 2022:$34,670,000 $20,956,684 
2021 Dispositions:
Union Place1/29/2021Multi-family$77,300,000 $18,966,200 
Canterbury10/13/2021Multi-family171,800,000 113,313,696 
Forest Park10/19/2021Multi-family107,300,000 53,499,660 
Gulf Coast12/1/2021Multi-family265,330,000 174,559,244 
Total 2021:$621,730,000 $360,338,800 
19
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
4.Real Estate Assets
The Company’s ownership interests in real estate properties range from 67% to 100% via either direct ownership or ownership of a property owning entity. Through its ownership interests, the Company controls and therefore consolidates the properties and property owning entities. The interest owned by the other joint venture partner is reflected as non-controlling interest in these combined consolidated financial statements.
The Company’s real estate assets consisted of the following as of December 31, 2022 and 2021:
PropertyAcquisition DateOwnership PercentageAsset TypeLocationReal Estate Assets, Net of Accumulated Depreciation
20222021
Filet of Chicken10/24/2012100.0%IndustrialForest Park, GA$4,064,982 $4,225,493 
Arlington Park5/8/201393.3%Multi-FamilyMarietta, GA8,616,016 8,387,519 
Verandas at Rocky Ridge11/15/201399.3%Multi-FamilyVestavia Hills, AL— 12,790,100 
Taco Bell, OK6/4/2014100.0%CommercialYukon, OK1,080,637 1,133,714 
Taco Bell, MO6/4/2014100.0%CommercialMarshall, MO872,568 916,862 
Abbie Lakes9/30/201479.1%Multi-FamilyCanal Winchester, OH10,070,645 10,318,581 
Brooksedge9/30/201479.1%Multi-FamilyReynoldsburg, OH9,574,690 9,873,596 
Reserve at Abbie Lakes9/30/201479.1%Multi-FamilyCanal Winchester, OH22,577,192 23,366,142 
Lake's Edge9/30/201479.1%Multi-FamilyPickerington, OH9,709,282 10,132,352 
Sunbury Ridge9/30/201479.1%Multi-FamilyColumbus OH11,375,360 11,872,598 
Stonebridge9/30/201479.1%Multi-FamilyBlacklick, OH16,284,411 17,017,050 
Jefferson Chase9/30/201479.1%Multi-FamilyBlacklick, OH10,286,606 10,673,209 
Lake Ridge10/29/201479.1%Multi-FamilyHilliard, OH5,647,294 5,882,478 
Orchard Village11/5/201580.0%Multi-FamilyAurora, IL28,425,777 29,524,559 
Sterling Crimson9/28/201667.0%Student HousingTuscaloosa, AL42,362,222 43,325,815 
Hawks Ridge9/28/201667.0%Student HousingIowa City, IA26,762,353 26,760,642 
Islander Village9/28/201667.0%Student HousingCorpus Christi, TX10,875,899 11,114,729 
Campus Quarters9/28/201667.0%Student HousingCorpus Christi, TX14,277,046 14,544,927 
District on Luther9/28/201667.0%Student HousingCollege Station, TX30,507,794 30,722,119 
West 229/28/201667.0%Student HousingKennesaw, GA45,474,999 46,630,704 
Legacy9/28/201667.0%Student HousingStatesboro, GA5,929,116 6,172,263 
University Crossing9/28/201667.0%Student HousingManhattan, KS16,858,191 17,338,300 
Seasons1/30/201792.5%Multi-FamilyLaurel, MD164,652,567 167,281,000 
Villages of Baymeadows10/31/201792.5%Multi-FamilyJacksonville, FL 82,038,859 84,280,919 
Casa del Mar10/31/201792.5%Multi-FamilyJacksonville, FL 13,388,394 13,772,317 
Silver Oaks11/8/201792.5%Multi-FamilySouthfield, MI14,088,499 14,069,596 
Sutton Place11/8/201792.5%Multi-FamilySouthfield, MI43,808,107 45,993,359 
Steeplechase1/9/201892.5%Multi-FamilyLargo, MD40,135,930 41,345,174 
Olentangy Commons6/1/201892.5%Multi-FamilyColumbus, OH103,376,766 105,579,130 
Villages of Wildwood7/20/201892.5%Multi-FamilyFairfield, OH43,465,102 45,338,690 
Falling Creek8/8/201890.0%Multi-FamilyRichmond, VA21,812,770 22,508,966 
Crown Pointe8/30/201880.0%Multi-FamilyDanbury, CT96,754,311 98,544,334 
Lorring Park10/30/201880.0%Multi-FamilyForestville, MD56,642,818 57,891,108 
Hamptons1/9/201992.5%Multi-FamilyBeachwood, OH76,343,120 80,273,436 
The Isle6/28/201992.5%Multi-FamilyOrlando, FL24,524,503 24,850,216 
Druid Hills7/30/201996.3%Multi-FamilyAtlanta, GA76,552,758 77,842,281 
Parcstone10/15/201988.0%Multi-FamilyFayetteville, NC40,094,024 41,169,242 
Stone Ridge10/15/201988.0%Multi-FamilyFayetteville, NC19,972,653 20,524,688 
Sterling Place10/28/201992.5%Multi-FamilyColumbus, OH40,196,735 39,683,098 
Hampton on Jupiter11/2/202080.0%Multi-FamilyDallas, TX35,123,195 35,507,104 
Palmetto Creek11/10/202090.0%Multi-FamilyNorth Charleston, SC31,299,438 31,452,060 
Valora at Homewood11/19/202090.0%Multi-FamilyHomewood, AL73,413,788 75,645,779 
The Dylan at Fairburn12/14/2020100.0%Multi-FamilyFairburn, GA48,589,466 49,618,896 
The Dylan at Grayson12/14/2020100.0%Multi-FamilyGrayson, GA44,488,009 45,437,812 
Chimneys of Greenville1/27/2021100.0%Multi-FamilyTaylors, SC18,255,507 17,900,909 
The Laurel Apartments2/26/202196.3%Multi-FamilySpartanburg, SC54,304,114 54,612,779 
The Willows Apartments2/26/202196.3%Multi-FamilySpartanburg, SC20,894,148 21,629,286 
The Edge at Clear Lake3/12/202180.0%Multi-FamilyWebster, TX32,889,330 33,721,152 
Pear Orchard6/28/202180.0%Multi-FamilyRidgeland, MS47,662,565 48,779,012 
20
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
PropertyAcquisition DateOwnership PercentageAsset TypeLocationReal Estate Assets, Net of Accumulated Depreciation
20222021
Lakeshore Landing6/28/202180.0%Multi-FamilyRidgeland, MS20,879,577 21,616,956 
Reflection Pointe6/28/202180.0%Multi-FamilyFlowood, MS38,603,634 39,777,295 
Crosswinds6/28/202180.0%Multi-FamilyPearl, MS41,368,894 42,985,832 
Elliot Norcross11/30/202190.0%Multi-FamilyNorcross, GA125,570,287 124,255,893 
West Vue12/30/202190.0%Multi-FamilyOrlando, FL83,173,770 84,743,290 
Enclave at Wolfchase3/18/2022100.0%Multi-FamilyCordova, TN77,513,083 — 
Twin Oaks3/18/2022100.0%Multi-FamilyHattiesburg, MS42,954,111 — 
Lancaster Place3/18/2022100.0%Multi-FamilyCalera, AL35,827,253 — 
Rutland Place3/18/2022100.0%Multi-FamilyMacon, GA28,208,461 — 
Southport Crossing3/29/202292.5%Multi-FamilyIndianapolis, IN47,412,735 — 
Cheyenne5/26/202290.0%Senior LivingCheyenne, WY26,964,513 — 
Pueblo5/26/202290.0%Senior LivingPueblo, CO30,780,715 — 
Stillwater5/26/202290.0%Senior LivingStillwater, OK25,693,236 — 
Kokomo5/26/202290.0%Senior LivingKokomo, IN20,148,278 — 
Total net real estate assets$2,341,499,103 $2,061,355,361 
5.Lease Intangibles
Lease intangibles consist of the following:
As of December 31, 2022As of December 31, 2021
Lease IntangiblesAccumulated AmortizationLease Intangibles, netLease IntangiblesAccumulated AmortizationLease Intangibles, net
In-place leases$109,870,457 $(104,818,996)$5,051,461 $95,857,545 $(86,403,445)$9,454,100 
Above-market leases10,989,653 (687,180)10,302,473 9,825,842 — 9,825,842 
Below-market leases— — — — — — 
Tenant relationships239,208 (65,433)173,775 239,208 (58,997)180,211 
Deferred leasing costs635,325 (372,685)262,640 635,325 (334,172)301,153 
     Total$121,734,643 $(105,944,294)$15,790,349 $106,557,920 $(86,796,614)$19,761,306 
Future amortization expense for the Company’s lease intangibles is as follows: $95,686 (2023), $95,686 (2024), $95,686 (2025), $95,686 (2026), $95,686 (2027), and $15,311,919 (thereafter).
6.Real Estate Assets Held for Sale
As of December 31, 2022, no real estate assets met the criteria to be classified as held for sale.
As of December 31, 2021, the real estate assets held by Veranda at Rocky Ridge met the criteria to be classified as held for sale. The Company entered into a purchase and sale agreement with an unrelated third-party on October 1, 2021. The sale closed on February 1, 2022, resulting in the recognition of a gain in the amount of $20,956,684.

Below is a summary of the major classes of real estate assets classified as held for sale:    
Real Estate Assets Held for SaleDecember 31, 2022December 31, 2021
Land$— $1,485,596 
Building and improvements— 15,438,471 
Furniture, fixtures, and equipment— 2,105,271 
Less: accumulated depreciation— (6,238,749)
Total net real estate assets held for sale$— $12,790,589 
21
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
7.Preferred Equity Investments
On November 14, 2022, the Company, together with a joint venture partner, acquired Terraces at Perkins Rowe, a multi-family property located in Baton Rouge, LA for an aggregate purchase price of $41,400,000. The investment is structured as an investment that incorporates debt-like return metrics. The Company receives 7% cash return each month with additional 7% paid-in-kind (PIK) accrued to the Company’s outstanding capital balance. During the year ended 2022, the Company recognized total interest income of $240,425 from preferred equity investment. The Company's preferred equity investment meets the definition of held-to-maturity debt security, which are reported at amortized cost. The Company determined that as of December 31, 2022, fair value of the preferred equity investment approximated its cost of $13,073,865.
8.Involuntary Conversions
During 2022, the Company wrote off real estate assets from fire damages. As of December 31, 2022, proceeds of $3,117,599 were received. For the year ended December 31, 2022, a gain from involuntary conversion of $1,531,629 was recorded in relation to the assessed outcome of the damages and is included as gain on involuntary conversions on the combined consolidated statements of operations.
During 2021, the Company wrote off real estate assets from fire and storm damages. As of December 31, 2021, proceeds of $4,019,752 were received. For the year ended December 31, 2021, a gain from involuntary conversion of $655,239 was recorded in relation to the assessed outcome of the damages and is included as gain on involuntary conversions on the combined consolidated statements of operations.
9.Unsecured Consumer Loans
The Company purchased $0 and $0 of aggregate principal in unsecured consumer loans from LendingClub and NBT during the years ended December 31, 2022 and 2021, respectively.
During the year ended December 31, 2018, the Company purchased a trust certificate in LendingClub Issuance Trust, Series 2016-NP1 ("LCIT 2016-NP1") with a fair value of $5,665,256 representing a 59.32% interest in LCIT 2016-NP1. We were not involved in the design or creation of the trust and our continuing involvement is typically passive in nature and does not provide us with the power to direct the activities that most significantly impact the economic performance of the securitization trust. As a result, the Company does not consolidate the Club 2017 Securitization trust associated with this securitization.
During the year ended December 31, 2018, the Company purchased a trust certificate in LendingClub Issuance Trust, Series 2016-NP2 ("LCIT 2016-NP2") with a fair value of $10,458,276 representing a 72.60% interest in LCIT 2016-NP2. We were not involved in the design or creation of the trust and our continuing involvement is typically passive in nature and does not provide us with the power to direct the activities that most significantly impact the economic performance of the securitization trust. As a result, the Company does not consolidate the Club 2017 Securitization trust associated with this securitization.
On March 21, 2018, the Company sold 28,474 of unsecured consumer loans (with a cost of $200,001,980 and accrued interest of $2,261,777) previously purchased from LendingClub to Consumer Loan Underlying Bond (CLUB) Depositor, LLC ("Club 2018-NP-1") for proceeds of $166,701,211 net of related transaction expenses, and a trust certificate with a fair value of $32,965,958 representing a 56.36% interest in the Club 2018-NP1. On the date of sale, the Company reversed the unrealized loss of $(334,812) and the accrued interest of $(2,261,777), recording realized losses of $(334,812). The Company acquired an additional residual interest in the securitization for $928,822, increasing the total interest in the Club 2018-NP1 to 57.95%.
The Company’s portfolio of unsecured consumer loans consists of a large number of small balance homogeneous loans. As of December 31, 2022, the portfolio consisted of 216 loans having an average outstanding principal balance of $2,430 and a maximum balance of $50,000 at the time of origination. As of December 31, 2022, the unsecured consumer loans were issued with stated interest rates ranging from 8.0% to 36.0% with a weighted average interest rate of 18.6% based on outstanding principal of the unsecured consumer loans. As of December 31, 2021, the portfolio consisted of 841 loans having an average outstanding principal balance of $3,905 and maximum balance of $50,000 at the time of origination. As of December 31, 2021, the unsecured consumer loans were issued with stated interest rates ranging from 6.0% to 36.0% with a weighted average interest rate of 20.0% based on outstanding principal of the unsecured consumer loans.
The ability of the borrowers of the unsecured consumer loans to repay the Company are affected by their continuing financial stability. The credit risk of the unsecured consumer loans and the residual interest in securitizations is considered to be higher than for secured loans.
22
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The Lending Platforms classify the unsecured consumer loans into separately identified pools by rating ("Rating"), which indicates the expected level of risk associated with the loan. Each Rating corresponds to an estimated average annualized loss rate range as of the time the Rating is given. The estimated annual loss rate for each loan is based primarily on a proprietary custom risk model developed by each of the Lending Platforms using their respective historical data, borrower specific factors and Fair Isaac Corporation score (“FICO score”) obtained from a credit reporting agency. As part of the Rating determination, the Lending Platforms also consider borrower specific factors such as, but not limited to, credit related inquiries in the last six months and debt-to-income ratio.
Ratings are not consistent between Lending Platforms; as such the Company stratifies its unsecured consumer loans into separately identified pools based on the FICO score obtained from a credit reporting agency and as provided by each Lending Platform at origination. The stratified pools are designated "Super Prime," "Prime" or "Near Prime," and defined as follows: Super Prime loans as loans to borrowers with a FICO score of 720 or greater, Prime Loans as loans to borrowers with a FICO score of between 660 and 719 and Near Prime loans as loans to borrowers with a FICO score of between 600 and 659.
The following table summarizes the Company's unsecured consumer loans held as of December 31, 2022:
CategoryOutstanding PrincipalFair ValueInterest Rate RangeWeighted Average Interest Rate*
Super Prime$182,638 $182,194 8.0% - 20.5%12.2%
Prime211,193 204,355 12.0% - 25.0%19.1%
Near Prime131,088 134,397 19.5% - 36.0%26.8%
Total Loans$524,919 $520,946 18.6%
* Based on outstanding principal of the unsecured consumer loans.
The following table summarizes the Company's unsecured consumer loans held as of December 31, 2021:
CategoryOutstanding PrincipalFair ValueInterest Rate RangeWeighted Average Interest Rate*
Super Prime$738,479 $722,898 7.0% - 20.5%12.3%
Prime1,317,461 1,242,844 6.0% - 25.0%18.0%
Near Prime1,228,172 1,255,377 6.0% - 36.0%26.7%
Total Loans$3,284,112 $3,221,119 20.0%
* Based on outstanding principal of the unsecured consumer loans.
The following table summarizes the delinquency status of the unsecured consumer loans:
December 31, 2022December 31, 2021
Delinquency StatusOutstanding PrincipalFair Value% of TotalOutstanding PrincipalFair Value% of Total
Current$488,255 $491,804 93.00 %$3,062,038 $3,107,025 93.24 %
1 - 30 days23,907 21,852 4.60 %95,595 75,454 2.91 %
31 - 60 days5,877 4,623 1.10 %51,460 28,052 1.57 %
61 - 90 days6,879 2,667 1.30 %19,046 4,099 0.58 %
91 - 120 days— — — %55,973 6,489 1.70 %
Total Loans$524,918 $520,946 100.00 %$3,284,112 $3,221,119 100.00 %
10.Collateralized Loan Obligations
The CLO investments held by NGL are subordinated debt interests in broadly syndicated loans managed by established collateral management teams with many years of experience in the industry.
The credit risk of a CLO is dependent on the underlying assets within the portfolio. For “traditional” CLOs, the collateral pool primarily consists of first lien, senior secured broadly syndicated bank loans (usually at least 90% of the total portfolio), and it may include a predetermined allowable portion of other asset types such as second lien bank loans (which are highly leveraged) and unsecured debt, as well as middle market loans.
Some CLOs consist predominantly of middle market loans as the underlying collateral. The average rating of the underlying collateral is typically single-B, and the leveraged bank loans are typically floating rate, based on LIBOR.
23
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The securities held at NGL are B or BB rated mezzanine debt that pay a quarterly interest coupon, based on the notional balance held and a fixed spread plus LIBOR, which resets after each payment. The principal is returned through the CLO waterfall at the earlier of the call date or expected maturity. As of December 31, 2022, based on outstanding notional balance, 12.6% of the portfolio was invested in single-B rated tranches and 87.4% of the portfolio in BB rated tranches with a fixed spread plus LIBOR at the most recent reset date.
As of December 31, 2022, the outstanding investment of CLOs comprised of 94 investments with a fair value of $424,746,173 and a face value of $448,235,434. The average outstanding note is approximately $4,768,000 with a stated maturity date ranging from April 2026 to October 2033 and a weighted average stated maturity of 6.0 years as of December 31, 2022. Coupons range from three-month LIBOR (“3ML”) plus 5.20% to 9.23% with a weighted average coupon of 3ML + 6.93%.
As of December 31, 2021, the outstanding investment of CLOs comprised of 43 investments with a fair value of $237,125,053 and a face value of approximately $246,306,660. The average outstanding note is approximately $5,728,000 with a stated maturity date ranging from April 2026 to January 2032 and a weighted average stated maturity of 5.0 years as of December 31, 2021. Coupons range from three-month LIBOR (“3ML”) plus 5.45% to 9.45% with a weighted average coupon of 3ML + 7.16%.
The Company purchased $186,569,431 and $44,332,546, respectively, of aggregate principal of CLOs from various third-party brokers during the year ended December 31, 2022 and 2021, respectively, which are held by the Bank of New York Mellon as custodian.
11.Fair Value of Financial Instruments
The fair value of a financial instrument is defined as the price that we would receive upon selling an asset or pay to transfer a liability in an orderly transaction to an independent buyer in the principal or most advantageous market in which that financial instrument is transacted.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.
Most of our financial instruments measured at fair value on a recurring basis were classified as Level 3 as of December 31, 2022 and 2021. During the year ended December 31, 2022, NGL’s CLO portfolio totaling $237,125,053 was transferred from Level 2 to Level 3 at January 1, 2022 due to the volatility of the observable inputs, which were caused primarily by rising interest rates. The net change in unrealized (losses) gains on the investments that use Level 3 inputs was $1,276,630 as of December 31, 2022.
Other than as previously discussed, we did not transfer any assets or liabilities in or out of Level 3 during the year ended December 31, 2021. Transfers between levels, should they occur, will be recognized at the beginning of the quarter during which the asset or liability was transferred.
Unsecured Consumer Loans, Residual Interests in Securitizations, and Repurchase Agreements
The unsecured consumer loans, residual interests in securitizations, repurchase agreements, and collateralized loan obligations do not trade in an active market with readily observable prices. For the unsecured consumer loans and residual interests in securitizations, fair value is estimated by using a discounted cash flow methodology based upon significant unobservable inputs, such as loss adjusted discount rates and projected loss rates. The loss adjusted discount rates are used to discount the estimated future cash flows expected to be received from the underlying unsecured consumer loans, which includes both future principal and interest payments. The projected loss rates are based on the perceived credit risk inherent in each Rating of the unsecured loan portfolio. See Note 9 for details of the unsecured consumer loans.
Repurchase agreements are collateralized with the security portfolio. As the carrying value of the repurchase agreement approximates fair value, there were no unobservable inputs that have been internally developed by the Company as of December 31, 2022.
NGL qualifies as an investment company pursuant to ASC Topic 946, Financial Services-Investment Companies. Accordingly, the underlying CLO investments and repurchase agreements are carried at fair value and were retained in consolidation by the Company.
24
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
In determining the range of values for our investments in CLOs, management utilizes an independent valuation firm that uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.
The interests we have acquired in CLOs are generally thinly traded or have only a limited trading market. CLOs are typically privately offered and sold, even in the secondary market. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLO residual interests carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) our investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO investment or unexpected investment results. Our net asset value may also decline over time if our principal recovery with respect to CLO residual interests is less than the cost of those investments. Our CLO investments and/or the CLOs’ underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on our value. These investments are classified as Level 3 in the fair value hierarchy.
Corporate Bonds and Interest Rate Caps
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. The typical settlement time for Depository Trust Company bonds is three days. Gains or losses from the sale or call of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale or call. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
On a recurring basis, the Company measures its interest rate cap at its estimated fair value. In determining the fair value of the Company's derivative, the Company uses the present value of expected cash flows based on market observable interest rate yield curve commensurate with the term of the instrument. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and that of the respective counterparty in the fair value measurement. The credit valuation adjustments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by either the respective counterparty or the Company. However, the Company determined that as of December 31, 2022, the impact of the credit valuation adjustments were not significant to the overall valuation of the derivatives. As a result, the fair value of the derivative is considered to be based primarily on Level 2 inputs.










25
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The following table shows the fair value of our unsecured consumer loans, residual interest in securitizations, CLOs, interest rate caps, corporate bonds, and repurchase agreements, disaggregated into the three levels of the ASC 820 valuation hierarchy as of December 31, 2022.
Level 1Level 2Level 3Total
Assets
Unsecured consumer loans$— $— $520,946 $520,946 
Residual interests in securitizations— — 8,540,118 8,540,118 
Collateralized loan obligations— — 424,746,173 424,746,173 
Corporate bonds— 11,616,950 — 11,616,950 
Interest rate cap— 25,724,128 — 25,724,128 
Total investments at fair value$— $37,341,078 $433,807,237 $471,148,315 
Liabilities
Reverse repurchase facilities$— $— $196,118,000 $196,118,000 
Total liabilities at fair value$— $— $196,118,000 $196,118,000 
For the year ended December 31, 2022, the Company had charge-offs of $(285,500) and recoveries of $463,304 to Level 3 unsecured consumer loans. Also, the Company borrowed $87,315,000 and repaid $1,247,000 relating to repurchase agreements during 2022.
The following table shows the fair value of our unsecured consumer loans, residual interest in securitizations, CLOs, interest rate caps, corporate bonds, and repurchase agreements, disaggregated into the three levels of the ASC 820 valuation hierarchy as of December 31, 2021.
Level 1Level 2Level 3Total
Assets
Unsecured consumer loans$— $— 3,221,119 $3,221,119 
Residual interests in securitizations— — 1,348,844 1,348,844 
Collateralized loan obligations— 237,125,053 — 237,125,053 
Corporate bonds— 8,032,000 — 8,032,000 
Interest rate cap— 3,311,090 — 3,311,090 
Total investments at fair value$— $248,468,143 $4,569,963 $253,038,106 
Liabilities
Reverse repurchase facilities$— $— $110,050,000 $110,050,000 
Total liabilities at fair value$— $— $110,050,000 $110,050,000 
For the year ended December 31, 2021, the Company had charge-offs of $471,989 and recoveries of $1,275,919 to Level 3 unsecured consumer loans. In addition, the Company borrowed $48,969,000 and repaid $18,919,000 relating to repurchase agreements during 2021.
Refer to Note 9 for details of the unsecured consumer loans.










26
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The ranges of unobservable inputs used in the fair value measurement of our Level 3 financial instruments as of December 31, 2022 and 2021 were as follows:
December 31, 2022
Assets/LiabilitiesFair ValueValuation TechniqueUnobservable InputRangeWeighted Average
Unsecured consumer loans$520,946  Discounted cash flow Loss-adjusted discounted rate7.60% - 13.83%8.40%
Projected prepay rate1.24% - 12.09%7.63%
Projected loss rate0.11% - 8.25%5.13%
Recovery rate7.50% - 11.00%8.26%
Residual interests in securitizations$8,540,118  Discounted cash flow Forecasted prepay % of current balance5.67% - 30.56%30.14%
Forecasted default % of current balance6.08% - 14.54%14.01%
Severity89.00% - 92.50%92.48%
Discount rate10.00% - 15.00%14.97%
Collateralized loan obligations$424,746,173 Discounted Cash FlowDiscount Rate10.60% - 17.00%12.70%
Weighted Average Life2.5 - 5.04.3
Reverse repurchase facilities$196,118,000 Cost, which approximates fair value———
December 31, 2021
Assets/LiabilitiesFair ValueValuation TechniqueUnobservable InputRangeWeighted Average
Unsecured consumer loans$3,221,119 Discounted cash flowLoss-adjusted discounted rate4.85% - 8.25%7.49%
Projected prepay rate0.00% - 4.28%0.05%
Projected loss rate0.00% - 1.95%0.03%
Recovery rate7.50% - 11.00%9.15%
Residual interests in securitizations$1,348,844 Discounted cash flowForecasted prepay % of current balance6.28% - 13.07%12.56%
Forecasted default % of current balance5.52% - 11.41%10.97%
Severity89.00% - 89.00%89.00%
Discount rate7.00% - 7.00%7.00%
Reverse repurchase facilities$110,050,000 Cost, which approximates fair value———
27
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
12.Corporate Bonds
The Company holds corporate bonds comprised of investment grade and high yield corporate bonds including performing credit strategies focused on income-oriented, senior loan and bond investment strategies targeting U.S. issuers.
The outstanding maturity is November 2026 including a bi-annual fixed interest coupon of 7.00%. Relevant details for the corporate bonds as of December 31, 2022 and 2021 are as follows:
December 31, 2022
Purchase DateSecurityFace Value (Par)PriceNet Purchase PriceMaturityCoupon
12/7/2021WRLD$3,000,000 99.75$2,992,500 11/1/20267.00%
12/16/2021WRLD5,000,000 100.005,000,000 11/1/20267.00%
2/15/2022WRLD7,000,000 94.006,580,000 11/1/20267.00%
3/23/2022WRLD2,572,000 87.752,256,930 11/1/20267.00%
3/30/2022WRLD1,250,000 88.251,103,125 11/1/20267.00%
4/4/2022WRLD310,000 88.25273,575 11/1/20267.00%
$19,132,000 $18,206,130 
December 31, 2021
Purchase DateSecurityFace Value (Par)PriceNet Purchase PriceMaturityCoupon
12/7/2021WRLD$3,000,000 99.75$2,992,500 11/1/20267.00%
12/16/2021WRLD5,000,000 100.005,000,000 11/1/20267.00%
$8,000,000 $7,992,500 
Secondary corporate bonds purchased from a broker are recorded on a trade date basis and are recorded as the settlement value of cash, plus purchased accrued interest. Purchased accrued interest is treated as a return of capital upon receipt of coupon. The discount to par is amortized over the stated maturity of the corporate bond and recognized as part of interest income on the combined consolidated statements of operations. The typical settlement time for Depository Trust Company bonds is three days. Gains or losses from the sale or call of Corporate Bonds are recorded as a realized gain or loss on the combined consolidated statements of operations and recognized on the date of sale or call. Unrealized gains or losses are recorded on the combined consolidated statements of operations and recognized on each valuation date.
13.Reverse Repurchase Facilities
On October 30, 2019, NGL entered into a Master Repurchase Agreement (the “Repo Agreement”) with Nomura Securities International, Inc. (“Nomura”) to provide a borrowing facility ("Repo") from which NGL could pledge securities as collateral and borrow up to $105,000,000 under agreed upon terms. Under the terms of the Repo Agreement, NGL received cash up to 75% of the market value of securities with an interest charge of a minimum of 1.80% plus LIBOR, calculated as T-2 days for the reference rate. For the year ending December 31, 2021, the Company paid $3,335,130 of interest to Nomura. The term of the Repo is two years from commencement date subject to eight rolling three-month periods where upon each reset date, the entire Repo is closed and reopened, and borrowed interest is due to Nomura. Securities in the Repo can be purchased back at any time, subject to maintaining the agreed upon minimum draw on the Repo: 60% drawn during the ramp up period, as defined in the Repo Agreement, ending January 31, 2020, (subsequently extended to March 15, 2020 in the January 15, 2020 amended and restated Repo Agreement), and 90% drawn subsequent to the end of the ramp up period. Should the value of the securities drop to an LTV greater than 77.5%, NGL Limited must contribute cash or securities to Nomura’s collateral account until the combined value is below 70%. There was $0 of additional cash and securities pledged as collateral as of December 31, 2021.
On August 5, 2020, NGL agreed to the amended and restated Repo Agreement lowering the maximum borrowing under the agreement to $80,000,000, lowering the minimum LTV from 60% to 50% and reducing the deleveraging requirement from 77.5% to 60% including a drop in combined LTV from 70% to 50%. On April 27, 2022, NGL agreed to the fourth amended and restated repurchase agreement to increase the facility maximum to $200,000,000. Scheduled maturity of the facility is April 27, 2025, beginning with an accelerated paydown over the final twelve months of the facility starting on April 27, 2024.
Under the terms of the amended and restated Repo Agreement, NGL continues to receive cash up to 60% of the market value of securities with an interest charge of a minimum of 3.00%. The interest rate at December 31, 2022 was 3.00%. For the year ended December 31, 2022, the Company paid $6,002,989 of interest to Nomura. Should the value of the securities drop to an LTV greater than 50%, NGL Limited must contribute cash or securities to Nomura’s
28
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
collateral account until the combined value is below 60%. There was $0 of additional cash and securities pledged as collateral as of December 31, 2022.
The following table presents a summary of our repurchase agreement borrowings and interest as of December 31, 2022 and 2021:
Master Repurchase AgreementDecember 31, 2022December 31, 2021
Beginning Balance$110,050,000 $79,803,125 
Principal Borrowed87,315,000 48,969,000 
Principal Paid(1,247,000)(18,919,000)
Amortization of debt issuance cost— 196,875 
Total Outstanding Principal196,118,000 110,050,000 
Less: unamortized debt issuance cost— — 
Total Outstanding Principal, net of unamortized debt issuance cost$196,118,000 $110,050,000 
14.Mortgages Payable
The Company has outstanding mortgages payable that bear interest at either a fixed or variable rate. Each mortgage payable is secured by a respective real estate property and certain cash reserve accounts required by the borrowing agreements, which are included as restricted cash on the accompanying combined consolidated balance sheets. The following table presents a summary of our mortgages payable as of December 31, 2022 and 2021:
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal 12/31/2022Outstanding Principal 12/31/2021
Verandas at Rocky Ridge (1)2.71%2/1/2031Amortizing$— $18,410,000 
Abbie Lakes4.20%10/1/2024Amortizing9,872,848 10,060,723 
Brooksedge4.20%10/1/2024Amortizing10,402,426 10,600,379 
Reserve at Abbie Lakes4.20%10/1/2024Amortizing19,047,787 19,410,258 
Lakes Edge4.20%10/1/2024Amortizing9,532,405 9,713,802 
Sunbury Ridge4.20%10/1/2024Amortizing9,910,675 10,099,270 
Stonebridge4.20%10/1/2024Amortizing14,639,050 14,917,624 
Jefferson Chase4.20%10/1/2024Amortizing11,575,063 11,795,331 
Lake Ridge4.11%10/1/2024Amortizing7,607,986 7,754,390 
Orchard Village4.43%12/1/2025Amortizing25,148,946 25,603,331 
Sterling Crimson - Loan 14.20%10/1/2026Amortizing40,457,910 41,139,939 
Hawk's Ridge4.20%10/1/2026Amortizing24,348,306 24,758,764 
Islander Village4.20%10/1/2026Amortizing10,592,616 10,771,184 
Campus Quarters4.20%10/1/2026Amortizing13,902,809 14,137,179 
District on Luther4.20%10/1/2026Amortizing31,442,416 31,972,465 
West 22 - Loan 14.20%10/1/2026Amortizing43,868,144 44,607,662 
Legacy4.77%1/1/2029Interest Only7,480,000 7,480,000 
Seasons4.59%2/1/2029Interest Only153,580,000 153,580,000 
Abbie Lakes - Loan 25.82%10/1/2024Amortizing2,510,634 2,545,879 
Brooksedge - Loan 25.82%10/1/2024Amortizing2,402,144 2,435,866 
Reserve at Abbie Lakes - Loan 25.82%10/1/2024Amortizing2,989,719 3,031,689 
Lakes Edge - Loan 25.84%10/1/2024Amortizing4,225,101 4,284,179 
Sunbury Ridge - Loan 25.83%10/1/2024Amortizing3,490,218 3,539,117 
Stonebridge - Loan 25.84%10/1/2024Amortizing2,734,793 2,773,032 
Jefferson Chase - Loan 25.82%10/1/2024Amortizing4,762,044 4,828,894 
Lake Ridge - Loan 25.82%10/1/2024Amortizing1,499,364 1,520,297 
Villages of Baymeadows4.14%11/1/2027Interest Only76,452,417 76,560,000 
Casa del Mar4.14%11/1/2027Interest Only12,222,800 12,240,000 
Sutton Place4.03%12/1/2029Interest Only44,044,000 44,044,000 
Silver Oaks4.03%12/1/2029Interest Only14,185,000 14,185,000 
Steeplechase4.07%2/1/2028Interest Only36,668,000 36,668,000 
West 22 - Loan 26.00%10/1/2026Amortizing3,714,149 3,770,458 
Sterling Crimson - Loan 26.04%10/1/2026Amortizing1,762,483 1,789,001 
Olentangy Commons4.43%6/1/2030Interest Only92,876,000 92,876,000 
29
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal 12/31/2022Outstanding Principal 12/31/2021
Villages of Wildwood4.46%8/1/2030Interest Only39,525,000 39,525,000 
Falling Creek4.52%9/1/2030Interest Only19,335,000 19,335,000 
Reserve at Abbie Lakes - Loan 35.88%10/1/2024Amortizing5,415,477 5,496,945 
Sunbury Ridge - Loan 35.94%10/1/2024Amortizing1,180,296 1,197,850 
Abbie Lakes - Loan 35.94%10/1/2024Amortizing1,116,931 1,133,543 
Brooksedge - Loan 35.90%10/1/2024Amortizing2,306,590 2,341,157 
Jefferson Chase - Loan 35.90%10/1/2024Amortizing2,174,244 2,206,828 
Lake Ridge - Loan 35.91%10/1/2024Amortizing2,174,490 2,207,016 
Crown Pointe4.44%9/1/2030Interest Only89,400,000 89,400,000 
Lorring Park4.83%11/1/2030Interest Only47,680,000 47,680,000 
Hamptons Apartments4.61%2/1/2031Interest Only79,520,000 79,520,000 
The Isle3.79%7/1/2031Interest Only21,200,000 21,200,000 
Druid Hills4.26%8/1/2046Interest Only79,104,000 79,104,000 
Abbie Lakes - Loan 44.71%10/1/2024Amortizing1,446,688 1,471,786 
Reserve at Abbie Lakes - Loan 44.65%10/1/2024Amortizing1,373,647 1,397,741 
Lakes Edge - Loan 34.45%10/1/2024Amortizing2,647,053 2,695,209 
Sunbury Ridge - Loan 44.67%10/1/2024Amortizing2,054,221 2,090,121 
Stonebridge - Loan 34.48%10/1/2024Amortizing6,396,752 6,512,491 
Parcstone3.14%11/1/2029Interest Only30,127,000 30,127,000 
Stone Ridge3.14%11/1/2029Interest Only14,662,000 14,662,000 
Sterling Place3.95%11/1/2031Interest Only34,196,000 34,196,000 
West 224.06%10/1/2026Amortizing2,493,507 2,540,709 
University Crossing - Loan 25.04%7/1/2030Interest Only14,679,000 14,679,000 
Arlington Park5.00%11/1/2030Interest Only13,494,000 13,494,000 
Hampton on Jupiter2.90%11/1/2032Interest Only27,590,000 27,590,000 
Palmetto Creek3.32%9/1/2030Interest Only25,865,000 25,865,000 
Valora at Homewood2.80%8/1/2030Interest Only63,844,000 63,844,000 
The Dylan at Fairburn3.10%10/1/2026Interest Only43,900,000 43,900,000 
The Dylan at Grayson3.10%10/1/2026Interest Only40,500,000 40,500,000 
Sutton Place - Loan 24.36%12/1/2029Amortizing10,414,291 10,592,577 
Silver Oaks - Loan 24.36%12/1/2029Amortizing4,688,853 4,769,123 
Chimneys of Greenville3.10%2/1/2031Interest Only14,075,000 14,075,000 
The Laurel Apartments3.06%3/1/2031Interest Only42,025,000 42,025,000 
The Willows Apartments3.06%3/1/2031Interest Only19,000,000 19,000,000 
The Edge at Clear Lake3.87%4/1/2033Interest Only25,496,000 25,496,000 
Pear Orchard3.20%7/1/2033Interest Only38,175,000 38,175,000 
Lakeshore Landing3.20%7/1/2033Interest Only16,950,000 16,950,000 
Reflection Pointe3.20%7/1/2033Interest Only31,050,000 31,050,000 
Crosswinds3.20%7/1/2033Interest Only33,825,000 33,825,000 
Parcstone4.60%11/1/2029Interest Only12,666,000 12,666,000 
Stone Ridge4.60%11/1/2029Interest Only6,883,000 6,883,000 
Falling Creek4.18%9/1/2030Interest Only6,039,000 6,039,000 
Elliot Norcross5.60%12/1/2024Interest Only101,123,607 98,800,000 
West Vue3.40%1/1/2025Interest Only73,000,000 73,000,000 
Enclave at Wolfchase3.67%4/1/2027Interest Only60,000,000 — 
Twin Oaks4.15%4/1/2027Interest Only33,960,361 — 
Lancaster Place4.15%4/1/2027Interest Only28,535,911 — 
Rutland Place4.15%4/1/2027Interest Only22,710,174 — 
Southport Crossing3.46%4/1/2032Interest Only36,075,000 — 
Cheyenne4.71%6/1/2032Interest Only17,656,000 — 
Pueblo4.71%6/1/2032Interest Only20,166,000 — 
Stillwater4.71%6/1/2032Interest Only15,328,000 — 
Kokomo4.71%6/1/2032Interest Only12,753,000 — 
Villages of Wildwood - Loan 26.80%8/1/2030Interest Only18,868,000 — 
Villages of Baymeadows - Loan 27.19%11/1/2027Interest Only14,196,784 — 
Casa del Mar - Loan 27.19%11/1/2027Interest Only3,541,202 — 
30
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
Mortgage Note
Interest Rate (2)
Maturity DateAmortizing or Interest OnlyOutstanding Principal 12/31/2022Outstanding Principal 12/31/2021
Pear Orchard - Loan 24.50%7/1/2033Interest Only4,800,000 — 
Lakeshore Landing - Loan 24.50%7/1/2033Interest Only1,005,000 — 
Reflection Pointe - Loan 24.50%7/1/2033Interest Only2,153,000 — 
Crosswinds - Loan 24.50%7/1/2033Interest Only4,776,000 — 
Total outstanding principal2,197,284,332 1,923,161,809 
Less: unamortized discount and debt issuance costs(15,151,751)(14,895,356)
Total mortgages payable, net of unamortized discount and debt issuance costs$2,182,132,581 $1,908,266,453 
(1) Verandas at Rocky Ridge was disposed of on February 1, 2022 (Note 3). The mortgage payable was extinguished at date of sale.
(2) Floating interest rates are indexed to the one month USD LIBOR or SOFR. Rates noted are as of December 31, 2022.
On February 1, 2022, in connection with the sale of Verandas at Rocky Ridge, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $18,410,000. As a result, the Company recognized a loss on early extinguishment of debt of $503,896, which is included within interest expense on the combined consolidated statements of operations.
On December 1, 2021, in connection with the sale of Gulf Coast Portfolio, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $90,718,320. As a result, the Company recognized a loss on early extinguishment of debt of $5,583,748, which is included within interest expense on the combined consolidated statements of operations.
On October 19, 2021, in connection with the sale of Forest Park Portfolio, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $43,517,256. As a result, the Company recognized a loss on early extinguishment of debt of $368,465, which is included within interest expense on the combined consolidated statements of operations.
On October 13, 2021, in connection with the sale of Canterbury Green, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $83,568,133. As a result, the Company recognized a loss on early extinguishment of debt of $9,560,112, which is included within interest expense on the combined consolidated statements of operations.
On January 29, 2021, in connection with the sale of Union Place, as described in Note 3, Recent Real Estate Transactions, the Company utilized sale proceeds to repay the associated outstanding mortgage balance in the amount of $51,800,000. As a result, the Company recognized a loss on early extinguishment of debt of $185,139, which is included within interest expense on the combined consolidated statements of operations.
Future scheduled principal payments of mortgage payable are as follows: $102,602,746 (2023), $209,243,169 (2024), $169,687,696 (2025), $99,500,222 (2026), $168,815,348 (2027), and $1,447,435,151 (thereafter).
15.Ground Leases
The Company entered into ground lease agreements through acquisition of Druid Hills and West Vue. If the Company has right to extend the term of a ground lease, such option period has been included within the calculation of the right of use assets and lease liabilities. The Company incurred initial costs of $15,689,752 to acquire the leases, which is included in the intangibles and amortized over the life of the lease. As of December 31, 2022 and 2021, the right-of-use asset were $24,311,989 and $31,917,176, respectively. As of December 31, 2022 and 2021, the lease liability was $26,926,303 and $26,445,556, respectively. During the years ended December 31, 2022 and 2021, the lease expense recognized on a straight-line basis was $4,263,995 and $234,999, respectively, and is included in property operating expenses on the accompanying combined consolidated statements of operations.
The Company utilized the risk-free rate over the term of each lease as the discount rate to be applied to its future lease payments when accounting for its right of use assets and lease liabilities, which ranged between 4.26% and 7.11%.
The table below presents the summarized quantitative information with regard to lease contracts the Company has entered into as of December 31, 2022:
CategoryTerm
Weighted avg. of remaining term - operating leases (months)956
Weighted avg. of remaining term - operating leases (years)80
Weighted avg. of annual discount rate - operating leases6.04%
31
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The future minimum lease payments to be paid under noncancelable leases in effect as of December 31, 2022 are as follows:
YearPayment
2023$1,405,577 
20241,432,408 
20251,459,777 
20261,487,692 
20271,516,166 
Thereafter374,228,549 
Total balance due381,530,169 
Less: lease discount(354,603,866)
Lease liabilities$26,926,303 
Total cash paid for amounts included in lease liabilities for the years ended December 31, 2022 and 2021 are $1,381,446 and $64,000, respectively.
In addition, as of December 31, 2022 and 2021, the Company also has an equipment lease liability of $573,807 and $610,133, respectively.
16.Income Taxes
Income taxes consisted of the following for the years ended:
December 31, 2022December 31, 2021
Current federal tax expense$— $— 
Current state tax expense(11,380)(7,219)
Net deferred federal tax expense— — 
Net deferred state tax expense— — 
Income tax expense$(11,380)$(7,219)
17.Equity
As of December 31, 2022 and 2021, the Company authorized 100,000,000 common shares, par value $0.001. NPH is the Company’s sole common stockholder. As of December 31, 2022 and 2021, the Company paid an aggregate of $876,160,619 and $872,160,619 of dividends on common shares, respectively.
As of December 31, 2022 and 2021, the Company had 125 shares outstanding in connection with a private placement of 12.5% Series A Cumulative Non-Voting Preferred Stock, par value $0.001 per share (Series A Preferred Stock), respectively. In general, holders of Series A Preferred Stock are entitled to receive cumulative dividends semiannually at a per annum rate equal to 12.5% of the total purchase price of $1,000 per share plus accumulated and unpaid dividends. The Series A Preferred Stock is redeemable by the Company for $1,000 per share plus accumulated and unpaid dividends. Upon liquidation and dissolution of the Company, the holders of the Series A Preferred Stock are entitled to a liquidation preference in the amount of the share’s purchase price, plus all accumulated and unpaid dividends. Series A Preferred Stock are not convertible or exchangeable for any other property or securities of the Company. As of December 31, 2022 and 2021, the Company paid an aggregate of $266,749 and $251,124 of dividends on Series A preferred shares, respectively.
18.Related Party Transactions
On December 31, 2013, the Company entered into a management assistance agreement with Prospect Administration LLC ("Prospect") to provide significant managerial assistance to the Company on behalf of PSEC.
32
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
In accordance with the Investment Company Act of 1940, PSEC must make available "significant managerial assistance" to the Company. Prospect provides assistance with significant guidance and counsel concerning the management, operations, and business objectives and policies to the Company. Services may include arranging financing, managing relationships with financing sources, restructuring existing debt and evaluating acquisition and divestiture opportunities. Prospect also exercises a controlling influence over the policies of the Company. On a quarterly basis, the Company pays a managerial assistance fee to Prospect for time and effort in assisting and providing commercial and mezzanine lending, investment banking, and private equity investing services. The Company incurred managerial assistance fees of $2,100,000 for each of the years ended December 31, 2022 and 2021, which are included in management fees in the accompanying combined consolidated statements of operations.
On a quarterly basis, the Company pays Prospect for professional services provided related to legal counsel, taxation, and general accounting. For the years ended December 31, 2022 and 2021, the Company incurred professional service fees of $1,773,219 and $1,988,417, respectively, which are included in general and administrative expenses in the accompanying combined consolidated statements of operations. As of December 31, 2022 and 2021, $651,770 and $1,056,934, respectively, is due to Prospect and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
As of December 31, 2022, $78,112, $8,738 and $3,323 is due to Prospect, Prospect Capital Management ("PCM") and PSEC, respectively, for reimbursement of expenses paid on behalf of the Company and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
As of December 31, 2021, $0, $17,446 and $748 is due to Prospect, PCM and PSEC, respectively, for reimbursement of expenses paid on behalf of the Company and is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
The Company generally incurs a 2% to 3% structuring fee for the PSEC equity portion of each acquired property. The structuring fee is paid to PSEC for structuring and providing guidance for each purchase transaction. For the years ended December 31, 2022 and 2021, the Company incurred structuring fees of $2,685,990 and $3,005,230, respectively.
The Company also entered into property management agreements with the non-controlling interest joint venture partners to manage the operations of the properties. The Company pays a monthly management fee of 2% - 5% of the gross monthly rents to the property managers. For the years ended December 31, 2022 and 2021, property management fees were $8,604,274 and $7,818,818, respectively, and are included in management fees in the combined consolidated statements of operations.
The Company also pays a monthly asset management fee up to 2.00% of the gross monthly rents to the property managers. For the years ended December 31, 2022 and 2021, asset management fees were $2,676,322 and $2,255,770, respectively. These amounts are included in the management fee line item in the accompanying combined consolidated statements of operations.
As of December 31, 2022 and 2021, $5,510,912 and $3,931,933 of management fees and asset management fees, respectively, were payable to property managers, and is included in due to affiliates in the accompanying combined consolidated balance sheets.
The property management agreements also stipulate that a construction management fee up to 5% of project cost is to be paid to the property managers. For the years ended December 31, 2022 and 2021, capitalized construction management fees were $4,951,656 and $3,475,815, respectively, and are included within building and improvements in the accompanying combined consolidated balance sheets.
The Company generally incurs an acquisition fee from 0.5% to 1% of the purchase price of each acquired property. The acquisition fee is paid to the Property Managers for services rendered in connection with the investigation, selection, sourcing, due diligence and acquisition of a property or investment. For the years ended December 31, 2022 and 2021, the Company incurred acquisition fees of $2,013,700 and $255,000, respectively. The amounts related to the years ended December 31, 2022 and 2021 have been capitalized and included in real estate assets in the accompanying combined consolidated balance sheets.
In connection with the acquisitions of several properties during the year ended December 31, 2022, the Company has retained a portion of the non-controlling joint venture partners’ acquisition fees as deferred acquisition fees. These deferred acquisition fees are earned by and payable to the non-controlling joint venture partner upon reaching certain performance measures. During the years ended 2022 and 2021, $0 and $631,360, respectively, were paid to the non-controlling joint venture partners, respectively. As of December 31, 2022 and 2021, $2,068,799 and $1,540,799, respectively, of deferred acquisition fees were retained by the Company and included within due to affiliates on the combined consolidated balance sheets. As of December 31, 2022, $540,365 and $0, respectively, of deferred
33
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
acquisition fees retained by the Company are included within restricted cash on the combined consolidated balance sheets.
The Company noted that certain expenses are paid for by the property managers and have yet to be reimbursed. As of December 31, 2022 and 2021, unreimbursed advances and other amounts due to related parties were $2,848,376 and $2,355,220, respectively, and are recorded by the Company as due to affiliates on the combined consolidated balance sheets.
19.Senior Secured Term Loans - Related Party
NPRC Credit Agreement
On April 1, 2014, the Company entered into a credit agreement (the "Credit Agreement") with PSEC in the form of a senior secured term loan. As of December 31, 2022 and 2021, the total commitment was $2,700,000,000 and $2,500,000,000, respectively. The maturity date of the senior secured term loans under the amended Credit Agreement is December 31, 2023.
On November 9, 2022, the Company amended the Credit Agreement. The amendment resulted in a new tranche of senior secured term loan E ("TLE"). Under the amended and restated Credit Agreement, the new TLE incurs cash interest equivalent to three-month USD LIBOR rate with a floor of 5.00%, plus 2.00%, and PIK interest of 7.00%.
The Credit Agreement does not require payments on the outstanding principal until maturity, with prepayments allowed but may be subject to a prepayment penalty. During the year ended December 31, 2022, the Company has voluntarily pre-paid in aggregate $94,351,510 of the Term Loan A and B and incurred a prepayment penalty of $98,515. During the year ended December 31, 2021, the Company had voluntarily pre-paid in aggregate $315,481,965 of the Term Loan A and B and incurred a prepayment penalty of $2,945,820.
The Company is required to make payments for Residual Profit Interest equivalent to 8.33% of the residual profit earned during the applicable period. The Company determines the residual profit as all gross receipts from operations received by the Company less the sum of operating expenses, interest expense, structuring fees, M&A fees, and cost basis in connection to the sale of any real estate property during the applicable period.
Cash interest and Residual Profit Interest are payable in cash quarterly. PIK interest due quarterly is added to the outstanding principal balance of the loan or paid in cash, in whole or in part, at the option of the Company.
The Company generally incurs structuring fees from restructuring or refinancing the Credit Agreement, which are deferred and amortized over the life of the senior secured term loan. The structuring fees are capitalized as a direct offset to the Term Loan balance on the combined consolidated balance sheets. For the years ended December 31, 2022 and 2021, the Company incurred $0 and $0 of structuring fees for borrowings under the senior secured term loans, respectively. For the years ended December 31, 2022 and 2021, $4,106,358 and $4,106,358 were amortized and recorded within interest expense on the combined consolidated statements of operations, respectively.














34
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
The following tables present a summary of our senior secured term loan terms and payable as of December 31, 2022 and 2021:
As of December 31, 2022
Senior Secured Term LoanCash RatePIK RateOutstanding Principal
Term Loan A
3-Mo LIBOR(1) + 1.44%
3.53%$458,747,266 
Term Loan B
3-Mo LIBOR(1) + 2.00%
5.50%23,080,000 
Term Loan C
3-Mo LIBOR(2) + 10.00%
2.25%200,600,000 
Term Loan D
3-Mo LIBOR(1) + 0.50%
2.50%183,425,355 
Term Loan E
3-Mo LIBOR(3) + 2.0%
7.00%13,151,592 
Total outstanding principal879,004,213 
Less: unamortized debt issuance costs(4,106,358)
Total senior secured term loans, net of debt issuance costs$874,897,855 
(1) Rates are accrued at minimum LIBOR floor of 300 basis points
(2) Rates are accrued at minimum LIBOR floor of 100 basis points
(3) Rates are accrued at minimum LIBOR floor of 500 basis points
As of December 31, 2021
Senior Secured Term LoanCash RatePIK RateOutstanding Principal
Term Loan A
3-Mo LIBOR(1) + 1.44%
3.53%$287,150,130 
Term Loan B
3-Mo LIBOR(1) + 2.00%
5.50%6,600,000 
Term Loan C
3-Mo LIBOR(2) + 10.00%
2.25%108,600,000 
Term Loan D
3-Mo LIBOR(1) + 0.50%
2.50%183,425,355 
Total outstanding principal585,775,485 
Less: unamortized debt issuance costs(8,212,716)
Total senior secured term loans, net of debt issuance costs$577,562,769 
(1) Rates are accrued at minimum LIBOR floor of 300 basis points
(2) Rates are accrued at minimum LIBOR floor of 100 basis points
For the year ended December 31, 2022, the Company incurred $49,159,031, $25,055,620, and $81,118,070 of cash interest, PIK interest, and Residual Profit Interest, respectively. For the year ended December 31, 2022, a total of $25,050,506 of PIK interest was paid in cash on the senior secured term loans. As of December 31, 2022, $0 of cash interest and $5,115 of PIK interest is recorded by the Company as due to affiliates on the combined consolidated balance sheets.
For the year ended December 31, 2021, the Company incurred $36,687,547, $22,573,362, and $38,849,306 of cash interest, PIK interest, and Residual Profit Interest, respectively. For the year ended December 31, 2021, a total of $22,565,566 of PIK interest was paid in cash on the senior secured term loans. As of December 31, 2021, $34,100 of cash interest and $7,796 of PIK interest is recorded by the Company as due to affiliates on the combined consolidated balance sheets.




35
National Property REIT Corp
Notes to Combined Consolidated Financial Statements
20.Commitments and Contingencies
The Company believes that it has complied with the requirements of the mortgage payable by obtaining the requisite third-party insurance coverage for losses that may be incurred at the properties. Losses for amounts below the threshold of the deductible amounts specified in certain of the Company’s insurance policies are self‑insured; however, management does not believe that this exposure will have a material adverse effect on the Company’s combined consolidated financial position or results of operations.
Periodically, the Company may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of business. The Company does not believe that there are any proceedings threatened or pending, if determined adversely, that would have a material adverse effect on the financial position, results of operations, or liquidity of the Company.
During the year ended December 31, 2021, the Company entered into confidential agreements related to certain investments. The Company recognized a gain of $15,151,362 in connection with those agreements. No lawsuit was filed in connection with those agreements, and all parties thereto denied wrongdoing.
The Company may at times issue certain loan guarantees to obtain financing related to the Company’s investments. These guarantees may include but are not limited to repayment guarantees, completion guarantees, and debt ratio guarantees to certain lenders of the Company’s investments in real estate assets. Under certain guarantees, the Company may be liable in the event of fraud, misappropriation, environmental liabilities and other recourse obligations. As of December 31, 2022, the Company has not violated any of these guaranty provisions.
21.Subsequent Events
On March 14, 2023, Hampton on Jupiter entered into a supplemental mortgage agreement for $11,253,000. The supplemental mortgage is secured by the real estate property and certain cash reserve accounts required by the borrowing agreements. The supplemental mortgage accrues interest at 6.84% and matures on December 1, 2032.
On June 27, 2023, the Gramercy purchased a rate cap agreement for $822,000. The agreement covers the notional amount of $14,679,000. The strike rate of the cap agreement is 2.00% and matures on July 1, 2025.
On July 21, 2023, Palmetto Creek purchased a rate cap agreement for $1,330,000. The agreement covers the notional amount of $25,856,000. The strike rate of the cap agreement is 2.00% and matures on August 1, 2025.
The Company has evaluated subsequent events through August 10, 2023, the date of which these combined consolidated financial statements were available to be issued, and has determined that, except for the above, there have not been any additional events that have occurred that would require adjustments to, or disclosures in, the combined consolidated financial statements.
36
v3.24.3
Cover - USD ($)
$ in Millions
 12 Months Ended
Jun. 30, 2024
Aug. 27, 2024
Dec. 29, 2023
Document Information [Line Items]      
Document Type 10-K/A    
Document Annual Report true    
Current Fiscal Year End Date --06-30    
Document Period End Date Jun. 30, 2024    
Document Transition Report false    
Entity File Number 814-00659    
Entity Registrant Name PROSPECT CAPITAL CORP    
Entity Incorporation, State or Country Code MD    
Entity Tax Identification Number 43-2048643    
Entity Address, Address Line One 10 East 40th Street    
Entity Address, Address Line Two 42nd Floor    
Entity Address, City or Town New York    
Entity Address, State or Province NY    
Entity Address, Postal Zip Code 10016    
City Area Code 212    
Local Phone Number 448-0702    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Document Financial Statement Error Correction false    
Entity Shell Company false    
Entity Public Float     $ 1,809
Entity Common Stock, Shares Outstanding   428,988,217  
Documents Incorporated by Reference
Documents Incorporated by Reference
Portions of the Registrant’s definitive Proxy Statement relating to the 2024 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission, are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent described therein.
    
Entity Central Index Key 0001287032    
Document Fiscal Year Focus 2024    
Document Fiscal Period Focus FY    
Amendment Flag false    
Common Stock, par value $0.001 per share      
Document Information [Line Items]      
Title of 12(b) Security Common Stock, par value $0.001 per share    
Trading Symbol PSEC    
Security Exchange Name NASDAQ    
5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001      
Document Information [Line Items]      
Title of 12(b) Security 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001    
Trading Symbol PSEC PRA    
Security Exchange Name NYSE    
Prospect Capital (NASDAQ:PSEC)
과거 데이터 주식 차트
부터 12월(12) 2024 으로 1월(1) 2025 Prospect Capital 차트를 더 보려면 여기를 클릭.
Prospect Capital (NASDAQ:PSEC)
과거 데이터 주식 차트
부터 1월(1) 2024 으로 1월(1) 2025 Prospect Capital 차트를 더 보려면 여기를 클릭.