Generation Income Properties Announces Q2 2025 Financial and Operating Results

Rhea-AI Summary

Generation Income Properties (NASDAQ:GIPR) reported its Q2 2025 financial results, highlighting both operational stability and significant challenges. The company's portfolio maintains 98.6% occupancy with 100% rent collection, with approximately 60% of annualized rent coming from investment-grade tenants. Revenue reached $4.8 million for H1 2025, slightly up from $4.7 million in H1 2024.

CEO David Sobelman addressed recent share price volatility, attributed to large block sales by former Modiv Industrial REIT shareholders. The company is pursuing strategic alternatives, including potential merger or sale options, and is under contract to sell its Fresenius property in Chicago. Notable challenges include a widening net loss of $7.15 million for H1 2025, compared to $5.18 million in H1 2024, and limited cash reserves of $356,000 as of June 30, 2025.

The company successfully extended its JV subsidiary preferred equity expiration date and is working to recapitalize LOCI Capital's preferred equity position.

Positive

• 100% rent collection and 98.6% portfolio occupancy rate
• 60% of rental income from investment-grade tenants
• 92% of leases include contractual base rent increases
• 15.3% reduction in compensation costs through optimized staffing
• Successful extension of preferred equity expiration date in JV subsidiary
• Under contract to sell Fresenius property to optimize portfolio

Negative

• Net loss increased to $7.15 million in H1 2025 from $5.18 million in H1 2024
• Limited liquidity with only $356,000 in cash and cash equivalents
• Significant debt burden with $54.8 million in mortgage loans
• Recent sharp decline in share price due to large block sales
• CEO needed to defer compensation and provide personal guarantees to maintain operations

Insights

Real Estate Investment Trust (REIT) Analyst

GIPR reports concerning Q2 results with widening losses, liquidity concerns, and possible strategic sale amid 100% rent collection from mostly investment-grade tenants.

Generation Income Properties' Q2 2025 results reveal a concerning financial trajectory despite strong underlying property fundamentals. The REIT reported a $7.15 million net loss attributable to common shareholders for the first half of 2025, a substantial 38% deterioration from the $5.18 million loss in the same period of 2024. This widening loss comes despite marginally improved revenue of $4.8 million versus $4.7 million year-over-year.

The portfolio fundamentals remain solid with 98.6% occupancy, 100% rent collection, and approximately 60% of rental income derived from investment-grade tenants. The $16.24 average effective annual rent per square foot and built-in rent escalators in 92% of leases represent quality cash flow characteristics. However, these strong property-level metrics haven't translated to bottom-line performance.

The company's liquidity position is concerning with only $356,000 in cash against $54.8 million in mortgage debt. The CEO's letter signals serious financial pressure, including deferred compensation and personal financial support from the CEO to meet short-term cash needs. The company is actively selling assets (Fresenius property in Chicago) and exploring strategic alternatives including a potential merger or outright sale of the company.

The CEO's transparent discussion about share price volatility, attributed to large block sales by former shareholders from the Modiv Industrial REIT transaction, suggests significant ownership restructuring. While management has successfully extended preferred equity in their JV subsidiary, the company is still working to recapitalize LOCI Capital's preferred equity position, indicating ongoing capital structure challenges despite the strong underlying tenant base.

TAMPA, FL / ACCESS Newswire / August 15, 2025 / Generation Income Properties, Inc. (NASDAQ:GIPR) ("GIPR" or the "Company") today announced its three-month financial and operating results for the period ended June 30, 2025.

Portfolio

• Approximately 60% of our portfolio's annualized rent as of June 30, 2025, was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of "BBB-" or better. Our largest tenants are General Services Administration, Dollar General, the City of San Antonio, exp U.S. Services, and Kohl's Corporation, who collectively contributed approximately 59% our portfolio's annualized base rent as of June 30, 2025.

• Our portfolio is 98.6% leased and occupied and tenants are currently 100% rent paying.

• Approximately 92% of the leases in our current portfolio (based on ABR as of June 30, 2025) provide for increases in contractual base rent during future years of the current term or during the lease extension periods.

• Average effective annual rental per square foot is $16.24.

Liquidity and Capital Resources

• $356 thousand in total cash and cash equivalents as of June 30, 2025.

• Total mortgage loans, net was $54.8 million as of June 30, 2025.

Financial Results

• During the six months ended June 30, 2025, total revenue from operations was $4.8 million, as compared to $4.7 million for the six months ended June 30, 2024.

• Operating expenses, including G&A, for the six months ended June 30, 2025 were $1.06 million as compared to $1.05 million for the six months ended June 30, 2024. Compensation costs decreased by $79,519, or approximately 15.3% as management optimized staffing levels and overhead to align with the Company's scale.

• Net loss attributable to common shareholders was $7.15 million for the six months ended June 30, 2025 as compared to $5.18 million for the six months ended June 30, 2024.

Commenting on the quarter, a letter from CEO David Sobelman:

To my fellow GIPR Shareholders,

I would like to take this opportunity to update you on several important developments at Generation Income Properties (Nasdaq: GIPR). Most notably, over the past few weeks, you may have seen volatility in our share price and this letter will provide context on that as well as other portions of our efforts.

Extension and Compliance of Preferred Equity

As previously reported, we are pleased to report the successful extension of our preferred equity expiration date in our JV subsidiary by an additional year. This outcome was achieved because we remained in full compliance with the stringent covenants and underwriting thresholds established at the time of the original equity investment in 2023. This extension reinforces the strength of our financial management and provides us with additional flexibility in executing our long-term business strategy.

LOCI Capital Recapitalization Efforts

Separately, we remain in active discussions to fully recapitalize LOCI Capital's preferred equity in our JV subsidiary. While there is no definitive timeline to do so, our intention is to complete this process as soon as possible. In the meantime, GIPR currently remains able to meet all of its debt and equity obligations without interruption and remains in regular communication with LOCI and their principals.

Recent Share Price Activity

We have seen a notable decline in GIPR's share price recently. We believe that this has been driven primarily by large block trades executed over a short period by, what we believe to be, our former largest shareholder, who appears to have sold either all or a substantial portion of their holdings based on information available to us. This shareholder acquired their shares in the Modiv Industrial REIT (NYSE: MDV) transaction we completed in 2023, so they did not actually purchase GIPR shares in a traditional cash transaction. With that, we believe that the vast majority of MDV shareholders, at least the largest ones, may no longer be significant shareholders of GIPR.

While shareholder transactions are outside of our control, the size and speed of these recent trades created short-term market pressure on the stock. As a result of these changes in ownership, at last look, I am now the second largest shareholder of GIPR and continue to be the most financially exposed individual to the company's performance-aligning my interests directly with all shareholders.

Personal Financial Commitment

While I have previously outlined portions of my personal financial exposure to Generation Income Properties, it's important that, during this market, I am more emphatic about this topic. My exposure to GIPR is significant, encompassing the shares I have both purchased and been granted, as well as the personal guarantees I have undertaken to secure the most favorable loan rates and terms possible for a company of our size. I have also contributed personal cash to the company at various times to ensure short-term cash flow needs were met without placing an additional burden on shareholders. In addition, I have deferred substantial portions of my compensation in order to preserve liquidity and help the company navigate the challenging capital markets environment we face today. These actions were taken with one objective in mind - to protect shareholders while providing every opportunity possible to get through this period.

Portfolio Rent Collection

Our portfolio continues to perform at a high level, with 100% rent collection across all leased properties. This consistent performance is underpinned by the composition of our portfolio, which is approximately 60% leased to investment-grade tenants. Historically, such tenants demonstrate a higher probability of timely rent payments and greater resilience-particularly during periods of capital market volatility or broader economic uncertainty. We actively monitor every asset on a daily basis to ensure operational stability, maintain tenant satisfaction, and safeguard the income stream that supports our long-term shareholder value.

Property Sale in Progress

We are exploring strategic asset sales to maximize property values in the current market and to pay off debt and equity obligations. We are under contract to sell our Fresenius (NYSE: FMS) property in Chicago, IL with a scheduled closing date at the end of August 2025. This transaction is consistent with our strategy to optimize our portfolio and provide future opportunities for both debt and equity.

Strategic Alternatives Process

As previously disclosed, we are engaged in a strategic alternatives process to explore potential paths to maximize shareholder value. These alternatives may include a merger, reverse merger, or outright sale of the Company. While we are ultimately unsure of whether a transaction will occur altogether, we are encouraged by the level of interest we have received-many potential counterparties have already executed and returned non-disclosure agreements (NDAs), which is a mandatory step in any strategic transaction process.

In Closing

I realize that there are a lot of "moving parts" within our Company and, as a shareholder, you may not want to delve deeply into our filings, hence the reason I outline our most material efforts in this letter. To reiterate this point, our portfolio remains strong, our rent collections are at 100% and we have managed our maturity schedules well. These facts are not reflected in our current price and an undervaluation of our securities remains a topic of discussion. Our focus remains on protecting and growing shareholder value through prudent asset management, disciplined financial practices, and the exploration of all opportunities that can enhance the company's future. I deeply appreciate your continued confidence in our management team and strategy, and I remain fully aligned with you in seeking the best possible ways to maximize the value of our Company for our stakeholders.

Sincerely,

David Sobelman
Chairman & Chief Executive Officer
Generation Income Properties, Inc.
(Nasdaq:GIPR)

About Generation Income Properties

Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate investment trust formed to acquire and own, directly and jointly, real estate investments focused on retail, office, and industrial net lease properties in densely populated submarkets. Additional information about Generation Income Properties, Inc. can be found at the Company's corporate website: www.gipreit.com.

Forward-Looking Statements

This Current Report on Form 8-K may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Words such as "anticipate," "estimate," "expect," "intend," "plan," and "project" and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Investors are cautioned that there can be no assurance actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Please refer to the risks detailed from time to time in the reports we file with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 28, 2025, as well as other filings on Form 10-Q and periodic filings on Form 8-K, for additional factors that could cause actual results to differ materially from those stated or implied by such forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

Notice Regarding Non-GAAP Financial Measures

In addition to our reported results and net earnings per diluted share, which are financial measures presented in accordance with GAAP, this press release contains and may refer to certain non-GAAP financial measures, including Funds from Operations ("FFO"), Core Funds From Operations ("Core FFO"), Adjusted Funds from Operations ("AFFO"), Core Adjusted Funds from Operations ("Core AFFO"), and Net Operating Income ("NOI"). We believe the use of Core FFO, Core AFFO and NOI are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and related measures, including NOI, should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures. You should not consider our Core FFO, Core AFFO, or NOI as an alternative to net income or cash flows from operating activities determined in accordance with GAAP. Our reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure and statements of why management believes these measures are useful to investors are included below.

Our reported results are presented in accordance with GAAP. We also disclose funds from operations ("FFO"), adjusted funds from operations ("AFFO"), core funds from operations ("Core FFO") and core adjusted funds of operations ("Core AFFO") all of which are non- GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO and related measures do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income or loss as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gains from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets, and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. We then adjust FFO for non-cash revenues and expenses such as amortization of deferred financing costs, above and below market lease intangible amortization, straight line rent adjustment where the Company is both the lessor and lessee, and non-cash stock compensation to calculate Core AFFO.

FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies. We believe that Core FFO and Core AFFO are useful measures for management and investors because they further remove the effect of non-cash expenses and certain other expenses that are not directly related to real estate operations. We use each as measures of our performance when we formulate corporate goals.

As FFO excludes depreciation and amortization, gains and losses from property dispositions that are available for distribution to stockholders and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, providing a perspective not immediately apparent from net income or loss. However, FFO should not be viewed as an alternative measure of our operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties which could be significant economic costs and could materially impact our results from operations. Additionally, FFO does not reflect distributions paid to redeemable non-controlling interests.

Investor Contacts
Investor Relations
ir@gipreit.com

SOURCE: Generation Income Properties

View the original press release on ACCESS Newswire

FAQ

What were GIPR's key financial results for Q2 2025?

For H1 2025, GIPR reported revenue of $4.8 million, slightly up from $4.7 million in H1 2024, but saw net losses increase to $7.15 million compared to $5.18 million in the previous year.

What is causing the recent decline in GIPR stock price?

The decline is primarily attributed to large block trades by former Modiv Industrial REIT shareholders who received GIPR shares through the 2023 MDV transaction, selling substantial portions of their holdings.

What is GIPR's current occupancy and rent collection rate?

GIPR maintains a 98.6% occupancy rate with 100% rent collection across all leased properties, with approximately 60% of rental income coming from investment-grade tenants.

What strategic alternatives is GIPR currently exploring?

GIPR is exploring several options including a potential merger, reverse merger, or outright sale of the company, with multiple parties having executed non-disclosure agreements. They are also selling their Fresenius property in Chicago.

How much debt does GIPR currently carry?

As of June 30, 2025, GIPR had $54.8 million in total mortgage loans and only $356,000 in cash and cash equivalents.

What percentage of GIPR's tenants are investment grade?

Approximately 60% of GIPR's portfolio's annualized rent comes from tenants with investment grade credit ratings of BBB- or better.