Generation Income Properties, Inc. Announces Second Quarter 2020 Financial Results

TAMPA, FL / ACCESSWIRE / August 18, 2020 / Generation Income Properties, Inc. (OTCQB:GIPR) ("GIP" or the "Company") today announced its results for the second quarter ended June 30, 2020.

Key Second Quarter 2020 Operating and Financial Highlights:

  • Revenues from operations increased approximately $600 thousand over the prior year quarter to approximately $877 thousand
  • Portfolio was 100% occupied and all tenants paid contractual rents on time
  • Approximately $1.0 million of cash remained on hand as of June 30, 2020
  • Net loss for the quarter was approximately $243 thousand as compared to the prior year quarter of $603 thousand
  • Core Funds from Operations ("Core FFO") was approximately $135 thousand as compared to a negative Core FFO of approximately $196 thousand in the prior year quarter
  • Core FFO per share was $0.064 for the current quarter as compared to a negative Core FFO per share of $0.097 in the prior year quarter
  • Cash distribution of $.0875 per share was authorized for common stockholders

CEO David Sobelman

"In light of current macroeconomic realities, I am particularly pleased that we maintained 100% occupancy and received all rents throughout the second quarter," said founder and CEO David Sobelman. "I believe our focus on tenant quality, strong underlying real estate, and an intelligent acquisition process helped us deliver strong results."

Financial Results

Revenue

Revenues from operations for the three months ended June 30, 2020 increased 216% to $877,604, as compared to $277,912 for the comparable period in 2019 due to three revenue generating properties acquired in September 2019.

Total Expenses

The Company's total expenses for the three months ended June 30, 2020 were $1,120,328, an increase of $239,208 over the quarter ended June 30, 2019 due primarily to increases in depreciation and amortization, interest, and building expenses as the result of the three properties acquired in September 2019, partially offset by nonrecurring costs of $305,000 and $85,000 relating to a stock based payment to an investment bank and a contract termination fee in 2019, respectively.

General, administrative, and organizational ("GAO") expenses for the three months ended June 30, 2020 decreased by $326,910 over the comparable period in 2019 due primarily to the non-recurrence of the above mentioned $305,000 stock based payment to the Company's investment bank.

Net Loss

Net loss for the quarter ended June 30, 2020 and 2019 was $242,724 and $603,208, respectively. The improvement in net loss was due to increased revenues and decreased GAO expenses offset by increased building expenses, depreciation, amortization, interest expense.

Core Funds From Operations

Core FFO for the three months ended June 30, 2020 and 2019 was $134,509 and ($196,444), respectively; a $330,953 increase over the prior year comparable period. Core FFO is a non-GAAP financial measure. A reconciliation of Core FFO to GAAP net income is included in the schedules attached hereto.

Distributions

On June 23, 2020, the Company's Board of Directors authorized a $.0875 per share cash distribution for common stockholders of record as of July 2, 2020. On July 27, 2020, the Company also paid the Non-Controlling Redeemable Interest in the Operating Partnership $.0875 per unit.

Liquidity

As of June 30, 2020, the Company had approximately $1.0 million of cash on hand, total current liabilities (excluding the current portion of the acquired lease intangible liability which consists of accounts payable, accrued expenses, and insurance payable) of approximately $0.3 million, and current mortgage loans due within 12 months totaling $0.4 million.

Important Links

SEC Filings

The Company's U.S. Securities and Exchange Commission filings and corresponding press releases can be found at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001651721.

Additional Resources

The Company also publishes press releases on the following mediums:

Finally, the Company has undertaken efforts to publish non-compulsory regular stockholder letters at https://gipreit.com/press/.

Company Contact:

Justin Gore - Director of Communications
Generation Income Properties Inc.
Tel (813) 448-1234
jgore@gipreit.com

About Generation Income Properties

Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate investment trust formed to acquire and own, directly and jointly, real estate investments focused on retail, office and industrial net lease properties located primarily in major United States cities, with an emphasis on the major coastal markets. GIP invests primarily in freestanding, single-tenant commercial retail, office and industrial properties.

Additional information about Generation Income Properties, Inc. can be found at the Company's corporate website: www.gipreit.com.

Forward-Looking Statements:

This press release, whether or not expressly stated, may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. It reflects the Company's expectations regarding future events and economic performance and are forward-looking in nature and, accordingly, are subject to risks and uncertainties. Such forward-looking statements include risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements which are, in some cases, beyond the Company's control which could have a material adverse effect on the Company's business, financial condition, and results of operations. Some of these risks and uncertainties are identified in the Company's most recent Annual Report on Form 1-K and its other filings with the SEC, which are available at www.sec.gov. The occurrence of any of these risks and uncertainties could have a material adverse effect on the Company's business, financial condition, and results of operations. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Generation Income Properties, Inc.
Consolidated Balance Sheet

  As of June 30,  As of December 31, 
  2020  2019 
  (Unaudited)    
Assets      
       
Investment in real estate      
Property $35,642,058  $35,462,653 
Tenant improvements  482,701   482,701 
Acquired lease intangible assets  2,829,382   2,858,250 
Less accumulated depreciation and amortization  (1,584,917)  (864,898)
Total investments  37,369,224   37,938,706 
Cash and cash equivalents  837,667   974,365 
Restricted cash  184,800   424,000 
Deferred Rent asset  59,689   65,102 
Prepaid expenses  124,836   78,008 
Deferred financing costs  353,955   590,990 
Accounts Receivable  74,016   73,848 
Escrow deposit and other assets  35,721   10,607 
Total Assets $39,039,908   $40,155,626  
         
         
Liabilities and Stockholder's Equity        
         
Liabilities        
Accounts payable $64,535  $82,937 
Accrued expenses  200,088   473,545 
Acquired lease intangible liability, net  470,395   525,144 
Insurance payable  73,270   55,200 
Deferred rent liability  131,958   89,599 
Note Payable - related party  1,100,000   1,900,000 
Mortgage loans, net of unamortized discount of $722,026 and $182,255 at June 30, 2020 and December 31, 2019, respectively  27,202,684   26,397,547 
Total liabilities  29,242,930   29,523,972 
         
Redeemable Non-Controlling Interests   8,198,251   8,198,251 
         
Stockholders' Equity         
Common stock, $0.01 par value, 100,000,000 shares authorized;
2,100,960 shares issued and outstanding at June 30, 2020 and 2,100,960 at December 31, 2019
  21,010   21,010 
Additional paid-in capital  4,699,813   4,757,882 
Accumulated deficit  (3,122,096)  (2,345,489)
Total Generation Income Properties, Inc. stockholders' equity  1,598,727   2,433,403 
         
Total Liabilities and Stockholders' Equity  $39,039,908   $40,155,626  
         

Generation Income Properties, Inc.
Consolidated Statements of Operations (unaudited)

  Three Months ended June 30,  Six Months ended June 30, 
  2020  2019  2020  2019 
Revenue            
Rental income $877,604  $277,912  $1,758,242  $552,118 
                 
Expenses                
General, administrative and organizational costs  180,688   507,598   422,052   608,398 
Building expenses  166,167   22,901   355,628   49,361 
Depreciation and amortization  363,001   99,941   720,019   199,715 
Interest expense, net  350,163   138,666   726,453   263,087 
Other expenses  -   85,000   -   85,000 
Compensation costs  60,309   27,014   128,002   54,305 
Total expenses  1,120,328   881,120   2,352,154   1,259,866 
Net Loss $(242,724) $(603,208) $(593,912) $(707,748)
                 
Less: Net income attributable to Non-controlling interest  39,851   109,854   182,695   212,995 
Net Loss attributable to Generation Income Properties, Inc. $(282,575) $(713,062) $(776,607) $(920,743)
                 
Total Weighted Average Shares of Common Shares Outstanding  2,100,960   2,018,182   2,100,960   1,929,467 
                 
Basic and Diluted Loss Per Share Attributable to Common Stockholder $(0.13) $(0.35) $(0.37) $(0.48)
                 
       -       - 

Generation Income Properties, Inc.

Consolidated Statements of Cash Flows (unaudited)

   Six Months Ended June 30, 
   2020    2019 
OPERATING ACTIVITIES         
Net loss  (593,912)    (707,748) 
Adjustments to reconcile net loss to cash used in operating activities               
Depreciation    514,788      152,755 
Amortization of acquired lease intangible assets    205,231      46,960 
Amortization of debt issuance costs    77,786      37,233 
Amortization of below market leases    (54,749)    (7,062)
Stock award compensation    47,032      305,965 
Changes in operating assets and liabilities                
Account receivables    (168)    - 
Other assets    (25,114)    8,352 
Deferred rent asset    5,413      (12,599)
Prepaid expense    (46,828)    (178,920)
Accounts payable    (49,667)    148,966 
Accrued expenses    19,994      (121,580)
Deferred rent liability    42,359      - 
Net cash provided by (used in) operating activities    142,165       (327,678) 
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Purchase of land, buildings, other tangible and intangible assets    (150,537)    - 
Net cash (used in) generated from investing activities    (150,537)      -  
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Proceeds from sale of stock    -      1,000,000 
Mortgage loan borrowings    11,287,500      - 
Mortgage loan repayments    (9,942,592)    (3,550)
Mortgage loan repayments - related party    (800,000)    - 
Deferred financing costs paid in cash    (77,851)    - 
Stock costs paid in cash    -      (124,100)
Debt issuance costs paid in cash    (564,857)    - 
Insurance financing borrowings    106,084      59,891 
Insurance financing repayments    (88,014)    (24,103)
Distribution on redeemable non-controlling interests    (182,695)    (103,141)
Dividends paid on common stock    (105,101)    (119,676)
                
Net cash generated from (used in) financing activities    (367,526)      685,321  
                
Net Increase (Decrease) in Cash    (375,898)    357,643 
Cash and cash equivalents and restricted cash - beginning of period    1,398,365      642,132 
Cash and cash equivalents and restricted cash - end of period  1,022,467     999,775  
                
CASH TRANSACTIONS               
Interest Paid    634,285      218,499 
NON-CASH TRANSACTIONS               
Deferred distribution on redeemable non-controlling interest    -      109,854 
                

Core Funds From Operations

Our reported results are presented in accordance with GAAP. We also disclose funds from operations (FFO) and adjusted funds from operations (AFFO) both of which are non-GAAP financial measures. We believe these two 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 AFFO 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 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.

The following table reconciles net income (which we believe is the most comparable GAAP measure) to FFO and AFFO:

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as amortization of deferred financing costs, amortization of capitalized lease incentives, above- and below-market lease related intangibles, non-cash stock compensation, and non-cash compensation. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.

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 also use Core FFO and Core AFFO to adjust for non-capitalized costs incurred by the Company in relation to initial public company status and costs incurred with up-listing to Nasdaq. These costs will typically include non-cash stock compensation, consulting fees to investment banks, consultants for advice for public company status, non-recurring litigation expenses and distribution on redeemable non-controlling interest OP Units. Core FFO and Core AFFO may not be comparable to similarly titled measures employed by other companies.

SOURCE: Generation Income Properties Inc.



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