[10-Q] Generation Income Properties Inc. Quarterly Earnings Report
Generation Income Properties, Inc. is an internally managed REIT focused on net-leased retail, office and industrial properties across major U.S. markets. As of June 30, 2025, about 60% of annualized base rent (ABR) comes from tenants rated investment grade and the portfolio is 98.6% leased. Approximately 92% of leases provide for contractual rent increases and the average effective annual rent is $16.24 per square foot. The company reports multiple temporary equity and preferred interests that are redeemable at specified values, including a preferred interest with a 15.5% per annum cumulative distribution preference and other preferred units aggregated at a $3.0 million redemption value as of June 30, 2025. Interest expense rose materially in the three and six months ended June 30, 2025 due to costs tied to a loan prepayment, and the company recorded guaranty fee expense to the CEO totaling $177,626 for the six months. Several contribution, unit issuance and redemption agreements create outstanding redemption obligations reflected in related-party payables.
Generation Income Properties, Inc. è una REIT gestita internamente che investe in immobili net-lease a uso commerciale, uffici e industriale nei principali mercati statunitensi. Al 30 giugno 2025 circa il 60% dell’affitto base annualizzato (ABR) proviene da conduttori con rating investment grade e il portafoglio risulta locato per il 98,6%. Circa il 92% dei contratti di locazione prevede aumenti contrattuali del canone e l’affitto effettivo medio annuo è di $16,24 per piede quadrato. La società segnala vari strumenti di capitale temporaneo e interessi privilegiati rimborsabili a valori prefissati, inclusa una partecipazione privilegiata con una distribuzione cumulativa del 15,5% annuo e altre unità privilegiate aggregate con valore di riscatto pari a $3,0 milioni al 30 giugno 2025. Le spese per interessi sono aumentate considerevolmente nei tre e sei mesi conclusisi il 30 giugno 2025 a causa dei costi legati al prepago di un prestito, e la società ha contabilizzato una commissione di garanzia al CEO pari a $177.626 per il periodo di sei mesi. Diversi accordi di contribuzione, emissione e riscatto di unità hanno generato obbligazioni di riscatto in essere riflessi nei debiti verso parti correlate.
Generation Income Properties, Inc. es una REIT gestionada internamente centrada en propiedades net-lease minoristas, de oficinas e industriales en los principales mercados de EE. UU. Al 30 de junio de 2025, aproximadamente el 60% de la renta base anualizada (ABR) proviene de inquilinos calificados como investment grade y la cartera está ocupada en un 98,6%. Alrededor del 92% de los contratos de arrendamiento incluyen aumentos contractuales de renta y la renta efectiva media anual es de $16,24 por pie cuadrado. La compañía informa múltiples instrumentos de capital temporal e intereses preferentes rescatables a valores especificados, incluida una participación preferente con una preferencia de distribución acumulativa del 15,5% anual y otras unidades preferentes con un valor de rescate agregado de $3,0 millones al 30 de junio de 2025. Los gastos por intereses aumentaron de forma significativa en los tres y seis meses finalizados el 30 de junio de 2025 debido a costos asociados con el prepago de un préstamo, y la empresa registró una comisión de garantía al CEO por un total de $177.626 en el período de seis meses. Varios acuerdos de contribución, emisión y rescate de unidades han generado obligaciones de rescate pendientes reflejadas en cuentas por pagar con partes relacionadas.
Generation Income Properties, Inc.는 주요 미국 시장의 순임대(네트 리스) 소매, 오피스 및 산업용 부동산에 주력하는 내부 관리형 리츠입니다. 2025년 6월 30일 기준 연간화 기초임대료(ABR)의 약 60%가 투자등급 테넌트에서 발생하며 포트폴리오는 98.6% 임대 중입니다. 약 92%의 임대계약이 계약상 임대료 인상을 포함하고 있으며 연평균 실효 임대료는 평방피트당 $16.24입니다. 회사는 특정 가치로 상환 가능한 여러 임시 자본 및 우선지분을 보고하고 있으며, 연간 누적 배당 우선권이 15.5%인 우선지분과 2025년 6월 30일 기준 $3.0백만의 상환 가치로 집계된 기타 우선 단위가 포함됩니다. 이자비용은 2025년 6월 30일 종료된 3개월 및 6개월 동안 대출 조기상환 관련 비용으로 크게 증가했으며, 회사는 6개월 동안 CEO에 대한 보증 수수료로 총 $177,626를 계상했습니다. 여러 출자·단위 발행·상환 계약으로 인해 관련 당사자 지급금에 반영된 상환 의무가 발생해 있습니다.
Generation Income Properties, Inc. est une REIT gérée en interne, spécialisée dans les biens en net-lease à usage commercial, bureaux et industriel sur les principaux marchés américains. Au 30 juin 2025, environ 60% du loyer de base annualisé (ABR) provient de locataires notés investment grade et le portefeuille est loué à 98,6%. Environ 92% des baux prévoient des augmentations contractuelles de loyer et le loyer effectif moyen annuel est de 16,24 $ par pied carré. La société signale plusieurs instruments de capitaux temporaires et d’intérêts privilégiés remboursables à des valeurs spécifiées, y compris une participation privilégiée avec une préférence de distribution cumulative de 15,5% par an et d’autres unités privilégiées totalisant une valeur de rachat de 3,0 M$ au 30 juin 2025. Les charges d’intérêts ont augmenté sensiblement au cours des trois et six mois clos le 30 juin 2025 en raison de coûts liés au remboursement anticipé d’un prêt, et la société a enregistré des frais de garantie au profit du PDG d’un montant total de 177 626 $ pour les six mois. Plusieurs accords de contribution, d’émission et de rachat d’unités ont créé des obligations de rachat en cours, inscrites dans les comptes fournisseurs liés.
Generation Income Properties, Inc. ist eine intern verwaltete REIT mit Schwerpunkt auf net-lease Einzelhandels-, Büro- und Industrieimmobilien in wichtigen US-Märkten. Zum 30. Juni 2025 entfallen etwa 60% der annualisierten Basismiete (ABR) auf Mieter mit Investment-Grade-Rating und das Portfolio ist zu 98,6% vermietet. Ungefähr 92% der Mietverträge sehen vertragliche Mieterhöhungen vor, und die durchschnittliche effektive Jahresmiete beträgt $16,24 pro Quadratfuß. Das Unternehmen meldet mehrere temporäre Eigenkapital- und Vorzugsanteile, die zu festgelegten Werten rückzahlbar sind, darunter ein Vorzugsanteil mit einer kumulativen Ausschüttungspräferenz von 15,5% p.a. sowie weitere Vorzugseinheiten mit einem aggregierten Rückzahlungswert von $3,0 Mio. zum 30. Juni 2025. Die Zinsaufwendungen sind in den drei und sechs Monaten zum 30. Juni 2025 aufgrund von Kosten im Zusammenhang mit einer Darlehensvorfälligkeit deutlich gestiegen, und das Unternehmen verbuchte für die sechs Monate eine Bürgschaftsgebühr an den CEO in Höhe von $177.626. Mehrere Einbringungs-, Einheitsausgabe- und Rücknahmevereinbarungen haben ausstehende Rückzahlungsverpflichtungen geschaffen, die in Verbindlichkeiten gegenüber verbundenen Parteien ausgewiesen sind.
- High occupancy with the portfolio 98.6% leased and occupied as of June 30, 2025
- Concentrated investment-grade ABR: ~60% of portfolio ABR from tenants rated BBB- or better
- Contractual rent growth embedded in ~92% of leases and average effective rent of $16.24/ft
- Rising interest expense: interest expense increased by $1,061,611 and $1,223,137 for the three and six months ended June 30, 2025 due to loan prepayment costs
- Substantial redeemable/temporary equity and preferred interests (including a 15.5% preferred return) create fixed payout and redemption obligations
- Related-party transactions and CEO guaranty fees ($177,626 for six months) and guaranty fees payable of $371,970 raise governance and cash-flow concerns
- Ongoing redemption liabilities reflected in other payable - related party totaling material amounts and prior redemptions funded by new preferred equity
Insights
TL;DR Portfolio shows strong occupancy and contractual rent growth, but financing and temporary equity costs pressure earnings and cash flow.
The company benefits from high portfolio occupancy (98.6%) and a large share of ABR from investment-grade tenants (60%), supporting stable rental cash flows. Contractual rent escalations on ~92% of leases and average effective rent of $16.24/ft indicate embedded revenue growth. Offsetting these positives are elevated financing costs and complex capital structure items: increased interest expense from a loan prepayment materially raised interest cost in both three- and six-month periods, and several redeemable preferred and temporary equity instruments—including a preferred interest with a 15.5% annual return—create fixed payout obligations and potential redemption cash needs. These factors constrain free cash flow and increase refinancing and liquidity risk.
TL;DR Significant related-party transactions and CEO-guarantee fees warrant close scrutiny for conflicts and governance oversight.
The filing discloses multiple related-party contributions, redemptions and a guaranty fee paid to the CEO that is recorded as interest expense, along with redemption agreements executed with unit holders and preferred equity investors. These arrangements have produced material related-party payables and temporary equity classifications. The presence of high-yield preferred interests with extended redemption terms and CEO guaranties shifts economic risk and may present governance and alignment concerns for public shareholders. Adequate disclosure and independent oversight of these arrangements will be important for investor confidence.
Generation Income Properties, Inc. è una REIT gestita internamente che investe in immobili net-lease a uso commerciale, uffici e industriale nei principali mercati statunitensi. Al 30 giugno 2025 circa il 60% dell’affitto base annualizzato (ABR) proviene da conduttori con rating investment grade e il portafoglio risulta locato per il 98,6%. Circa il 92% dei contratti di locazione prevede aumenti contrattuali del canone e l’affitto effettivo medio annuo è di $16,24 per piede quadrato. La società segnala vari strumenti di capitale temporaneo e interessi privilegiati rimborsabili a valori prefissati, inclusa una partecipazione privilegiata con una distribuzione cumulativa del 15,5% annuo e altre unità privilegiate aggregate con valore di riscatto pari a $3,0 milioni al 30 giugno 2025. Le spese per interessi sono aumentate considerevolmente nei tre e sei mesi conclusisi il 30 giugno 2025 a causa dei costi legati al prepago di un prestito, e la società ha contabilizzato una commissione di garanzia al CEO pari a $177.626 per il periodo di sei mesi. Diversi accordi di contribuzione, emissione e riscatto di unità hanno generato obbligazioni di riscatto in essere riflessi nei debiti verso parti correlate.
Generation Income Properties, Inc. es una REIT gestionada internamente centrada en propiedades net-lease minoristas, de oficinas e industriales en los principales mercados de EE. UU. Al 30 de junio de 2025, aproximadamente el 60% de la renta base anualizada (ABR) proviene de inquilinos calificados como investment grade y la cartera está ocupada en un 98,6%. Alrededor del 92% de los contratos de arrendamiento incluyen aumentos contractuales de renta y la renta efectiva media anual es de $16,24 por pie cuadrado. La compañía informa múltiples instrumentos de capital temporal e intereses preferentes rescatables a valores especificados, incluida una participación preferente con una preferencia de distribución acumulativa del 15,5% anual y otras unidades preferentes con un valor de rescate agregado de $3,0 millones al 30 de junio de 2025. Los gastos por intereses aumentaron de forma significativa en los tres y seis meses finalizados el 30 de junio de 2025 debido a costos asociados con el prepago de un préstamo, y la empresa registró una comisión de garantía al CEO por un total de $177.626 en el período de seis meses. Varios acuerdos de contribución, emisión y rescate de unidades han generado obligaciones de rescate pendientes reflejadas en cuentas por pagar con partes relacionadas.
Generation Income Properties, Inc.는 주요 미국 시장의 순임대(네트 리스) 소매, 오피스 및 산업용 부동산에 주력하는 내부 관리형 리츠입니다. 2025년 6월 30일 기준 연간화 기초임대료(ABR)의 약 60%가 투자등급 테넌트에서 발생하며 포트폴리오는 98.6% 임대 중입니다. 약 92%의 임대계약이 계약상 임대료 인상을 포함하고 있으며 연평균 실효 임대료는 평방피트당 $16.24입니다. 회사는 특정 가치로 상환 가능한 여러 임시 자본 및 우선지분을 보고하고 있으며, 연간 누적 배당 우선권이 15.5%인 우선지분과 2025년 6월 30일 기준 $3.0백만의 상환 가치로 집계된 기타 우선 단위가 포함됩니다. 이자비용은 2025년 6월 30일 종료된 3개월 및 6개월 동안 대출 조기상환 관련 비용으로 크게 증가했으며, 회사는 6개월 동안 CEO에 대한 보증 수수료로 총 $177,626를 계상했습니다. 여러 출자·단위 발행·상환 계약으로 인해 관련 당사자 지급금에 반영된 상환 의무가 발생해 있습니다.
Generation Income Properties, Inc. est une REIT gérée en interne, spécialisée dans les biens en net-lease à usage commercial, bureaux et industriel sur les principaux marchés américains. Au 30 juin 2025, environ 60% du loyer de base annualisé (ABR) provient de locataires notés investment grade et le portefeuille est loué à 98,6%. Environ 92% des baux prévoient des augmentations contractuelles de loyer et le loyer effectif moyen annuel est de 16,24 $ par pied carré. La société signale plusieurs instruments de capitaux temporaires et d’intérêts privilégiés remboursables à des valeurs spécifiées, y compris une participation privilégiée avec une préférence de distribution cumulative de 15,5% par an et d’autres unités privilégiées totalisant une valeur de rachat de 3,0 M$ au 30 juin 2025. Les charges d’intérêts ont augmenté sensiblement au cours des trois et six mois clos le 30 juin 2025 en raison de coûts liés au remboursement anticipé d’un prêt, et la société a enregistré des frais de garantie au profit du PDG d’un montant total de 177 626 $ pour les six mois. Plusieurs accords de contribution, d’émission et de rachat d’unités ont créé des obligations de rachat en cours, inscrites dans les comptes fournisseurs liés.
Generation Income Properties, Inc. ist eine intern verwaltete REIT mit Schwerpunkt auf net-lease Einzelhandels-, Büro- und Industrieimmobilien in wichtigen US-Märkten. Zum 30. Juni 2025 entfallen etwa 60% der annualisierten Basismiete (ABR) auf Mieter mit Investment-Grade-Rating und das Portfolio ist zu 98,6% vermietet. Ungefähr 92% der Mietverträge sehen vertragliche Mieterhöhungen vor, und die durchschnittliche effektive Jahresmiete beträgt $16,24 pro Quadratfuß. Das Unternehmen meldet mehrere temporäre Eigenkapital- und Vorzugsanteile, die zu festgelegten Werten rückzahlbar sind, darunter ein Vorzugsanteil mit einer kumulativen Ausschüttungspräferenz von 15,5% p.a. sowie weitere Vorzugseinheiten mit einem aggregierten Rückzahlungswert von $3,0 Mio. zum 30. Juni 2025. Die Zinsaufwendungen sind in den drei und sechs Monaten zum 30. Juni 2025 aufgrund von Kosten im Zusammenhang mit einer Darlehensvorfälligkeit deutlich gestiegen, und das Unternehmen verbuchte für die sechs Monate eine Bürgschaftsgebühr an den CEO in Höhe von $177.626. Mehrere Einbringungs-, Einheitsausgabe- und Rücknahmevereinbarungen haben ausstehende Rückzahlungsverpflichtungen geschaffen, die in Verbindlichkeiten gegenüber verbundenen Parteien ausgewiesen sind.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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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.
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).
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.:
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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
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GENERATION INCOME PROPERTIES, INC.
TABLE OF CONTENTS
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PART I. |
FINANCIAL INFORMATION |
3 |
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Item 1. |
Financial Statements |
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Generation Income Properties, Inc. Consolidated Balance Sheets |
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Generation Income Properties, Inc. Consolidated Statements of Operations Three and |
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Generation Income Properties, Inc. Consolidated Statements of Changes in (Deficit) Equity, Redeemable Preferred Stock, and Redeemable Non-Controlling Interests for the Six Months Ended June 30, 2025 and June 30, 2024 (unaudited) |
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Generation Income Properties, Inc. Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and June 30, 2024 (unaudited) |
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Notes to Unaudited Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
Defaults Upon Senior Securities |
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Item 4. |
Mine Safety Disclosures |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
42 |
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SIGNATURES |
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
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Consolidated Balance Sheets |
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As of June 30, |
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As of December 31, |
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2025 |
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2024 |
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(unaudited) |
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Assets |
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Investments in real estate |
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Land |
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Building and site improvements |
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Acquired tenant improvements |
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Acquired lease intangible assets |
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Less: accumulated depreciation and amortization |
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Net real estate investments |
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Cash and cash equivalents |
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Restricted cash |
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Deferred rent asset |
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Prepaid expenses |
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Accounts receivable |
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Held for sale assets |
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Right-of-use asset, net |
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Total Assets |
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Liabilities and Equity |
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Liabilities |
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Accounts payable |
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Accrued expenses |
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Accrued expense - related party |
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Acquired lease intangible liabilities, net |
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Insurance payable |
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Deferred rent liability |
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Lease liability, net |
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Loan payable - related party |
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Mortgage loans, net of unamortized debt discount of $ |
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Derivative liabilities |
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Total liabilities |
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$ |
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Redeemable Non-Controlling Interests |
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Stockholders' (Deficit) Equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Generation Income Properties, Inc. Stockholders' (Deficit) Equity |
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Non-Controlling Interest |
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$ |
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Total equity |
|
$ |
|
( |
) |
$ |
|
|
|
|
|
|
|
|
|
|
|
||
Total Liabilities and Equity |
|
$ |
|
|
$ |
|
|
||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
Generation Income Properties, Inc |
|
||||||||||||||||
Consolidated Statements of Operations |
|
||||||||||||||||
(unaudited) |
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months ended June 30, |
|
|
|
Six Months ended June 30, |
|
|||||||||||
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental income |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Building expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
||||
Operating loss |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Other expense |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
(Loss) gain on derivative valuation |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
||
Dead deal expense |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
Loss on held for sale asset valuation |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loss on extinguishment of debt |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
||
Loss on sale of property |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net loss |
$ |
|
( |
) |
$ |
|
( |
) |
|
$ |
|
( |
) |
$ |
|
( |
) |
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to Generation Income Properties, Inc. |
$ |
|
( |
) |
$ |
|
( |
) |
|
$ |
|
( |
) |
$ |
|
( |
) |
Less: Preferred stock dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to common shareholders |
$ |
|
( |
) |
$ |
|
( |
) |
|
$ |
|
( |
) |
$ |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Weighted Average Shares of Common Stock Outstanding – Basic & Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic & Diluted Loss Per Share Attributable to Common Stockholders |
$ |
|
( |
) |
$ |
|
( |
) |
|
$ |
|
( |
) |
$ |
|
( |
) |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
Generation Income Properties Inc |
|
||||||||||||||||||||||||||
Consolidated Statements of Changes in Equity, Redeemable Preferred Stock, and Redeemable Non-Controlling Interests |
|
||||||||||||||||||||||||||
(unaudited) |
|
||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||
|
Common Stock |
|
Additional |
|
Accumulated Deficit |
|
Stockholders' Equity |
|
Non-Controlling Interests |
|
Total Equity |
|
Redeemable Preferred Stock |
|
Redeemable Non-Controlling Interests |
|
|||||||||||
|
Shares |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2023 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Restricted stock compensation |
|
- |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
- |
|
|||
Stock issuance costs |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
- |
|
Cashless exercise of warrants |
|
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Conversion of preferred stock to Common stock |
|
|
|
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
( |
) |
|
- |
|
|||||
Distribution on Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
Dividends on preferred stock |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
Dividends paid on common stock |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
- |
|
Net (loss) income for the period |
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
||
Balance, March 31, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
$ |
- |
|
$ |
|
|||||||
Restricted stock compensation |
|
- |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
- |
|
|||
Stock issuance costs |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
- |
|
Cashless exercise of warrants |
|
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Issuance of Redeemable Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
Distribution on Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
Dividends paid on common stock |
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
- |
|
Net (loss) income for the period |
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
|
|
Balance, June 30, 2024 |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
$ |
- |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2024 |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
$ |
- |
|
|
|
|||||||
Issuance of Redeemable Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
Distribution on Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
Net (loss) income for the period |
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
|
- |
|
|
|
|
Balance, March 31, 2025 |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
$ |
- |
|
|
|
|||||||
Issuance of Redeemable Non-Controlling Interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
- |
|
|
Dividends paid on common stock |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
( |
) |
|
Net (loss) income for the period |
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
( |
) |
|
|
|
|
||
Balance, June 30, 2025 |
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
$ |
- |
|
|
|
|||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
6
Generation Income Properties, Inc |
|
||||||
Consolidated Statements of Cash Flows |
|
||||||
(unaudited) |
|
||||||
|
|
|
|
|
|
||
|
|
Six Months Ended June 30, |
|
||||
|
|
2025 |
|
2024 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
$ |
( |
) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities |
|
|
|
|
|
||
Depreciation of building and site improvements |
|
|
|
|
|
||
Amortization of acquired tenant improvements |
|
|
|
|
|
||
Amortization of in-place leases |
|
|
|
|
|
||
Amortization of above-market leases |
|
|
|
|
|
||
Amortization of below-market leases |
|
|
( |
) |
|
( |
) |
Amortization of above-market ground lease |
|
|
( |
) |
|
( |
) |
Amortization of debt issuance costs |
|
|
|
|
|
||
Amortization of debt discount |
|
|
|
|
|
||
Restricted stock unit compensation |
|
|
|
|
|
||
Non-cash ground lease expense |
|
|
|
|
|
||
Dead deal expense |
|
|
|
|
|
||
Loss (gain) on derivative valuation |
|
|
|
|
( |
) |
|
Loss on held for sale asset valuation |
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
||
Loss on sale of property |
|
|
|
|
|
||
Changes in operating assets and liabilities |
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
( |
) |
Escrow and other assets |
|
|
|
|
( |
) |
|
Deferred rent asset |
|
|
( |
) |
|
|
|
Prepaid expenses |
|
|
( |
) |
|
( |
) |
Prepaid guaranty fees - related party |
|
|
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
||
Accrued expenses |
|
|
|
|
( |
) |
|
Accrued expenses - related party |
|
|
|
|
|
||
Lease liability |
|
|
|
|
|
||
Deferred rent liability |
|
|
|
|
( |
) |
|
Net cash (used in) provided by operating activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
||
Proceeds from sale of land, buildings, other tangible and intangible assets |
|
|
|
|
|
||
Net cash provided by investing activities |
|
|
|
|
|
||
|
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
||
Proceeds from issuance of redeemable non-controlling interests |
|
|
|
|
|
||
Proceeds of issuance on loan payable - related party |
|
|
|
|
|
||
Repayment of other payable - related party |
|
|
|
|
( |
) |
|
Mortgage loan borrowings |
|
|
|
|
|
||
Mortgage loan repayments |
|
|
( |
) |
|
( |
) |
Debt extinguishment costs |
|
|
( |
) |
|
|
|
Equity issuance costs |
|
|
|
|
( |
) |
|
Debt issuance costs |
|
|
( |
) |
|
|
|
Insurance financing borrowings |
|
|
|
|
|
||
Insurance financing repayments |
|
|
( |
) |
|
( |
) |
Distribution on non-controlling interests |
|
|
( |
) |
|
( |
) |
Dividends paid on preferred stock |
|
|
|
|
( |
) |
|
Dividends paid on common stock |
|
|
|
|
( |
) |
|
Net cash used in financing activities |
|
|
( |
) |
|
( |
) |
|
|
|
|
|
|
||
Net decrease in cash and cash equivalents |
|
|
( |
) |
|
( |
) |
Cash and cash equivalents and restricted cash - beginning of period |
|
|
|
|
|
||
Cash and cash equivalents and restricted cash - end of period |
|
$ |
|
$ |
|
||
|
|
|
|
|
|
||
CASH TRANSACTIONS |
|
|
|
|
|
||
Interest paid |
|
$ |
|
$ |
|
||
NON-CASH TRANSACTIONS |
|
|
|
|
|
||
Assumption of loans in connection with property acquisitions |
|
$ |
|
$ |
|
||
Issuance of Series B-2 Preferred Units in connection with property acquisitions |
|
$ |
|
$ |
|
||
Conversion of Preferred Stock into Common Stock |
|
$ |
|
$ |
|
||
7
Stock issued for cashless exercise of Investor Warrants |
|
$ |
|
$ |
|
||
Deferred distribution on redeemable non-controlling interests |
|
$ |
|
$ |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8
GENERATION INCOME PROPERTIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Nature of Operations
Generation Income Properties, Inc. (the “Company”) was formed as a Maryland corporation on
The Company formed Generation Income Properties L.P. (the “Operating Partnership”) in
The Company places each property in a separate entity which may have a Redeemable Non-Controlling interest as a member.
As of June 30, 2025, the Company, the Operating Partnership, and their controlled subsidiaries on a consolidated basis owned
Management’s Liquidity Plans and Going Concern
On August 27, 2014, FASB issued ASU 2014-05, Disclosure of Uncertainties about an Entity’s ability to Continue as a Going Concern, which requires management to assess a company’s ability to continue as a going concern within one year from financial statement issuance and to provide related footnote disclosures in certain circumstances. In accordance with ASU 2014-05, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying Consolidated Financial Statements are prepared in accordance with U.S. GAAP applicable to a going concern. This presentation contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described below.
For the six months ended June 30, 2025, the Company used operating cash flows of $
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2025. The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025.
The preparation of the consolidated financial statements is in conformity with U.S. GAAP. The Company adopted the calendar year as its basis of reporting. Certain immaterial prior year amounts have been reclassified for consistency with the current period presentation.
9
Consolidation
The accompanying consolidated financial statements include the accounts of Generation Income Properties, Inc. and the Operating Partnership and all of the direct and indirect wholly owned subsidiaries of the Operating Partnership and the Company’s subsidiaries. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements.
The consolidated financial statements include the accounts of all entities in which the Company has a controlling interest. The ownership interests of other investors in these entities are recorded as non-controlling interests or redeemable non-controlling interest. Non-controlling interests are adjusted each period for additional contributions, distributions, and the allocation of net income or loss attributable to the non-controlling interests. Investments in entities for which the Company has the ability to exercise significant influence over, but does not have financial or operating control, are accounted for using the equity method of accounting. Accordingly, the Company’s share of the earnings (or losses) of these entities are included in consolidated net income or loss.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of commitments and contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly if economic conditions were to weaken.
10
Cash
The Company considers all demand deposits, cashier’s checks and money market accounts to be cash equivalents. Amounts included in restricted cash represent funds owned by the Company related to tenant escrow reimbursements and immediate capital repair reserve.
|
As of June 30, |
|
|
As of June 30, |
|
||
|
2025 |
|
|
2024 |
|
||
Cash and cash equivalents |
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
||
Cash and cash equivalents and restricted cash |
$ |
|
|
$ |
|
||
Revenue Recognition
The Company leases real estate to its tenants under long-term net leases which the Company accounts for as operating leases. Those leases that have fixed and determinable rent increases are recognized on a straight-line basis over the lease term. Deferred rent liability includes $
The Company reviews the collectability of charges under its tenant operating leases on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area where the property is located. In the event that uncollectibility exists with respect to any tenant changes, the Company would record an allowance with a corresponding reduction to Rental income. The Company’s review of collectability of charges under its operating leases includes any accrued rental revenues related to the straight-line rents. There were no allowances for receivables recorded during three and six months ended June 30, 2025 or 2024.
The Company’s leases provide for reimbursement from tenants for common area maintenance (“CAM”), insurance, real estate taxes and other operating expenses (“recoverable costs”). A portion of our operating cost reimbursement revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred and accrued.
The Company often recognizes above- and below-market lease intangibles in connection with acquisitions of real estate. The capitalized above- and below-market lease intangibles are amortized to rental income over the remaining term of the related leases.
Stock-Based Compensation
The Company records all equity-based incentive grants to employees and non-employee members of the Company’s Board of Directors in compensation costs based on their fair values on the date of grant. Stock-based compensation expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the outstanding equity awards.
Investments in Real Estate
Acquisitions of real estate are recorded at cost. The Company assigns the purchase price of real estate to tangible and intangible assets and liabilities based on fair value. Tangible assets consist of land, buildings, site improvements, and tenant improvements. Intangible assets and liabilities consist of the value of in-place leases and above- or below-market leases assumed with the acquisition. At the time of acquisition, the Company assesses whether the purchase of the real estate falls within the definition of a business under Accounting Standards Codification (“ASC”) 805,"Business Combinations," and to date has concluded that all asset transactions have been asset acquisitions. Therefore, each acquisition has been recorded at the purchase price whereas assets and liabilities, inclusive of closing costs, are allocated to land, building, site improvements, tenant improvements, and intangible assets and liabilities based upon their relative fair values at the date of acquisition.
The fair value of the in-place leases are estimated as the cost to replace the leases including loss of rent, commissions and legal fees. The in-place leases are amortized over the remaining term of the leases as amortization expense. The fair value of an above- or below-market lease is estimated as the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the estimated market lease rate expected over the remaining non-cancelable life of the lease at the date of acquisition. The capitalized above- or below-market lease values are amortized as a decrease or increase to rental income over the remaining term of the lease inclusive of the renewal option periods that are considered probable at acquisition.
Depreciation Expense
Real estate and related assets are stated net of accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the
11
estimated useful life of the buildings, which are generally between
Lease Liabilities
The Company has a certain property within its portfolio that is on land subject to a ground lease with a third party, which is classified as an operating lease. Accordingly, the Company owns only a long-term leasehold in this property. The building and improvements constructed on the leased land are capitalized as investment in real estate and are depreciated over the shorter of the useful life of the improvements or the lease term.
Under ASC 842, "Leases," the Company recognizes a lease liability for its ground lease and corresponding right-of-use asset related to this same ground lease which is classified as an operating lease. A key input in estimating the lease liability and resulting right-of-use asset is establishing the discount rate in the lease, which since the rate implicit in the contract is not readily determinable, requires additional inputs for the longer-term ground lease, including mortgage market-based interest rates that correspond with the remaining term of the lease, the Company's credit spread, and the payment terms present in the lease. This discount rate is applied to the remaining unpaid minimum rental payments for the lease to measure the lease liability.
Impairments
The Company reviews investments in real estate and related lease intangibles for possible impairment when certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable though operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, and an expectation to sell assets before the end of the previously estimated life. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. There were
The valuation of impaired assets is determined using valuation techniques including discounted cash flow analysis, analysis of recent comparable sales transactions, and purchase offers received from third parties, which are Level 3 inputs. The Company may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results.
Real Estate Held for Sale
The Company generally considers assets to be held for sale when certain criteria have been met, and management believes it is probable that the disposition will occur within one year. Properties are held for sale for a period longer than one year if events or circumstances out of the Company's control occur that delay the sale and while management continues to be committed to the plan of sale and is performing actions necessary to respond to the conditions causing the delay the properties held for sale remain salable in their current condition. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value, less cost to sell, and depreciation and amortization are no longer recognized. Held for sale properties are evaluated quarterly to ensure that properties continue to meet the held for sale criteria. If properties are required to be reclassified from held for sale to held for use due to changes to a plan of sale, they are recorded at the lower of fair value or the carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used. Properties that do not meet the held for sale criteria are accounted for as operating properties.
Subsequent to the reporting date, the Company executed a contract to sell the property at 3134 W 76th Street, Chicago, IL for $
Income Taxes
The Company elected to be taxed as a real estate investment trust (“REIT”) under Section 856 through 860 of the Internal Revenue Code, commencing with our taxable year ending December 31, 2021. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its taxable income to its stockholders. As a REIT, the Company generally will not be subject to federal corporate income tax on that portion of its taxable income that is currently distributed to stockholders. Accordingly, the only provision for federal income taxes in the accompanying
12
consolidated financial statements relates to the Company's consolidated taxable REIT subsidiary of which no income was generated during the three and six months ended June 30, 2025 and 2024.
The Company also recognizes liabilities for unrecognized tax benefits which are recognized if the weight of available evidence indicates that it is not more-likely-than-not that the positions will be sustained on examination, including resolution of the related processes, if any. As of each balance sheet date, unrecognized benefits are reassessed and adjusted if the Company’s judgment changes as a result of new information.
Earnings per Share
In accordance with ASC 260, "Earnings Per Share," basic earnings (loss) per share (“EPS”) is computed by dividing net loss attributable to the Company that is available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock warrants, using the treasury stock method, and convertible debt, using the if-converted method. Diluted EPS excludes all potentially dilutive securities such as warrants and convertible membership units of the Operating Partnership (“GIP LP Units”) if their effect is anti-dilutive. For the three and six months ended June 30, 2025 and 2024, all potentially dilutive securities were excluded because the effect was anti-dilutive.
Derivative Financial Instruments
Derivatives are recorded at fair value on the balance sheet as assets or liabilities. The valuation of derivative instruments requires us to make estimates and judgments that affect the fair value of the instruments. Fair values of our derivatives are estimated by pricing models that consider the forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to estimates that may change in the future.
Fair Value Measurements
Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from independent sources (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the Company's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:
Note 3 – Acquired Lease Intangible Assets, net
In-place leases, net is comprised of the following:
|
As of June 30, |
|
|
As of December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
In-place leases |
$ |
|
|
$ |
|
||
Accumulated amortization |
|
( |
) |
|
|
( |
) |
In-place leases, net |
$ |
|
|
$ |
|
||
13
The amortization for in-place leases for the three and six months ended June 30, 2025 and 2024 was $
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
|
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
|
$ |
|
|
Above-market leases, net is comprised of the following:
|
As of June 30, |
|
|
As of December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Above-market leases |
$ |
|
|
$ |
|
||
Accumulated amortization |
|
( |
) |
|
|
( |
) |
Above-market leases, net |
$ |
|
|
$ |
|
||
The amortization for above-market leases for the three and six months ended June 30, 2025 and 2024 was $
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
|
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
|
$ |
|
|
Note 4 – Acquired lease intangible liabilities, net
Acquired lease intangible liabilities, net is comprised of the following:
|
As of June 30, |
|
|
As of December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Acquired lessor lease intangible liabilities |
$ |
|
|
$ |
|
||
Accumulated accretion to rental income |
|
( |
) |
|
|
( |
) |
Acquired lessor lease intangible liabilities, net |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Acquired lessee lease intangible liabilities |
$ |
|
|
$ |
|
||
Accumulated amortization to offset building expenses |
|
( |
) |
|
|
( |
) |
Acquired lessee lease intangible liabilities, net |
$ |
|
|
$ |
|
||
The amortization for acquired lessor lease intangible liabilities for the three and six months ended June 30, 2025 and 2024 was $
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
$ |
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
|
$ |
|
|
14
The amortization for acquired lessee lease intangible liabilities for the three and six months ended June 30, 2025 and 2024 was $
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
$ |
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
|
$ |
|
|
Note 5 – Leases
Lessor Accounting
All of the Company's leases are classified as operating leases. The Company's rental income is comprised of both fixed and variable income. Fixed and in-substance fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent. Income for these amounts is recognized on a straight-line basis. The Company’s leases also provide for reimbursement of recoverable costs. A portion of our operating cost reimbursement revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred. Variable lease income includes the tenants' contractual obligations to reimburse the Company for their portion of recoverable costs incurred and index-based rent adjustments.
|
2025 |
|
|
2024 |
|
||
Rental income |
|
|
|
|
|
||
Fixed and in-substance fixed lease income |
$ |
|
|
$ |
|
||
Variable lease income |
|
|
|
|
|
||
Other related lease income, net: |
|
|
|
|
|
||
Amortization of above- and below-market leases, net |
|
( |
) |
|
|
( |
) |
Straight line rent, net |
|
|
|
|
|
||
Total Rental income |
$ |
|
|
$ |
|
||
For the six months ended June 30, 2025 and 2024, the following tenants each accounted for more than 10% of our rental revenue as indicated below:
|
2025 |
|
2024 |
General Services Administration - Norfolk, VA, Manteo, NC & Vacaville, CA |
|
||
Dollar General - multiple locations |
|
N/A |
|
Pre-K - San Antonio, TX |
|
||
Kohl's - Tucson, AZ |
|
||
exp U.S. Services - Maitland, FL |
|
||
PRA Holdings, Inc. - Norfolk, VA |
N/A |
|
The following table presents future minimum rental cash payments due to the Company over the next five calendar years and thereafter as of December 31:
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
$ |
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
|
$ |
|
|
On February 6, 2025, the Company acquired
15
base rent of approximately $
Lessee Accounting
The Company acquired
The following table summarizes the undiscounted future cash flows for subsequent years ending December 31 attributable to the lease liability as of June 30, 2025 and provides a reconciliation to the lease liability included in the accompanying Consolidated Balance Sheets as of June 30, 2025.
|
As of June 30, |
|
|
|
2025 |
|
|
2025 (6 months remaining) |
|
|
|
2026 |
|
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
Thereafter |
|
|
|
Total undiscounted liability |
$ |
|
|
Present value discount |
|
( |
) |
Lease liability |
$ |
|
|
Discount rate |
|
% |
|
Term Remaining |
|
||
Note 6 – Non-Controlling Interests
Redeemable Non-Controlling Interests (Temporary Equity)
Operating Unit Holders
LMB Owenton I LLC
As part of the Company’s acquisition of
Norfolk, VA Partnership
As part of the Company’s acquisition of
16
allowed for the
JCWC Funding, LLC
On June 27, 2024, the Operating Partnership and an accredited investor entered into a Unit Purchase Agreement pursuant to which the Operating Partnership issued and sold to the investor
Lloyd M. Bernstein
On February 6, 2025, the Operating Partnership entered into a Contribution and Subscription Agreement with LMB Lewiston, LLC, LMB Ft. Kent, LLC, and LMB Auburn Hills I, LLC (collectively, the "Contributed Entities") and their members. Pursuant to the agreement, the members of the Contributed Entities contributed
Preferred Equity Partners
Brown Family Trust and Brown Family Enterprises, LLC
As part of the Company’s acquisition of a property for approximately $
17
subsidiary received a capital contribution of $
On February 8, 2023, the Operating Partnership entered into new Amended and Restated Limited Liability Company Agreements for the Norfolk, Virginia properties, GIPVA 2510 Walmer Ave, LLC ("GIPVA 2510") and GIPVA 130 Corporate Blvd, LLC ("GIPVA 130"), in which the Operating Partnership, as the sole member of GIPVA 2510 and GIPVA 130, admitted a new preferred member, Brown Family Enterprises, LLC, through the issuance of preferred membership interests in the form of Class A Preferred Units of GIPVA 2510 and GIPVA 130. GIPVA 2510 and GIPVA 130 (the “Virginia SPEs”) hold the Company’s Norfolk, Virginia properties. In addition, both of the Virginia SPEs and Brown Family Enterprises, LLC entered into Unit Purchase Agreements in which GIPVA 2510 issued and sold
LC2-NNN Pref, LLC
In connection with the acquisition of the Modiv Portfolio, the Operating Partnership and LC2 entered into an Amended and Restated Limited Liability Company Agreement for GIP SPE (the “GIP SPE Operating Agreement”) pursuant to which LC2 made a $
The Preferred Interest is required to be redeemed in full by the Company on or before August 10, 2025 for a redemption amount equal to the greater of (i) the amount of the LC2 Investment plus the accrued preferred return, and (ii) the Make-Whole Amount. Upon a failure to timely redeem the Preferred Interest, the preferred return will accrue at an increased rate of
18
Under the GIP SPE Operating Agreement, GIP SPE is also required to pay to Loci Capital, an affiliate of LC2, an equity fee of 1.5% of the LC2 Investment, with 1% having been paid upon the execution and delivery of the GIP SPE Operating Agreement and the
Due to the redemption right, the Preferred Interest is presented as temporary equity at redemption value of $
Non-Controlling Interest (Permanent Equity)
As part of the Company’s acquisition of
Following these transactions as of June 30, 2025, the Company owned
|
Brown Family Trust and Brown Family Enterprises, LLC |
|
LMB Owenton I LLC |
|
GIP LP (Former Greenwal, L.C. and Riverside Crossing, L.C. Members) |
|
JCWC Funding, LLC |
|
Lloyd M. Bernstein |
|
LC2-NNN Pref, LLC |
|
Total Redeemable Non-Controlling Interests |
|
Non-Controlling Interests - Former GIP Fund 1 Members |
|
||||||||
Balance, December 31, 2023 |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
$ |
|
$ |
|
$ |
|
||||||||
Distribution on Non-Controlling Interests |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
( |
) |
|
( |
) |
|
( |
) |
||
Net income (loss) for the quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||
Balance, March 31, 2024 |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
$ |
|
$ |
|
$ |
|
||||||||
Issuance of Redeemable Non-Controlling Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution on Non-Controlling Interests |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
( |
) |
|
( |
) |
|
( |
) |
||
Net income (loss) for the quarter |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, June 30, 2024 |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2024 |
$ |
|
$ |
|
$ |
|
$ |
|
|
|
$ |
|
$ |
|
$ |
|
||||||||
Issuance of Redeemable Non-Controlling Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Distribution on Non-Controlling Interests |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
||
Net income (loss) for the quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, March 31, 2025 |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Distribution on Non-Controlling Interests |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
$ |
( |
) |
$ |
( |
) |
|
( |
) |
|
|
||
Net income (loss) for the quarter |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
||||||||
Balance, June 30, 2025 |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
19
Note 7 – Equity
Authorized Equity
The Company is authorized to issue up to
In January 2024, the Company redeemed all
Issuance of Equity Securities
On November 13, 2020, the Company raised $
In January 2024, the Company declared and paid final preferred stock dividends of $
On July 24, 2024, the Operating Partnership of Generation Income Properties, Inc. (the “Company”), entered into a Fifth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership (the “LPA Amendment”), pursuant to which the Company, as the general partner of the Operating Partnership, issued partnership interests to LMB Owenton I LLC (“Contributor”) in the form of Series B-1 Preferred Units (the “Series B-1 Preferred Units”).
Also on July 24, 2024, the Operating Partnership and the Contributor entered into a Contribution and Exchange Agreement (the “Contribution Agreement”) pursuant to which the Contributor contributed
Warrants
Private Placement Warrants
On April 25, 2019, the Company raised $
On November 13, 2020, the Company raised $
20
Investor Warrants
The Investor Warrants may be exercised on a cashless basis if there is no effective registration statement available for the resale of the shares of common stock underlying such warrants. In addition, after
Representative Warrants
In addition, the Company issued to Maxim Group LLC (or its designee) warrants to purchase an aggregate of
The Company has
|
As of June 30, |
|
|
Issue Date |
2025 |
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
Warrants |
|
|
Weighted Average Price |
|
|
Weighted Average Remaining Life |
|
|||
As of December 31, 2024 |
|
|
|
$ |
|
|
|
|
|||
Exercised |
|
|
|
|
|
|
|
|
|||
As of June 30, 2025 |
|
|
|
$ |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Warrants exercisable |
|
|
|
$ |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Warrants |
|
|
Weighted Average Price |
|
|
Weighted Average Remaining Life |
|
|||
As of December 31, 2023 |
|
|
|
$ |
|
|
|
|
|||
Exercised |
|
( |
) |
|
|
|
|
|
|
||
As of June 30, 2024 |
|
|
|
$ |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Warrants exercisable |
|
|
|
$ |
|
|
|
|
|||
There was
Stock Compensation
Generation Income Properties, Inc. 2020 Omnibus Incentive Plan
In connection with the Public Offering, the Company's Board of Directors adopted and stockholders approved, the Generation Income Properties, Inc. 2020 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which became effective upon the completion of the Public Offering. The Omnibus Incentive Plan reserves
Restricted Common Shares issued to the Board and Employees
On January 6, 2022, the board granted
21
granted
On December 8, 2022, the board approved grants of
In March 2024, the board approved grants of restricted stock to directors effective June 15, 2024, allowing an elective deferral of up to three years. All board members elected to defer restricted stock and dividend equivalents for the full three year period.
The following is a summary of restricted shares for the six months ended June 30, 2025 and 2024:
|
2025 |
|
|
2024 |
|
||
Number of Shares Outstanding at beginning of period |
|
|
|
|
|
||
Restricted Shares Issued |
|
|
|
|
|
||
Restricted Shares Vested |
|
|
|
|
( |
) |
|
Number of Shares Outstanding at end of period |
|
|
|
|
|
||
On June 15, 2024, the Company issued restricted stock units with respect to an aggregate of
The Company recorded stock based compensation expense of $
Cash Distributions
While the Company is under no obligation to do so, the Company has historically declared and paid distributions to its common stockholders and Operating Partnership unit holders, provided that on July 3, 2024, the Company announced that its Board of Directors determined to suspend the Company’s regular dividend, commencing with the monthly dividends that would have been paid in July 2024.
The issuance of future distributions will be determined by the Company's board of directors based on the Company's financial condition and such other factors as the Company's board of directors deems relevant. The Company has not established a minimum distribution, and the Company's charter does not require that the Company issue distributions to its stockholders other than as necessary to meet REIT qualification standards.
22
Note 8 – Mortgage Loans
The Company had the following mortgage loans outstanding as of June 30, 2025 and December 31, 2024, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Occupying Tenant |
Property Location |
Original Loan Amount |
|
|
Interest Rate |
|
Maturity Date |
6/30/2025 |
|
12/31/2024 |
|
Debt Service Coverage Ratios ("DSCR") Required |
|||
7-Eleven Corporation |
Washington, D.C. |
$ |
|
|
|
$ |
|
$ |
|
||||||
7-Eleven Corporation, Starbucks Corporation & Auburn University |
Washington, D.C., Tampa, FL, and Huntsville, AL |
|
|
(a) |
|
|
|
|
|
||||||
General Services Administration-Navy & AYMCA |
Norfolk, VA |
|
|
(f) |
|
|
|
|
|
||||||
PRA Holdings, Inc. |
Norfolk, VA |
|
|
(f) |
|
|
|
|
|
||||||
Sherwin Williams Company |
Tampa, FL |
|
|
|
(b) |
|
|
|
|
||||||
General Services Administration-FBI |
Manteo, NC |
|
|
(c) |
(d) |
|
|
|
|
||||||
Irby Construction |
Plant City , FL |
|
|
(c) |
(d) |
|
|
|
|
||||||
La-Z-Boy Inc. |
Rockford, IL |
|
|
|
(d) |
|
|
|
|
||||||
Best Buy Co., Inc. |
Grand Junction, CO |
|
|
(c) |
(d) |
|
|
|
|
||||||
Fresenius Medical Care Holdings, Inc. |
Chicago, IL |
|
|
(c) |
(d) |
|
|
|
|
||||||
Starbucks Corporation |
Tampa, FL |
|
|
(c) |
(d) |
|
|
|
|
||||||
Kohl's Corporation |
Tucson, AZ |
|
|
(c) |
(d) |
|
|
|
|
||||||
City of San Antonio (PreK) |
San Antonio, TX |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General Market |
Bakersfield, CA |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Big Spring, TX |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Castalia, OH |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
East Wilton, ME |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Lakeside, OH |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Litchfield, ME |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Mount Gilead, OH |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar General |
Thompsontown, PA |
|
|
(e) |
(b) |
|
|
|
|
||||||
Dollar Tree Stores, Inc. |
Morrow, GA |
|
|
(e) |
(b) |
|
|
|
|
||||||
exp U.S. Services Inc. |
Maitland, FL |
|
|
(e) |
(b) |
|
|
|
|
||||||
General Services Administration |
Vacaville, CA |
|
|
(e) |
(b) |
|
|
|
|
||||||
Walgreens |
Santa Maria, CA |
|
|
(e) |
(b) |
|
|
|
|
||||||
Best Buy Co., Inc. |
Ames, IA |
|
|
|
(b) |
|
|
|
|
||||||
Zaxby's |
Sanford, FL |
|
|
|
|
|
|
n/a |
|
||||||
Dollar General |
Cleveland, TN |
|
|
|
|
|
|
n/a |
|
||||||
Tractor Supply |
Kernersville, NC |
|
|
|
|
|
|
n/a |
|
||||||
|
|
$ |
|
|
|
|
|
$ |
|
$ |
|
|
|||
|
|
|
|
|
|
|
Less Debt Discount, net |
|
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
|
Less Debt Issuance Costs, net |
|
( |
) |
|
( |
) |
|
|
|
|
|
$ |
|
$ |
|
|
||||||||
(a) Loan subject to prepayment penalty
(b) Fixed via interest rate swap
(c) One loan in the amount of $
(d) Adjustment effective April 1, 2027 equal to 5-year Treasury plus
(e) One loan in the amount of $
23
The Company amortized debt issuance costs and debt discount during the three and six months ended June 30, 2025 and 2024 to interest expense of approximately $
Each mortgage loan requires the Company to maintain certain debt service coverage ratios as noted above. In addition,
On April 1, 2022, the Company entered into two mortgage loan agreements with an aggregate balance of $
On August 10, 2023, GIP13, LLC, a Delaware limited liability company and wholly owned subsidiary of GIP SPE ("GIP Borrower"), entered into a Loan Agreement with Valley Bank pursuant to which Valley Bank made a loan to the Company in the amount of $
The Company's President and CEO entered into a personal, full recourse guarantee with a $
On August 9, 2022 the Company and Operating Partnership entered a Redemption Agreement with a unit holder. As such, the Company recorded in other payable - related party in the amount of $
On October 14, 2022, the Company entered into a loan transaction that is evidenced by a secured non-convertible promissory note to Brown Family Enterprises, LLC, a preferred equity partner and therefore a related party, for $
24
Concurrent with the aforementioned sales, the Company repaid the corresponding loan in full, which had been secured by three properties: a 7-Eleven store in Washington, D.C., the Starbucks store in South Tampa, Florida, and the property in Huntsville, Alabama. The prepayment resulted in a loss on extinguishment of debt of $
On June 13, 2025, the Company, through its subsidiary GIPDC 3707 14TH ST, LLC, entered into a loan agreement with Valley National Bank in the principal amount of $
Minimum required principal payments on the Company’s debt for subsequent years ending December 31 are as follows:
|
Mortgage Loans |
|
Other Payable - Related Party |
|
Loan Payable - Related Party |
|
Total as of June 30, 2025 |
|
||||
2025 |
$ |
|
|
|
|
|
|
|
||||
2026 |
|
|
|
|
|
|
|
|
||||
2027 |
|
|
|
|
|
|
|
|
||||
2028 |
|
|
|
|
|
|
|
|
||||
2029 |
|
|
|
|
|
|
|
|
||||
Thereafter |
|
|
|
|
|
|
|
|
||||
|
$ |
|
$ |
|
$ |
|
$ |
|
||||
Other Loans Payable
On May 29, 2025, the Company, through the Operating Partnership, entered into a loan transaction for $332,000 with Chase Commercial Realty, Inc. d/b/a NAI Chase for broker’s fees payable by the Company to Chase in connection with the sale of the Company’s Auburn University-occupied industrial building located in Huntsville, Alabama. The loan provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 7.5% per annum, will be due on December 31, 2025. The loan may be repaid without penalty at any time.
On May 29, 2025, GIPFL 1300 S Dale Mabry, LLC (“GIPFL”), an indirect wholly owned subsidiary of the Company, entered into a loan for $103,500 that is evidenced by a promissory note issued to SRS Real Estate Partners, LLC ("SRS") for broker’s fees payable by the Company to SRS in connection with the sale of the Company’s Starbucks-occupied retail building located in Tampa, Florida.. The note provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 0% per annum, will be due on December 31, 2025. The note may be repaid without penalty at any time.
Note 9 – Related Party
As disclosed previously, on August 9, 2022 the Company and Operating Partnership entered a Redemption Agreement with a unit holder. As such, the Company recorded in other payable - related party in the amount of $
As disclosed previously, on October 14, 2022, the Company entered into a loan transaction that is evidenced by a secured non-convertible promissory note to Brown Family Enterprises, LLC, a preferred equity partner and therefore a related party, for $
On November 30, 2020, the Company acquired an approximately
During the three months and six ended June 30, 2025 and 2024 the Company incurred a guaranty fee expense to the Company's CEO of $
25
related party on the Consolidated Balance Sheets as of June 30, 2025. See Note 8 – Debt for details of the guaranty provided by the Company's President and CEO.
On April 25, 2025, the Company entered into a secured promissory note with Brown Family Enterprises LLC, a related party. The Note represents a loan in the principal amount of $
On May 29, 2025, the Company, through the Operating Partnership, entered into a loan transaction with David Sobelman, the Company’s Chief Executive Officer, for $610,000 to fund closing costs relating to the sale of the Company’s Auburn University-occupied industrial building located in Huntsville, Alabama and Starbucks-occupied retail building located in Tampa, Florida. The loan provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 5.75% per annum, will be due on August 31, 2025.
Note 10 – Derivative Financial Instruments and Fair Value Measurements
On August 10, 2023, as previously disclosed, the Company entered into a loan agreement for $
In November 2020, the Company entered into a $
The Company has not elected hedge accounting and has reported periodic changes in derivative valuations in loss on derivative valuation, net for $
The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. Certain inputs, which are material to the value, are considered Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amount of cash and cash equivalents and restricted cash reported in our consolidated balance sheets approximates fair value due to the short-term nature of these instruments.
The carrying amounts and estimated fair values of our financial instruments are as follows:
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
|
|
|
|
|
|
|
|
|
|
||||
26
Note 11 – Subsequent Events
On July 9, 2025, Generation Income Properties, L.P. (the "Seller") entered into a Purchase and Sale Agreement with 919 Investments LLC (the "Buyer") for the sale of a property located at 3134 West 76th Street, Chicago, Illinois (the "Property"). The agreed purchase price for the Property is $
The closing of the transaction is scheduled to occur on or before August 29, 2025, subject to the completion of Buyer’s due diligence within the Inspection Period and the satisfaction of the specified closing conditions.
The property is recorded to held for sale assets at sales price of $
As mentioned above, On August 7, 2025, the Company exercised its first 12-month extension option under the GIP SPE Operating Agreement, extending the Mandatory Redemption Date from August 10, 2025 to August 10, 2026. In connection with the extension, the Company paid LC2 an extension fee of $141,000 (equal to 100 basis points of the outstanding LC2 Investment), increased the Preferred Equity Return from 15.5% to 18% per annum, and increased the Accrued Preferred Return from 10.5% to 13% per annum, while the Current Preferred Return remained at 5% per annum. The Company also confirmed that the trailing six-month annualized adjusted net operating income exceeded $5.0 million, the senior loans had been extended through the end of the extension period, and there were no material breaches or defaults under the GIP SPE Operating Agreement.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward‑Looking Statements
This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained herein. When used in this report, the words "anticipate," "believe," "estimate," "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. Actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward-looking statements. Readers should be aware of important factors that, in some cases, have affected, and in the future could affect, actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, funds derived from operations, cash available for distribution, cash flows, liquidity and prospects include, but are not limited to, the risk factors listed from time to time in our reports with the Securities and Exchange Commission, including, in particular, those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
In this Quarterly Report on Form 10-Q, references to the “Company,” “we,” “us,” “our” or similar terms refer to Generation Income Properties, Inc., a Maryland corporation, together with its consolidated subsidiaries, including Generation Income Properties, L.P., a Delaware limited partnership, which we refer to as our operating partnership (the “Operating Partnership”). As used in this Quarterly Report, an affiliate, or person affiliated with a specified person, is a person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
Overview
We are an internally managed, Maryland corporation focused on acquiring retail, office and industrial real estate located in major U.S. markets. We initiated operations during the year ended December 31, 2015 and have elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2021. Substantially all of the Company’s assets are held by, and operations are conducted through, the Operating Partnership and the Operating Partnership’s direct and indirect subsidiaries. The Company is the general partner of the Operating Partnership and as of June 30, 2025 owned 99.6% of the outstanding common units of the Operating Partnership. The Company formed a Maryland entity GIP REIT OP Limited LLC in 2018 that owns 0.001% of the Operating Partnership.
Public Offering and Nasdaq Listing
In September 2021, the Company closed an underwritten public offering of 1,665,000 units at a price to the public of $10 per unit generating net proceeds of $13.8 million including issuance costs incurred during the years ended December 31, 2021 and 2020. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock at an exercise price equal to $10
27
per share. The common stock and warrants included in the units (which were separated into one share of common stock and one warrant) currently trade on the Nasdaq Capital Market (“Nasdaq”) under the symbols “GIPR” and “GIPRW,” respectively.
Our Investments
The following are characteristics of our properties as of June 30, 2025:
Given the nature of our leases, our tenants either pay the realty taxes directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance.
The table below presents an overview of the properties in our portfolio as of June 30, 2025:
28
Property Type |
Location |
Rentable Square Feet |
|
Tenant |
S&P Credit Rating (1) |
IG |
Remaining Term (Yrs) |
|
Options (Number x Yrs) |
Contractual Rent Escalations (3) |
ABR (2) |
|
ABR per Sq. Ft. |
|
||||
Retail |
Washington, DC |
|
3,000 |
|
7-Eleven Corporation |
A |
Y |
|
1.0 |
|
2 x 5 |
Yes |
$ |
129,804 |
|
$ |
43.27 |
|
Office |
Norfolk, VA |
|
49,902 |
|
General Services Administration-Navy (5) |
AA+ |
Y |
|
3.5 |
|
N/A |
Yes |
|
640,742 |
|
|
12.84 |
|
Office |
Norfolk, VA |
|
22,247 |
|
Armed Services YMCA of the U.S.A. (5) |
N/A |
N/A |
|
9.1 |
|
2 x 5 |
Yes |
|
411,570 |
|
|
18.50 |
|
Office |
Norfolk, VA |
|
34,847 |
|
PRA Holdings, Inc. |
BB |
N |
|
2.4 |
|
1 x 5 |
Yes |
|
811,734 |
|
|
23.29 |
|
Retail |
Tampa, FL |
|
3,500 |
|
Sherwin Williams Company |
BBB |
Y |
|
3.3 |
|
5 x 5 |
Yes |
|
126,788 |
|
|
36.23 |
|
Office |
Manteo, NC |
|
7,543 |
|
General Services Administration-FBI |
AA+ |
Y |
|
3.9 |
|
1 x 5 |
Yes |
|
100,682 |
|
|
13.35 |
|
Office |
Plant City, FL |
|
7,826 |
|
VACANT |
N/A |
N/A |
|
0.0 |
|
N/A |
N/A |
|
- |
|
|
- |
|
Retail |
Rockford, IL |
|
15,288 |
|
La-Z-Boy Inc. |
Not Rated |
Not Rated |
|
2.6 |
|
4 x 5 |
Yes |
|
366,600 |
|
|
23.98 |
|
Retail |
Grand Junction, CO |
|
30,701 |
|
Best Buy Co., Inc. |
BBB+ |
Y |
|
2.0 |
|
1 x 5 |
Yes |
|
353,061 |
|
|
11.50 |
|
Medical-Retail |
Chicago, IL |
|
10,947 |
|
Fresenius Medical Care Holdings, Inc. |
BBB |
Y |
|
8.6 |
|
2 x 5 |
Yes |
|
238,149 |
|
|
21.75 |
|
Retail |
Tampa, FL |
|
2,642 |
|
Starbucks Corporation |
BBB+ |
Y |
|
1.9 |
|
2 x 5 |
Yes |
|
148,216 |
|
|
56.10 |
|
Retail |
Tucson, AZ |
|
88,408 |
|
Kohl's Corporation |
BB- |
N |
|
4.8 |
|
7 x 5 |
Yes |
|
864,630 |
|
|
9.78 |
|
Retail |
San Antonio, TX |
|
50,000 |
|
City of San Antonio (PreK) |
AAA |
Y |
|
4.3 |
|
1 x 8 |
Yes |
|
924,000 |
|
|
18.48 |
|
Retail |
Bakersfield, CA |
|
18,827 |
|
Dollar General Market |
BBB |
Y |
|
3.3 |
|
3 x 5 |
Yes |
|
361,075 |
|
|
19.18 |
|
Retail |
Big Spring, TX |
|
9,026 |
|
Dollar General |
BBB |
Y |
|
5.3 |
|
3 x 5 |
Yes |
|
86,041 |
|
|
9.53 |
|
Retail |
Castalia, OH |
|
9,026 |
|
Dollar General |
BBB |
Y |
|
10.2 |
|
3 x 5 |
Yes |
|
79,320 |
|
|
8.79 |
|
Retail |
East Wilton, ME |
|
9,100 |
|
Dollar General |
BBB |
Y |
|
5.3 |
|
3 x 5 |
Yes |
|
112,439 |
|
|
12.36 |
|
Retail |
Lakeside, OH |
|
9,026 |
|
Dollar General |
BBB |
Y |
|
10.2 |
|
3 x 5 |
Yes |
|
81,036 |
|
|
8.98 |
|
Retail |
Litchfield, ME |
|
9,026 |
|
Dollar General |
BBB |
Y |
|
5.5 |
|
3 x 5 |
Yes |
|
92,961 |
|
|
10.30 |
|
Retail |
Mount Gilead, OH |
|
9,026 |
|
Dollar General |
BBB |
Y |
|
5.3 |
|
3 x 5 |
Yes |
|
85,924 |
|
|
9.52 |
|
Retail |
Thompsontown, PA |
|
9,100 |
|
Dollar General |
BBB |
Y |
|
5.6 |
|
3 x 5 |
Yes |
|
85,998 |
|
|
9.45 |
|
Retail |
Morrow, GA |
|
10,906 |
|
Dollar Tree Stores, Inc. |
BBB |
Y |
|
5.3 |
|
2 x 5 |
Yes |
|
103,607 |
|
|
9.50 |
|
Office |
Maitland, FL |
|
33,118 |
|
exp U.S. Services Inc. |
Not Rated |
Not Rated |
|
1.7 |
|
1 x 5 |
Yes |
|
864,583 |
|
|
26.11 |
|
Office |
Vacaville, CA |
|
11,014 |
|
General Services Administration |
AA+ |
Y |
|
1.4 |
|
N/A |
No |
|
257,050 |
|
|
23.34 |
|
Retail |
Santa Maria, CA |
|
14,490 |
|
Walgreens (4) |
BB- |
Y |
|
7.0 |
|
N/A |
No |
|
369,000 |
|
|
25.47 |
|
Retail |
Ames, IA |
|
30,259 |
|
Best Buy Co., Inc. |
BBB+ |
Y |
|
5.0 |
|
2 x 5 |
Yes |
|
452,372 |
|
|
14.95 |
|
Retail |
Sanford, FL |
|
4,108 |
|
Zaxby's |
Not Rated |
Not Rated |
|
14.7 |
|
4 x 5 |
Yes |
|
240,434 |
|
|
58.53 |
|
Retail |
Cleveland, TN |
|
10,640 |
|
Dollar General |
BBB |
Y |
|
11.1 |
|
5 x 5 |
No |
|
119,728 |
|
|
11.25 |
|
Retail |
Kernersville, NC |
|
19,097 |
|
Tractor Supply |
BBB |
Y |
|
10.3 |
|
4 x 5 |
Yes |
|
303,000 |
|
|
15.87 |
|
Tenants - All Properties |
|
|
542,640 |
|
|
|
|
|
|
|
|
$ |
8,810,544 |
|
$ |
16.24 |
|
|
Distributions
From inception through June 30, 2025, we have distributed $5,024,622 to common stockholders.
Recent Developments
Brown Family Enterprises Loan
On April 25, 2025, Generation Income Properties, Inc. (the “Company”), through its operating partnership Generation Income Properties L.P. (the “Operating Partnership”), entered into a loan transaction for a $1.0 million loan that is evidenced by a secured non-convertible promissory note (the "Promissory Note") payable to Brown Family Enterprises, LLC ("Lender") in the original principal amount of $1 million. The Promissory Note provides that an amount equal to $500,000 in aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an initial interest rate of 16% per annum, will be due on the date that is 90
29
days from the date of the Promissory Note (the “Initial Payment Date”). Thereafter, the Promissory Note bears a fixed interest rate of 9%, simple interest, and interest is payable monthly after the initial 90 days, with all remaining principal and accrued but unpaid interest being due on the 180th day after the issuance of the Promissory Note. Interest that is accrued but unpaid as of the Initial Payment Date will be added to the principal amount of the Promissory Note. The Promissory Note may be repaid without penalty at any time. The Promissory Note is secured by the assets of the Operating Partnership under a Security Agreement previously entered into with Lender on July 21, 2024.
Property Sales
On May 29, 2025, GIPFL 1300 S Dale Mabry, LLC, an indirect wholly owned subsidiary the Company, completed the sale of its Starbucks-occupied retail building located in Tampa, Florida pursuant to a Purchase and Sale Agreement, entered into effective as of April 2, 2025, by and among GIPFL 1300 S Dale Mabry, LLC, as seller, and 6800 4thStreet Holdings LLC, as purchaser, as amended effective May 2, 2025 and subsequently assigned by purchaser to 1300 Dale Mabry Holdings LLC, for a purchase price of $3,450,000, in cash, subject to customary pro-rations and adjustments.
On May 29, 2025, GIPAL JV 15091 SW Alabama 20, LLC, an indirect wholly owned subsidiary of the Company, completed the sale of its Auburn University-occupied industrial building located in Huntsville, Alabama pursuant to a Purchase and Sale Agreement, entered into effective as of January 24, 2025, by and among GIPAL JV 15091 SW Alabama 20, LLC , as seller, and Titomic, USA, Inc., as purchaser, as amended effective April 7, 2025, May 9, 2025 and May 29, 2025, for a purchase price of $7,200,000, in cash, subject to customary pro-rations and adjustments.
Promissory Notes
On May 29, 2025, the Company, through its operating partnership Generation Income Properties L.P. (the “Operating Partnership”), entered into a loan transaction for $332,000.00 that is evidenced by a promissory note (the “NAI Chase Promissory Note”) issued to Chase Commercial Realty, Inc. d/b/a NAI Chase (“Chase”). The NAI Chase Promissory Note provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 7.5% per annum, will be due on December 31, 2025. The NAI Chase Promissory Note may be repaid without penalty at any time. The NAI Chase Promissory Note relates to broker’s fees payable by the Company to Chase in connection with the sale of the Company’s Auburn University-occupied industrial building located in Huntsville, Alabama, as further described under Item 2.01 above.
On May 29, 2025, the Company’s Chief Executive Officer, David Sobelman (the "Guarantor") executed a Personal Guaranty (the “Guaranty”) in favor of Chase, in connection with the loan made by Chase to the Operating Partnership pursuant to the Chase Promissory Note. Under the terms of the Guaranty, the Guarantor unconditionally and irrevocably guarantees the full and punctual payment of all obligations of the Operating Partnership under the Chase Promissory Note, including principal, interest, and enforcement costs. The Guarantor’s liability is limited to the maximum amount enforceable under applicable bankruptcy and fraudulent transfer laws.
On May 29, 2025, GIPFL 1300 S Dale Mabry, LLC (“GIPFL”), an indirect wholly owned subsidiary of the Company, entered into a loan transaction for $103,500.00 that is evidenced by a promissory note (the “SRS Promissory Note”) issued to SRS Real Estate Partners, LLC. (“SRS”). The SRS Promissory Note provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 0% per annum, will be due on December 31, 2025. The SRS Promissory Note may be repaid without penalty at any time. The SRS Promissory Note relates to broker’s fees payable by the Company to SRS in connection with the sale of the Company’s Starbucks-occupied retail building located in Tampa, Florida, as further described under Item 2.01 above.
On May 29, 2025, the Company, through the Operating Partnership, entered into a loan transaction with David Sobelman, the Company’s Chief Executive Officer, for $610,000.00 to fund closing costs relating to the sale of the Company’s Auburn University-occupied industrial building located in Huntsville, Alabama and Starbucks-occupied retail building located in Tampa, Florida, as further described under Item 2.01 above. The loan is evidenced by a promissory note (the “Sobelman Promissory Note”) payable to the David E. Sobelman Revocable Trust, under
Agreement dated September 5, 2007. The Sobelman Promissory Note provides that an amount equal to the aggregate unpaid principal amount of the loan, together with accrued but unpaid interest at an interest rate of 5.75% per annum, will be due on August 31, 2025.
Valley National Mortgage Loan
On June 13, 2025, GIPDC 3707 14th St, LLC (the “Borrower”), an indirect subsidiary of the Company, entered into a Loan Agreement (the “Loan Agreement”) with Valley National Bank (the “Lender”), pursuant to which the Lender made a mortgage loan in the original principal amount of $1.1 million (the “Loan”). The Loan is secured by a first-priority Deed of Trust and Assignment of Rents and Leases on the Borrower’s fee interest in a previously unencumbered single-tenant property located at 3707–3711 14th Street NW, Washington, D.C. (the “Property”).
The Loan is evidenced by a Promissory Note, dated June 13, 2025 (the “Note”), bearing interest at a fixed rate of 6.50% per annum. The net proceeds of the Loan were used to extract equity from the Property for general corporate purposes. At closing, $750,000 of the Loan proceeds was disbursed, with an additional $350,000 (the “Renewal Funds”) to be disbursed upon satisfaction of certain conditions,
30
including the delivery to the Lender, on or before March 31, 2026, of an executed lease renewal with the Property’s current tenant, 7-Eleven, Inc., extending the lease for an additional five years beyond its current expiration date of March 31, 2026. Monthly interest-only payments are due beginning July 13, 2025, through June 13, 2026. If the required lease renewal is delivered and all other conditions are satisfied to the Lender’s sole satisfaction, the Renewal Funds will be disbursed, and the maturity date of the Loan will be automatically extended to June 13, 2030. In such case, beginning July 13, 2026, the borrower will make monthly payments of principal and interest based on a 25-year amortization schedule, with a final balloon payment due on the extended maturity date of June 13, 2030. If the lease renewal is not delivered by March 31, 2026, the Loan will mature on that date, and all outstanding principal, accrued interest, and other amounts will become immediately due and payable.
The Loan Agreement contains customary representations, covenants, and events of default, including financial reporting obligations and a requirement to maintain a minimum debt service coverage ratio (DSCR) of at least 1.50:1.00, tested quarterly on a trailing twelve-month basis.
In connection with the Loan, David E. Sobelman, Executive Chairman of the Company, entered into a Guaranty of Nonrecourse Carveout Obligations (the “Guaranty Agreement”), pursuant to which he unconditionally guaranteed certain nonrecourse carveout obligations of the Borrower to the Lender.
Results of Operations
Operating results for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024:
Revenue
During the three and six months ended June 30, 2025, total revenue from operations were 2,432,270 and $4,813,865, respectively, as compared to $2,259,235 and 4,692,408 for the three and six months ended June 30, 2024, respectively. Revenue increased by $173,035 and $121,457 during the three and six months ended June 30, 2025, respectively, compared with the three and six months ended June 30, 2024.
Operating Expenses
During the three and six months ended June 30, 2025, we incurred total operating expenses of $4,805,285 and $8,662,661, respectively, as compared to $3,729,846 and $7,363,671, respectively, for the three and six months ended June 30, 2024. Operating expenses increased overall by $1,075,439 and $1,298,990, respectively, as follows:
|
Three months ended June 30, |
|
|
|
|||||
|
2025 |
|
2024 |
|
Change |
|
|||
General and administrative expense |
$ |
552,893 |
|
$ |
604,656 |
|
$ |
(51,763 |
) |
Building expenses |
|
703,118 |
|
|
683,627 |
|
|
19,491 |
|
Depreciation and amortization |
|
1,264,581 |
|
|
1,180,232 |
|
|
84,349 |
|
Interest expense, net |
|
2,084,751 |
|
|
1,023,140 |
|
|
1,061,611 |
|
Compensation costs |
|
199,942 |
|
|
238,191 |
|
|
(38,249 |
) |
Total expenses |
$ |
4,805,285 |
|
$ |
3,729,846 |
|
$ |
1,075,439 |
|
|
Six months ended June 30, |
|
|
|
|||||
|
2025 |
|
2024 |
|
Change |
|
|||
General and administrative expense |
$ |
1,058,271 |
|
$ |
1,054,453 |
|
$ |
3,818 |
|
Building expenses |
|
1,339,343 |
|
|
1,338,294 |
|
|
1,049 |
|
Depreciation and amortization |
|
2,557,342 |
|
|
2,406,837 |
|
|
150,505 |
|
Interest expense, net |
|
3,267,018 |
|
|
2,043,881 |
|
|
1,223,137 |
|
Compensation costs |
|
440,687 |
|
|
520,206 |
|
|
(79,519 |
) |
Total expenses |
$ |
8,662,661 |
|
$ |
7,363,671 |
|
$ |
1,298,990 |
|
31
Net loss
During the three and six months ended June 30, 2025 and 2024, we generated a net loss of $3,466,522 and $5,263,981, and $1,461,488 and $3,340,584, respectively.
Net income attributable to non-controlling interests
During the three and six months ended June 30, 2025 and 2024, net income attributable to non-controlling interest was $956,107 and $1,890,506, and $800,234 and $1,746,358, respectively.
Net loss attributable to common shareholders
During the three and six months ended June 30, 2025 and 2024, we generated a net loss attributable to our shareholders of $4,422,629 and $7,154,487 and $2,261,722 and $5,086,942, respectively.
Liquidity and Capital Resources
We require capital to fund our investment activities and operating expenses. Our capital sources may include net proceeds from offerings of our equity securities, cash flow from operations and borrowings under credit facilities. As of June 30, 2025, we had total cash (unrestricted and restricted) of $390,630, properties with a gross cost basis of $106,581,342 and outstanding mortgage loans with a principal balance of $56,049,047.
In September 2021, we closed an underwritten public offering of 1,665,000 units at a price to the public of $10 per unit generating net proceeds of $13.8 million including issuance costs incurred during the years ended December 31, 2021 and 2020.
On April 1, 2022, we entered into two mortgage loan agreements with an aggregate balance of $13.5 million to refinance seven of our properties. The loan agreements consist of one loan in the amount of $11.4 million secured by six properties and allocated to each property based on each property's appraised value, and one loan in the amount of $2.1 million on the property previously held in the tenancy-in-common investment at an interest rate of 3.85% from April 1, 2022 through and until March 31, 2027. In conjunction with the LC2 Investment to purchase the remaining interest in the tenancy-in-common interest discussed above, the Company assumed the original $2.1 million loan on the property with a remaining balance of $2,079,178 and recognized a discount of $383,767. Effective April 1, 2027 and through the maturity date of March 31, 2032, the interest rate adjusts to the 5-year Treasury plus 2.5% and is subject to a floor of 3.85%. Our CEO entered into a guarantee agreement pursuant to which he guaranteed the payment obligations under the promissory notes if they become due as a result of certain “bad-boy” provisions, individually and on behalf of the Operating Partnership.
On August 10, 2023, GIP13, LLC, a Delaware limited liability company and wholly owned subsidiary of GIP SPE ("GIP Borrower"), entered into a Loan Agreement with Valley pursuant to which Valley made a loan to the Company in the amount of $21.0 million to finance the acquisition of the Modiv Portfolio. The outstanding principal amount of the loan bears interest at an annual rate for each 30-day interest period equal to the compounded average of the secured overnight financing rate published by Federal Reserve Bank of New York for the thirty-day period prior to the last day of each 30-day interest rate for the applicable interest rate period plus 3.25%, with interest payable monthly after each 30-day interest period. However, the Company entered into an interest rate swap to fix the interest rate at 7.47% per annum. Payments of interest and principal in the amount of approximately $156,000 are due and payable monthly, with all remaining principal and accrued but unpaid interest due and payable on a maturity date of August 10, 2028. The loan may generally be prepaid at any time without penalty in whole or in part, provided that there is no return of loan fees and prepaid financing fees. The loan is secured by first mortgages and assignments of rents in the properties comprising the Modiv Portfolio and eight other properties held by subsidiaries of GIP SPE that had outstanding loans with Valley. All of the mortgaged properties cross collateralize the loan, and the loan is guaranteed by the Operating Partnership and the subsidiaries of the Company that hold the properties that comprise the Modiv Portfolio. The loan agreement also provides for customary events of default and other customary affirmative and negative covenants that are applicable to GIP Borrower and its subsidiaries, including reporting covenants and restrictions on investments, additional indebtedness, liens, sales of properties, certain mergers, and certain management changes. The Company's President and CEO also entered into a personal, full recourse guarantee with a $7,500,000 cap.
On June 27, 2024, the Operating Partnership and an accredited investor entered into a Unit Purchase Agreement pursuant to which the Operating Partnership issued and sold to the investor 500,000 Series A Preferred Units at a price of $5.00 per unit for an aggregate purchase price of two million five hundred thousand dollars ($2,500,000) in cash. Under the terms of the Series A Preferred Units, the investor will be paid cumulative cash distributions in the amount of $0.325 per Series A Preferred Unit per year, payable monthly in arrears, on or about the 15th day of each month. Each of the investor and the Operating Partnership will have the right to cause the Operating Partnership to redeem the Series A Preferred Units after two (2) years for cash in an amount equal to $5.15 per Series A Preferred Unit plus any accrued but unpaid Series A Preferred Return, provided that the Operating Partnership may (with the prior written consent of the investor) cause the redemption price to be satisfied by the issuance of a number of shares of common stock of the Company equal to the number of Series A Preferred Units being redeemed multiplied by 1.03 plus any accrued but unpaid Series
32
A Preferred Return. If the Operating Partnership fails to declare and pay the Series A Preferred Return for a period of three consecutive months, the investor may exercise the foregoing redemption right within the 30-day period following such failure.
Our President and CEO has also personally guaranteed the repayment of the $1.3 million loan secured by the Company's Sherwin-Williams - Tampa, FL property. In addition, our President and CEO has also provided a guaranty of the Company’s nonrecourse carveout liabilities and obligations in favor of the lender for the GSA and PRA Holdings, Inc. - Norfolk, VA mortgage loans ("Bayport loans") with an aggregate principal amount of $11.4 million.
During the three and six months ended June 30, 2025, we incurred a guaranty fee expense to our President and CEO of $79,935 and $177,626, respectively, recorded to interest expense. A guaranty fee expense of $96,360 and $192,712 was incurred during the three and six months ended June 30, 2024, respectively.
On June 13, 2025, GIPDC 3707 14th St, LLC, an indirect subsidiary of the Company, entered into a secured Loan Agreement with Valley National Bank (the “Lender”), pursuant to which the Lender made a mortgage loan in the original principal amount of $1.1 million (the “Loan”). The proceeds of the loan will be used for general corporate purposes.
On August 9, 2022, we entered a Redemption Agreement with a unit holder. As such, we recorded another payable - related party in the amount of $2,912,300 upon execution of the Redemption Agreement entered into July 20, 2022 and has paid the note in full as of June 30, 2025. Remaining balances of $0 and $904,920 outstanding as of June 30, 2025 and 2024, respectively.
On October 14, 2022, we entered into a loan transaction that is evidenced by a secured non-convertible promissory note to Brown Family Enterprises, LLC, a preferred equity partner and therefore a related party, for $1.5 million that is due on October 14, 2024, and bears a fixed interest rate of 9% with simple interest payable monthly. On July 21, 2023, the Company amended and restated the promissory note to reflect an increase in the loan to $5.5 million and extend the maturity date thereof from October 14, 2024 to October 14, 2026. Except for the increase in the amount of the Loan and Note and the extension of the maturity date thereof, no changes were made to the original note. The loan may be repaid without penalty at any time. The loan is secured by the Operating Partnership’s equity interest in its current direct subsidiaries that hold real estate assets pursuant to the terms of a security agreement between the Operating Partnership and Brown Family Enterprises, LLC.
We currently obtain the capital required to primarily invest in and manage a diversified portfolio of commercial net lease real estate investments and conduct our operations from the proceeds of equity offerings, debt financings, preferred minority interest obtained from third parties, issuance of Operating Partnership units and from any undistributed funds from our operations.
As a result of our recurring losses, our projected cash needs, and our current liquidity, substantial doubt exists about the Company’s ability to continue as a going concern one year after the date that these financial statements are issued. The Company’s ability to continue as a going concern is contingent upon successful execution of management’s plan to improve the Company’s liquidity and profitability. Our current and anticipated liquidity is less than the principal balance of these obligations. As a result of our recurring losses, our projected cash needs, and our current liquidity, substantial doubt exists about the Company’s ability to provide sufficient liquidity to meet future funding commitments for at least the next 12 months.
33
Outstanding mortgage loans payable consisted of the following as of June 30, 2025 and December 31, 2024, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Occupying Tenant |
Property Location |
Original Loan Amount |
|
|
Interest Rate |
|
Maturity Date |
6/30/2025 |
|
12/31/2024 |
|
Debt Service Coverage Ratios ("DSCR") Required |
|||
7-Eleven Corporation |
Washington, D.C. |
$ |
750,000 |
|
|
6.50% |
|
3/31/2026 |
$ |
750,000 |
|
$ |
- |
|
1.50 |
7-Eleven Corporation, Starbucks Corporation & Auburn University |
Washington, D.C., Tampa, FL, and Huntsville, AL |
|
11,287,500 |
|
(a) |
4.17% |
|
3/6/2030 |
|
- |
|
|
10,602,711 |
|
1.25 |
General Services Administration-Navy & AYMCA |
Norfolk, VA |
|
8,260,000 |
|
(f) |
6.15% |
|
8/30/2029 |
|
7,023,791 |
|
|
7,119,184 |
|
1.25 |
PRA Holdings, Inc. |
Norfolk, VA |
|
5,216,749 |
|
(f) |
6.15% |
|
8/23/2029 |
|
4,351,851 |
|
|
4,410,949 |
|
1.25 |
Sherwin Williams Company |
Tampa, FL |
|
1,286,664 |
|
|
3.72% |
(b) |
8/10/2028 |
|
1,238,754 |
|
|
1,255,068 |
|
1.20 |
General Services Administration-FBI |
Manteo, NC |
|
928,728 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
879,195 |
|
|
891,071 |
|
1.50 |
Irby Construction |
Plant City , FL |
|
928,728 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
879,195 |
|
|
891,071 |
|
1.50 |
La-Z-Boy Inc. |
Rockford, IL |
|
2,100,000 |
|
|
3.85% |
(d) |
3/31/2032 |
|
1,987,989 |
|
|
2,014,851 |
|
1.50 |
Best Buy Co., Inc. |
Grand Junction, CO |
|
2,552,644 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
2,416,501 |
|
|
2,449,141 |
|
1.50 |
Fresenius Medical Care Holdings, Inc. |
Chicago, IL |
|
1,727,108 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
1,634,994 |
|
|
1,657,079 |
|
1.50 |
Starbucks Corporation |
Tampa, FL |
|
1,298,047 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
1,228,817 |
|
|
1,245,414 |
|
1.50 |
Kohl's Corporation |
Tucson, AZ |
|
3,964,745 |
|
(c) |
3.85% |
(d) |
3/31/2032 |
|
3,753,289 |
|
|
3,803,985 |
|
1.50 |
City of San Antonio (PreK) |
San Antonio, TX |
|
6,444,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
6,273,913 |
|
|
6,323,628 |
|
1.50 |
Dollar General Market |
Bakersfield, CA |
|
2,428,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
2,363,914 |
|
|
2,382,646 |
|
1.50 |
Dollar General |
Big Spring, TX |
|
635,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
618,239 |
|
|
623,138 |
|
1.50 |
Dollar General |
Castalia, OH |
|
556,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
541,325 |
|
|
545,614 |
|
1.50 |
Dollar General |
East Wilton, ME |
|
726,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
706,837 |
|
|
712,439 |
|
1.50 |
Dollar General |
Lakeside, OH |
|
567,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
552,034 |
|
|
556,409 |
|
1.50 |
Dollar General |
Litchfield, ME |
|
624,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
607,530 |
|
|
612,344 |
|
1.50 |
Dollar General |
Mount Gilead, OH |
|
533,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
518,932 |
|
|
523,044 |
|
1.50 |
Dollar General |
Thompsontown, PA |
|
556,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
541,325 |
|
|
545,614 |
|
1.50 |
Dollar Tree Stores, Inc. |
Morrow, GA |
|
647,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
629,922 |
|
|
634,914 |
|
1.50 |
exp U.S. Services Inc. |
Maitland, FL |
|
2,950,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
2,872,136 |
|
|
2,894,895 |
|
1.50 |
General Services Administration |
Vacaville, CA |
|
1,293,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
1,258,872 |
|
|
1,268,847 |
|
1.50 |
Walgreens |
Santa Maria, CA |
|
3,041,000 |
|
(e) |
7.47% |
(b) |
8/10/2028 |
|
2,960,734 |
|
|
2,984,195 |
|
1.50 |
Best Buy Co., Inc. |
Ames, IA |
|
2,495,000 |
|
|
6.29% |
(b) |
8/23/2029 |
|
2,495,000 |
|
|
2,495,000 |
|
1.50 |
Zaxby's |
Sanford, FL |
|
2,947,000 |
|
|
6.29% |
|
5/14/2026 |
|
2,499,550 |
|
n/a |
|
1.30 |
|
Dollar General |
Cleveland, TN |
|
1,350,000 |
|
|
3.50% |
|
5/14/2026 |
|
1,239,210 |
|
n/a |
|
1.25 |
|
Tractor Supply |
Kernersville, NC |
|
3,507,000 |
|
|
2.90% |
|
10/22/2031 |
|
3,225,198 |
|
n/a |
|
1.20 |
|
|
|
$ |
71,599,913 |
|
|
|
|
|
$ |
56,049,047 |
|
$ |
59,443,251 |
|
|
|
|
|
|
|
|
|
Less Debt Discount, net |
|
(778,551 |
) |
|
(317,978 |
) |
|
|
|
|
|
|
|
|
|
Less Debt Issuance Costs, net |
|
(483,403 |
) |
|
(785,358 |
) |
|
|
|
|
|
$ |
54,787,093 |
|
$ |
58,339,915 |
|
|
||||||
(a) Loan subject to prepayment penalty
(b) Fixed via interest rate swap
(c) One loan in the amount of $11.4 million secured by six properties and allocated to each property based on each property's appraised value.
(d) Adjustment effective April 1, 2027 equal to 5-year Treasury plus 2.5% and subject to a floor of 3.85%
(e) One loan in the amount of $21.0 million secured by 13 properties and allocated to each property based on each property's appraised value.
34
We amortized debt issuance costs during the three and six months ended June 30, 2025 and 2024 to interest expense of approximately $46,104 and $47,780 and $88,637 and $95,560, respectively. During the six months ended June 30, 2025 and 2024, the company paid $72,900 and $0, respectively, in debt issuance costs.
Each mortgage loan requires the Company to maintain certain debt service coverage ratios as noted above. In addition, two mortgage loans, one encumbered by six properties and requiring a 1.50 DSCR, and another stand alone mortgage loan requiring a 1.50 DSCR, require the Company to maintain a 54% loan to fair market stabilized value ratio. Fair market stabilized value shall be determined by the lender by reference to acceptable guides and indices or appraisals from time to time at its discretion. As of June 30, 2025, the Company was in compliance with all covenants.
Minimum required principal payments on our debt as of June 30, 2025 are as follows:
|
Mortgage Loans |
|
Other Payable - Related Party |
|
Loan Payable - Related Party |
|
Total as of June 30, 2025 |
|
||||
2025 |
$ |
584,509 |
|
|
- |
|
|
2,074,870 |
|
|
2,659,379 |
|
2026 |
|
5,632,806 |
|
|
- |
|
|
5,500,000 |
|
|
11,132,806 |
|
2027 |
|
1,271,201 |
|
|
- |
|
|
- |
|
|
1,271,201 |
|
2028 |
|
21,599,551 |
|
|
- |
|
|
- |
|
|
21,599,551 |
|
2029 |
|
13,053,041 |
|
|
- |
|
|
- |
|
|
13,053,041 |
|
Thereafter |
|
13,907,939 |
|
|
- |
|
|
- |
|
|
13,907,939 |
|
|
$ |
56,049,047 |
|
$ |
- |
|
$ |
7,574,870 |
|
$ |
63,623,917 |
|
On February 8, 2023, we entered into new Amended and Restated Limited Liability Company Agreements for the Norfolk, Virginia properties, GIPVA 2510 Walmer Ave, LLC ("GIPVA 2510") and GIPVA 130 Corporate Blvd, LLC ("GIPVA 130"), in which we, as the sole member of GIPVA 2510 and GIPVA 130, admitted a new preferred member, Brown Family Enterprises, LLC, through the issuance of preferred membership interests in the form of Class A Preferred Units of GIPVA 2510 and GIPVA 130. GIPVA 2510 and GIPVA 130 (the “Virginia SPEs”) hold our Norfolk, Virginia properties. In addition, both of the Virginia SPEs and Brown Family Enterprises, LLC entered into Unit Purchase Agreements in which GIPVA 2510 issued and sold 180,000 Class A Preferred Units at a price of $10.00 per unit for an aggregate price of $1,800,000, and GIPVA 130 issued and sold 120,000 Class A Preferred Units at a price of $10.00 per unit for an aggregate price of $1,200,000. The Operating Partnership is the general manager of the subsidiary while Brown Family Enterprises, LLC is a preferred equity member. Pursuant to the agreement, we are required to pay the preferred equity member a 7% IRR paid on a monthly basis and will share in 16% of the equity in each of the Virginia SPEs upon a capital transaction resulting in distributable proceeds. After 24 months, Brown Family Enterprises, LLC has the right to redeem the preferred equity at redemption value. On July 25, 2024, we entered into First Amendments to the Second Amended and Restated Limited Liability Company Agreements, dated as of February 8, 2023, for each of these entities revising the redemption date from February 8, 2025 to February 8, 2027. Because of the redemption right, the non-controlling interest is presented as temporary equity at an aggregated redemption value of $3,000,000 as of June 30, 2025.
In connection with the acquisition of the Modiv Portfolio, the Operating Partnership and LC2 entered into an Amended and Restated Limited Liability Company Agreement for GIP SPE (the “GIP SPE Operating Agreement”) pursuant to which LC2 made a $12.0 million initial capital contribution to GIP SPE, together with a commitment to make an additional $2.1 million contribution upon the satisfactory completion of the acquisition of a tenant-in-common interest held by a third party in the Company’s Rockford, Illinois property (the “LC2 Investment”). The Company completed the acquisition of such tenant-in-common interest on September 7, 2023, for a purchase price of $1.3 million and LC2 made the additional $2.1 million capital contribution on September 11, 2023. LC2 made the LC2 Investment in exchange for a preferred equity interest in GIP SPE (the “Preferred Interest”). The Preferred Interest has a cumulative accruing distribution preference of 15.5% per year, compounded monthly, a portion of which in the amount of 5% per annum (compounded monthly) is deemed to be the “current preferred return,” and the remainder of which in the amount of 10.5% per annum (compounded monthly) is deemed to be the “accrued preferred return.” The GIP SPE operating agreement provides that operating distributions by GIP SPE will be made first to LC2 to satisfy any accrued but unpaid current preferred return, with the balance being paid to the Operating Partnership, unless the “annualized debt yield” of GIP SPE is less than 10%, in which case the balance will be paid to LC2. For this purpose, “annualized debt yield” is calculated as the sum of senior debt and LC2 Investment divided by the trailing three-month annualized adjusted net operating income (as defined in the GIP SPE Operating Agreement) of GIP SPE. The GIP SPE Operating Agreement also provides that distributions from capital transactions will be paid first to LC2 to satisfy any accrued but unpaid preferred return, then to LC2 until the “Make-Whole Amount” (defined as the amount equal to 1.3 times the LC2 Investment) is reduced to zero, and then to the Operating Partnership.
The Preferred Interest is required to be redeemed in full by the Company on or before August 10, 2025 for a redemption amount equal to the greater of (i) the amount of the LC2 Investment plus the accrued preferred return, and (ii) the Make-Whole Amount. Upon a failure to timely redeem the Preferred Interest, the preferred return will accrue at an increased rate of 18% per annum, compounded monthly. The Company will have the right to extend the Mandatory Redemption Date for two consecutive 12-month extension periods, provided that (i) LC2 is paid an extension fee of 0.01% of the outstanding amount of the LC2 Investment for each such extension, (ii) the preferred return is increased from 15.5% to 18% of which the accrued preferred return is increased from 10.5% to
35
13%, (iii) the trailing 6-month annualized adjusted net operating income (as defined in the GIP SPE Operating Agreement) is in excess of $5.0 million, (iv) GIP SPE and its subsidiaries’ senior debt is extended through the end of the extension period, and there are no defaults under the GIP SPE Operating Agreement.
Under the GIP SPE Operating Agreement, GIP SPE is also required to pay to Loci Capital, an affiliate of LC2, an equity fee of 1.5% of the LC2 Investment, with 1% having been paid upon the execution and delivery of the GIP SPE Operating Agreement and the 0.5% payable upon redemption of the LC2 Investment.
Due to the redemption right, the Preferred Interest is presented as temporary equity at redemption value of $14,100,000 plus accrued but unpaid preferred interest of $3,932,478 as of June 30, 2025.
Each of the preferred members described above may redeem their interest on or after the Redemption date (second year anniversary of the closing of the acquisition), at the discretion of such preferred member, as applicable, all or a portion thereof, of such preferred member’s pro-rata share of the redemption value in the form of the units of the Operating Partnership ("GIP LP Units"). Such GIP LP Units shall be subject to all such restrictions, such as with respect to transferability, as reasonably imposed by the Operating Partnership. The number of GIP LP Units issued to any preferred member shall be determined by dividing the total amount of the redemption value that such preferred member shall receive in GIP LP Units by a 15% discount of the average 30-day market price of Generation Income Properties, Inc. common stock. GIP LP Units shall then be convertible into common stock of Generation Income Properties, Inc. on a 1:1 basis in accordance with the partnership agreement of the Operating Partnership. Additionally, the Operating Partnership has the right to redeem the preferred equity at redemption value with cash after the second year anniversary of the closing of the acquisition.
The primary objective of our financing strategy is to maintain financial flexibility using retained cash flows, long-term debt and common and perpetual preferred stock to finance our growth. We intend to have a lower-leveraged portfolio over the long-term after we have acquired an initial substantial portfolio of diversified investments. During the period when we are acquiring our current portfolio, we will employ greater leverage on individual assets (that will also result in greater leverage of the current portfolio) in order to quickly build a diversified portfolio of assets.
Cash from Operating Activities
Net cash used in operating activities was $519,833 and net cash provided by operating activities was $226,605 for the six months ended June 30, 2025 and 2024, respectively.
Cash from Investing Activities
Net cash provided by investing activities during the six months ended June 30, 2025 and 2024 was $10,333,595 and $0, respectively.
Cash from Financing Activities
Net cash used in financing activities was $10,070,571 and $790,817 for the six months ended June 30, 2025 and 2024, respectively.
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Non-GAAP Financial Measures
Our reported results are presented in accordance with U.S. generally accepted accounting principles (“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.
36
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, net gains from sales of property and adding back real estate depreciation; namely, excluding from net income depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. 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 non-recurring or 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.
37
The following tables reconcile net income (net loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO and Core AFFO:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
$ |
(3,466,521 |
) |
$ |
(1,461,488 |
) |
|
$ |
(5,263,981 |
) |
$ |
(3,340,584 |
) |
Other expense |
|
- |
|
|
- |
|
|
|
286 |
|
|
- |
|
Loss (gain) on derivative valuation |
|
122,326 |
|
|
(44,996 |
) |
|
|
415,825 |
|
|
(425,546 |
) |
Depreciation and amortization |
|
1,264,581 |
|
|
1,180,232 |
|
|
|
2,557,342 |
|
|
2,406,837 |
|
Funds From Operations |
$ |
(2,079,614 |
) |
$ |
(326,252 |
) |
|
$ |
(2,290,528 |
) |
$ |
(1,359,293 |
) |
Amortization of debt issuance costs |
|
46,104 |
|
|
95,560 |
|
|
|
88,637 |
|
|
95,560 |
|
Amortization of debt discount |
|
47,720 |
|
|
- |
|
|
|
58,685 |
|
|
- |
|
Non-cash stock compensation |
|
- |
|
|
189,870 |
|
|
|
- |
|
|
189,870 |
|
Write-off of deferred financing costs |
|
286,219 |
|
|
- |
|
|
|
286,219 |
|
|
- |
|
Adjustments to Funds From Operations |
|
380,043 |
|
|
285,430 |
|
|
|
433,541 |
|
|
285,430 |
|
Core Funds From Operations |
$ |
(1,699,571 |
) |
$ |
(40,822 |
) |
|
$ |
(1,856,987 |
) |
$ |
(1,073,863 |
) |
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
$ |
(3,466,521 |
) |
$ |
(1,461,488 |
) |
|
$ |
(5,263,981 |
) |
$ |
(3,340,584 |
) |
Other expense |
|
- |
|
|
- |
|
|
|
286 |
|
|
- |
|
Loss (gain) on derivative valuation |
|
122,326 |
|
|
(44,996 |
) |
|
|
415,825 |
|
|
(425,546 |
) |
Depreciation and amortization |
|
1,264,581 |
|
|
1,180,232 |
|
|
|
2,557,342 |
|
|
2,406,837 |
|
Loss on held for sale asset valuation |
|
- |
|
|
- |
|
|
|
- |
|
|
1,058,994 |
|
Amortization of debt issuance costs |
|
46,104 |
|
|
95,560 |
|
|
|
88,637 |
|
|
95,560 |
|
Amortization of debt discount |
|
47,720 |
|
|
- |
|
|
|
58,685 |
|
|
- |
|
Above and below-market lease amortization, net |
|
55,433 |
|
|
135,572 |
|
|
|
115,395 |
|
|
135,572 |
|
Straight line rent, net |
|
(12,138 |
) |
|
31,282 |
|
|
|
29,370 |
|
|
31,281 |
|
Adjustments to net loss |
$ |
1,524,026 |
|
$ |
1,397,650 |
|
|
$ |
3,265,540 |
|
$ |
3,302,698 |
|
Adjusted Funds From Operations |
$ |
(1,942,495 |
) |
$ |
(63,838 |
) |
|
$ |
(1,998,441 |
) |
$ |
(37,886 |
) |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Dead deal expense |
$ |
- |
|
$ |
35,873 |
|
|
$ |
27,894 |
|
$ |
35,873 |
|
Loss on extinguishment of debt |
|
926,398 |
|
|
- |
|
|
|
926,398 |
|
|
- |
|
Non-cash stock compensation |
|
- |
|
|
189,870 |
|
|
|
- |
|
|
189,870 |
|
Write-off of deferred financing costs |
|
286,219 |
|
|
- |
|
|
|
286,219 |
|
|
- |
|
Adjustments to Adjusted Funds From Operations |
$ |
1,212,617 |
|
$ |
225,743 |
|
|
$ |
1,240,511 |
|
$ |
225,743 |
|
Core Adjusted Funds From Operations |
$ |
(729,878 |
) |
$ |
161,905 |
|
|
$ |
(757,930 |
) |
$ |
187,857 |
|
Critical Accounting Policies
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. See our audited consolidated financial statements included herein for a summary of our significant accounting policies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to make disclosures under this item.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Management, with the participation of our CEO and Principal Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based on that evaluation, our management, including our CEO and Principal Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2025.
(b) Changes in internal control over financial reporting.
38
There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
39
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings that are required to be disclosed in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, except as follows.
We can provide no assurance that our common stock and warrants will continue to meet Nasdaq listing requirements. If we fail to comply with the continuing listing standards of Nasdaq, our securities could be delisted.
The continued listing of our common stock on The Nasdaq Capital Market (“Nasdaq”) is subject to our compliance with Nasdaq’s continued listing standards, including requirements related to stockholders’ equity and the minimum bid price of our common stock. Under Nasdaq listing rules, we are required to maintain at least $2.5 million in stockholders’ equity, or meet alternative requirements relating to market value of listed securities or net income. In this Quarterly Report on Form 10-Q, as of June 30, 2025, we reported stockholders’ equity which is below the $2.5 million minimum.
In addition, under Nasdaq Listing Rule 5550(a)(2), our common stock is required to maintain a minimum bid price of at least $1.00 per share. Recently, the closing bid price of our common stock has fallen below $1.00 for 6 consecutive business days. If the bid price of our common stock remains below $1.00 for 30 consecutive business days, we may receive a deficiency notice from Nasdaq regarding this requirement.
If we fail to regain compliance with either of these listing requirements within the applicable cure periods, our common stock may be delisted from The Nasdaq Capital Market. Delisting could materially reduce the liquidity and market price of our common stock, impair the ability of our stockholders to sell or purchase shares, and adversely affect our access to capital markets. There can be no assurance that we will be able to regain or maintain compliance with Nasdaq’s listing requirements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
40
Item 5. Other Information
(a) None.
(b) None.
(c) During the three months ended June 30, 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934)
41
Item 6. Exhibits
The following documents are filed as a part of this report or are incorporated herein by reference.
EXHIBIT NUMBER |
DESCRIPTION |
|
|
3.1 |
Articles of Amendment and Restatement of Generation Income Properties, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Form 1-A/A filed on January 28, 2016) |
3.1.1 |
Articles of Amendment to Amended and Restated Articles of Incorporation. (incorporated by reference to Exhibit 2.1 to the Company’s Form 1-U filed on October 9, 2020.) |
3.2 |
Bylaws of Generation Income Properties, Inc. (incorporated by reference to Exhibit 2.2 of the Company’s Form 1-A filed on September 16, 2015) |
4.1 |
Form of Stock Certificate (incorporated by reference to Exhibit 3.3 of the Company’s Form 1-A filed on September 16, 2015) |
4.2 |
Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference to Exhibit 6.2 of the Company’s Form 1-A POS filed on March 29, 2018) |
4.2.1 |
First Amendment to Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference from Exhibit 4.4 to the Company’s Amendment No. 5 to Registration Statement on Form S-11 filed on April 12, 2021) |
4.2.2 |
Second Amendment to Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference to Exhibit 4.5 to the Company’s Amendment No. 5 to Registration Statement on Form S-11 filed on April 12, 2021) |
4.2.3 |
Fourth Amendment to Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference to Exhibit 4.1 from Form 8-K filed on July 2, 2024). |
4.2.4 |
Fifth Amendment to Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference to Exhibit 4.1 from Form 8-K filed on July 29, 2024). |
4.2.5 |
Sixth Amendment to Amended and Restated Agreement of Limited Partnership of Generation Income Properties, L.P. (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on February 10, 2025) any’s Form 8-K filed on February 10, 2025)
|
4.3 |
Common Stock Purchase Warrant, dated April 17, 2019. (incorporated by reference from Exhibit 4.6 to the Company’s Amendment No. 5 to Registration Statement on Form S-11 filed on April 12, 2021) |
4.4 |
Common Stock Purchase Warrant dated November 12, 2020 (incorporated by reference to Exhibit 4.7 to the Company’s Amendment No. 5 to Registration Statement on Form S-11 filed on April 12, 2021). |
4.5 |
Representative’s Warrant, dated September 8, 2021 (incorporated by reference from Exhibit 4.1 from Form 8-K filed on September 9, 2021) |
4.6 |
Form of Investor Warrant (incorporated by reference from Exhibit 4.2 from Form 8-K filed on September 9, 2021) |
4.7 |
Warrant Agent Agreement, dated September 2, 2021 between the Company and VStock Transfer, LLC (incorporated by reference from Exhibit 4.3 from Form 8-K filed on September 9, 2021) |
10.1 |
Secured Promissory Note dated April 25, 2025 (incorporated by reference to Exhibit 10.1 from Form 8-K filed on April 29, 2025). |
10.2 |
Promissory Note issued to Chase Commercial Realty, Inc. dated May 29, 2025 (incorporated by reference to Exhibit 10.1 from Form 8-K filed on June 5, 2025) |
10.3 |
Personal Guaranty, dated May 29, 2025, made by David Sobelman in favor of Chase Commercial Realty, Inc. (incorporated by reference to Exhibit 10.2 from Form 8-K filed on June 5, 2025) |
10.4 |
Promissory Note issued to SRS Real Estate Partners, LLC dated May 29, 2025 (incorporated by reference to Exhibit 10.3 from Form 8-K filed on June 5, 2025) |
10.5 |
Promissory Note issued to David E. Sobelman Revocable Trust, dated May 29, 2025 (incorporated by reference to Exhibit 10.4 from Form 8-K filed on June 5, 2025) |
10.6 |
Purchase and Sale Agreement, entered into effective as of April 2, 2025, by and among GIPFL 1300 S Dale Mabry, LLC and 6800 4th Street Holdings LLC, as amended effective May 2, 2025 (incorporated by reference to Exhibit 10.5 from Form 8-K filed on June 5, 2025) |
10.7 |
Purchase and Sale Agreement, entered into effective as of January 24, 2025, by and among GIPAL JV 15091 SW Alabama 20, LLC and Titomic, Inc., as amended effective April 7, 2025 and May 9, 2025 (incorporated by reference to Exhibit 10.6 from Form 8-K filed on June 5, 2025). |
10.8 |
Loan Agreement, dated June 13, 2025, between GIPDC 3707 14th St, LLC, as borrower and Valley National Bank, as lender (incorporated by reference to Exhibit 10.1 from Form 8-K filed on June 20, 2025). |
10.9 |
Promissory Note, dated June 13, 2025, between GIPDC 3606 14th St, LLC, as borrower and Valley National Bank as lender (incorporated by reference to Exhibit 10.2 tfrom Form 8-K filed on June 20, 2025). |
10.10 |
Guaranty Agreement, dated June 13, 2025, between David E. Sobelman, as guarantor, and Valley National Bank (incorporated by reference to Exhibit 10.3 from Form 8-K filed on June 20, 2025). |
31.1* |
Rule 13a – 14(a) Certification of the Principal Executive Officer |
42
31.2* |
Rule 13a – 14(a) Certification of the Principal Financial Officer |
32.1* |
Written Statement of the Principal Executive Officer, Pursuant to 18 U.S.C. § 1350 |
32.2* |
Written Statement of the Principal Financial Officer, Pursuant to 18 U.S.C. § 1350 |
101.INS |
Inline XBRL Instance Document. |
101.SCH |
Inline XBRL Taxonomy Extension Schema. |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase. |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase. |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase. |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase. |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
43
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:
|
|
GENERATION INCOME PROPERTIES, INC. |
|
|
|
|
|
Date: August 15, 2025 |
|
By: |
/s/ David Sobelman |
|
|
|
David Sobelman |
|
|
|
Chief Executive Officer and Chair of the Board |
|
|
|
(Principal Executive Officer) |
|
|
|
|
Date: August 15, 2025 |
|
By: |
/s/ Ron Cook |
|
|
|
Ron Cook |
|
|
|
VP Accounting and Finance |
|
|
|
(Principal Financial and Accounting Officer) |
44
FAQ
What is Generation Income Properties (GIPR) occupancy and tenant credit quality?
How much contractual rent growth is embedded in GIPR's leases?
Did GIPR report any material increases in interest expense?
Are there redeemable or preferred interests that affect GIPR's capital structure?
Does GIPR have related-party transactions or fees to insiders?
