2. Investment Properties

6 Months Ended

Mar. 31, 2018

Investment properties leased or held for lease to others under operating leases consisted of the following at March 31, 2018 and September 30, 2017:

	March 31, 2018			September 30, 2017
		(unaudited)			(audited)

National Plaza building, land and improvements	$	5,322,260		$	5,322,260
Evans Ground Lease, land and improvements		2,382,673			2,382,673
Wrightsboro Road building, land and improvements		1,929,690			1,929,690
Commercial land and improvements		3,804,728			3,804,728
		13,439,351			13,439,351
Less accumulated depreciation		(2,985,768	)		(2,891,630	)

Investment properties for lease, net of depreciation	$	10,453,583		$	10,547,721

Depreciation expense totaled approximately $47,000 for the three-month periods ended March 31, 2018 and 2017 and approximately $94,000 for the six-month periods ended March 31, 2018 and 2017.

National Plaza is a retail strip center located on Washington Road in Augusta Georgia. Approximately 81% of the rentable space at the National Plaza is leased to Publix Supermarkets, Inc., the National Plaza’s anchor tenant.

The Company entered into a long-term ground lease with a major national tenant and its developer in May 2006 on approximately 18 acres of land in Columbia County, Georgia. The agreement required monthly rental payments of $20,833 during the development period, which was completed in January 2007. Following the expiration of the development period, the lease required annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lessee has an option to renew in year 21 and another option every 5 years thereafter for a possible total lease term of 50 years.

The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term.

In September of 2015, the Company purchased a commercial building consisting of approximately 25,000 square feet of retail space and 27,000 square feet of warehouse space on approximately 3.5 acres of land located on Wrightsboro Road. The retail space is currently leased to a local retailer and rent commenced on October 1, 2015. The related lease term is 10 years with annual rental payments totaling $142,000, paid monthly, increasing to $153,000 per year in 2021. The warehouse space is available for lease. The Company is recognizing rents on a straight-line basis over the lease term.

The Company holds several parcels of land for investment or development purposes, including 19.38 acres of land in North Augusta, South Carolina, purchased in parcels during 2007 and 2008. The Company also owns approximately 85 acres of land in south Richmond County, Georgia and a 1.1-acre parcel along Washington Road in Augusta, Georgia that adjoins the Company’s National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,804,728 at both March 31, 2018 and September 30, 2017.

Refer to the Company’s Form 10-K for the year ended September 30, 2017 for further information on operating lease agreements and land held for investment or development purposes.

SECURITY LAND & DEVELOPMENT CORP 10-Q