Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

(Mark One)


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

For the quarterly period ended September 30, 2023


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

For the transition period from _____ to _____

Commission file number 000-54376

_________________________________

STRATEGIC REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

_________________________________

Maryland

90-0413866

(State or Other Jurisdiction of
Incorporation or Organization)

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

1 S. Wacker Dr, Suite 3210

Chicago,

Illinois

60606

(Address of Principal Executive Offices)

(Zip Code)

(312) 878-4860

(Registrant’s Telephone Number, Including Area Code)

_________________________________

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

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 ☐

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 ☐

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	ý	Smaller reporting company	☒

		Emerging growth company	☐

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

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

As of November 6, 2023, there were 10,752,966 shares of the registrant’s common stock issued and outstanding.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page



































PART I — FINANCIAL INFORMATION		3

Item 1.	Unaudited Condensed Consolidated Financial Statements	4

	Condensed Consolidated Statement of Nets Assets as of September 30, 2023 (Liquidation Basis)	3

	Condensed Consolidated Balance Sheet as of December 31, 2022	4

	Condensed Consolidated Statement of Changes in Net Assets (Liquidation Basis) for the Period from July 1, 2023 through September 30, 2023	5

	Condensed Consolidated Statements of Operations and Comprehensive Income for the Six Months Ended June 30, 2023 and the Three and Nine Months Ended September 30, 2022	6

	Condensed Consolidated Statements of Equity for the Six Months Ended June 30, 2023 and the Three and Nine months ended September 30, 2022	7

	Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2023 and the Nine Months Ended September 30, 2022	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

Signatures		28

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PART I

FINANCIAL INFORMATION

STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS

(Liquidation Basis)

(unaudited, in thousands)


	September 30,
	2023
ASSETS
Real estate	$	26,475
Cash, cash equivalents and restricted cash	1,967
Tenant receivables	31
Other assets	113
TOTAL ASSETS	$	28,586

LIABILITIES
Liabilities for estimated costs in excess of estimated receipts during liquidation	$	4,779
Notes payable	18,000
Accounts payable and accrued expenses	403
Amounts due to affiliates	34
Other liabilities	113
TOTAL LIABILITIES	$	23,329
Commitments and contingencies (Note 10)
NET ASSETS IN LIQUIDATION	$	5,257

See accompanying notes to condensed consolidated financial statements.

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ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Going Concern Basis)

(in thousands, except shares and per share amounts)

(unaudited)


	December 31,

	2022
ASSETS
Investments in real estate
Land	$	12,374
Building and improvements	22,140
Tenant improvements	947
	35,461
Accumulated depreciation	(4,838)
Investments in real estate, net	30,623





Cash, cash equivalents and restricted cash	3,471
Prepaid expenses and other assets	152
Tenant receivables, net of $19 bad debt reserve	841
Deferred leasing costs, net	353
Lease intangibles, net	308


TOTAL ASSETS (1)	$	35,748
LIABILITIES AND EQUITY
LIABILITIES
Notes payable, net	$	18,000
Accounts payable and accrued expenses	285
Amounts due to affiliates	37
Other liabilities	172

Below-market lease liabilities, net	108

TOTAL LIABILITIES	18,602
Commitments and contingencies (Note 12)
EQUITY
Stockholders’ equity
Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding	—
Common stock, $0.01 par value; 400,000,000 shares authorized; 10,752,966 shares issued and outstanding at December 31, 2022	110
Additional paid-in capital	94,644
Accumulated deficit	(77,852)
Accumulated other comprehensive income	—
Total stockholders’ equity	16,902
Non-controlling interests	244
TOTAL EQUITY	17,146
TOTAL LIABILITIES AND EQUITY	$	35,748

(1)As of December 31, 2022, includes approximately $576 thousand, respectively, of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities.

See accompanying notes to condensed consolidated financial statements.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

(Liquidation Basis)

(unaudited, in thousands)


	For the Period from July 1, 2023 to September 30, 2023

Net assets in liquidation, beginning of period	$	5,257
Change in net assets in liquidation	—
Net assets in liquidation, end of period	$	5,257

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Going Concern Basis)

(in thousands, except shares and per share amounts)

(unaudited)


	Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2022		2022
Revenue:
Rental and reimbursements	$	1,252	$	734	$	2,189

Expense:
Operating and maintenance	651		273		1,323
General and administrative	785		290		1,238
Depreciation and amortization	506		254		846

Interest expense	735		852		1,484
Loss on early lease termination	—		—		190
Loss on impairment of real estate	—		152		6,035
	2,677		1,821		11,116
Operating loss	(1,425)		(1,087)		(8,927)









Net loss	(1,425)		(1,087)		(8,927)
Net loss attributable to non-controlling interests	(26)		(19)		(165)
Net loss attributable to common stockholders	$	(1,399)	$	(1,068)	$	(8,762)

Loss per common share - basic and diluted	$	(0.13)	$	(0.10)	$	(0.81)

Weighted average shares outstanding used to calculate loss per common share - basic and diluted	10,752,966		10,752,966		10,752,966

Other comprehensive income:
Unrealized gain on interest rate cap	$	43	$	—	$	—
Comprehensive loss attributable to common stockholders	$	(1,356)	$	(1,068)	$	(8,762)

See accompanying notes to condensed consolidated financial statements.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Going Concern Basis)

(in thousands, except shares)

(unaudited)


Six Months Ended June 30, 2023

	Number of Shares	Par Value		APIC(1)		Accumulated Deficit		AOCI(2)		Total Stockholders’ Equity		NCI(3)		Total Equity






BALANCE — December 31, 2022	10,752,966	$	110	$	94,644	$	(77,852)	$	—	$	16,902	$	244	$	17,146



Net loss	—	—		—		(1,399)		—		(1,399)		(26)		(1,425)
Unrealized gain on interest rate cap	—	—		—		—		43		43		—		43
BALANCE — June 30, 2023	10,752,966	$	110	$	94,644	$	(79,251)	$	43	$	15,546	$	218	$	15,764










Three and Nine Months Ended September 30, 2022

	Number of Shares	Par Value		APIC(1)		Accumulated Deficit		AOCI(2)		Total Stockholders’ Equity		NCI(3)		Total Equity
BALANCE — December 31, 2021	10,752,966	$	110	$	94,644	$	(66,307)	$	—	$	28,447	$	461	$	28,908



Net loss	—	—		—		(8,762)		—		(8,762)		(165)		(8,927)

BALANCE — September 30, 2022	10,752,966	$	110	$	94,644	$	(75,069)	$	—	$	19,685	$	296	$	19,981


BALANCE — June 30, 2022	10,752,966	$	110	$	94,644	$	(74,001)	$	—	$	20,753	$	315	$	21,068




Net loss	—	—		—		(1,068)		—		(1,068)		(19)		(1,087)
BALANCE — September 30, 2022	10,752,966	$	110	$	94,644	$	(75,069)	$	—	$	19,685	$	296	$	19,981

(1) APIC: Additional paid-in capital

(2) AOCI: Accumulated other comprehensive income

(3) NCI: Non-controlling interest

See accompanying notes to condensed consolidated financial statements.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Going Concern Basis)

(in thousands)

(unaudited)


	Six Months Ended June 30,		Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(1,425)	$	(8,927)
Adjustments to reconcile net loss to net cash used in operating activities:


Unrealized gain on interest rate cap	43		—
Loss on impairment of real estate	—		6,035

Straight-line rent	(17)		(130)
Amortization of deferred financing costs	27		369
Depreciation and amortization	506		846
Amortization of above and below-market leases	(12)		(16)
Provision for losses on tenant receivable	93		19
Loss on early lease termination	—		190
Other	—		42
Changes in operating assets and liabilities:
Prepaid expenses and other assets	131		(73)
Tenant receivables	(136)		66
Accounts payable and accrued expenses	15		(113)
Amounts due to affiliates	(1)		(35)
Other liabilities	(41)		(57)
Net cash used in operating activities	(817)		(1,784)

Cash flows from investing activities:



Investment in properties under development and development costs	—		(884)
Improvements and capital expenditures	(35)		(357)




Payments for leasing costs	(4)		(276)
Net cash used in investing activities	(39)		(1,517)

Cash flows from financing activities:




Proceeds from notes payable from investments in consolidated variable interest entities	—		152

Loan proceeds from an affiliate	—		2,000
Payment of loan fees and financing costs	(313)		—


Payment of loan fees from investments in consolidated variable interest entities	—		(182)
Net cash (used in) provided by financing activities	(313)		1,970

Net (decrease) in cash, cash equivalents and restricted cash	(1,169)		(1,331)
Cash, cash equivalents and restricted cash – beginning of period	3,471		2,407
Cash, cash equivalents and restricted cash – end of period	$	2,302	$	1,076

Supplemental disclosure of non-cash investing and financing activities and other cash flow information:

Change in accrued liabilities capitalized to investment in development	$	—	$	10

Amortization of deferred loan fees capitalized to investment in development	—		87


Changes in capital improvements and leasing costs, accrued but not paid	29		—

Cash paid for interest, net of amounts capitalized	$	699	$	990

See accompanying notes to condensed consolidated financial statements.

Table of Contents

STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION AND BUSINESS

Strategic Realty Trust, Inc. (the “Company”) was formed on September 18, 2008, as a Maryland corporation. Effective August 22, 2013, the Company changed its name from TNP Strategic Retail Trust, Inc. to Strategic Realty Trust, Inc. The Company believes it qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and has elected REIT status beginning with the taxable year ended December 31, 2009, the year in which the Company began material operations.

Since the Company’s inception, its business has been managed by an external advisor. The Company has no direct employees and all management and administrative personnel responsible for conducting the Company’s business are employed by its advisor. The Company is currently externally managed and advised by SRT Advisor, LLC, a Delaware limited liability company (the “Advisor”) pursuant to an advisory agreement with the Advisor (the “Advisory Agreement”) initially executed on August 10, 2013, and subsequently renewed every year through 2024. The current term of the Advisory Agreement terminates on August 9, 2024. As of April 2021, the advisor is an affiliate of PUR Management LLC (“PUR”), which is an affiliate of L3 Capital, LLC. L3 Capital, LLC is a real estate investment firm focused on institutional quality, value-add, prime urban retail and mixed-use investment within first tier U.S. metropolitan markets.

Substantially all of the Company’s business is conducted through Strategic Realty Operating Partnership, L.P. (the “OP”). During the Company’s initial public offering (“Offering”), as the Company accepted subscriptions for shares of its common stock, it transferred substantially all of the net proceeds of the Offering to the OP as a capital contribution. The Company is the sole general partner of the OP. As of September 30, 2023 and December 31, 2022, the Company owned 98.1% of the limited partnership interests in the OP.

On May 12, 2023, the board of directors unanimously approved the sale of all of the Company’s assets and the dissolution of the Company pursuant to the terms of a plan of complete liquidation and dissolution of the Company (the “Plan of Liquidation”). The principal purpose of the Plan of Liquidation is to maximize stockholder value by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to the Company’s stockholders. On August 23, 2023 the Company’s stockholders approved the Plan of Liquidation.

The Company expects any future liquidity to its stockholders will be provided in the form of liquidating distributions. The Company expects to distribute all of the net proceeds from liquidation to its stockholders within 24 months from August 23, 2023. The Company can give no assurance regarding the timing of asset dispositions in connection with the implementation of the Plan of Liquidation, the sale prices it will receive for its assets, and the amount or timing of any liquidating distributions to be received by its stockholders.

The Company manages a portfolio of income-producing retail properties located in California. As of September 30, 2023, the Company’s portfolio was comprised of six properties, with approximately 27,000 rentable square feet of retail space located in California, as well as an improved land parcel. As of September 30, 2023, the rentable space at the Company’s retail properties was 85% leased.

2. PLAN OF LIQUIDATION

The Plan of Liquidation authorizes the Company to undertake an orderly liquidation. In an orderly liquidation, the Company intends to sell or otherwise dispose of its remaining properties, pay or otherwise settle all of its known liabilities, provide for the payment of its unknown or contingent liabilities, distribute any remaining cash to its stockholders, wind up its operations and dissolve. The Company is authorized to provide for the payment of any unascertained or contingent liabilities and may do so by purchasing insurance, by establishing a reserve fund or in other ways.

The Plan of Liquidation enables the Company to sell any and all of its assets without further approval of its stockholders and provides that the amounts and timing of liquidating distributions will be determined by the Company’s board of directors or, if a liquidating trust is formed, by the trustees of the liquidating trust, in their discretion. Pursuant to applicable REIT rules, liquidating distributions the Company pays pursuant to the Plan of Liquidation will qualify for the dividends paid deduction, provided that they are paid within 24 months of the August 23, 2023 approval of the plan by the Company’s stockholders. However, if the Company cannot sell its properties and pay its debts within such time period, or if the board of directors determines that it is otherwise advisable to do so, the Company may transfer and assign its remaining assets to a liquidating trust. Upon such transfer and assignment, the Company’s stockholders would receive beneficial interests in the liquidating trust. The liquidating trust would pay or provide for all of the Company’s liabilities and distribute any remaining net proceeds from liquidation to the holders of beneficial interests in the liquidating trust. If the Company is not able to sell its properties and pay

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

its debt within the 24-month period and the remaining assets are not transferred to a liquidating trust, any distributions made during the 24 months may not qualify for the dividends paid deduction and may increase the Company’s tax liability.

The Company’s expectations about the implementation of the Plan of Liquidation and the amount of any liquidating distributions that the Company pays to its stockholders and when the Company will pay them are subject to risks and uncertainties and are based on certain estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of any liquidating distributions the Company pays to its stockholders may be more or less than the Company estimates and the liquidating distributions may be paid later than the Company predicts. There are many factors that may affect the amount of liquidating distributions the Company will ultimately pay to its stockholders. If the Company underestimates its existing obligations and liabilities or the amount of taxes, transaction fees and expenses relating to the liquidation and dissolution or if unanticipated or contingent liabilities arise, the amount of liquidating distributions ultimately paid to the Company’s stockholders could be less than estimated. Moreover, the liquidation value will fluctuate over time in response to developments related to individual assets in the Company’s portfolio and the management of those assets, in response to the real estate and finance markets, based on the amount of net proceeds received from the disposition of the remaining assets and due to other factors. Accordingly, it is not possible to precisely predict the timing of any liquidating distributions the Company pays to it stockholders or the aggregate amount of liquidating distributions that the Company will ultimately pay to its stockholders. No assurance can be given that any liquidating distributions the Company pays to its stockholders will equal or exceed the estimate of net assets in liquidation presented on the Condensed Consolidated Statement of Net Assets as of September 30, 2023.

The Company expects to comply with the requirements necessary to continue to qualify as a REIT through the completion of the liquidation process, or until such time as any remaining assets are transferred into a liquidating trust. The board of directors shall use commercially reasonable efforts to continue to cause the Company to maintain its REIT status; provided, however, that the board of directors may elect to terminate the Company’s status as a REIT if it determines that such termination would be in the best interest of the stockholders.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), including Subtopic 205-30, “Liquidation Basis of Accounting”, as indicated, and the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements.

Pursuant to the Company’s stockholders’ approval of the Plan of Liquidation, the Company adopted the liquidation basis of accounting as of and for the periods subsequent to July 1, 2023 (as the approval of the Plan of Liquidation by the Company’s stockholders became imminent during the month of July 2023 based on the results of the Company’s solicitation of proxies from its stockholders for their approval of the Plan of Liquidation). Accordingly, on July 1, 2023, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash or other consideration that the Company expects to realize through the disposal of assets as it carries out the Plan of Liquidation. The liquidation values of the Company’s remaining real estate properties are presented on an undiscounted basis. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

The Company accrues costs and income that it expects to incur and earn through the completion of its liquidation, including the estimated amount of cash or other consideration that the Company expects to realize through the disposal of its assets and the estimated costs to dispose of its assets, to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Condensed Consolidated Statement of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. See Note 2, “Plan of Liquidation” and Note 4, “Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation” for further discussion. Actual costs

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

incurred but unpaid as of September 30, 2023 are included in accounts payable and accrued expenses, due to affiliates and other liabilities on the Condensed Consolidated Statement of Net Assets.

Net assets in liquidation represents the remaining estimated liquidation value available to stockholders upon liquidation. Due to the uncertainty in the timing of the sale or transfer of the Company’s remaining real estate properties and the estimated cash flows from operations, actual liquidation costs and sale proceeds may differ materially from the amounts estimated.

All financial results and disclosures through June 30, 2023, prior to the adoption of the liquidation basis of accounting, are presented on a GAAP historical basis, which contemplates the realization of assets and liabilities in the normal course of business. As a result, the balance sheet as of December 31, 2022, the statements of operations and comprehensive income, the statements of stockholders’ equity and the statements of cash flows for the six months ended June 30, 2023 and the comparative three and nine months ended September 30, 2022 are presented using the GAAP historical basis of accounting.

The interim unaudited condensed consolidated financial statements include the accounts of the Company, the OP, their direct and indirect owned subsidiaries, and the accounts of joint ventures that are determined to be variable interest entities for which the Company is the primary beneficiary. All significant intercompany balances and transactions are eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s condensed consolidated financial position, results of operations and cash flows have been included.

The Company evaluates the need to consolidate joint ventures and variable interest entities based on standards set forth in ASC Topic 810, Consolidation (“ASC 810”). In determining whether the Company has a controlling interest in a joint venture or a variable interest entity and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the partners/members, as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary. During the three and nine months ended September 30, 2023 and 2022, the Company held variable interests in two variable interest entities and consolidated those entities.

Use of Estimates

Certain of the Company’s accounting estimates are particularly important for an understanding of the Company’s financial position and results of operations and require the application of significant judgment by management. As a result, these estimates are subject to a degree of uncertainty. The Company is required to estimate all costs and revenue it expects to incur and earn through the end of liquidation including the estimated amount of cash it expects to collect on the disposal of its assets and the estimated costs to dispose of its assets. All of the estimates and evaluations are susceptible to change and actual results could differ materially from the estimates and evaluations.

Real Estate - Liquidation Basis of Accounting

As of July 1, 2023, the Company’s investments in real estate were adjusted to their estimated net realizable value, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash or other consideration the Company expects to realize through the disposal of its assets, including any residual value attributable to lease intangibles, as it carries out the Plan of Liquidation. The liquidation value of investments in real estate was based on a number of factors including discounted cash flow and direct capitalization analyses, detailed analysis of current market comparables and broker opinions of value. The liquidation values of the Company’s investments in real estate are presented on an undiscounted basis and investments in real estate are no longer depreciated. Subsequent to July 1, 2023, all changes in the estimated liquidation value of the investments in real estate are reflected as a change to the Company’s net assets in liquidation.

Rents and Other Receivables

In accordance with the liquidation basis of accounting, as of July 1, 2023, rents and other receivables were adjusted to their net realizable value. The Company periodically evaluates the collectibility of amounts due from tenants. Any changes in the collectibility of the receivables are reflected as a change to the Company’s net assets in liquidation.

Revenue Recognition - Liquidation Basis of Accounting

Under the liquidation basis of accounting, the Company has accrued all income that it expects to earn through the completion of its liquidation to the extent it has a reasonable basis for estimation. Revenue from tenants is estimated based on the contractual in-place leases and projected leases through the anticipated disposition date of the property. These amounts are presented net of estimated expenses and other liquidation costs and are classified in liabilities for estimated costs in excess of estimated receipts during liquidation on the Condensed Consolidated Statement of Net Assets.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. Contingent rental income is not contemplated under liquidation accounting unless there is a reasonable basis to estimate future receipts.

Accrued Liquidation Costs

In accordance with the liquidation basis of accounting, the Company accrues for certain estimated liquidation costs to the extent it has a reasonable basis for estimation. These consist of legal fees, dissolution costs, final audit/tax costs, insurance, and transfer agent related costs.

Derivative Instruments and Hedging Activities

The Company measures derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in changes in net assets in liquidation on the condensed consolidated statement of changes in net assets. The ineffective portion of a derivative’s change in fair value is recognized in liabilities for estimated costs in excess of estimated receipts during liquidation on the Condensed Consolidated Statement of Net Assets.

The Company does not net its derivative fair values or any existing rights or obligations to cash collateral. The Company does not use derivatives for trading or speculative purposes. For the periods presented, the Company's derivative, comprised of an interest rate cap, qualified and was designated as a cash flow hedge, and was not deemed ineffective.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents represent current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit. The Company limits cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk in cash.

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statement of cash flows (amounts in thousands):


	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	2,057	$	477
Restricted cash	245		599
Total cash, cash equivalents, and restricted cash	$	2,302	$	1,076

Recent Accounting Pronouncements

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

4. LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of Liquidation. As of September 30, 2023, the Company estimated that it will have costs in excess of estimated receipts during the liquidation process. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, estimates of tenant improvement costs and capital expenditures, the timing of property sales, direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding down of operations. These costs are estimated and are anticipated to be paid out over the liquidation period.

Upon transition to the liquidation basis of accounting on July 1, 2023, the Company accrued the following revenues and expenses expected to be incurred during liquidation (amounts in thousands):

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


	As of July 1, 2023
Rental income	$	1,935
Other operating income	28
Operating, maintenance and management	(473)
Real estate taxes and insurance	(337)
General and administrative expenses	(2,484)
Interest expense	(1,485)
Tenant improvements	(78)
Return of escrow funds	162
Liquidating transaction costs	(2,510)
Liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)

The change in the liabilities for estimated costs in excess of estimated receipts during liquidation as of September 30, 2023 is as follows (amounts in thousands):


	July 1, 2023		Cash Payments (Receipts)		Remeasurement of Assets and Liabilities		September 30, 2023



Liabilities:
Estimated net outflows from investments in real estate	$	(248)	$	72	$	—	$	(176)
Liquidation transaction costs	(2,510)		—		—		(2,510)
Corporate expenditures	(2,484)		391		—		(2,093)
	(5,242)		463		—		(4,779)
Total liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)	$	463	$	—	$	(4,779)

5. NET ASSETS IN LIQUIDATION

The net assets in liquidation as of September 30, 2023 would result in the payment of estimated liquidating distributions of approximately $0.48 per share of common stock to the Company’s stockholders of record as of September 30, 2023. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the estimated period required to complete the Plan of Liquidation. There is inherent uncertainty with these estimates and projections, and they could change materially based on the timing of the disposition or transfer of the Company’s remaining real estate properties, the performance of the Company’s remaining assets and any changes in the underlying assumptions of the projected cash flows from such properties. See Note 2,“Plan of Liquidation.”

6. REAL ESTATE

As of September 30, 2023 the Company’s portfolio was composed of six income-producing retail properties located in California with approximately 27,000 rentable square feet, as well as an improved land parcel. As of September 30, 2023, the rentable space at the Company’s retail properties was 85% leased. As of September 30, 2023, the Company’s liquidation value of real estate was $26.5 million.

As a result of adopting the liquidation basis of accounting in July 2023, as of September 30, 2023, real estate properties were recorded at their estimated liquidation value, which represents the estimated gross amount of cash or other consideration the Company expects to realize through the disposition or transfer of its real estate properties owned as of September 30, 2023 as it carries out its Plan of Liquidation.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7. NOTES PAYABLE, NET

On December 24, 2019, the Company entered into a Loan Agreement (the “SRT Loan Agreement”) with PFP Holding Company, LLC (the “SRT Lender”) for a non-recourse secured loan (the “SRT Loan”).

The SRT Loan is secured by first deeds of trust on the Company’s five San Francisco assets (Fulton Shops, 8 Octavia, 400 Grove, 450 Hayes and 388 Fulton Street) as well as the Company’s Silverlake Collection located in Los Angeles. The SRT Loan was scheduled to mature on January 9, 2023. On January 18, 2023, pursuant to the terms of the SRT Loan Agreement, the Company and the SRT Lender extended the maturity date of the SRT Loan for an additional twelve-month period under the same terms and conditions. The new maturity date is January 9, 2024. The Company has one additional option to extend the term of the loan for an additional twelve-month period, subject to the satisfaction of certain covenants and conditions contained in the SRT Loan Agreement. The Company has the right to prepay the SRT Loan in whole at any time or in part from time to time, subject to the payment of certain expenses, costs or liabilities potentially incurred by the SRT Lender as a result of the prepayment and subject to certain other conditions contained in the loan documents. Individual properties may be released from the SRT Loan collateral in connection with bona fide third-party sales, subject to compliance with certain covenants and conditions contained in the SRT Loan Agreement.

As of September 30, 2023, the SRT Loan had a principal balance of approximately $18.0 million. The SRT Loan is a floating Secured Overnight Financing Rate (“SOFR”) rate loan which bears interest at 30-day SOFR (with a floor of 1.50%) plus 2.80%. The default rate is equal to 5% above the rate that otherwise would be in effect. Monthly payments are interest-only with the entire principal balance and all outstanding interest due at maturity. Effective January 9, 2023, the Company entered into a derivative transaction with a financial institution with a notional amount of $18,000,000, representing an interest rate cap. The Company will receive a payment from the counterparty if the rate on SOFR exceeds 3.5%. The instrument is measured at fair value which was determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets and is classified as Level 2 in the fair value hierarchy. The Company paid $260 thousand for the derivative and it matures on January 9, 2024. The interest rate cap is included in other assets on the condensed consolidated statement of net assets. As of September 30, 2023 the fair value of the derivative was approximately $113 thousand. For the six months ended June 30, 2023 approximately $43 thousand, respectively, was recognized in other comprehensive income on the accompanying condensed consolidated statements of operations and comprehensive income.

Pursuant to the SRT Loan, the Company must comply with certain matters contained in the loan documents including but not limited to, (i) requirements to deliver audited and unaudited financial statements, SEC filings, tax returns, pro forma budgets, and quarterly compliance certificates, and (ii) minimum limits on the Company’s liquidity and tangible net worth. The SRT Loan contains customary covenants, including, without limitation, covenants with respect to maintenance of properties and insurance, compliance with laws and environmental matters, covenants limiting or prohibiting the creation of liens, and transactions with affiliates. As of September 30, 2023, the Company was in compliance with the loan requirements.

In connection with the SRT Loan, the Company executed customary non-recourse carveout and environmental guaranties, together with limited additional assurances with regard to the condominium structures of the San Francisco assets.

The following is a schedule of future principal payments for all of the Company’s notes payable outstanding as of September 30, 2023 (amounts in thousands):


Remainder of 2023	$	—
2024	18,000

Total future principal payments	18,000

Notes payable (1)	$	18,000

(1)As described in Note 3, “Summary of Significant Accounting Policies” on July 1, 2023, the Company adopted the liquidation basis of accounting which requires the Company to record notes payable at their contractual amounts.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table sets forth interest costs incurred by the Company for the periods presented (amounts in thousands):


	Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2022		2022
Expensed
Interest costs, net of amortization of deferred financing costs	$	708	$	674	$	1,114
Amortization of deferred financing costs	27		178		370
Total interest expensed	$	735	$	852	$	1,484

Capitalized
Interest costs, net of amortization of deferred financing costs	$	—	$	—	$	779
Amortization of deferred financing costs	—		—		87
Total interest capitalized	$	—	$	—	$	866

As of September 30, 2023 and December 31, 2022, interest expense payable was approximately $0.1 million for each period.

8. EQUITY

Share Redemption Program

As the Company’s stockholders have approved the Plan of Liquidation, the board of directors expects any future liquidity to be in the form of liquidating distributions and does not expect to resume the SRP.

Distributions

In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual REIT taxable income, subject to certain adjustments, to its stockholders. The Company’s board of directors regularly evaluates the amount and timing of distributions based on the Company’s operational cash needs. As the Company’s stockholders have approved the Plan of Liquidation, the Company’s board of directors expects any future distributions to be in the form of liquidating distributions and does not expect to consider regular distributions.

9. RELATED PARTY TRANSACTIONS

On August 7, 2013, the Company entered into the Advisory Agreement with the Advisor, which has been renewed for successive terms with a current expiration date of August 9, 2024. The Advisor manages the Company’s business as the Company’s external advisor pursuant to the Advisory Agreement. Pursuant to the Advisory Agreement, the Company pays the Advisor specified fees for services related to the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services. On August 12, 2022, the Company, the OP, and the Advisor, entered into the Tenth Amendment to the Advisory Agreement (the “Tenth Amendment”). The Tenth Amendment renewed the term of the Advisory Agreement for an additional twelve-month period, beginning on August 10, 2022 and amended certain provisions in the Advisory Agreement with respect to the payment of certain fees as follows. The disposition fee payable to the Advisor was reduced by half in connection with the sale of certain properties held by the Company during the renewed term of the agreement. The financing coordination fee payable to the Advisor was waived in connection with the refinancings of the Wilshire Joint Venture Property and Sunset & Gardner Joint Venture property. The asset management fee payable to the Advisor for the twelve-month period commencing August 2022 through July 2023 was reduced to $250,000 in the aggregate. In all other material respects, the terms of the Advisory Agreement remain unchanged. On August 9, 2023, the parties entered the Eleventh Amendment to the Advisory Agreement (the “Eleventh Amendment”). The Eleventh Amendment renewed the term of the Advisory Agreement for an additional one-year period and again set the asset management fee at $250,000 in the aggregate for the twelve-month period commencing August 2023 through July 2024. The Advisory Agreement remained unchanged in all other respects.

The Company is party to property management agreements with respect to each of its properties pursuant to which PUR was engaged to serve as property manager. The property management agreements expire August 10, 2024 and will automatically renew every year, unless expressly terminated.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Summary of Related Party Fees

The following table sets forth the Advisor related-party costs incurred and payable by the Company for the periods presented (amounts in thousands):


	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,		December 31,
Expensed	2023		2022		2023		2022		2023		2022


Asset management fees	$	63	$	90	$	188	$	377	$	21	$	21
Reimbursement of operating expenses	—		4		—		18		—		—
Property management fees	18		24		63		79		12		16


Total	$	81	$	118	$	251	$	474	$	33	$	37

Asset Management Fees

Under the Tenth Amendment and the Eleventh Amendment the asset management fee payable to the Advisor in each of the twelve-month periods commencing August 2022 through July 2023 and August 2023 through July 2024 is $250,000 in the aggregate.

Reimbursement of Operating Expenses

The Company reimburses the Advisor for all expenses paid or incurred by the Advisor in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company’s total operating expenses (including the asset management fee described above) at the end of the four preceding fiscal quarters exceeded the greater of (1) 2% of its average invested assets (as defined in the Company’s Articles of Amendment and Restatement (the “Charter”)); or (2) 25% of its net income (as defined in the Charter) determined without reduction for any additions to depreciation, bad debts or other similar non-cash expenses and excluding any gain from the sale of the Company’s assets for that period (the “2%/25% Guideline”). The Advisor is required to reimburse the Company quarterly for any amounts by which total operating expenses exceed the 2%/25% Guideline in the previous expense year that the independent directors do not approve. The Company will not reimburse the Advisor for any of its personnel costs or other overhead costs except for customary reimbursements for personnel costs under property management agreements entered into between the OP and the Advisor or its affiliates. Notwithstanding the above, the Company may reimburse the Advisor for expenses in excess of the 2%/25% Guideline if a majority of the independent directors determine that such excess expenses are justified based on unusual and non-recurring factors.

Property Management Fees

Under the property management agreements the Company pays property management fees calculated at a maximum of up to 4% of the properties’ gross revenue.

Disposition Fees

Under the Advisory Agreement, if the Advisor or its affiliates provide a substantial amount of services, as determined by the Company’s independent directors, in connection with the sale of a real property, the Advisor or its affiliates may be paid disposition fees up to 50% of a customary and competitive real estate commission, but not to exceed 3% of the contract sales price of each property sold. Pursuant to the Tenth Amendment the disposition fee payable to the Advisor was reduced by half in connection with the sale of certain properties held by the Company during the renewed term of the agreement (August 2022 through August 2023).

Leasing Fees

Under the property management agreements, the Company pays a separate fee for the leases of new tenants, and for expansions, extensions and renewals of existing tenants in an amount not to exceed the fee customarily charged by similarly situated parties rendering similar services in the same geographic area for similar properties.

Legal Leasing Fees

Under the property management agreements, the Company pays a market-based legal leasing fee for the negotiation and production of new leases, renewals, and amendments.

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STRATEGIC REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

10. COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company is dependent on the Advisor and its affiliates for certain services that are essential to the Company, including the negotiation and disposition of real estate in connection with the implementation of the Plan of Liquidation, continued management of the daily operations of the Company’s real estate and real estate-related investment portfolio, and other general and administrative responsibilities. In the event that the Advisor is unable to provide such services to the Company, the Company will be required to obtain such services from other sources.

Legal Matters

From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its condensed consolidated financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

11. SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and the notes thereto.

As used herein, the terms “we,” “our,” “us,” and “Company” refer to Strategic Realty Trust, Inc., and, as required by context, Strategic Realty Operating Partnership, L.P., a Delaware limited partnership, which we refer to as our “operating partnership” or “OP”, and to their respective subsidiaries. References to “shares” and “our common stock” refer to the shares of our common stock.

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Special Note Regarding Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto, including with respect to a Plan of Liquidation (as defined below) are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

•Although our board of directors and stockholders have approved the sale of all of our assets and our dissolution pursuant to the terms of a plan of complete liquidation and dissolution (the “Plan of Liquidation”), we can give no assurance whether we will be able to successfully implement the Plan of Liquidation and sell our assets, pay our debts and distribute the net proceeds from liquidation to our stockholders as we expect.

•We can give no assurance regarding the timing of asset dispositions and the sale prices we will receive for assets and the amount and timing of liquidating distributions to be received by our stockholders.

•We may face unanticipated difficulties, delays or expenditures relating to our implementation of the Plan of Liquidation, which may reduce or delay our payment of liquidating distributions.

•We may face risks associated with legal proceedings, including stockholder litigation, that may be instituted against us related to the Plan of Liquidation.

•The adverse effect of the public health crisis of the novel coronavirus disease (COVID-19) pandemic, or any future pandemic, epidemic or outbreak of infectious disease, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market, in particular with respect to retail commercial properties and the global economy and financial markets.

•Our executive officers and certain other key real estate professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor. As a result, they face conflicts of interest, including conflicts created by our advisor’s compensation arrangements with us and conflicts in allocating time among us and other programs and business activities.

•We are uncertain of our sources for funding our future capital needs. If we cannot obtain debt or equity financing on acceptable terms, our ability to fund or expand our operations will be adversely affected.

•We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our financial obligations, including debt service and adversely affect total returns to our stockholders.

•All our assets are concentrated in one state and in urban retail properties, any adverse economic, real estate or business conditions in this geographic area or in the urban retail market, including with respect to the continued economic slowdown, the rising interest rate environment and inflation (or the perception that these events may continue) could adversely affect our operating results and the amount of any liquidating distributions to our stockholders.

•Our investments in real estate may be affected by unfavorable real estate market and general economic conditions, including the continued economic slowdown, rapidly rising interest rates and significant inflation (or the perception that these events may continue) as well as lack of lending activity in the debt markets, which could decrease the value

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of our assets and reduce the investment return to our stockholders. Revenues from our properties could decrease. Such events would make it more difficult for us to meet our debt service obligations.

•Certain of our debt obligations have variable interest rates with interest and related payments that vary with the movement of SOFR or other indices. Increases in these indices could increase the amount of our debt payments.

All forward-looking statements should be read in light of the risks identified herein and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”). Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed upon on any forward-looking statements included herein. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements made after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, and the risks described in Part I, Item 1A of the 2022 Annual Report on Form 10-K, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report on Form 10-Q will be achieved.

Overview

We are a Maryland corporation that was formed on September 18, 2008, to invest in and manage a portfolio of income-producing retail properties, located in the United States, real estate-owning entities and real estate-related assets, including the investment in or origination of mortgage, mezzanine, bridge and other loans related to commercial real estate. As of September 30, 2023, our portfolio included six retail properties, excluding a land parcel, comprising an aggregate of approximately 27,000 square feet of multi-tenant, commercial retail space located in California.

We have elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with the taxable year ended December 31, 2009, and we have operated and intend to continue to operate in such a manner. We own substantially all of our assets and conduct our operations through our operating partnership, of which we are the sole general partner. We also own a majority of the outstanding limited partner interests in the operating partnership.

Since our inception, our business has been managed by an external advisor. We do not have direct employees and all management and administrative personnel responsible for conducting our business are employed by our advisor. Currently we are externally managed and advised by SRT Advisor, LLC, a Delaware limited liability company (the “Advisor”) pursuant to an advisory agreement with the Advisor (the “Advisory Agreement”) initially executed on August 10, 2013, and subsequently renewed every year through 2023. The current term of the Advisory Agreement terminates on August 9, 2024. As of April 2021, the Advisor is an affiliate of PUR Management LLC, which is an affiliate of L3 Capital, LLC. L3 Capital, LLC is a real estate investment firm focused on institutional quality, value-add, prime urban retail and mixed-use investment within first tier U.S. metropolitan markets.

Plan of Liquidation

On May 12, 2023, our board of directors unanimously approved the sale of all of our assets and our dissolution pursuant to the terms of the Plan of Liquidation. The principal purpose of the Plan of Liquidation is to maximize stockholder value by selling our assets, paying our debts and distributing the net proceeds from liquidation to our stockholders. On August 23, 2023 our stockholders approved the Plan of Liquidation.

We intend to pursue an orderly liquidation of our company by selling our remaining assets, paying our debts and our known liabilities, providing for the payment of unknown or contingent liabilities, distributing the net proceeds from liquidation to our stockholders and winding up our operations and dissolving our company. While pursuing our liquidation pursuant to the Plan of Liquidation, we intend to continue to manage our portfolio of assets to maintain and, if possible, improve the quality and income-producing ability of our properties to enhance property stability and better position our assets for sale.

We will pay multiple, or a single, liquidating distribution payments to our stockholders during the liquidation process and will pay a final liquidating distribution after we sell all of our assets, pay all our known liabilities and provide for unknown liabilities. We expect to complete these activities within 24 months from August 23, 2023. However, if we cannot sell our assets and pay our debts within 24 months from May 9, 2023, or if the board of directors determine that it is otherwise advisable to do so, pursuant to the Plan of Liquidation, we may transfer and assign our remaining assets to a liquidating trust. Upon such transfer and assignment, our stockholders will receive beneficial interests in the liquidating trust. We can give no assurance regarding the timing of asset dispositions in connection with the implementation of the Plan of Liquidation, the sale prices we

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will receive for our assets, and the amount or timing of any liquidating distributions to be received by our stockholders. For more information, see the Plan of Liquidation, which is included as an exhibit to this Quarterly Report on Form 10-Q.

As a result of the approval of the Plan of Liquidation by our stockholders in August 2023, we adopted the liquidation basis of accounting as of July 1, 2023, as described further in Note 3,“Summary of Significant Accounting Policies - Principles of Consolidation and Basis of Presentation.”

Market Outlook

Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, recent macroeconomic trends, including inflation and rising interest rates, we continue to monitor and address risks related to the general state of the economy on our portfolio and retail tenants and the impact on our ability to implement the Plan of Liquidation.

Since early 2022, inflation in the United States has accelerated and is currently expected to continue at an elevated level in the near-term. Rising inflation could have an adverse impact on our variable rate debt, as well as general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. In addition, our retail tenants may experience decreased revenue as a result of rising inflation and reduced consumer spending. The Federal Reserve has raised interest rates to combat inflation and restore price stability and rates may continue to rise. As a result, to the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such increases may result in higher debt service costs, which will adversely affect our cash flows. In addition, the rising interest rates have resulted in a lack of lending activity in the debt markets which may impact the ability of buyers for our properties to obtain favorable financing and adversely impact our ability to implement the Plan of Liquidation.

Results of Operations

In light of the adoption of liquidation basis accounting as of July 1, 2023 and our liquidation pursuant to the Plan of Liquidation, the results of operations for the current year period are not comparable to the prior year period. The sale of assets under the Plan of Liquidation will have a significant impact on our operations. See “— Overview — Plan of Liquidation”.

Liquidity and Capital Resources

As described above under “—Overview – Plan of Liquidation,” our board of directors and our stockholders have approved the sale of all of our assets and our dissolution pursuant to the terms of the Plan of Liquidation. The principal purpose of the Plan of Liquidation is to provide liquidity to our stockholders by selling our assets, paying our debts and distributing the net proceeds from liquidation to our stockholders. We expect our principal demands for funds during the short and long-term are and will be for the payment of operating expenses, interest on our outstanding indebtedness, general and administrative expenses, including expenses in connection with the Plan of Liquidation, and payments of distributions to stockholders pursuant to the Plan of Liquidation. We expect to use our cash on hand as our primary source of liquidity. To the extent available, we also intend to use cash flow generated by our real estate investments; however, asset sales will further reduce cash flow from these sources.

Our investments in real estate generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures, capital expenditures, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flow from operations from real estate investments is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures, all of which may be adversely affected by the general market conditions impacting commercial real estate and our tenants as discussed above.

As of September 30, 2023, our cash and cash equivalents were approximately $1.6 million and we had $0.4 million of restricted cash (funds held by the lenders for property taxes, insurance, tenant improvements, leasing commissions, capital expenditures, rollover reserves and other financing needs).

We believe that our cash on hand, along with other potential sources of liquidity that we may be able to obtain, will be sufficient to fund our working capital needs and debt obligations through the completion of the Plan of Liquidation. However, the fixed costs associated with managing a public REIT, including the significant cost of corporate compliance with all federal, state and local regulatory requirements applicable to us with respect to our business activities, are substantial. Such costs include, without limitation, the cost of preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports, documents and filings required under the Exchange Act, or other federal or state laws for the general maintenance of our status as a REIT, under the applicable provisions of the Code, or otherwise. Given the size of our portfolio of properties, these costs constitute a significant percentage of our gross income, reducing our net income and cash flow. Moreover, over the long term, if we are unsuccessful in implementing the Plan of

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Liquidation and our cash flow from operations does not increase from current levels, whether through increased occupancy or rent rates, we will have to address a liquidity deficiency as our cash flow is not sufficient to cover our current operating expenses over the long term. These forward-looking statements are subject to a number of uncertainties, including with respect to the current economic environment and there can be no guarantee that we will be successful with our plan.

Cash Flows from Operating Activities

During the six months ended June 30, 2023, net cash used in operating activities was $817 thousand.

Cash Flows from Investing Activities

Cash flows used by investing activities during the six months ended June 30, 2023, was $39 thousand and consisted of a payment of lease commission and payment of building improvements.

Cash Flows from Financing Activities

Cash flows used by financing activities during the six months ended June 30, 2023, was $313 thousand and consisted of a payment of an interest rate cap and loans fees in connection with the extension of the maturity date of the SRT Loan for an additional twelve-month period.

Recent Financing Transactions

Multi-Property Secured Financing

On December 24, 2019, we entered into a Loan Agreement (the “SRT Loan Agreement”) with PFP Holding Company, LLC (the “SRT Lender”) for a non-recourse secured loan (the “SRT Loan”).

The SRT Loan is secured by first deeds of trust on our five San Francisco assets (Fulton Shops, 8 Octavia, 400 Grove, 450 Hayes and 388 Fulton Street) as well as our Silverlake Collection located in Los Angeles. The SRT Loan was scheduled to mature on January 9, 2023. We have an option to extend the term of the loan for two additional twelve-month periods, subject to the satisfaction of certain covenants and conditions contained in the SRT Loan Agreement. On January 18, 2023, the Company and the SRT Lender extended the maturity date of the SRT Loan for an additional twelve-month period under the same terms and conditions. The new maturity date is January 9, 2024. We have the right to prepay the SRT Loan in whole at any time or in part from time to time, as well as certain expenses, costs or liabilities potentially incurred by the SRT Lender as a result of the prepayment and subject to certain other conditions contained in the loan documents. Individual properties may be released from the SRT Loan collateral in connection with bona fide third-party sales, subject to compliance with certain covenants and conditions contained in the SRT Loan Agreement.

Pursuant to the SRT Loan, we must comply with certain matters contained in the loan documents including but not limited to, (i) requirements to deliver audited and unaudited financial statements, SEC filings, tax returns, pro forma budgets, and quarterly compliance certificates, and (ii) minimum limits on our liquidity and tangible net worth. The SRT Loan contains customary covenants, including, without limitation, covenants with respect to maintenance of properties and insurance, compliance with laws and environmental matters, covenants limiting or prohibiting the creation of liens, and transactions with affiliates.

In connection with the SRT Loan, we executed customary non-recourse carveout and environmental guaranties, together with limited additional assurances with regard to the condominium structures of the San Francisco assets.

Guidelines on Total Operating Expenses

We reimburse our Advisor for some expenses paid or incurred by our Advisor in connection with the services provided to us, except that we will not reimburse our Advisor for any amount by which our total operating expenses at the end of the four preceding fiscal quarters exceed the greater of (1) 2% of our average invested assets, as defined in our charter; and (2) 25% of our net income, as defined in our charter, or the “2%/25% Guidelines” unless a majority of our independent directors determines that such excess expenses are justified based on unusual and non-recurring factors.

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Inflation

The majority of our leases at our properties contain inflation protection provisions applicable to reimbursement billings for common area maintenance charges, real estate tax and insurance reimbursements on a per square foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. We expect to include similar provisions in our future tenant leases designed to protect us from the impact of inflation. Due to the generally long-term nature of these leases, annual rent increases, as well as rents received from acquired leases, may not be sufficient to cover inflation and rent may be below market rates.

REIT Compliance

To qualify as a REIT for tax purposes, we are required to annually distribute at least 90% of our REIT taxable income, subject to certain adjustments, to our stockholders. We must also meet certain asset and income tests, as well as other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which our REIT qualification is lost unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders.

Quarterly Distributions

In accordance with the Plan of Liquidation, our objectives are to pursue an orderly liquidation of our company by selling or otherwise disposing of our remaining assets, paying or otherwise settling our debts and our known liabilities, providing for the payment of unknown or contingent liabilities, distributing the net proceeds from liquidation to our stockholders and winding up our operations and dissolving our company. We may pay multiple, or a single, liquidating distribution(s) to our stockholders during the liquidation process. We will pay the final liquidating distribution after we sell all of our assets, pay or provide for all of our known liabilities and provide for unknown liabilities. We expect to complete these activities within 24 months of August 23, 2023, the day we received stockholder approval of the Plan of Liquidation. A final liquidating distribution to our stockholders may not be paid until all of our liabilities have been satisfied.

Our expectations about the amount of liquidating distributions that we will pay and when we will pay them are based on many estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of liquidating distributions we pay to our stockholders may be more or less than we estimate and the liquidating distributions may be paid later than we predict. We do not expect to pay regular monthly distributions during the liquidation process. We intend to maintain adequate cash reserves for liquidity, debt repayments and other future capital needs.

Related Party Transactions and Agreements

We are currently party to the Advisory Agreement, pursuant to which the Advisor manages our business in exchange for specified fees paid for services related to the investment of funds in real estate and real estate-related investments, management of our investments and for other services. Refer to Note 11. “Related Party Transactions” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the Advisory Agreement and other related party transactions, agreements and fees.

Critical Accounting Policies and Estimates

Below is a discussion of the accounting policies that management believes are or will be critical during our liquidation. We consider these policies critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements.

Subsequent to the adoption of the liquidation basis of accounting, we are required to estimate all costs and income we expect to incur and earn through the end of liquidation including the estimated amount of cash we expect to collect through the disposal of our assets and the estimated costs to dispose of our assets.

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Pursuant to our stockholders’ approval of the Plan of Liquidation, we adopted the liquidation basis of accounting as of and for the periods subsequent to July 1, 2023 (as approval of the Plan of Liquidation became imminent during the month of July 2023 based on the results of our solicitation of proxies from our stockholders for their approval of the Plan of Liquidation). Accordingly, on July 1, 2023, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash or other consideration that we expect to receive through the disposal of our assets as we carry out our Plan of Liquidation. The liquidation values of our remaining real estate properties are presented on an undiscounted basis. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

We accrue costs and income that we expect to incur and earn through the completion of our liquidation, including the estimated amount of cash or other consideration that we expect to receive through the disposal of our assets and the estimated costs to dispose of our assets, to the extent we have a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Condensed Consolidated Statement of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. See Note 2, “Plan of Liquidation” and Note 4, “Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation” for further discussion. Actual costs incurred but unpaid as of September 30, 2023 are included in accounts payable and accrued expenses, due to affiliate and other liabilities on the Condensed Consolidated Statement of Net Assets.

Real Estate - Liquidation Basis of Accounting

As of July 1, 2023, our investments in real estate were adjusted to their estimated net realizable value, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash or other consideration we expect to realize through the disposal our assets, including any residual value attributable to lease intangibles, as we carries out the Plan of Liquidation. The liquidation value of investments in real estate was based on a number of factors including discounted cash flow and direct capitalization analyses, detailed analysis of current market comparables and broker opinions of value. The liquidation values of the Company’s investments in real estate are presented on an undiscounted basis and investments in real estate are no longer depreciated. Subsequent to July 1, 2023, all changes in the estimated liquidation value of the investments in real estate are reflected as a change to our net assets in liquidation.

Rents and Other Receivables

In accordance with the liquidation basis of accounting, as of July 1, 2023, rents and other receivables were adjusted to their net realizable value. We periodically evaluate the collectibility of amounts due from tenants. Any changes in the collectibility of the receivables are reflected as a change to our net assets in liquidation.

Revenue Recognition - Liquidation Basis of Accounting

Under the liquidation basis of accounting, we accrued all income that we expect to earn through the completion of our liquidation to the extent we have a reasonable basis for estimation. Revenue from tenants is estimated based on the contractual in-place leases and projected leases through the anticipated disposition date of the property. These amounts are presented net of estimated expenses and other liquidation costs and are classified in liabilities for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets.

We own certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. Contingent rental income is not contemplated under liquidation accounting unless there is a reasonable basis to estimate future receipts.

Accrued Liquidation Costs

In accordance with the liquidation basis of accounting, we accrue for certain estimated liquidation costs to the extent we have a reasonable basis for estimation. These consist of legal fees, dissolution costs, final audit/tax costs, insurance, and transfer agent related costs.

Derivative Instruments and Hedging Activities

We measure derivative instruments at fair value and records them as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated and that qualified as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in changes in net assets in liquidation on the condensed consolidated statement of changes in net assets. The ineffective portion of a derivative’s change in fair value is recognized in liabilities for estimated costs in excess of estimated receipts during liquidation on the condensed consolidated statement of net assets.

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We do not net our derivative fair values or any existing rights or obligations to cash collateral. We do not use derivatives for trading or speculative purposes. For the periods presented, the our derivative, comprised of an interest rate cap, qualified and was designated as a cash flow hedge, and was not deemed ineffective.

Subsequent Events

We evaluate subsequent events up until the date the condensed consolidated financial statements are issued.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted as permitted under rules applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon, and as of the date of, the evaluation, our chief executive officer and chief financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Matters

In connection with the adoption of liquidation basis accounting, during the third quarter of 2023 (i) certain of our internal controls over financial reporting became no longer relevant primarily relating to asset impairments and (ii) we adopted additional internal controls over financial reporting primarily with respect to the calculations of our asset values for liquidation basis accounting purposes.

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PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Omitted as permitted under rules applicable to smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period covered by this Quarterly Report on Form 10-Q, we did not issue any equity securities that were not registered under the Securities Act of 1933, as amended.

Share Redemption Program

Our board of directors adopted a share redemption program that could enable our stockholders to sell their shares of common stock to us in limited circumstances (the “SRP”), subject to the significant restrictions and limitations of the program. During the three and nine months ended September 30, 2023, we did not redeem shares. As a result of the approval by our board of directors and our stockholders of the Plan of Liquidation, we do not expect to redeem any shares under the SRP going forward and expect that any future liquidity provided to stockholders will be in the form of liquidating distributions. We can provide no assurances as to the timing, amount, or successful implementation of the Plan of Liquidation.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On November 8, 2023, our board of directors approved an updated estimated liquidation value per share of our common stock of $0.48, which is equal to our net assets in liquidation, divided by the number of shares outstanding, all as of September 30, 2023, and as disclosed in this Quarterly Report on Form 10-Q (the “November 2023 Estimated Liquidation Value Per Share”). The November 2023 Estimated Liquidation Value Per Share has decreased compared to our most recent estimated value per share as of December 28, 2022. The November 2023 Estimated Liquidation Value Per Share includes other liquidation costs that are not included in the December 28, 2022 estimated value per share but was most significantly impacted by the updated value of our investments in real estate. The ongoing uncertainty in both the debt and capital markets has significantly reduced the amount of potential buyers in the commercial real estate market and this uncertainty along with rising interest rates, has adversely impacted the value of our properties. We adopted the liquidation basis of accounting as of and for the periods subsequent to July 1, 2023. Net assets in liquidation represents the remaining estimated liquidation value available to stockholders upon liquidation. For a description of our accounting policies and the methodologies, limitations and assumptions used in the determination of the November 2023 Estimated Liquidation Value Per Share, see the notes to our consolidated financial statements in this Quarterly Report on Form 10-Q.

We are providing the November 2023 Estimated Liquidation Value Per Share to assist broker-dealers that participated in our now-terminated initial public offering in meeting their customer account statement reporting obligations under the Financial Industry Regulatory Authority Rule 2231.

The November 2023 Estimated Liquidation Value Per Share will first appear on the December 2023 stockholder account statements.

Limitations of the November 2023 Estimated Liquidation Value Per Share

As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated liquidation value per share, and this difference could be significant. The November 2023 Estimated Liquidation Value Per Share does not represent the fair value of our assets less the fair value of our liabilities according to GAAP. Moreover, we did not obtain updated appraisals in connection with the determination of the November 2023 Estimated Liquidation Value Per Share, and the determination was based solely on the net assets in liquidation as reported in this Quarterly Report on Form 10-Q.

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Our expectations about the implementation of the Plan of Liquidation and the amount of any liquidating distributions that we pay to our stockholders and when we will pay them are subject to risks and uncertainties and are based on certain estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of any liquidating distributions that we pay to our stockholders may be more or less than our estimate and the liquidating distributions may be paid later than we predict. There are many factors that may affect the amount of liquidating distributions we will ultimately pay to our stockholders. If we underestimated our existing obligations and liabilities or the amount of taxes, transaction fees and expenses relating to the liquidation and dissolution, or if unanticipated or contingent liabilities arise, the amount of liquidating distributions ultimately paid to our stockholders could be less than estimated. Moreover, the liquidation value will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets, based on the amount of net proceeds received from the disposition of our remaining assets and due to other factors. Accordingly, it is not possible to precisely predict the timing of any liquidating distributions we pay to our stockholders or the aggregate amount of liquidating distributions that we will ultimately pay to our stockholders.

No assurance can be given that any liquidating distributions we pay to our stockholders will equal or exceed the November 2023 Estimated Liquidation Value Per Share. Accordingly, with respect to the November 2023 Estimated Liquidation Value Per Share, we can give no assurance:

•of the amount or timing of liquidating distributions we will ultimately be able to pay our stockholders;

•that a stockholder would be able to resell his or her shares at the November 2023 Estimated Liquidation Value Per Share;

•that an independent third-party appraiser or third-party valuation firm would agree with the November 2023 Estimated Liquidation Value Per Share; or

•that the methodology used to determine the November 2023 Estimated Liquidation Value Per Share would be acceptable to FINRA or for compliance with ERISA reporting requirements.

ITEM 6. EXHIBITS

The exhibits listed on the Exhibit Index (following the signatures section of this Quarterly Report on Form 10-Q) are included herewith, or incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements 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 November 9, 2023.


			Strategic Realty Trust, Inc.

			By:			/s/ Matthew Schreiber
						Matthew Schreiber
						Chief Executive Officer and Director (Principal Executive Officer)

			By:			/s/ Ryan Hess
						Ryan Hess
						Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).

Incorporated by Reference

Exhibit No.

Description

Filed
Herewith

Form/File No.

Filing Date

2.1

Plan of Complete Liquidation and Dissolution

10-Q

5/15/2023

3.1.1

Articles of Amendment and Restatement of TNP Strategic Retail Trust, Inc.

S-11/
No. 333-154975

7/10/2009

3.1.2

Articles of Amendment, dated August 22, 2013

8-K

8/26/2013

3.1.3

Articles Supplementary, dated November 1, 2013

8-K

11/4/2013

3.1.4

Articles Supplementary, dated January 22, 2014

8-K

1/28/2014

3.2

Third Amended and Restated Bylaws of Strategic Realty Trust, Inc.

8-K

1/28/2014

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1

Strategic Realty Trust, Inc. Amended and Restated Share Redemption Program Adopted August 26, 2016

8-K

8/30/2016

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104.1

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew Schreiber, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc.;

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, including its consolidated subsidiaries, 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 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 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: November 9, 2023


			/s/ Matthew Schreiber
			Matthew Schreiber
			Chief Executive Officer and Director
			(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ryan Hess, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc.;

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: November 9, 2023


			/s/ Ryan Hess
			Ryan Hess
			Chief Financial Officer
			(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc. (the “Company”) for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer of the Company, certifies, to his 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 Company.

Date: November 9, 2023


			/s/ Matthew Schreiber
			Matthew Schreiber
			Chief Executive Officer and Director
			(Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Strategic Realty Trust, Inc. (the “Company”) for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Financial Officer of the Company, certifies, to his 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 Company.

Date: November 9, 2023


			/s/ Ryan Hess
			Ryan Hess
			Chief Financial Officer
			(Principal Financial Officer)

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2023	Nov. 06, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-54376
Entity Registrant Name	STRATEGIC REALTY TRUST, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	90-0413866
Entity Address, Address Line One	1 S. Wacker Dr, Suite 3210
Entity Address, City or Town	Chicago,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60606
City Area Code	312
Local Phone Number	878-4860
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001446371
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		10,752,966

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Sep. 30, 2023

Dec. 31, 2022

Investments in real estate

Land

$ 12,374

Building and improvements

22,140

Tenant improvements

947

Real Estate Investment Property, at Cost

35,461

Accumulated depreciation

(4,838)

Investments in real estate, net

30,623

Real Estate, Liquidation Value

$ 26,475

Cash, cash equivalents and restricted cash

1,967

3,471

Prepaid expenses and other assets

152

Accounts and Other Receivables, Net, Current

Other Assets

113

Tenant receivables, net of $19 bad debt reserve

841

Deferred Costs, Leasing, Net

353

Lease intangibles, net

308

Total assets

28,586

35,748

^[1]

LIABILITIES

Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation

4,779

Notes payable, net

18,000

Notes Payable, Fair Value Disclosure

18,000

Accounts payable and accrued expenses

403

285

Amounts due to affiliates.

Other Liabilities

113

172

Below Market Lease, Net

108

TOTAL LIABILITIES (1)

23,329

18,602

^[1]

Net Assets

$ 5,257

Commitments and contingencies (Note 12)

EQUITY

Preferred stock, $0.01 par value; 50,000,000 shares authorized, none issued and outstanding

Common stock, $0.01 par value; 400,000,000 shares authorized; 10,752,966 shares issued and outstanding at December 31, 2022

110

Additional paid-in capital

94,644

Accumulated deficit

(77,852)

Accumulated Other Comprehensive Income (Loss), Net of Tax

Total stockholders’ equity

16,902

Non-controlling interests

244

TOTAL EQUITY

17,146

TOTAL LIABILITIES AND EQUITY

$ 35,748

Preferred Stock, Shares Outstanding

Preferred Stock, Shares Issued

Preferred Stock, Shares Authorized

50,000,000

Preferred Stock, Par or Stated Value Per Share

$ 0.01

Common Stock, Shares, Outstanding

10,752,966

Common Stock, Shares, Issued

10,752,966

Common Stock, Shares Authorized

400,000,000

Common Stock, Par or Stated Value Per Share

$ 0.01

Bad Debt Reserve

$ 19

Variable Interest Entity, Primary Beneficiary [Member]

Investments in real estate

Total assets

$ 576

[1]	As of December 31, 2022, includes approximately $576 thousand, respectively, of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2022
Revenue:
Rental and reimbursements	$ 734	$ 1,252	$ 2,189
Expense:
Operating and maintenance	273	651	1,323
General and administrative	290	785	1,238
Depreciation and amortization	254	506	846
Interest expense	852	735	1,484
Gain (Loss) on Termination of Lease	0	0	190
Loss on impairment of real estate	152	0	6,035
Total expense	1,821	2,677	11,116
Operating loss	(1,087)	(1,425)	(8,927)
Other income:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest, Total	(1,087)	(1,425)	(8,927)
Net loss attributable to non-controlling interests	(19)	(26)	(165)
Net Income (Loss) Attributable to Parent, Total	$ (1,068)	$ (1,399)	$ (8,762)
Earnings Per Share, Diluted	$ (0.10)	$ (0.13)	$ (0.81)
Earnings Per Share, Basic	$ (0.10)	$ (0.13)	$ (0.81)
Weighted average shares outstanding used to calculate loss per common share - basic and diluted	10,752,966	10,752,966	10,752,966
Weighted Average Number of Shares Outstanding, Diluted	10,752,966	10,752,966	10,752,966
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	$ 0	$ 43	$ 0
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ (1,068)	$ (1,356)	$ (8,762)

CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders' Equity	Non-controlling Interests	AOCI Attributable to Parent
Stockholders' Equity Attributable to Parent		$ 110,000	$ 94,644,000	$ (66,307,000)	$ 28,447,000		$ 0
BALANCE at Dec. 31, 2021	$ 28,908,000					$ 461,000
BALANCE (in shares) at Dec. 31, 2021		10,752,966
Net Income (Loss) Attributable to Noncontrolling Interest	(165,000)					(165,000)
Net Income (Loss)	(8,762,000)	$ 0	0	(8,762,000)	(8,762,000)		0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(8,927,000)
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	0
BALANCE at Sep. 30, 2022	19,981,000					296,000
BALANCE (in shares) at Sep. 30, 2022		10,752,966
Other Noncash Expense	42,000
Proceeds from Contributions from Affiliates	2,000,000
Stockholders' Equity Attributable to Parent		$ 110,000	94,644,000	(74,001,000)	20,753,000		0
BALANCE at Jun. 30, 2022	21,068,000					315,000
BALANCE (in shares) at Jun. 30, 2022		10,752,966
Net Income (Loss) Attributable to Noncontrolling Interest	(19,000)					(19,000)
Net Income (Loss)	(1,068,000)	$ 0	0	(1,068,000)	(1,068,000)		0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(1,087,000)
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	0
BALANCE at Sep. 30, 2022	19,981,000					296,000
BALANCE (in shares) at Sep. 30, 2022		10,752,966
Stockholders' Equity Attributable to Parent		$ 110,000	94,644,000	(75,069,000)	19,685,000		0
Stockholders' Equity Attributable to Parent	16,902,000	$ 110,000	94,644,000	(77,852,000)	16,902,000		0
BALANCE at Dec. 31, 2022	17,146,000					244,000
BALANCE (in shares) at Dec. 31, 2022		10,752,966
Net Income (Loss) Attributable to Noncontrolling Interest	(26,000)					(26,000)
Net Income (Loss)	(1,399,000)	$ 0	0	(1,399,000)	(1,399,000)		0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(1,425,000)
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	43,000	$ 0	0	0	43,000	0	43,000
BALANCE at Jun. 30, 2023	15,764,000					$ 218,000
BALANCE (in shares) at Jun. 30, 2023		10,752,966
Other Noncash Expense	0
Proceeds from Contributions from Affiliates	$ 0
Stockholders' Equity Attributable to Parent		$ 110,000	$ 94,644,000	$ (79,251,000)	$ 15,546,000		$ 43,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended	9 Months Ended
	Jun. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ (1,425)	$ (8,927)
Adjustments to reconcile net loss to net cash used in operating activities:
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge	(43)	0
Loss on impairment of real estate	0	6,035
Straight-line rent	(17)	(130)
Amortization of deferred financing costs	27	369
Depreciation and amortization	506	846
Amortization of above and below-market leases	(12)	(16)
Provision for losses on tenant receivable	93	19
Gain (Loss) on Termination of Lease	0	190
Other Noncash Expense	0	42
Changes in operating assets and liabilities:
Prepaid expenses and other assets	131	(73)
Tenant receivables	(136)	66
Accounts payable and accrued expenses	15	(113)
Amounts due to affiliates	(1)	(35)
Other liabilities	(41)	(57)
Net cash used in operating activities	(817)	(1,784)
Cash flows from investing activities:
Investment in properties under development and development costs	0	(884)
Improvements and capital expenditures	(35)	(357)
Payments for leasing costs	(4)	(276)
Net cash used in investing activities	(39)	(1,517)
Cash flows from financing activities:
Proceeds from notes payable from investments in consolidated variable interest entities	0	152
Proceeds from Contributions from Affiliates	0	2,000
Payments of Financing Costs	(313)	0
Payment of loan fees from investments in consolidated variable interest entities	0	(182)
Net cash (used in) provided by financing activities	(313)	1,970
Net (decrease) in cash, cash equivalents and restricted cash	(1,169)	(1,331)
Cash, cash equivalents and restricted cash – beginning of period	3,471	2,407
Cash, cash equivalents and restricted cash – end of period	2,302	1,076
Supplemental disclosure of non-cash investing and financing activities and other cash flow information:
Change in accrued liabilities capitalized to investment in development	0	10
Amortization of deferred loan fees capitalized to investment in development	0	87
Changes in capital improvements and leasing costs, accrued but not paid	29	0
Cash paid for interest, net of amounts capitalized	$ 699	$ 990

ORGANIZATION AND BUSINESS	9 Months Ended
ORGANIZATION AND BUSINESS	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND BUSINESS	1. ORGANIZATION AND BUSINESS Strategic Realty Trust, Inc. (the “Company”) was formed on September 18, 2008, as a Maryland corporation. Effective August 22, 2013, the Company changed its name from TNP Strategic Retail Trust, Inc. to Strategic Realty Trust, Inc. The Company believes it qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and has elected REIT status beginning with the taxable year ended December 31, 2009, the year in which the Company began material operations. Since the Company’s inception, its business has been managed by an external advisor. The Company has no direct employees and all management and administrative personnel responsible for conducting the Company’s business are employed by its advisor. The Company is currently externally managed and advised by SRT Advisor, LLC, a Delaware limited liability company (the “Advisor”) pursuant to an advisory agreement with the Advisor (the “Advisory Agreement”) initially executed on August 10, 2013, and subsequently renewed every year through 2024. The current term of the Advisory Agreement terminates on August 9, 2024. As of April 2021, the advisor is an affiliate of PUR Management LLC (“PUR”), which is an affiliate of L3 Capital, LLC. L3 Capital, LLC is a real estate investment firm focused on institutional quality, value-add, prime urban retail and mixed-use investment within first tier U.S. metropolitan markets. Substantially all of the Company’s business is conducted through Strategic Realty Operating Partnership, L.P. (the “OP”). During the Company’s initial public offering (“Offering”), as the Company accepted subscriptions for shares of its common stock, it transferred substantially all of the net proceeds of the Offering to the OP as a capital contribution. The Company is the sole general partner of the OP. As of September 30, 2023 and December 31, 2022, the Company owned 98.1% of the limited partnership interests in the OP. On May 12, 2023, the board of directors unanimously approved the sale of all of the Company’s assets and the dissolution of the Company pursuant to the terms of a plan of complete liquidation and dissolution of the Company (the “Plan of Liquidation”). The principal purpose of the Plan of Liquidation is to maximize stockholder value by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to the Company’s stockholders. On August 23, 2023 the Company’s stockholders approved the Plan of Liquidation. The Company expects any future liquidity to its stockholders will be provided in the form of liquidating distributions. The Company expects to distribute all of the net proceeds from liquidation to its stockholders within 24 months from August 23, 2023. The Company can give no assurance regarding the timing of asset dispositions in connection with the implementation of the Plan of Liquidation, the sale prices it will receive for its assets, and the amount or timing of any liquidating distributions to be received by its stockholders. The Company manages a portfolio of income-producing retail properties located in California. As of September 30, 2023, the Company’s portfolio was comprised of six properties, with approximately 27,000 rentable square feet of retail space located in California, as well as an improved land parcel. As of September 30, 2023, the rentable space at the Company’s retail properties was 85% leased.

Accounting Changes and Error Corrections	9 Months Ended
Accounting Changes and Error Corrections	Sep. 30, 2023
Accounting Changes and Error Corrections [Abstract]
Liquidation Basis of Accounting	2. PLAN OF LIQUIDATION The Plan of Liquidation authorizes the Company to undertake an orderly liquidation. In an orderly liquidation, the Company intends to sell or otherwise dispose of its remaining properties, pay or otherwise settle all of its known liabilities, provide for the payment of its unknown or contingent liabilities, distribute any remaining cash to its stockholders, wind up its operations and dissolve. The Company is authorized to provide for the payment of any unascertained or contingent liabilities and may do so by purchasing insurance, by establishing a reserve fund or in other ways. The Plan of Liquidation enables the Company to sell any and all of its assets without further approval of its stockholders and provides that the amounts and timing of liquidating distributions will be determined by the Company’s board of directors or, if a liquidating trust is formed, by the trustees of the liquidating trust, in their discretion. Pursuant to applicable REIT rules, liquidating distributions the Company pays pursuant to the Plan of Liquidation will qualify for the dividends paid deduction, provided that they are paid within 24 months of the August 23, 2023 approval of the plan by the Company’s stockholders. However, if the Company cannot sell its properties and pay its debts within such time period, or if the board of directors determines that it is otherwise advisable to do so, the Company may transfer and assign its remaining assets to a liquidating trust. Upon such transfer and assignment, the Company’s stockholders would receive beneficial interests in the liquidating trust. The liquidating trust would pay or provide for all of the Company’s liabilities and distribute any remaining net proceeds from liquidation to the holders of beneficial interests in the liquidating trust. If the Company is not able to sell its properties and pay its debt within the 24-month period and the remaining assets are not transferred to a liquidating trust, any distributions made during the 24 months may not qualify for the dividends paid deduction and may increase the Company’s tax liability. The Company’s expectations about the implementation of the Plan of Liquidation and the amount of any liquidating distributions that the Company pays to its stockholders and when the Company will pay them are subject to risks and uncertainties and are based on certain estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of any liquidating distributions the Company pays to its stockholders may be more or less than the Company estimates and the liquidating distributions may be paid later than the Company predicts. There are many factors that may affect the amount of liquidating distributions the Company will ultimately pay to its stockholders. If the Company underestimates its existing obligations and liabilities or the amount of taxes, transaction fees and expenses relating to the liquidation and dissolution or if unanticipated or contingent liabilities arise, the amount of liquidating distributions ultimately paid to the Company’s stockholders could be less than estimated. Moreover, the liquidation value will fluctuate over time in response to developments related to individual assets in the Company’s portfolio and the management of those assets, in response to the real estate and finance markets, based on the amount of net proceeds received from the disposition of the remaining assets and due to other factors. Accordingly, it is not possible to precisely predict the timing of any liquidating distributions the Company pays to it stockholders or the aggregate amount of liquidating distributions that the Company will ultimately pay to its stockholders. No assurance can be given that any liquidating distributions the Company pays to its stockholders will equal or exceed the estimate of net assets in liquidation presented on the Condensed Consolidated Statement of Net Assets as of September 30, 2023. The Company expects to comply with the requirements necessary to continue to qualify as a REIT through the completion of the liquidation process, or until such time as any remaining assets are transferred into a liquidating trust. The board of directors shall use commercially reasonable efforts to continue to cause the Company to maintain its REIT status; provided, however, that the board of directors may elect to terminate the Company’s status as a REIT if it determines that such termination would be in the best interest of the stockholders.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

incurred but unpaid as of September 30, 2023 are included in accounts payable and accrued expenses, due to affiliates and other liabilities on the Condensed Consolidated Statement of Net Assets.

Use of Estimates

Real Estate - Liquidation Basis of Accounting

Rents and Other Receivables

Revenue Recognition - Liquidation Basis of Accounting

Accrued Liquidation Costs

Derivative Instruments and Hedging Activities

Cash, Cash Equivalents and Restricted Cash

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.


	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	2,057	$	477
Restricted cash	245		599
Total cash, cash equivalents, and restricted cash	$	2,302	$	1,076

Recent Accounting Pronouncements

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

Other Liabilities

9 Months Ended

Sep. 30, 2023

Other Liabilities Disclosure [Abstract]

Liquidation Liabilities

4. LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION

Upon transition to the liquidation basis of accounting on July 1, 2023, the Company accrued the following revenues and expenses expected to be incurred during liquidation (amounts in thousands):


	As of July 1, 2023
Rental income	$	1,935
Other operating income	28
Operating, maintenance and management	(473)
Real estate taxes and insurance	(337)
General and administrative expenses	(2,484)
Interest expense	(1,485)
Tenant improvements	(78)
Return of escrow funds	162
Liquidating transaction costs	(2,510)
Liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)

The change in the liabilities for estimated costs in excess of estimated receipts during liquidation as of September 30, 2023 is as follows (amounts in thousands):


	July 1, 2023		Cash Payments (Receipts)		Remeasurement of Assets and Liabilities		September 30, 2023



Liabilities:
Estimated net outflows from investments in real estate	$	(248)	$	72	$	—	$	(176)
Liquidation transaction costs	(2,510)		—		—		(2,510)
Corporate expenditures	(2,484)		391		—		(2,093)
	(5,242)		463		—		(4,779)
Total liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)	$	463	$	—	$	(4,779)

Equity	9 Months Ended
Equity	Sep. 30, 2023
Equity [Abstract]
Net Assets in Liquidation Disclosure	5. NET ASSETS IN LIQUIDATION The net assets in liquidation as of September 30, 2023 would result in the payment of estimated liquidating distributions of approximately $0.48 per share of common stock to the Company’s stockholders of record as of September 30, 2023. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the estimated period required to complete the Plan of Liquidation. There is inherent uncertainty with these estimates and projections, and they could change materially based on the timing of the disposition or transfer of the Company’s remaining real estate properties, the performance of the Company’s remaining assets and any changes in the underlying assumptions of the projected cash flows from such properties. See Note 2,“Plan of Liquidation.”

NOTES PAYABLE, NET

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE

7. NOTES PAYABLE, NET

The following is a schedule of future principal payments for all of the Company’s notes payable outstanding as of September 30, 2023 (amounts in thousands):


Remainder of 2023	$	—
2024	18,000

Total future principal payments	18,000

Notes payable (1)	$	18,000

The following table sets forth interest costs incurred by the Company for the periods presented (amounts in thousands):


	Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2022		2022
Expensed
Interest costs, net of amortization of deferred financing costs	$	708	$	674	$	1,114
Amortization of deferred financing costs	27		178		370
Total interest expensed	$	735	$	852	$	1,484

Capitalized
Interest costs, net of amortization of deferred financing costs	$	—	$	—	$	779
Amortization of deferred financing costs	—		—		87
Total interest capitalized	$	—	$	—	$	866

As of September 30, 2023 and December 31, 2022, interest expense payable was approximately $0.1 million for each period

EQUITY	9 Months Ended
EQUITY	Sep. 30, 2023
Stockholders' Equity Note [Abstract]
EQUITY	8. EQUITY Share Redemption Program As the Company’s stockholders have approved the Plan of Liquidation, the board of directors expects any future liquidity to be in the form of liquidating distributions and does not expect to resume the SRP. Distributions In order to qualify as a REIT, the Company is required to distribute at least 90% of its annual REIT taxable income, subject to certain adjustments, to its stockholders. The Company’s board of directors regularly evaluates the amount and timing of distributions based on the Company’s operational cash needs. As the Company’s stockholders have approved the Plan of Liquidation, the Company’s board of directors expects any future distributions to be in the form of liquidating distributions and does not expect to consider regular distributions.

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

RELATED PARTY TRANSACTIONS

9. RELATED PARTY TRANSACTIONS

Summary of Related Party Fees

The following table sets forth the Advisor related-party costs incurred and payable by the Company for the periods presented (amounts in thousands):


	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,		December 31,
Expensed	2023		2022		2023		2022		2023		2022


Asset management fees	$	63	$	90	$	188	$	377	$	21	$	21
Reimbursement of operating expenses	—		4		—		18		—		—
Property management fees	18		24		63		79		12		16


Total	$	81	$	118	$	251	$	474	$	33	$	37

Asset Management Fees

Reimbursement of Operating Expenses

Property Management Fees

Under the property management agreements the Company pays property management fees calculated at a maximum of up to 4% of the properties’ gross revenue.

Disposition Fees

Leasing Fees

Legal Leasing Fees

Under the property management agreements, the Company pays a market-based legal leasing fee for the negotiation and production of new leases, renewals, and amendments.

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	10. COMMITMENTS AND CONTINGENCIES Economic Dependency The Company is dependent on the Advisor and its affiliates for certain services that are essential to the Company, including the negotiation and disposition of real estate in connection with the implementation of the Plan of Liquidation, continued management of the daily operations of the Company’s real estate and real estate-related investment portfolio, and other general and administrative responsibilities. In the event that the Advisor is unable to provide such services to the Company, the Company will be required to obtain such services from other sources. Legal Matters From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. Environmental As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its condensed consolidated financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

SUBSEQUENT EVENTS SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS SUBSEQUENT EVENTS	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events [Text Block]	11. SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

incurred but unpaid as of September 30, 2023 are included in accounts payable and accrued expenses, due to affiliates and other liabilities on the Condensed Consolidated Statement of Net Assets.

Use of Estimates

Real Estate - Liquidation Basis of Accounting

Rents and Other Receivables

Revenue Recognition - Liquidation Basis of Accounting

Accrued Liquidation Costs

Derivative Instruments and Hedging Activities

Cash, Cash Equivalents and Restricted Cash

Restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, debt service and leasing costs held by lenders.


	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	2,057	$	477
Restricted cash	245		599
Total cash, cash equivalents, and restricted cash	$	2,302	$	1,076

Recent Accounting Pronouncements

There are no new accounting pronouncements that are applicable or relevant to the Company under the liquidation basis of accounting.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2023

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]

Cash, Cash Equivalents and Restricted Cash [Table Text Block]


	June 30, 2023		September 30, 2022
Cash and cash equivalents	$	2,057	$	477
Restricted cash	245		599
Total cash, cash equivalents, and restricted cash	$	2,302	$	1,076

Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Other Liabilities Disclosure [Abstract]

Schedule of Accrued Revenues and Expenses Expected During Liquidation

Upon transition to the liquidation basis of accounting on July 1, 2023, the Company accrued the following revenues and expenses expected to be incurred during liquidation (amounts in thousands):


	As of July 1, 2023
Rental income	$	1,935
Other operating income	28
Operating, maintenance and management	(473)
Real estate taxes and insurance	(337)
General and administrative expenses	(2,484)
Interest expense	(1,485)
Tenant improvements	(78)
Return of escrow funds	162
Liquidating transaction costs	(2,510)
Liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)

Summary of Changes in Liquidation Accrual of Company

The change in the liabilities for estimated costs in excess of estimated receipts during liquidation as of September 30, 2023 is as follows (amounts in thousands):


	July 1, 2023		Cash Payments (Receipts)		Remeasurement of Assets and Liabilities		September 30, 2023



Liabilities:
Estimated net outflows from investments in real estate	$	(248)	$	72	$	—	$	(176)
Liquidation transaction costs	(2,510)		—		—		(2,510)
Corporate expenditures	(2,484)		391		—		(2,093)
	(5,242)		463		—		(4,779)
Total liabilities for estimated costs in excess of estimated receipts during liquidation	$	(5,242)	$	463	$	—	$	(4,779)

NOTES PAYABLE, NET (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of maturities for notes payable outstanding

The following is a schedule of future principal payments for all of the Company’s notes payable outstanding as of September 30, 2023 (amounts in thousands):


Remainder of 2023	$	—
2024	18,000

Total future principal payments	18,000

Notes payable (1)	$	18,000

Interest Income and Interest Expense Disclosure

The following table sets forth interest costs incurred by the Company for the periods presented (amounts in thousands):


	Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2022		2022
Expensed
Interest costs, net of amortization of deferred financing costs	$	708	$	674	$	1,114
Amortization of deferred financing costs	27		178		370
Total interest expensed	$	735	$	852	$	1,484

Capitalized
Interest costs, net of amortization of deferred financing costs	$	—	$	—	$	779
Amortization of deferred financing costs	—		—		87
Total interest capitalized	$	—	$	—	$	866

RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2023

Related Party Transactions

The following table sets forth the Advisor related-party costs incurred and payable by the Company for the periods presented (amounts in thousands):


	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,		December 31,
Expensed	2023		2022		2023		2022		2023		2022


Asset management fees	$	63	$	90	$	188	$	377	$	21	$	21
Reimbursement of operating expenses	—		4		—		18		—		—
Property management fees	18		24		63		79		12		16


Total	$	81	$	118	$	251	$	474	$	33	$	37

ORGANIZATION AND BUSINESS (Details Textual) ft² in Thousands	9 Months Ended
	Sep. 30, 2023 ft²	Sep. 30, 2022
Real Estate Properties [Line Items]
Number of Real Estate Properties	6
Net Rentable Area	27
Percent of Real Estate Properties Leased	85.00%
Strategic Realty Trust [Member]
Real Estate Properties [Line Items]
Partnership Interest Ownership Percentage	98.10%	98.10%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract]
Cash and Cash Equivalents		$ 2,057		$ 477
Restricted Cash		245		599
Cash, cash equivalents and restricted cash	$ 1,967	$ 2,302	$ 3,471	$ 1,076	$ 2,407

Other Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
Other Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jul. 01, 2023
Other Liabilities Disclosure [Abstract]
Liquidation Basis of Accounting, Costs and Incomes		$ (2,510)
Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation	$ (4,779)	5,242
Liquidation Basis of Accounting, Estimated Net Outflows from Investments in Real Estate	(176)	(248)
Liquidation Basis of Accounting, Liqudation transaction costs	(2,510)	(2,510)
Liquidation Basis of Accounting, Corporate Expenditures	(2,093)	(2,484)
Liquidation Basis of Accounting, Total Liabilities	(4,779)	(5,242)
Liquidation Basis of Accounting, Payments for investments in real estate	72
Liquidation Basis of Accounting, Payments for liquidation costs	0
Liquidation Basis of Accounting, Payments for corporate expenditures	391
Liquidation Basis of Accounting, Payments for Liabilities	463
Liquidation Basis of Accounting, Payments for (Proceeds) from Liquidation	463
Liquidation Basis of Accounting, Remeasurement, Increase (Decrease) in Estimated Net Outflows from Investments in Real Estate	0
Liquidation Basis of Accounting, Remeasurement, Increase (Decrease) in Liquidation transaction costs	0
Liquidation Basis of Accounting, Remeasurement, Increase (Decrease) in Corporate Expenditures	0
Liquidation Basis of Accounting, Remeasurement, Increase (Decrease) in Liabilities	0
Liquidation Basis of Accounting, Liquidation Plan	$ 0
Liquidation Basis of Accounting, Revenues for Estimated Costs in Excess of Estimated Receipts during Liquidation, Rental Income		1,935
Liquidation Basis of Accounting, Revenues for Estimated Costs in Excess of Estimated Receipts during Liquidation, Other Operating Income		28
Liquidation Basis of Accounting, Expenses for Estimated Costs in Excess of Estimated Receipts during Liquidation, Operating, Maintenance and management		(473)
Liquidation Basis of Accounting, Expenses for Estimated Costs in Excess of Estimated Receipts during Liquidation, Real Estate Taxes and Insurance		(337)
Liquidation Basis of Accounting, Expenses for Estimated Costs in Excess of Estimated Receipts during Liquidation, General & Administrative Expenses		(2,484)
Liquidation Basis of Accounting, Expenses for Estimated Costs in Excess of Estimated Receipts during Liquidation, Interest Expense		(1,485)
Liquidation Basis of Accounting, Expenses for Estimated Costs in Excess of Estimated Receipts during Liquidation, Tenant Improvements		(78)
Liquidation Basis of Accounting, Revenues for Estimated Costs in Excess of Estimated Receipts during Liquidation, Return of Escrow Funds		$ 162

Equity (Details)	Sep. 30, 2023 $ / shares
Equity [Abstract]
Common Stock, Additional Estimated Liquidation Distribution Per Share	$ 0.48

NOTES PAYABLE, NET NOTES PAYABLE, NET (Multi-Property Secured Financing) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Debt Instrument, Maturity Date			Jan. 09, 2024
Secured Debt			$ 18,000
Increase (Decrease) in Fair Value of Interest Rate Fair Value Hedging Instruments	$ 0	$ 43		$ 0
Secured Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis			30-day SOFR
Debt Instrument, Basis Spread on Variable Rate			2.80%
Derivative, Notional Amount			$ 18,000
Payments of Derivative Issuance Costs			260
Derivative, Fair Value, Net			$ 113
Secured Debt [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate			1.50%
Measurement Input, Default Rate [Member] \| Secured Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate			5.00%

NOTES PAYABLE, NET (Loans Secured by Properties Under Development) (Details)	9 Months Ended
	Sep. 30, 2023
Short-term Debt [Line Items]
Debt Instrument, Maturity Date	Jan. 09, 2024
Secured Debt [Member]
Short-term Debt [Line Items]
Debt Instrument, Description of Variable Rate Basis	30-day SOFR
Debt Instrument, Basis Spread on Variable Rate	2.80%
Minimum [Member] \| Secured Debt [Member]
Short-term Debt [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.50%

NOTES PAYABLE, NET (Future Principal Payments) (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Schedule of maturities for notes payable outstanding
Remainder of 2023	$ 0
2024	18,000
Total (1)	18,000
Notes Payable, Fair Value Disclosure	$ 18,000

NOTES PAYABLE, NET NOTES PAYABLE, NET (Interest Expense) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2022	Sep. 30, 2023
Short-term Debt [Line Items]
Interest Income (Expense), Net	$ 674	$ 708	$ 1,114
Interest expense	852	735	1,484
Amortization of Deferred Financing Costs	178	27	370
Interest Payable				$ 100
Variable Interest Entity, Primary Beneficiary [Member]
Short-term Debt [Line Items]
Interest Costs Incurred	0	0	779
Amortization of Deferred Financing Costs	0	0	87
Interest Costs Capitalized	$ 0	$ 0	$ 866

FAIR VALUE DISCLOSURES (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
FAIR VALUE DISCLOSURES (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loss on impairment of real estate	$ 152	$ 0	$ 6,035

EQUITY EQUITY (Quarterly Distribution (Details)	9 Months Ended
EQUITY EQUITY (Quarterly Distribution (Details)	Sep. 30, 2023
Stockholders' Equity Note [Abstract]
Minimum Percentage of Taxable Income Distributed to Shareholders	90.00%

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Summarized below are the related-party transactions
Amounts due to affiliates.	$ 34		$ 34		$ 37
Expensed Asset management Fees [Member] \| Advisor Fees [Member]
Summarized below are the related-party transactions
Related-party costs, Incurred	63	$ 90	188	$ 377
Amounts due to affiliates.	21		21		21
Expensed Reimbursement Of Operating Expenses [Member] \| Advisor Fees [Member]
Summarized below are the related-party transactions
Related-party costs, Incurred	0	4	0	18
Amounts due to affiliates.	0		0		0
Expensed Property Management Fees [Member] \| Advisor Fees [Member]
Summarized below are the related-party transactions
Related-party costs, Incurred	18	24	63	79
Amounts due to affiliates.	12		12		16
Expensed [Member] \| Advisor Fees [Member]
Summarized below are the related-party transactions
Related-party costs, Incurred	81	$ 118	251	$ 474
Amounts due to affiliates.	$ 33		$ 33		$ 37

RELATED PARTY TRANSACTIONS (Details) (Narrative)	9 Months Ended
RELATED PARTY TRANSACTIONS (Details) (Narrative)	Sep. 30, 2023
Advisor Fees [Member]
Related Party Transaction [Line Items]
Percentage of Average Invested Assets	2.00%
Percent of Net Income	25.00%
Advisor or its affiliates also will be paid disposition fees of a customary and competitive real estate commission	50.00%
SRT Manager [Member]
Related Party Transaction [Line Items]
Property Management Fee, Percent Fee	4.00%
Maximum [Member] \| Advisor Fees [Member]
Related Party Transaction [Line Items]
Advisor or its affiliates also will be paid disposition fees of the contract price	3.00%

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