gipr-ex991

Generation Income Properties Announces Third Quarter 2021 Financial and Operating Results

TAMPA, FLORIDA – Generation Income Properties, Inc. (NASDAQ:GIPR) ("GIP" or the "Company") today announced its financial and operating results for the period ended September 30, 2021.

Commenting on the quarter, CEO David Sobelman stated, “This is a transformative time for GIPR. Following the closing of our underwritten public offering in early September, our team focused squarely on deploying the offering proceeds to generate returns for our shareholders. Since then, we placed six properties under contract, including one UPREIT transaction. Further, we believe we are on track to deploy the majority of the offering proceeds by year-end through our robust investment pipeline, which is in various stages of negotiations and due diligence.” Mr. Sobelman continued, “We remain steadfastly committed to our investment principles – focusing on investment-grade credit tenants, opportunistic lease terms, diverse asset classes, and locations with a high likelihood of re-tenanting in dense markets.”

Commenting on the company’s financial results, CFO Rick Russell stated, “GIPR is in a state of positive transformation. We successfully completed an underwritten public offering that, including the partial exercise of the over-allotment, generated net proceeds of approximately $14.4 million. In conjunction with these capital markets activities, we also up-listed our common shares to trade on the NASDAQ to create greater liquidity for our shareholders.” Mr. Russell concluded, “Subsequent to quarter-end, we continued our transformation and announced a commitment from American Momentum Bank for a $25 million commitment credit facility, and we welcomed Gena Cheng as a new independent director to our already-impressive Board of Directors.”

At its October 5, 2021, meeting, the Board of Directors declared a monthly distribution of $0.054 per common share and operating partnership unit to be paid monthly to holders of record as of October 15, November 15, and December 15, 2021.

As previously disclosed, the Company’s Chief Financial Officer, Richard Russell, has been operating in a part-time role, and as such, the Company, in conjunction with Mr. Russell, intends to begin the search for a full-time Chief Financial Officer. A specific timeline has not been established, and the Company’s Board of Directors are in the initial stages of running a formal process to find a replacement.

“Rick has and continues to be an essential member of the team. As the Company continues to grow, and after a successful listing on NASDAQ, we look to build on his legacy at GIPR with a full-time Chief Financial Officer to take us into the next phase of our growth,” stated, Chief Executive Officer, David Sobelman.

Richard Russell, CFO, added, "I'm thrilled with the headway made by Generation Income Properties since my appointment, but for GIPR to reach the next stage, we recognize the need for a full-time CFO. I have continued faith in their growth trajectory, I am excited to follow their progress and assist in the search for a full-time CFO."

The Company is not providing guidance on FFO, AFFO, G&A or acquisitions and dispositions at this time. However, GIPR will provide timely updates on material events, which will be broadly disseminated in due course. The Company executives, along with its Board of Directors, continue to assess the timing of providing such guidance to better align GIPR with its industry peers.

The company will host its third quarter earnings conference call and audio webcast on Monday, November 15, 2021, at 9:00 a.m. Eastern Time.

To access the live webcast, which will be available in listen-only mode, please follow this link. If you prefer to listen via phone, U.S. participants may dial: 877-407-3141 (toll free) or 201-689-7803 (local).

A replay of the conference call will be available approximately three hours after the conclusion of the live broadcast and for 30 days after. U.S. participants may access the replay at 877-660-6853 (toll free) or 201-612-7415 (local), using access code 13725104.

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

This press release, whether or not expressly stated, may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. The words "believe," "intend," "expect," "plan," "should," "will," "would," and similar expressions and all statements, which are not historical facts, are intended to identify forward-looking statements. These statements reflect 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. These risks and uncertainties include the risk that we may not be able to timely identify and close on acquisition opportunities, our limited operating history, potential changes in the economy in general and the real estate market in particular, the COVID-19 pandemic, and other risks and uncertainties that are identified from time to in our SEC filings, including those identified in our registration statement on Form S-11 (File No. 333-235707), 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. Any forward-looking statement made by us herein speaks only as of the date on which it is made. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as may be required by law.

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

	As of September 30,			As of December 31,
	2021			2020
Assets	(Unaudited)
Investment in real estate
Property	$	36,621,767			$	37,352,447
Tenant improvements		482,701				482,701
Acquired lease intangible assets		2,949,411				3,014,149
Less accumulated depreciation and amortization		(3,168,841	)			(2,317,454	)
Total investments		36,885,038				38,531,843
Investment in tenancy-in-common		717,337				-
Cash and cash equivalents		14,194,639				937,564
Restricted cash		34,500				184,800
Deferred rent asset		145,428				126,655
Prepaid expenses		220,652				134,165
Deferred financing costs		-				614,088
Accounts receivable		105,108				75,794
Escrow deposit and other assets		106,106				75,831
Total Assets	$	52,408,808			$	40,680,740

Liabilities and Stockholder's Equity
Liabilities
Accounts payable	$	156,638			$	118,462
Accounts payable – related party		100
Accrued expenses		278,581				406,125
Acquired lease intangible liability, net		608,697				415,648
Insurance payable		99,096				40,869
Deferred rent liability		185,805				188,595
Note Payable - related party		-				1,100,000
Mortgage loans, net of unamortized discount of $633,647 and $689,190 at September 30, 2021 and December 31, 2020, respectively		26,765,781				28,356,571
Total liabilities		28,094,698				30,626,270

Redeemable Non-Controlling Interests		9,605,028				8,684,431

Stockholders' Equity
Common stock, $0.01 par value, 100,000,000 shares authorized; 2,272,702 shares issued and 2,160,202 outstanding at September 30, 2021 and 576,918 issued and outstanding at December 31, 2020		22,727				5,770
Treasury shares		(100)				-
Additional paid-in capital		19,256,827				5,541,411
Accumulated deficit		(4,570,372	)			(4,177,142	)
Total Generation Income Properties, Inc. stockholders' equity		14,709,082				1,370,039

Total Liabilities and Stockholders' Equity	$	52,408,808			$	40,680,740

	Three Months ended September 30,						Nine Months ended September 30,
	2021		2020			2021				2020
Revenue
Rental income	$	988,244	$	871,825		$		2,913,322		$	2,630,067
Other income		45,250		-				45,250			-
Total revenue		1,033,494		871,825				2,958,572			2,630,067

Expenses
General, administrative and organizational costs		268,632		267,608				808,623			689,660
Building expenses		195,464		179,319				539,739			534,947
Depreciation and amortization		388,141		363,898				1,164,838			1,083,917
Interest expense, net		336,025		334,323				1,028,446			1,060,776
Compensation costs		117,332		129,880				328,394			257,882
Total expenses		1,305,594		1,275,028				3,870,040			3,627,182
Operating loss		(272,100)		(403,203)				(911,468)			(997,115)
Income on investment in tenancy-in-common		4,750		-				4,750			-
Gain on disposal of property		923,178		-				923,178			-
Net income (loss)	$	655,828	$	(403,203	)	$		16,460		$	(997,115	)

Less: Net income attributable to Non-controlling interest		199,716		152,023				409,690			334,718
Net Income (loss) attributable to Generation Income Properties, Inc.	$	456,112	$	(555,226	)	$		(393,230	)	$	(1,331,833	)

Total Weighted Average Shares of Common Stock Outstanding – Basic		939,559		525,495				699,395			525,332
Total Weighted Average Shares of Common Stock Outstanding – Diluted		939,559		525,495				699,395			525,332

Basic Income (Loss) Per Share Attributable to Common Stockholder	$	0.49	$	(1.06	)	$		(0.56	)	$	(2.54	)
Diluted Income (Loss) Per Share Attributable to Common Stockholder	$	0.49	$	(1.06	)	$		(0.56	)	$	(2.54	)

	Nine Months Ended September 30,
	2021			2020
CASHFLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	16,460		$	(997,115	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation		833,291			776,070
Amortization of acquired lease intangible assets		331,547			307,847
Amortization of debt issuance costs		94,600			106,210
Amortization of below market leases		(115,921	)		(82,123	)
Common stock issued in lieu of cash compensation		33,000			-
Restricted stock unit compensation		153,636			74,338
Equity in earnings on investment in tenancy-in-common		(4,750	)		-
Gain on sale of property		(923,178	)		-
Changes in operating assets and liabilities
Accounts receivable		(29,314	)		(168	)
Other assets		(30,275	)		(35,636	)
Deferred rent asset		(18,773	)		(1,510	)
Prepaid expenses		(86,487	)		(103,223	)
Accounts payable		38,176			29,503
Accrued expenses		(116,544	)		64,173
Deferred rent liability		(2,790	)		38,333
Net cash provided by operating activities		172,678			176,699

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of land, buildings, other tangible and intangible assets		(3,530,809	)		(196,016	)
Investment in tenancy-in-common		(712,587	)		-
Proceeds from sale of land, buildings, other tangible and intangible assets		5,245,858			-
Net cash provided by (used in) investing activities		1,002,462			(196,016	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock and warrants, net		14,379,505			-
Proceeds from issuance of redeemable interest		2,100,000			-
Mortgage loan repayments - related party		(1,100,000	)		(800,000	)
Redemption of redeemable non-controlling interests		(1,200,000	)		-
Mortgage loan borrowings		2,125,000			11,287,500
Mortgage loan repayments		(3,771,333	)		(10,024,198	)
Deferred financing costs paid in cash		-			(153,239	)
Debt issuance costs paid in cash		(39,991	)		(564,857	)
Insurance financing borrowings		277,059			189,153
Insurance financing repayments		(218,832	)		(145,749	)
Distribution on redeemable non-controlling interests		(389,093	)		(334,718	)
Dividends paid on common stock		(230,680	)		(210,185	)
Net cash generated from (used in) financing activities		11,931,635			(756,293	)
Net increase (decrease) in cash and cash equivalents		13,106,775			(775,610	)
Cash and cash equivalents and restricted cash - beginning of period		1,122,364			1,398,365
Cash and cash equivalents and restricted cash - end of period	$	14,229,139		$	622,755

CASH TRANSACTIONS
Interest Paid	$	938,984		$	940,316
NON-CASH TRANSACTIONS
Stock issued for accrued liabilities		11,000			-
Deferred financing costs incurred		-			182,697
Deferred distribution on redeemable non-controlling interests		20,597			-

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 September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020

Net Income (loss)	$ 655,828	$ (403,203)	$ 16,460	$ (997,115)
Gain on disposal of property	(923,178)	-	(923,178)	-
Depreciation and amortization	388,141	363,898	1,164,838	1,083,917
Funds From Operations	120,791	(39,305)	258,120	86,802

Amortization of deferred financing costs	30,678	28,424	94,600	106,210
Public company consulting fees	-	20,000	-	50,000
Non-cash stock compensation	53,887	27,306	186,636	74,338
Adjustments From Operations	84,565	75,730	281,236	230,548

Core Funds From Operations	$ 205,356	$ 36,425	$ 539,356	$ 317,350

Net Income (loss)	$ 655,828	$ (403,203)	$ 16,460	$ (997,115)
Gain on disposal of property	(923,178)	-	(923,178)	-
Depreciation and amortization	388,141	363,898	1,164,838	1,083,917
Amortization of deferred financing costs	30,678	28,424	94,600	106,210
Below-market lease related intangibles	(40,329)	(27,374)	(115,921)	(82,123)
Adjustments From Operation	(544,688)	364,948	220,339	1,108,004
Adjusted Funds From Operations	111,140	(38,255)	236,799	110,889

Non-cash stock compensation	53,887	27,306	186,636	74,338
Public company consulting fees	-	20,000	-	50,000

Adjustments From Operations	53,887	47,306	186,636	124,338
Core Adjusted Funds From Operations	$ 165,027	$ 9,051	$ 423,435	$ 235,227

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.

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. We then adjust FFO for amortization of deferred financing costs, non-cash stock compensation, public company consulting fees, and non-recurring litigation expenses and settlements to calculate Core Adjusted Funds From Operations, or Core AFFO. We use FFO and Core FFO as measures of our performance when we formulate corporate goals.

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, and above- and below-market lease related intangibles. We then adjust AFFO for noncash stock compensation, public company consulting fees, and non-recurring litigation expenses and settlements to calculate Core Adjusted Funds From Operations, or Core AFFO. We use AFFO and Core AFFO as measures 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 believe that Core FFO and Core AFFO are useful measures for management and investors because they further remove the effect of noncash expenses and certain other expenses that are not directly related to real estate operations.

Because FFO excludes depreciation and amortization, gains and losses from property dispositions that are available for distribution to stockholders and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses and interest costs, providing a perspective not immediately apparent from net income. In addition, our management team believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs. 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 are significant economic costs and could materially impact our results from operations. Nor does it reflect distributions paid to redeemable non-controlling interests (See Note 6 of our Consolidated Financial Statements for the nine months ended September 30, 2021 and Note 7 of our Consolidated Financial Statements for the year ended December 31, 2020).