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What changed in GENERATION INCOME PROPERTIES, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GENERATION INCOME PROPERTIES, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+244 added−222 removedSource: 10-K (2024-04-08) vs 10-K (2023-03-28)

Top changes in GENERATION INCOME PROPERTIES, INC.'s 2023 10-K

244 paragraphs added · 222 removed · 162 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

33 edited+10 added−8 removed57 unchanged
Biggest changeBefore acquiring a property, we review the terms of the management contract to ensure our team is able to maximize cash flow capital appreciation through potential lease renewals and/or potential re-tenanting. Additionally, we monitor any required capital improvements that would lead to increased rental income or capital appreciation over time.
Biggest changeDisciplined Underwriting & Risk Management We actively manage and regularly review each of our properties for changes in the underlying business, credit of the tenant and market conditions. Before acquiring a property, we review the terms of the management contract to ensure our team is able to maximize cash flow capital appreciation through potential lease renewals and/or potential re-tenanting.
We assess target markets and properties using an extensive underwriting and evaluation process, including: • offering materials review; • property and tenant lease information; • in depth conversations with offering agent, local brokers and property management companies; • thorough credit underwriting of the tenant; • review of tenant’s historical performance in the specific market and their nationwide trend to determine potential longevity of the asset and tenant’s business model; • market real estate dynamics, including macroeconomic market data and market rents for potential rental rate changes after initial lease term; • evaluation of business trends for local real estate demand specifics and competing business locations; • review of asset level financial performance; • pre-acquisition discussions with the asset manager to confirm property specific reserve amounts and potential future capital expenditures; 7 • review of property’s physical condition and related systems; and • financial modeling to determine our preliminary baseline pricing. • Specific acquisition criteria may include, but is not limited to, the following: • premier locations and facilities with multiple alternative uses; • sustainable rents specific to a tenants’ location that may be at or below market rents; • investment grade or strong credit tenant; • properties not subject to long-term management contracts with management companies; • opportunities to expand the tenants’ building and/or implement value-added operational improvements; and • population density and strong demand growth characteristics supported by favorable demographic indicators.
We assess target markets and properties using an extensive underwriting and evaluation process, including: • offering materials review; • property and tenant lease information; • in depth conversations with offering agent, local brokers and property management companies; • thorough credit underwriting of the tenant; • review of tenant’s historical performance in the specific market and their nationwide trend to determine potential longevity of the asset and tenant’s business model; • market real estate dynamics, including macroeconomic market data and market rents for potential rental rate changes after initial lease term; • evaluation of business trends for local real estate demand specifics and competing business locations; • review of asset level financial performance; 8 • pre-acquisition discussions with the asset manager to confirm property specific reserve amounts and potential future capital expenditures; • review of property’s physical condition and related systems; and • financial modeling to determine our preliminary baseline pricing. • Specific acquisition criteria may include, but is not limited to, the following: • premier locations and facilities with multiple alternative uses; • sustainable rents specific to a tenants’ location that may be at or below market rents; • investment grade or strong credit tenant; • properties not subject to long-term management contracts with management companies; • opportunities to expand the tenants’ building and/or implement value-added operational improvements; and • population density and strong demand growth characteristics supported by favorable demographic indicators.
We look for properties that are difficult or costly to replicate due to a specific location, special zoning, unique physical attributes, below market rents or a significant tenant investment in the facility, all of which contribute to a higher probability of tenant renewals.
We look for properties that are difficult or costly to replicate due to a specific location, special zoning, unique physical attributes, below market rents or a significant tenant investment in the facility, all of 7 which contribute to a higher probability of tenant renewals.
These laws typically impose cleanup responsibility and liability without regard to fault, or whether or not the owner, operator or tenant knew of or caused the presence of the contamination.
These laws typically impose cleanup responsibility and 11 liability without regard to fault, or whether or not the owner, operator or tenant knew of or caused the presence of the contamination.
Over a long-term period, we intend to maintain lower levels of debt encumbering the Company, its assets and/or the portfolio as compared to our current leverage. Our Current Portfolio as of December 31, 2022 The following are characteristics of our properties as of December 31, 2022: • Creditworthy Tenants .
Over a long-term period, we intend to maintain lower levels of debt encumbering the Company, its assets and/or the portfolio as compared to our current leverage. Our Current Portfolio as of December 31, 2023 The following are characteristics of our properties as of December 31, 2023: • Creditworthy Tenants .
In addition, on January 3, 2023, we announced that our Board of Directors authorized a distribution of $0.039 per share monthly cash distribution for shareholders of record of our common stock as of January 15, 2023, February 15, 2023 and March 15, 2023.
In addition, on January 3, 2024, we announced that our Board of Directors authorized a distribution of $0.039 per share monthly cash distribution for shareholders of record of our common stock as of January 15, 2024, February 15, 2024 and March 15, 2024.
Further, the Company’s references to website URLs are intended to be inactive textual references only. 11
Further, the Company’s references to website URLs are intended to be inactive textual references only.
BBB+ 4.2 1 x 5 Yes $ 353,061 $ 11.50 Medical-Retail Chicago, IL 10,947 Fresenius Medical Care Holdings, Inc.
BBB+ 3.2 1 x 5 Yes $ 353,061 $ 11.50 Medical-Retail Chicago, IL 10,947 Fresenius Medical Care Holdings, Inc.
(3) BB+ 4.7 1 x 5 Yes $ 765,136 $ 21.96 Retail Tampa, FL 3,500 Sherwin Williams Company BBB 5.6 5 x 5 Yes $ 126,788 $ 36.23 Office Manteo, NC 7,543 General Services Administration-FBI AA+ 6.1 1 x 5 Yes $ 161,346 $ 21.39 Office Plant City, FL 7,826 Irby Construction BBB- 2.0 2 x 5 Yes $ 160,437 $ 20.50 Retail Grand Junction, CO 30,701 Best Buy Co., Inc.
(3) BB+ 3.7 1 x 5 Yes $ 765,136 $ 21.96 Retail Tampa, FL 3,500 Sherwin Williams Company BBB 4.6 5 x 5 Yes $ 126,788 $ 36.23 Office Manteo, NC 7,543 General Services Administration-FBI AA+ 5.1 1 x 5 Yes $ 161,346 $ 21.39 Office Plant City, FL 7,826 Irby Construction BBB- 1.0 2 x 5 Yes $ 170,865 $ 21.83 Retail Grand Junction, CO 30,701 Best Buy Co., Inc.
Our Investment Committee is comprised of the following members: • Chairman, President and Chief Executive Officer ("CEO"), David Sobelman, who has over 19 years in different capacities within the net lease commercial real estate investment market including as investor, asset manager, broker, owner, analyst, and advisor. • Chief Financial Officer ("CFO"), Allison Davies, who has over 15 years in various capacities within the commercial real estate investment market. • Emily Hewland, Director of Capital Markets, who has been with the Company since inception and she has built out our acquisitions process to effectively underwrite assets thoroughly to find value in the market for investors and the portfolio alike. • Acquisitions Manager, Robert Rorhlack, who sources new acquisition opportunities that adhere to our investment criteria, and who has previously specialized in Tenant Representation.
Our Investment Committee is comprised of the following members: • Chairman, President and Chief Executive Officer ("CEO"), David Sobelman, who has over 19 years in different capacities within the net lease commercial real estate investment market including as investor, asset manager, broker, owner, analyst, and advisor. • Vice President of Accounting and Finance ("VP Accounting"), Ron Cook, who has over 20 years in various capacities within commercial real estate investment and finance. • Emily Hewland, Director of Capital Markets, who has been with the Company since inception and she has built out our acquisitions process to effectively underwrite assets thoroughly to find value in the market for investors and the portfolio alike. • Acquisitions Manager, Robert Rorhlack, who sources new acquisition opportunities that adhere to our investment criteria, and who has previously specialized in Tenant Representation.
Our portfolio is 100% leased and occupied. • Contractual Rent Growth . 93% of the leases in our current portfolio (based on annualized base rent as of December 31, 2022) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot .
Our portfolio is 96% leased and occupied. • Contractual Rent Growth . 84% of the leases in our current portfolio (based on annualized base rent as of December 31, 2023) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot .
Approximately 64% of our portfolio’s annualized rent as of December 31, 2022 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of 8 “BBB-” or better.
Approximately 68% of our portfolio’s annualized rent as of December 31, 2023 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of “BBB-” 9 or better.
Human Capital As of December 31, 2022 we had six full-time employees. We plan to use outside consultants, attorneys, and accountants, as necessary.
Human Capital As of December 31, 2023 we had four full-time employees. We plan to use outside consultants, attorneys, and accountants, as necessary.
On May 31, 2022, the Company terminated the agreement with Colliers International Asset Services effective June 30, 2022. The Company has since engaged Bevara Building Services for facility management and property management services for the two Norfolk, Virginia properties effective June 15, 2022.
On May 31, 2022, the Company terminated the agreement with Colliers International Asset Services effective June 30, 2022. The Company engaged Bevara Building Services for facility management and property management services for the two Norfolk, Virginia properties from June 15, 2022 through July 2023.
Retail Washington, D.C 3,000 7-Eleven Corporation A 3.2 2 x 5 Yes $ 129,804 $ 43.27 Retail Tampa, FL 2,200 Starbucks Corporation BBB+ 5.2 4 x 5 Yes $ 182,500 $ 82.95 Industrial Huntsville, AL 59,091 Pratt & Whitney Automation, Inc.
Retail Washington, D.C. 3,000 7-Eleven Corporation A 2.2 2 x 5 Yes $ 129,804 $ 43.27 Retail Tampa, FL 2,200 Starbucks Corporation BBB+ 4.2 4 x 5 Yes $ 200,750 $ 91.25 Industrial Huntsville, AL 59,091 Pratt & Whitney Automation, Inc.
Average effective annual rental per square foot is $16.07. Given the nature of our leases, our tenants either pay the real estate taxes or insurance directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance however maintain coverage in the event the coverage isn't sufficient.
Average effective annual rental per square foot is $16.02. Given the nature of our leases, our tenants either pay the real estate taxes or insurance directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance.
As of December 31, 2022, as the general partner of the Operating Partnership, we owned 86.6% of the outstanding common units in the Operating Partnership and outside investors owned 13.4%. The Company formed a Maryland entity GIP REIT OP Limited LLC as a wholly owned subsidiary in 2018 that owned 0.002% of the Operating Partnership as of December 31, 2022.
As of December 31, 2023, as the general partner of the Operating Partnership, we owned 90.7% of the outstanding common units in the Operating Partnership and outside investors owned 9.3%. The Company formed a Maryland entity GIP REIT OP Limited LLC as a wholly owned subsidiary in 2018 that owned 0.002% of the Operating Partnership as of December 31, 2023.
January and February distributions were paid on January 30, 2023 and February 28, 2023 respectively, and we expect to pay March dividends on or about March 30, 2023. Because we have not yet generated a cumulative profit, distributions have been made from proceeds from prior capital raises. Competition The net lease industry is highly competitive.
January and February distributions were paid on January 30, 2024, February 29, 2024 and March 29, 2024, respectively. Because we have not yet generated a cumulative profit, distributions have been made from proceeds from prior capital raises. Competition The net lease industry is highly competitive.
The table below presents an overview of the properties in our portfolio as of December 31, 2022: Property Type Location Rentable Square Feet Tenant S&P Credit Rating (1) Remaining Term (Yrs) Options (Number x Yrs) Contractual Rent Escalations (7) ABR (2) ABR per Sq. Ft.
For further information on our properties and our tenant base, see “Item 2–Properties.” The table below presents an overview of the properties in our portfolio as of December 31, 2023: Property Type Location Rentable Square Feet Tenant S&P Credit Rating (1) Remaining Term (Yrs) Options (Number x Yrs) Contractual Rent Escalations (5) ABR (2) ABR per Sq. Ft.
Not Rated 4.8 4 x 5 Yes $ 366,600 $ 23.98 Tenants - All Properties 338,142 $ 5,434,259 $ 16.07 (1) Tenant, or tenant parent, rated entity. (2) Annualized cash base rental income in place as of December 31, 2022. Our leases do not include tenant concessions or abatements.
Not Rated 3.8 4 x 5 Yes $ 366,600 $ 23.98 Tenants - All Properties 539,827 $ 8,647,766 $ 16.02 (1) Tenant, or tenant parent, rated entity. (2) Annualized cash base rental income in place as of December 31, 2023. Our leases do not include tenant concessions or abatements.
Focus on Real Estate Fundamentals: We have observed that the market for properties with bond type net leased structures, lease terms greater than ten years, and limited rent escalators upon renewal are exposed to many of the same operational and market risks as other net leased properties while providing lower returns due to competition.
We seek to identify properties in submarkets with high barriers to entry for development and where valuation is frequently influenced by local real estate market conditions and tenant needs Focus on Real Estate Fundamentals: We have observed that the market for properties with bond type net leased structures, lease terms greater than ten years, and limited rent escalators upon renewal are exposed to many of the same operational and market risks as other net leased properties while providing lower returns due to competition.
Additionally, we seek to ensure that many of our leases contain clauses that require a tenant to reimburse and indemnify us for any environmental contamination occurring at the property.
Additionally, we seek to ensure that many of our leases contain clauses that require a tenant to reimburse and indemnify us for any environmental contamination occurring at the property. We do not intend to purchase any properties that have known environmental deficiencies that cannot be remediated.
(6) A- 6.1 2 x 5 Yes $ 684,996 $ 11.59 Office Norfolk, VA 49,902 General Services Administration-Navy AA+ 5.7 N/A Yes $ 926,923 $ 18.57 Office Norfolk, VA 22,247 Maersk Shipping (5) BBB+ 0.1 1 x 5 N/A $ 375,588 $ 16.88 Office Norfolk, VA 34,847 PRA Holdings, Inc.
(4) A- 0.1 N/A N/A $ 684,996 $ 11.59 Office Norfolk, VA 49,902 General Services Administration-Navy (7) AA+ 4.7 N/A Yes $ 926,923 $ 18.57 Office Norfolk, VA 22,247 VACANT (7) N/A - N/A N/A $ - $ - Office Norfolk, VA 34,847 PRA Holdings, Inc.
(3) Richard Hornstrom owns a redeemable limited liability company interest in GIPIL 525 S Perryville Rd, LLC. Business Objectives and Investment Strategy We intend to continue to acquire and manage a diversified portfolio of high quality net leased properties that generates predictable cash flows and capital appreciation over market cycles. Our properties are generally net leased to a single tenant.
Business Objectives and Investment Strategy We intend to continue to acquire and manage a diversified portfolio of high-quality net leased properties that generates predictable cash flows and capital appreciation over market cycles. Our properties are generally net leased to a single tenant.
There is no assurance that any currently available properties in our acquisition pipeline will remain available, or that we will pursue or complete potential acquisitions, at prices acceptable to us or at all.
There is no assurance that any currently available properties in our acquisition pipeline will remain available, or that we will pursue or complete potential acquisitions, at prices acceptable to us or at all. 10 Property and Asset Management Agreements We manage our properties in-house, except for our Norfolk, Virginia properties and our Maitland, Florida property.
We believe that the profitability of the operations and the difficulty in replicating or moving operations reflect the importance of the property to the tenant’s business. 6 Target Investments that Maximize Growth Potential: We focus on net leased investment properties where, in our view, there is the potential to invest incremental capital to accommodate a tenant’s business, extend lease terms and increase the value of a property.
Target Investments that Maximize Growth Potential: We focus on net leased investment properties where, in our view, there is the potential to invest incremental capital to accommodate a tenant’s business, extend lease terms and increase the value of a property. We believe these opportunities can generate attractive returns due to the nature of our relationship with the tenant.
We do not intend to purchase any properties that have known environmental deficiencies that cannot be remediated. 10 Federal, state and local environmental laws and regulations regulate, and impose liability for, releases of hazardous or toxic substances into the environment.
Federal, state and local environmental laws and regulations regulate, and impose liability for, releases of hazardous or toxic substances into the environment.
(6) Tenant has the right to terminate the lease on January 31, 2024 subject to certain conditions. (7) Includes rent escalations available from lease renewal options Acquisition Pipeline We are continually engaging in internal research as well as informal discussions with various parties regarding our potential interest in potential acquisitions that fall within our target market.
Acquisition Pipeline We are continually engaging in internal research as well as informal discussions with various parties regarding our potential interest in potential acquisitions that fall within our target market.
Our largest tenants are the General Service Administration, PRA Holdings, Inc., Pratt & Whitney Automation, Inc., and Kohl's Corporation and contributed approximately 62% of our portfolio’s annualized base rent as of December 31, 2022. • 100% Occupied .
Our largest tenants are the General Service Administration, Dollar General, and the City of San Antonio, who collectively contributed approximately 39% of our portfolio’s annualized base rent as of December 31, 2023. • 96% Occupied .
The transaction is subject to customary closing conditions and due diligence. 9 Property and Asset Management Agreements We manage our properties in-house, except for our Norfolk, Virginia properties and our Manteo, North Carolina property. We previously engaged Colliers International Asset Services to provide property management services to our two properties in Norfolk, Virginia.
We previously engaged Colliers International Asset Services to provide property management services to our two properties in Norfolk, Virginia.
We target properties if we believe they are critical to the ongoing operations of the tenant and the profitability of its business.
An example of a specialized property is our General Services Administration occupied building in Norfolk, Virginia due to the tenant’s buildout for IT and security. We target properties if we believe they are critical to the ongoing operations of the tenant and the profitability of its business.
(3) Tenant has the right to terminate the lease on August 31, 2024 subject to certain conditions. (4) The Company’s pro-rata share is 50% of the tenancy-in-common investment. (5) Tenant did not exercise the renewal option as of the required exercise date of April 1, 2022 and vacated on January 31, 2023.
(3) Tenant has the right to terminate the lease on August 31, 2024 subject to certain conditions. (4) Tenant has the right to terminate the lease on January 31, 2024 subject to certain conditions. As of the reporting date the tenant has vacated. (5) Includes rent escalations available from lease renewal options.
The following chart shows the structure of the Company as of December 31, 2022: 5 (1) Brown Family Enterprises, LLC, owns a redeemable limited liability company interest in GIPNC 201 Etheridge Road, LLC. (2) Stephen Brown and Richard Hornstrom each own a redeemable limited liability company interest in GIPFL 702 Tillman Place LLC.
The following chart shows the structure of the Company as of December 31, 2023: 6 (1) Until August 8, 2023 The Brown Family owned redeemable liability company interests in GIPNC 199 N Etheridge Road LLC. The Company has since purchased the Brown Family's interest and as of the reporting date owns 100% of the entity.
Removed
We seek to identify properties in submarkets with high barriers to entry for development and where valuation is frequently influenced by local real estate market conditions and tenant needs.
Added
(2) Until August 8, 2023 Richard Hornstrom and Stephen Brown owned redeemable limited liability company member interests in GIPFL 702 Tillman Place LLC. The Company has purchased each of Mr. Hornstrom and Mr. Brown’s interests, in full, and as of the reporting date, owns 100% of the entity.
Removed
Examples of specialized properties include our Pratt & Whitney manufacturing facility located in Huntsville, Alabama whose specialized equipment is unique to such a facility and the General Services Administration occupied building in Norfolk, Virginia due to the tenant’s buildout for IT and security.
Added
(3) Until September 7, 2023 Richard Hornstrom owned a redeemable limited liability company interest in GIPIL 525 S Perryville Rd, LLC. The Company has since purchased Mr. Hornstrom’s interest and as of the reporting date owns 100% of the entity.
Removed
We believe these opportunities can generate attractive returns due to the nature of our relationship with the tenant. Disciplined Underwriting & Risk Management We actively manage and regularly review each of our properties for changes in the underlying business, credit of the tenant and market conditions.
Added
(4) On August 10, 2023 the company acquired a 13 property portfolio, now GIP13, LLC, from Modiv Inc. for a purchase price of $42 million. The acquired portfolio consists of eleven (11) retail and two (2) office properties.
Removed
BBB- 3.8 2 x 5 Yes $ 228,902 $ 20.91 Retail Tampa, FL 2,642 Starbucks Corporation BBB+ 4.2 2 x 5 Yes $ 148,216 $ 56.10 Retail Tucson, AZ 88,408 Kohl's Corporation BB+ 7.1 7 x 5 Yes $ 823,962 $ 9.32 Tenants - Consolidated Properties 322,854 $ 5,067,659 $ 15.70 Retail (4) Rockford, IL 15,288 La-Z-Boy Inc.
Added
We believe that the profitability of the operations and the difficulty in replicating or moving operations reflect the importance of the property to the tenant’s business.
Removed
On February 10, 2023, the Operating Partnership entered into a Purchase and Sale Agreement with Harbor Terrace Limited Partnership to acquire an approximately 48,000 square foot single-tenant retail building in Overland Park, KS for total consideration of $8,200,000, which is expected to be funded with approximately 50% mortgage debt and 50% equity.
Added
Additionally, we monitor any required capital improvements that would lead to increased rental income or capital appreciation over time.
Removed
The building is occupied by Best Buy, Inc., who holds an investment grade credit rating of BBB+ on the S&P scale, and has approximately two years remaining on the current lease term, with one additional five year renewal option. The annual rent for the property is $630,994.
Added
BBB 2.8 2 x 5 Yes $ 228,902 $ 20.91 Retail Tampa, FL 2,642 Starbucks Corporation BBB+ 3.2 2 x 5 Yes $ 148,216 $ 56.10 Retail Tucson, AZ 88,408 Kohl's Corporation BB 6.1 7 x 5 Yes $ 823,962 $ 9.32 Retail San Antonio, TX 50,000 City of San Antonio (PreK) AAA 5.6 1 x 8 Yes $ 924,000 $ 18.48 Retail Bakersfield, CA 18,827 Dollar General Market BBB 4.6 3 x 5 Yes $ 361,075 $ 19.18 Retail Big Spring, TX 9,026 Dollar General BBB 6.5 3 x 5 Yes $ 86,040 $ 9.53 Retail Castalia, OH 9,026 Dollar General BBB 11.4 3 x 5 Yes $ 79,320 $ 8.79 Retail East Wilton, ME 9,100 Dollar General BBB 6.6 3 x 5 Yes $ 112,440 $ 12.36 Retail Lakeside, OH 9,026 Dollar General BBB 11.4 3 x 5 Yes $ 81,036 $ 8.98 Retail Litchfield, ME 9,026 Dollar General BBB 6.8 3 x 5 Yes $ 92,964 $ 10.30 Retail Mount Gilead, OH 9,026 Dollar General BBB 6.5 3 x 5 Yes $ 85,920 $ 9.52 Retail Thompsontown, PA 9,100 Dollar General BBB 6.8 3 x 5 Yes $ 86,004 $ 9.45 Retail Morrow, GA 10,906 Dollar Tree Stores, Inc.
Removed
The agreements provide for us to pay Bevara Building Services a management fee equal to approximately $54,000 per year as well as a construction supervision fee for any approved construction. On November 8, 2022, the Company engaged Commonwealth Commercial Partners, LLC to provide facilities management services to our property in Manteo, North Carolina.
Added
BBB 1.6 3 x 5 Yes $ 103,607 $ 9.50 Office Maitland, FL 33,118 exp U.S. Services Inc.
Removed
The agreement provides for us to pay Commonwealth Commercial Partners, LLC a management fee equal to $745 on a monthly basis. Distributions From inception through December 31, 2022, we have distributed $2,655,755 to common stockholders.
Added
Not Rated 2.9 1 x 5 Yes $ 835,346 $ 25.22 Office Vacaville, CA 11,014 General Services Administration AA+ 2.6 N/A No $ 343,665 $ 31.20 Retail Santa Maria, CA 14,490 Walgreens (6) BBB 8.3 N/A No $ 369,000 $ 25.47 Retail Rockford, IL 15,288 La-Z-Boy Inc.
Added
(6) Tenant has the right to terminate the lease as of March 31, 2032, March 31, 2037, March 31, 2042, March 31, 2047, March 31, 2052, and March 31, 2057. (7) Two tenants occupy this single property.
Added
Effective August 2023 Colliers International Asset Services resumed management services for our Norfolk, VA properties for an aggregate of approximately $42,000 annually, as well as, for our Maitland, Florida property for approximately $24,000 annually. Distributions From inception through December 31, 2023, we have distributed $3,872,035 to common stockholders.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

72 edited+25 added−7 removed314 unchanged
Biggest changeSuch an event also could cause a decrease or cessation of current rental payments, reducing our operating cash flows and the amount available for distributions to you. In the event a current or future tenant or lease guarantor declares bankruptcy, the tenant or its director may not assume our lease or its guaranty.
Biggest changeThe bankruptcy of a current or future tenant or lease guarantor could delay our efforts to collect past due balances under the relevant lease, and could ultimately preclude full collection of these sums. Such an event also could cause a decrease or cessation of current rental payments, reducing our operating cash flows and the amount available for distributions to you.
If we were to raise additional capital through the issuance of equity securities, we could dilute the interests of holders of shares of our common stock. Our Board may authorize the issuance of classes or series of preferred stock which may have rights that could dilute, or otherwise adversely affect, the interest of holders of shares our common stock.
If we were to raise additional capital through the issuance of equity securities, we could dilute the interests of holders of shares of our common stock. Our Board may authorize the issuance of classes or series of preferred stock which may have rights that could dilute, or otherwise adversely affect, the interest of holders of shares of our common stock.
Our operating results are subject to risks generally incident to the ownership of real estate, including: • adverse changes in national and local economic and market conditions, including the credit markets; • changes in governmental laws and regulations, including with respect to taxes, real estate, and the environment, fiscal policies and zoning ordinances and the related costs of compliance with those laws and regulations, fiscal policies and ordinances; • takings by condemnation or eminent domain; • real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area; • the perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties; • competition from comparable properties; • the occupancy rate of our properties; • the ability to collect all rent from tenants on a timely basis; • the effects of any bankruptcies or insolvencies of major tenants; • the expense of re-leasing space; • changes in interest rates and in the availability, cost and terms of mortgage funding; • the impact of present or future environmental legislation and compliance with environmental laws; • acts of war or terrorism, including the consequences of terrorist attacks; • acts of God, including earthquakes, hurricanes, floods, health pandemics and other natural disasters, which may result in uninsured losses; • cost of compliance with the Americans with Disabilities Act; • changes in general economic or local conditions; • changes in supply of or demand for similar or competing properties in an area; • the impact of permanent mortgage funds, which may render the sale of a property difficult or unattractive; and • periods of high interest rates and tight money supply.
Our operating results are subject to risks generally incident to the ownership of real estate, including: • adverse changes in national and local economic and market conditions, including the credit markets; • changes in governmental laws and regulations, including with respect to taxes, real estate, and the environment, fiscal policies and zoning ordinances and the related costs of compliance with those laws and regulations, fiscal policies and ordinances; • takings by condemnation or eminent domain; • real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area; • the perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties; • competition from comparable properties; • the occupancy rate of our properties; • the ability to collect all rent from tenants on a timely basis; • the effects of any bankruptcies or insolvencies of major tenants; • the expense of re-leasing space; • changes in interest rates and in the availability, cost and terms of mortgage funding; • the impact of present or future environmental legislation and compliance with environmental laws; • acts of war or terrorism, including the consequences of terrorist attacks; • acts of God, including earthquakes, hurricanes, floods, health pandemics and other natural disasters, which may result in uninsured losses; • cost of compliance with the Americans with Disabilities Act; • changes in general economic or local conditions; 17 • changes in supply of or demand for similar or competing properties in an area; • the impact of permanent mortgage funds, which may render the sale of a property difficult or unattractive; and • periods of high interest rates and tight money supply.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our operating results, funds from operations, cash flows, liquidity or distributions; 28 • changes in our earnings estimates or those of analysts; • publication of research reports about us or the real estate industry or sector in which we operate; • increases in market interest rates that lead purchasers of our shares to demand a higher dividend yield; • changes in market valuations of companies similar to us; • adverse market reaction to any securities we may issue or additional debt we incur in the future; • adverse impacts of the coronavirus on our tenants or the economy in general; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • high levels of volatility in the credit markets; • the realization of any of the other risk factors included herein; and • general market and economic conditions.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our operating results, funds from operations, cash flows, liquidity or distributions; • changes in our earnings estimates or those of analysts; • publication of research reports about us or the real estate industry or sector in which we operate; • increases in market interest rates that lead purchasers of our shares to demand a higher dividend yield; • changes in market valuations of companies similar to us; • adverse market reaction to any securities we may issue or additional debt we incur in the future; • adverse impacts of the coronavirus on our tenants or the economy in general; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • high levels of volatility in the credit markets; • the realization of any of the other risk factors included herein; and • general market and economic conditions.
Adverse conditions (including business layoffs or downsizing, the impact of disruptions in global trade agreements or the imposition of tariffs, industry slowdowns, changing demographics, protests, riots and other factors) in the areas where our investments are located and/or concentrated, and local real estate conditions (such as oversupply of, or reduced demand for, office, industrial, retail or multifamily properties) may have an adverse effect on the value of our investments.
Adverse conditions (including business layoffs or downsizing, the impact of disruptions in global trade agreements or the imposition of tariffs, industry slowdowns, changing demographics, protests, riots and other factors) in the areas where our investments are located and/or 20 concentrated, and local real estate conditions (such as oversupply of, or reduced demand for, office, industrial, retail or multifamily properties) may have an adverse effect on the value of our investments.
If we or our subsidiaries were obligated to register as investment companies, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things: • limitations on capital structure; • restrictions on specified investments; • prohibitions on transactions with affiliates; and • compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses. • Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, an investment company is any issuer that: • is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or 22 • is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”).
If we or our subsidiaries were obligated to register as investment companies, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things: • limitations on capital structure; • restrictions on specified investments; • prohibitions on transactions with affiliates; and • compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses. • Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, an investment company is any issuer that: 23 • is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or • is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”).
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock if we qualify as a REIT.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less 28 attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock if we qualify as a REIT.
The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims would materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to you. Inflation and changes in interest rates may materially and adversely affect us and our tenants.
The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims would materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to you. 22 Inflation and changes in interest rates may materially and adversely affect us and our tenants.
Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our 30 business and financial condition.
Thus, the purchase of properties with 17 limited warranties increases the risk that we may lose some or all of our invested capital in the property as well as the loss of rental income from that property. Our real estate investments may include special use single-tenant properties that may be difficult to sell or re-lease upon lease terminations.
Thus, the purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property as well as the loss of rental income from that property. Our real estate investments may include special use single-tenant properties that may be difficult to sell or re-lease upon lease terminations.
To qualify for the tax benefits applicable to REITs, we have and intend to continue to make distributions to our stockholders in amounts such that we distribute all or substantially all our net taxable income each year, subject to certain adjustments. However, our ability to make distributions may be 27 adversely affected by the risk factors described herein.
To qualify for the tax benefits applicable to REITs, we have and intend to continue to make distributions to our stockholders in amounts such that we distribute all or substantially all our net taxable income each year, subject to certain adjustments. However, our ability to make distributions may be adversely affected by the risk factors described herein.
Compliance with CC&Rs may adversely affect our operating costs and reduce the amount of funds that we have available to pay distributions. Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks. We may acquire and develop properties upon which we will construct improvements.
Compliance with CC&Rs may adversely affect our operating costs and reduce the amount of funds that we have available to pay distributions. 21 Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks. We may acquire and develop properties upon which we will construct improvements.
If we are unable to lease properties on a net-lease 18 basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs which could adversely affect funds available for future acquisitions or cash available for distributions.
If we are unable to lease properties on a net-lease basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs which could adversely affect funds available for future acquisitions or cash available for distributions.
Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets. Because we have 110.0 million authorized shares of stock, management could issue additional shares, diluting the current shareholders’ equity.
Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets. Because we have 110 million authorized shares of stock, management could issue additional shares, diluting the current shareholders’ equity.
By their nature, the timing or extent of impairment charges are not predictable. We may incur non-cash impairment charges in the future, which may reduce our net income. 19 If we suffer losses that are not covered by insurance or that are in excess of insurance coverage, we could lose invested capital and anticipated profits.
By their nature, the timing or extent of impairment charges are not predictable. We may incur non-cash impairment charges in the future, which may reduce our net income. If we suffer losses that are not covered by insurance or that are in excess of insurance coverage, we could lose invested capital and anticipated profits.
Our CEO along with our Investment Committee has absolute discretion in implementing these policies and strategies, subject to the restrictions on investment objectives and policies set forth in our articles of incorporation. Because you cannot evaluate our investments, our securities may entail more risk than other types of investments.
Our CEO along with our Investment Committee has absolute discretion in implementing these policies and strategies, subject to the restrictions on investment objectives and policies set forth in our articles of incorporation. Because you cannot evaluate our investments, our securities 15 may entail more risk than other types of investments.
As we continue to acquire properties, we anticipate we will achieve scale to reduce these expenses; however, we cannot assure you that, in the future, we will be profitable or that we will realize growth in the value of our assets. 12 We may change our investment objectives without seeking stockholder approval.
As we continue to acquire properties, we anticipate we will achieve scale to reduce these expenses; however, we cannot assure you that, in the future, we will be profitable or that we will realize growth in the value of our assets. We may change our investment objectives without seeking stockholder approval.
The failure to identify or consummate investments on satisfactory terms, or at all, may impede our growth and negatively affect our cash available for distribution to our stockholders. If we cannot obtain additional capital, our ability to make acquisitions and lease properties will be limited.
The failure to identify or consummate investments on satisfactory terms, or at all, may impede our growth and negatively affect our cash available for distribution to our stockholders. 13 If we cannot obtain additional capital, our ability to make acquisitions and lease properties will be limited.
Any of the risks above might subject us to liabilities and thus reduce our returns on our investment with that partner. If a sale-leaseback transaction is re-characterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected.
Any of the risks above might subject us to liabilities and thus reduce our returns on our investment with that partner. 18 If a sale-leaseback transaction is re-characterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected.
Our articles of incorporation generally restrict any person from owning or being treated as owning more than 9.8% of our stock, limiting the amount of our stock any five 26 persons could own or be treated as owning 49% of our stock, in order to prevent us from failing the closely held requirement.
Our articles of incorporation generally restrict any person from owning or being treated as owning more than 9.8% of our stock, limiting the amount of our stock any five persons could own or be treated as owning 49% of our stock, in order to prevent us from failing the closely held requirement.
We do not believe we will have any undistributed “C” corporation earnings and profits, but in the event we do accumulate any non-REIT earnings and profits, we intend to distribute such non-REIT earnings and profits before the end of our first REIT taxable year to comply with this requirement.
We do not believe we will have any undistributed “C” corporation earnings and profits, but in the event we do accumulate any non-REIT 27 earnings and profits, we intend to distribute such non-REIT earnings and profits before the end of our first REIT taxable year to comply with this requirement.
Notwithstanding the foregoing, nothing in the warrant limits or restricts the federal district court in which a holder of a warrant may bring a claim under the federal securities laws. 29 Provisions of our warrants could discourage an acquisition of us by a third party.
Notwithstanding the foregoing, nothing in the warrant limits or restricts the federal district court in which a holder of a warrant may bring a claim under the federal securities laws. Provisions of our warrants could discourage an acquisition of us by a third party.
These and other such factors can result in increased costs of a project or loss of our investment. In addition, 20 we will be subject to normal lease-up risks relating to newly constructed projects.
These and other such factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects.
We have 100.0 million authorized shares of common stock and 10.0 million authorized shares of preferred stock. Our management could, without the consent of the existing shareholders, issue substantially more shares of common stock, causing a large dilution in the equity position of our current shareholders.
We have 100 million authorized shares of common stock and 10 million authorized shares of preferred stock. Our management could, without the consent of the existing shareholders, issue substantially more shares of common stock, causing a large dilution in the equity position of our current shareholders.
To date, we have funded and expect to continue to fund distributions from the net proceeds of our offerings. We may also fund 14 distributions with borrowings and the sale of assets to the extent distributions exceed our earnings or cash flows from operations.
To date, we have funded and expect to continue to fund distributions from the net proceeds of our offerings. We may also fund distributions with borrowings and the sale of assets to the extent distributions exceed our earnings or cash flows from operations.
Also, rising interest rates may affect the ability of our management to refinance an investment. Investments may be less desirable to prospective purchasers in a rising interest rate environment and their values may be adversely impacted by the reduction in cash flow due to increased interest payments. 25 We may use floating rate, interest-only or short-term loans to acquire assets.
Also, rising interest rates may affect the ability of our management to refinance an investment. Investments may be less desirable to prospective purchasers in a rising interest rate environment and their values may be adversely impacted by the reduction in cash flow due to increased interest payments. 26 We may use floating rate, interest-only or short-term loans to acquire assets.
Even though we have been successful in procuring equity financing and secured mortgages financing, we cannot be assured that we will be successful at doing so in the future. 23 High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
Even though we have been successful in procuring equity financing and secured mortgages financing, we cannot be assured that we will be successful at doing so in the future. 24 High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
The departure of either of these employees and our inability to find suitable replacements, or the loss of other key personnel in the future, could have a harmful effect on our business. Our President, Chief Executive Officer, and Chairman of the Board has guaranteed certain of our indebtedness, which could constitute a conflict of interest.
The departure of any of these employees and our inability to find suitable replacements, or the loss of other key personnel in the future, could have a harmful effect on our business. Our President, Chief Executive Officer, and Chairman of the Board has guaranteed certain of our indebtedness, which could constitute a conflict of interest.
We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future.
We cannot assure you that the market price of our common stock will not fluctuate 29 or decline significantly in the future.
In addition, the noncomplying offeror person shall be responsible for all of the Company’s expenses in connection with that 30 offeror’s noncompliance. This provision of our charter may discourage a person from initiating a tender offer for our shares and prevent you from receiving a premium price for your shares in such a transaction.
In addition, the noncomplying offeror person shall be responsible for all of the Company’s expenses in connection with that offeror’s 31 noncompliance. This provision of our charter may discourage a person from initiating a tender offer for our shares and prevent you from receiving a premium price for your shares in such a transaction.
Because we only own twelve properties, the loss of any one tenant (or financial difficulties experienced by one of our tenants) could have a material adverse impact on our business and operations.
Because we only own twenty-six properties, the loss of any one tenant (or financial difficulties experienced by one of our tenants) could have a material adverse impact on our business and operations.
This additional risk may hinder your ability to achieve your own personal investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives. The loss of any of our executive officers could adversely affect our ability to continue operations. We only have six full-time employees and are therefore entirely dependent on the efforts of our CEO and CFO.
This additional risk may hinder your ability to achieve your own personal investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives. The loss of any of our executive officers could adversely affect our ability to continue operations. We only have four full-time employees and are therefore entirely dependent on the efforts of our CEO and core staff.
Increased insurance premiums may make it difficult to increase rents to tenants on turnover, which may adversely affect our ability to increase our returns. The length and severity of any economic downturn cannot be predicted. Currently, the economic climate has been negatively impacted by the actions taken by governmental authorities, businesses and individuals in response to the coronavirus pandemic.
Increased insurance premiums may make it difficult to increase rents to tenants on turnover, which may adversely affect our ability to increase our returns. The length and severity of any economic downturn cannot be predicted. Recently, the economic climate was negatively impacted by the actions taken by governmental authorities, businesses and individuals in response to the coronavirus pandemic.
There can be no assurance that we will be able to locate suitable acquisition opportunities or achieve our investment goal and objectives. Because of the recent growth in demand for real estate investments, there may be increased competition among investors to invest in the same asset classes as the Company.
There can be no assurance that we will be able to locate suitable acquisition opportunities or achieve our investment goal and objectives. Because there are consistently periods of different levels of demand for real estate investments, there may be increased competition among investors to invest in the same asset classes as the Company.
This section should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
This discussion of risk factors contains forward-looking statements. 12 This section should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
Because of the following factors, as well as other factors affecting the Company’s results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. This discussion of risk factors contains forward-looking statements.
Because of the following factors, as well as other factors affecting the Company’s results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
In accordance with our President and CEO's employment agreement, we are also required to pay a guaranty fee payable to him for his personal guaranty and such payment will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans. 24 Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
In accordance with our President and CEO's employment agreement, we are also required to pay a guaranty fee payable 25 to him for his personal guaranty and such payment will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans.
In addition, because we intend to focus on single-tenant properties, we may never have a diverse group of tenants renting our properties, which will hinder our ability to achieve overall diversity in our portfolio. As of March 17, 2023, 39% of our total base rent is derived from our office properties, 14% from industrial properties, 47% from retail/medical-retail properties.
In addition, because we intend to focus on single-tenant properties, we may never have a diverse group of tenants renting our properties, which will hinder our ability to achieve overall diversity in our portfolio. As of March 29, 2024, 40% of our total base rent is derived from our office properties and 60% from retail/medical-retail properties.
These covenants, as well as any future covenants we may enter into through further loan agreements, could limit our operational flexibility and/or could inhibit our financial flexibility in the future and prevent distributions to stockholders. As of December 31, 2022, we were in compliance with all covenants.
These covenants, as well as any future covenants we may enter into through further loan agreements, could limit our operational flexibility and/or could inhibit our financial flexibility in the future and prevent distributions to stockholders.
In addition, our focus on coastal properties subjects us to the risk of rising sea levels, potential flooding, increased frequency or severity of hurricanes or other natural disasters as a result of climate change and global warming, which risk is increased given our geographic concentration.
In addition, we may own properties, either currently or in the future, that subjects us to the risk of rising sea levels, potential flooding, increased frequency or severity of hurricanes or other natural disasters as a result of climate change and global warming, which risk is increased given our geographic concentration.
As of December 31, 2022, we had total cash (unrestricted and restricted) of $3,752,996, properties with a cost basis of $56,917,321 and outstanding debt of $36,733,878. There is no limit on the amount we may invest in any single property or other asset or on the amount we can borrow to purchase any individual property or other investment.
As of December 31, 2023, we had total cash (unrestricted and restricted) of $3,151,946, properties with a cost basis of $104,912,421 and outstanding debt of $56,817,310. There is no limit on the amount we may invest in any single property or other asset or on the amount we can borrow to purchase any individual property or other investment.
We own six of our properties through preferred equity partnerships, which may lead to disagreements with our partners and adversely affect our interest in the partnerships. As of March 17, 2023, we own six properties (excluding our tenancy-in-common property) through preferred equity partnerships and we may enter into more in the future.
We own twenty-three of our properties through preferred equity partnerships, which may lead to disagreements with our partners and adversely affect our interest in the partnerships. As of March 29, 2024, we own twenty-three properties through preferred equity partnerships and we may enter into more in the future.
Any of our current or future tenants, or any guarantor of one of our current or future tenant’s lease obligations, could be subject to a bankruptcy proceeding pursuant to Title 11 of the bankruptcy laws of the United States.
Services Inc., Kohl's Corporation who collectively contributed approximately 64% of our portfolio’s annualized base rent. Any of our current or future tenants, or any guarantor of one of our current or future tenant’s lease obligations, could be subject to a bankruptcy proceeding pursuant to Title 11 of the bankruptcy laws of the United States.
If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates.
These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates.
These provisions would affect our ability to turn our investments into cash and thus affect cash available for distributions to you. Lock-out provisions may prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.
Lock-out provisions may prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.
Restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect the investments and our ability to execute its investment goals. Federal Income Tax Risks The Company's failure to qualify as a REIT would adversely affect our operations and our ability to make distributions.
Restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect the investments and our ability to execute its investment goals.
We believe that we have structured our activities in a manner designed to satisfy all of these requirements. However, if certain of our operations were to be recharacterized by the Internal Revenue Service (the “IRS”), such recharacterization could jeopardize our ability to satisfy all of the requirements for qualification as a REIT.
However, if certain of our operations were to be recharacterized by the Internal Revenue Service (the “IRS”), such recharacterization could jeopardize our ability to satisfy all of the requirements for qualification as a REIT. We will not apply for a ruling from the IRS regarding our status as a REIT.
Increased costs may have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us. 21 In addition, while the Company does not have any variable rate debt, to the extent that we incur variable rate debt in the future, increases in interest rates would increase our interest costs, which could reduce our cash flows and our ability to pay distributions to you.
In addition, while the Company does not have any variable rate debt, to the extent that we incur variable rate debt in the future, increases in interest rates would increase our interest costs, which could reduce our cash flows and our ability to pay distributions to you.
Additionally, with respect to our variable rate debt, increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you.
Additionally, we currently do not have any variable rate debt but if we do in the future then increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you.
In such event, the value of the leased property to a potential purchaser may not increase over time, which may restrict our ability to sell that property, or if we are able to sell that property, may result in a sale price less than the price that we paid to purchase the property.
In such event, the value of the leased property to a potential purchaser may not increase over time, which may restrict our ability to sell that property, or if we are able to sell that property, may result in a sale price less than the price that we paid to purchase the property. 19 We may acquire or finance properties with lock-out provisions, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.
In addition, distributions to stockholders would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.
We may never reach sufficient size to achieve diversity in our portfolio. We are presently a comparatively small company with only thirteen properties, including our investment in tenancy-in-common property, resulting in a portfolio that lacks geographic and tenant diversity.
We are presently a comparatively small company with only twenty-six properties, resulting in a portfolio that lacks geographic and tenant diversity. While we intend to endeavor to grow and diversify our portfolio through additional property acquisitions, we may never reach a significant size to achieve true portfolio diversity.
If a given lease or guaranty is not assumed, our operating cash flows and the amounts available for distributions to you may be adversely affected. The bankruptcy of a major tenant would have a harmful effect on our ability to pay distributions to you.
In the event a current or future tenant or lease guarantor declares bankruptcy, the tenant or its director may not assume our lease or its guaranty. If a given lease or guaranty is not assumed, our operating cash flows and the amounts available for distributions to you may be adversely affected.
While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our financial condition and results of operations. 13 Because of our holding company structure, we depend on our Operating Partnership subsidiary and its subsidiaries for cash flow and we will be structurally subordinated in right of payment to the obligations of such Operating Partnership subsidiary and its subsidiaries.
While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our financial condition and results of operations.
We may experience concentration in one or more tenants if the future leases we have with those tenants represent a significant percentage of our operations. As of March 17, 2023, we have four tenants, that each account for more than 10% of our annualized rent: General Services Administration, PRA Holdings, Inc., Pratt and Whitney Automation, Inc., and Kohl’s Corporation.
We may experience concentration in one or more tenants if the future leases we have with those tenants represent a significant percentage of our operations. As of March 29, 2024, we have five tenants, that each account for more than 10% of our annualized rent: the General Service Administration, Dollar General, the City of San Antonio, exp U. S.
We will not apply for a ruling from the IRS regarding our status as a REIT. Future legislative, judicial or administrative changes to the federal income tax laws could be applied retroactively, which could prevent our qualification or result in our disqualification as a REIT.
Future legislative, judicial or administrative changes to the federal income tax laws could be applied retroactively, which could prevent our qualification or result in our disqualification as a REIT. If we fail to qualify as a REIT for any taxable year after having qualified we will be subject to federal income tax on our taxable income at corporate rates.
Our future results of operations and overall financial performance could be uncertain should a new virus strain of COVID-19, or future pandemics or other health crises occur. 15 General Risks Related to Investments in Real Estate The third party valuations of real estate investments we seek to purchase often times includes the value of a commercial lease and the loss of such a lease could result in the value of the real property declining.
General Risks Related to Investments in Real Estate The third party valuations of real estate investments we seek to purchase often times includes the value of a commercial lease and the loss of such a lease could result in the value of the real property declining.
We currently own only twelve leased properties. As of March 17, 2023, we own twelve properties excluding our tenancy-in-common investment. We need to raise funds to acquire additional properties to lease in order to grow and generate additional revenue.
We currently own twenty-six properties. As of March 29, 2024, we own twenty-six properties. We will need to raise funds to acquire additional properties to lease in order to grow and generate additional revenue.
For example, the tenant for one of our Norfolk, Virginia properties did not renew its lease that terminated on January 31, 2023, and if we do not timely find a replacement tenant, it may materially adversely impact our business. We have experienced losses in the past, and we will likely experience similar losses in the near future.
For example, one tenant in one of our Norfolk, Virginia properties and another tenant in our Alabama property did not renew their leases that terminated on January 31, 2023 and January 31, 2024, respectively. Consequently, if we do not timely find replacement tenants for each, it may materially adversely impact our business.
Accordingly, our only source of cash to pay our obligations is distributions from our Operating Partnership and its subsidiaries of their net earnings and cash flows.
Our only significant asset is and will be the general and limited partnership interests in our Operating Partnership. We conduct, and intend to conduct, all our business operations through our Operating Partnership. Accordingly, our only source of cash to pay our obligations is distributions from our Operating Partnership and its subsidiaries of their net earnings and cash flows.
From inception of the Company through December 31, 2022, we had a cumulative net loss of approximately $8.6 million. Our losses can be attributed, in part, to the initial start-up costs and high corporate general and administrative expenses as a public company relative to the size of our portfolio.
Our losses can be attributed, in part, to the initial start-up costs and high corporate general and administrative expenses as a public company relative to the size of our portfolio. In addition, acquisition costs and depreciation and amortization expenses substantially reduced our income.
The provisions of Delaware law that allow the fiduciary duties of a general partner to be modified by a partnership agreement have not been tested in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties.
The provisions of Delaware law that allow the fiduciary duties of a general partner to be modified by a partnership agreement have not been tested in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties. 16 Pandemics or other health crises, such as the COVID-19 pandemic, may adversely affect our tenants' financial condition, the profitability of our properties, and our access to the capital markets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
A high concentration of our properties in a particular geographic area, or with tenants in a similar industry, magnify the effects of downturns in that geographic area or industry. We plan to focus our acquisition efforts on major primary and coastal markets.
The bankruptcy of a major tenant would have a harmful effect on our ability to pay distributions to you. A high concentration of our properties in a particular geographic area, or with tenants in a similar industry, magnify the effects of downturns in that geographic area or industry.
After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan.
The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity.
In such event, we may be required to sell our properties on an all-cash basis, which may make it more difficult to sell the property or reduce the selling price. Lenders may be able to recover against our other properties under our mortgage loans. In financing our acquisitions, we will seek to obtain secured nonrecourse loans.
Lenders may be able to recover against our other properties under our mortgage loans. In financing our acquisitions, we will seek to obtain secured nonrecourse loans.
We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2021. Our ongoing qualification as a REIT will depend upon our ability to meet, through investments, actual operating results, distributions and satisfaction of specific rules, the various tests imposed by the Code.
Our ongoing qualification as a REIT will depend upon our ability to meet, through investments, actual operating results, distributions and satisfaction of specific rules, the various tests imposed by the Code. We believe that we have structured our activities in a manner designed to satisfy all of these requirements.
We may finance our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period.
Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders. We may finance our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan.
Due-on sale clauses in mortgages allow a mortgage lender to demand full repayment of the mortgage loan if the borrower sells the mortgaged property. Similarly, due-on-encumbrance clauses allow a mortgage lender to demand full repayment if the borrower uses the real estate securing the mortgage loan as security for another loan.
Similarly, due-on-encumbrance clauses allow a mortgage lender to demand full repayment if the borrower uses the real estate securing the mortgage loan as security for another loan. In such event, we may be required to sell our properties on an all-cash basis, which may make it more difficult to sell the property or reduce the selling price.
Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions.
Also, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability.
Some of our mortgage loans may have “due on sale” provisions, which may impact the manner in which we acquire, sell and/or finance our properties. In purchasing properties subject to financing, we may obtain financing with “due-on-sale” and/or “due-on-encumbrance” clauses.
Additionally, a new lease was executed for 2510 Walmer Ave. on March 28, 2024 and will restore the property to full occupancy upon commencement. Some of our mortgage loans may have “due on sale” provisions, which may impact the manner in which we acquire, sell and/or finance our properties.
If a lease is rejected by a tenant in bankruptcy, we would have a general unsecured claim for damages.
If a lease is rejected by a tenant in bankruptcy, we would have a general unsecured claim for damages. This claim could be paid only in the event funds were available, and then only in the same percentage as that realized on other unsecured claims.
We are a holding company with no business operations of our own. Our only significant asset is and will be the general and limited partnership interests in our Operating Partnership. We conduct, and intend to conduct, all our business operations through our Operating Partnership.
Because of our holding company structure, we depend on our Operating Partnership subsidiary and its subsidiaries for cash flow and we will be structurally subordinated in right of payment to the obligations of such Operating Partnership subsidiary and its subsidiaries. We are a holding company with no business operations of our own.
Removed
In addition, acquisition costs and depreciation and amortization expenses substantially reduced our income.
Added
We have experienced losses in the past, and we will likely experience similar losses in the near future. From inception of the Company through December 31, 2023, we had a cumulative net loss of approximately $ 14.8 million.
Removed
While we intend to endeavor to grow and diversify our portfolio through additional property acquisitions, we may never reach a significant size to achieve true portfolio diversity.
Added
The Amended and Restated Limited Liability Company Agreement for GIP SPE, entered into by the Operating Partnership and LC2, contains provisions that could significantly impede our operations and our ability to efficiently manage our business and that could materially and adversely affect our financial condition, results of operations and cash flows, the trading price of our common stock and our ability to pay dividends to our common stockholders in the future.
Removed
Pandemics or other health crises, such as the COVID-19 pandemic, may adversely affect our tenants' financial condition, the profitability of our properties, and our access to the capital markets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Added
In connection with the preferred investment by LC2 in our GIP SPE subsidiary, LC2 has substantial rights under the Amended and Restated Limited Liability Company Agreement for GIP SPE (the “GIP SPE Operating Agreement”).
Removed
This claim could be paid only in the event funds were available, and then only in the same percentage as that realized on other unsecured claims. 16 The bankruptcy of a current or future tenant or lease guarantor could delay our efforts to collect past due balances under the relevant lease, and could ultimately preclude full collection of these sums.
Added
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations-- Recent Developments .” GIP SPE is a subsidiary of our Operating Partnership, which holds, directly and indirectly, 21 of our properties, including the properties comprising our portfolio acquisition from Modiv Industrial and eight of our other properties (collectively, the “Properties”).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMoller - Maersk 1 22,247 7 % 375,588 8 % Best Buy Co., Inc. 1 30,701 9 % 353,061 6 % Fresenius Medical Care Holdings, Inc. 1 10,947 3 % 228,902 4 % General Services Administration of the USA 2 57,445 17 % 1,088,269 20 % Kohl's Corporation 1 88,408 26 % 823,962 15 % La-Z-Boy Inc. 1 15,288 5 % 366,600 7 % PRA Group, Inc. 1 34,847 11 % 765,136 14 % Pratt & Whitney Automation, Inc. 1 59,091 17 % 684,996 13 % Irby Construction 1 7,826 2 % 160,437 3 % Sherwin Williams Company 1 3,500 1 % 126,788 2 % Starbucks Corporation 2 4,842 1 % 330,716 6 % 14 338,142 100 % $ 5,434,259 100 % Lease Expiration as of December 31, 2022 The following table sets forth lease expirations for our properties assuming that none of the tenants exercise their renewal options.
Biggest changeState # of Properties Square Feet % of Total Square Feet 2023 Annual Base Rent % of Total Annual Base Rent Illinois 2 26,235 5 % $ 595,502 7 % Ohio 3 27,078 5 % 246,276 3 % District of Columbia 1 3,000 1 % 129,804 2 % Maine 2 18,126 3 % 205,404 2 % Pennsylvania 1 9,100 2 % 86,004 1 % Alabama 1 59,091 11 % 684,996 8 % Florida 5 49,286 9 % 1,481,965 16 % North Carolina 1 7,543 1 % 161,346 2 % Virginia 2 106,996 20 % 1,692,059 20 % Texas 2 59,026 11 % 1,010,040 12 % Georgia 1 10,906 2 % 103,607 1 % Arizona 1 88,408 16 % 823,962 10 % Colorado 1 30,701 6 % 353,061 4 % California 3 44,331 8 % 1,073,740 12 % 26 539,827 100 % $ 8,647,766 100 % 33 Tenants as of December 31, 2023 Tenant # of Leases Square Feet % of Total Square Feet 2023 Annual Base Rent % of Total Annual Base Rent 7-Eleven Corporation 1 3,000 1 % $ 129,804 2 % Best Buy Co., Inc. 1 30,701 5 % 353,061 4 % Fresenius Medical Care Holdings, Inc. 1 10,947 2 % 228,902 3 % General Services Administration of the USA 3 68,459 13 % 1,431,934 17 % Kohl's Corporation 1 88,408 17 % 823,962 10 % La-Z-Boy Inc. 1 15,288 3 % 366,600 4 % PRA Group, Inc. 1 34,847 7 % 765,136 9 % Pratt & Whitney Automation, Inc. 1 59,091 11 % 684,996 8 % Irby Construction 1 7,826 2 % 170,865 2 % Sherwin Williams Company 1 3,500 1 % 126,788 1 % Starbucks Corporation 2 4,842 1 % 348,966 4 % San Antonio Early Childhood Education Municipal Development Corporation 1 50,000 10 % 924,000 11 % Dollar Tree 1 10,906 2 % 103,607 1 % Dollar General 8 82,157 16 % 984,799 11 % exp US Services, Inc. 1 33,118 6 % 835,346 10 % Walgreens 1 14,490 3 % 369,000 4 % 26 517,580 100 % $ 8,647,766 100 % Physical Occupancy Table for Last 2 Years Properties were 100% occupied at December 31, 2022, and 96% occupied as of December 31, 2023.
ITEM 2. PR OPERTIES The following are characteristics of our properties as of December 31, 2022: • Creditworthy Tenants . Approximately 64% of our portfolio’s annualized rent as of December 31, 2022 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of “BBB-” or better.
ITEM 2. PR OPERTIES The following are characteristics of our properties as of December 31, 2023: • Creditworthy Tenants . Approximately 68% of our portfolio’s annualized rent as of December 31, 2023 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of “BBB-” or better.
Approximately 93% of the leases in our current portfolio (based on annualized base rent as of December 31, 2022) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot .
Approximately 84% of the leases in our current portfolio (based on annualized base rent as of December 31, 2023) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot . Average effective annual rental per square foot is $16.02.
Average effective annual rental per square foot is $16.07. 31 Geographic Diversification Table The following tables show a list of properties grouped by the state where each of our investments are located.
Geographic Diversification Table The following tables show a list of properties grouped by the state where each of our investments are located.
Our largest tenants are the General Service Administration, PRA Holdings, Inc., Pratt & Whitney Automation, Inc., and Kohl's Corporation and contributed approximately 62% of our portfolio’s annualized base rent as of December 31, 2022. • 100% Occupied . Our portfolio is 100% leased and occupied. • Contractual Rent Growth .
Our largest tenants are the General Service Administration, Dollar General, and the City of San Antonio, who collectively contributed approximately 39% of our portfolio’s annualized base rent as of December 31, 2023. • 96% Occupied . Our portfolio is 96% leased and occupied. • Contractual Rent Growth .
Removed
State # of Properties Square Feet % of Total Square Feet 2022 Annual Base Rent % of Total Annual Base Rent Alabama 1 59,091 17 % $ 684,996 13 % Arizona 1 88,408 26 % 823,962 15 % Colorado 1 30,701 9 % 353,061 6 % District of Columbia 1 3,000 1 % 129,804 2 % Florida 4 16,168 5 % 617,941 11 % Illinois 2 26,235 8 % 595,502 11 % North Carolina 1 7,543 2 % 161,346 3 % Virginia 2 106,996 32 % 2,067,647 39 % 13 338,142 100 % $ 5,434,259 100 % Tenants as of December 31, 2022 Tenant # of Leases Square Feet % of Total Square Feet 2022 Annual Base Rent % of Total Annual Base Rent 7-Eleven Corporation 1 3,000 1 % $ 129,804 2 % A.P.
Added
SF Occupied as of December 31, Property Type Location Tenant 2023 2022 Retail Washington, D.C. 7-Eleven Corporation 3,000 3,000 Retail Tampa, FL Starbucks Corporation 2,200 2,200 Industrial Huntsville, AL Pratt & Whitney Automation, Inc. 59,091 59,091 Office Norfolk, VA General Services Administration-Navy (1) 49,902 49,902 Office Norfolk, VA VACANT (1) VACANT 22,247 Office Norfolk, VA PRA Holdings, Inc. 34,847 34,847 Retail Tampa, FL Sherwin Williams Company 3,500 3,500 Office Manteo, NC General Services Administration-FBI 7,543 7,543 Office Plant City, FL Irby Construction 7,826 7,826 Retail Grand Junction, CO Best Buy Co., Inc. 30,701 30,701 Medical-Retail Chicago, IL Fresenius Medical Care Holdings, Inc. 10,947 10,947 Retail Tampa, FL Starbucks Corporation 2,642 2,642 Retail Tucson, AZ Kohl's Corporation 88,408 88,408 Retail San Antonio, TX City of San Antonio (PreK) 50,000 N/A Retail Bakersfield, CA Dollar General Market 18,827 N/A Retail Big Spring, TX Dollar General 9,026 N/A Retail Castalia, OH Dollar General 9,026 N/A Retail East Wilton, ME Dollar General 9,100 N/A Retail Lakeside, OH Dollar General 9,026 N/A Retail Litchfield, ME Dollar General 9,026 N/A Retail Mount Gilead, OH Dollar General 9,026 N/A Retail Thompsontown, PA Dollar General 9,100 N/A Retail Morrow, GA Dollar Tree Stores, Inc. 10,906 N/A Office Maitland, FL exp U.S.
Removed
Year # of Leases Square Feet % of Total Square Feet 2022 Annual Base Rent % of Total Annual Base Rent 2023 1 22,247 7 % $ 375,588 7 % 2024 1 7,826 2 % 160,437 3 % 2025 - - 0 % - 0 % 2026 2 13,947 4 % 358,706 7 % 2027 4 83,478 25 % 1,633,013 29 % 2028 3 55,602 16 % 1,236,211 23 % 2029 2 66,634 20 % 846,342 16 % 2030 1 88,408 26 % 823,962 15 % 14 338,142 100 % $ 5,434,259 100 % Physical Occupancy Table for Last 5 Years All properties have been 100% occupied through December 31, 2022.
Added
Services Inc. 33,118 N/A Office Vacaville, CA General Services Administration 11,014 N/A Retail Santa Maria, CA Walgreens 14,490 N/A Retail Rockford, IL La-Z-Boy Inc. 15,288 N/A Tenants - All Properties 517,580 322,854 (1) Two tenants occupy this single property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we may be party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently subject to any lawsuits, claims or other legal proceedings. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 32 PART II.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we may be party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently subject to any lawsuits, claims or other legal proceedings. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 34 PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−12 removed10 unchanged
Biggest changeJanuary and February distributions were paid on January 30, 2023 and February 28, 2023 respectively, and we expect to pay March dividends on or about March 30, 2023. Because we have not yet generated a cumulative profit, distributions have been made from proceeds from prior capital raises. Recent Sales of Unregistered Securities None. ITEM 6. [R ESERVED] 34
Biggest changeJanuary and February distributions were paid on January 30, 2024, February 29, 2024 and March 29, 2024, respectively. Because we have not yet generated a cumulative profit, distributions have been made from proceeds from prior capital raises. Recent Sales of Unregistered Securities None. ITEM 6. [R ESERVED] 35
If our operations do not generate sufficient cash flow to enable us to pay our intended or required distributions, we may be 33 required either to fund distributions from working capital, borrowings, proceeds from the sale of equity securities or to reduce the amount of such distributions.
If our operations do not generate sufficient cash flow to enable us to pay our intended or required distributions, we may be required either to fund distributions from working capital, borrowings, proceeds from the sale of equity securities or to reduce the amount of such distributions.
From inception through December 31, 2022, we have distributed $2,655,755 to common stockholders. In addition, on January 3, 2023, we announced that our Board of Directors authorized a distribution of $0.039 per share monthly cash distribution for shareholders of record of our common stock as of January 15, 2023, February 15, 2023 and March 15, 2023.
From inception through December 31, 2023, we have distributed $3,872,035 to common stockholders. In addition, on January 3, 2024, we announced that our Board of Directors authorized a distribution of $0.039 per share monthly cash distribution for shareholders of record of our common stock as of January 15, 2024, February 15, 2024 and March 15, 2024.
On October 1, 2021, the units mandatorily separated into common stock and warrants and ceased trading. On October 4, 2021, the common stock and warrants included in the units commenced trading on The Nasdaq Capital Market under the symbols “GIPR” and “GIPRW,” respectively. As of March 17, 2023, we had 96 shareholders of record.
On October 1, 2021, the units mandatorily separated into common stock and warrants and ceased trading. On October 4, 2021, the common stock and warrants included in the units commenced trading on The Nasdaq Capital Market under the symbols “GIPR” and “GIPRW,” respectively. As of March 29, 2024, we had 4,134 shareholders of record.
Removed
Use of Proceeds from Public Offering On September 2, 2021, we entered into an Underwriting Agreement with Maxim Group LLC on behalf of itself and as representative of the underwriters named therein (the “Underwriting Agreement”), pursuant to which the Company issued and sold, in an underwritten public offering (the “Public Offering”), 1,500,000 units consisting of one share of common stock, $0.01 par value per share (“Common Stock”), and one warrant exercisable for one share of Common Stock (the “Investor Warrants”).
Removed
The units were sold to the public at the price of $10.00 per unit and were offered by the Company pursuant to the registration statement on Form S-11 (File No. 333-235707), which was declared effective on September 2, 2021 (the “Registration Statement”).
Removed
The shares of Common Stock and Investor Warrants comprising the units began separate trading 31 days from the date the registration statement was declared effective. On September 8, 2021, the Public Offering closed, resulting in gross proceeds to the Company of approximately $15,000,000, before deducting the underwriting discounts and commissions and estimated offering expenses.
Removed
The Company also granted to the underwriter a 30-day option to purchase up to an additional 225,000 units. On September 30, 2021, the underwriters partially exercised the over-allotment option and purchased an additional 165,000 units, generating gross proceeds of $1,650,000.
Removed
The Company received total net proceeds in the Public Offering of approximately $13.8 million after deducting underwriting discounts and commissions and other expenses of approximately $2.9 million incurred during the years ended December 31, 2021 and 2020. As of December 31, 2022, all of the proceeds have been used to finance the acquisition of properties and general corporate purposes.
Removed
None of the underwriting discounts and commissions or offering expenses were incurred or paid, directly or indirectly, to any of our directors or officers or their associates or to persons owning 10% or more of our common stock or to any of our affiliates.
Removed
The Investor Warrants issued in the Public Offering entitle the holder to purchase one share of common stock at a price equal to $10.00 upon the first separate trading day of the warrants for a period of five years.
Removed
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.
Removed
In addition, after 120 days after the Investor Warrants are issued, any Investor Warrant may be exercised on a cashless basis for 10% of the shares of common stock underlying the Investor Warrant if the volume-weighted average trading price of the Company’s shares of common stock on Nasdaq is below the then-effective exercise price of the Investor Warrant for 10 consecutive trading days.
Removed
The Company agreed to an underwriting discount of 9% of the public offering price of the Units sold in the Public Offering.
Removed
In addition, the Company issued to Maxim Group LLC (or its designee) warrants to purchase 149,850 shares of Common Stock, which is equal to an aggregate of 9% of the number of shares of Common Stock sold in the Public Offering (the “Representative’s Warrants”).
Removed
The Representative’s Warrants have an exercise price equal to $12.50, which is 125% of the offering price in the Public Offering. The Representative’s Warrants may be exercised on a cashless basis and will be exercisable six months following the closing date and until September 2, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+45 added−31 removed41 unchanged
Biggest changeThe following tables reconcile net income (net loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO and Core AFFO: Twelve Months Ended December 31, 2022 2021 Net loss $ (2,747,178 ) $ (712,433 ) Gain on disposal of property - (923,178 ) Depreciation and amortization 2,110,975 1,508,340 Funds From Operations $ (636,203 ) $ (127,271 ) Amortization of debt issuance costs 118,930 120,343 Non-cash stock compensation 421,882 314,122 Write-off of deferred financing cost 252,256 - Adjustments to Funds From Operations $ 793,068 $ 434,465 Core Funds From Operations $ 156,865 $ 307,194 Net loss $ (2,747,178 ) $ (712,433 ) Gain on disposal of property - (923,178 ) Depreciation and amortization 2,110,975 1,508,340 Amortization of debt issuance costs 118,930 120,343 Above and below-market lease amortization, net (102,775 ) (147,228 ) Straight line rent, net 53,193 (12,633 ) Adjustments to net income (loss) $ 2,180,323 $ 545,644 Adjusted Funds From Operations $ (566,855 ) $ (166,789 ) Dead deal expense 174,722 - Loss on debt extinguishment 144,029 - Non-cash stock compensation 421,882 314,122 Write-off of deferred financing cost 252,256 - Adjustments to Adjusted Funds From Operations $ 992,889 $ 314,122 Core Adjusted Funds From Operations $ 426,034 $ 147,333 Net loss $ (2,747,178 ) $ (712,433 ) Net income attributable to non-controlling interests (490,462 ) (513,581 ) Net loss attributable to Generation Income Properties, Inc. $ (3,237,640 ) $ (1,226,014 ) 43 Jumpstart Our Business Startups Act (“JOBS Act”) In April 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law.
Biggest changeThe following tables reconcile net income (net loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO and Core AFFO: Twelve Months Ended December 31, 2023 2022 Net loss $ (4,441,465 ) $ (2,747,178 ) Other expense 506,639 - Loss on derivative valuation, net 401,782 - Depreciation and amortization 3,538,569 2,110,975 Funds From Operations $ 5,525 $ (636,203 ) Amortization of debt issuance costs 146,745 118,930 Non-cash stock compensation 382,002 421,882 Write-off of deferred financing costs - 252,256 Adjustments to Funds From Operations 528,747 793,068 Core Funds From Operations $ 534,272 $ 156,865 Net loss $ (4,441,465 ) $ (2,747,178 ) Other expense 506,639 - Loss on derivative valuation, net 401,782 - Depreciation and amortization 3,538,569 2,110,975 Amortization of debt issuance costs 146,745 118,930 Above and below-market lease amortization, net (2,873 ) (102,775 ) Straight line rent, net 64,572 53,193 Adjustments to net loss $ 4,655,434 $ 2,180,323 Adjusted Funds From Operations $ 213,969 $ (566,855 ) Dead deal expense $ 109,569 $ 174,722 Loss on debt extinguishment - 144,029 Non-cash stock compensation 382,002 421,882 Write-off of deferred financing costs - 252,256 Adjustments to Adjusted Funds From Operations $ 491,571 $ 992,889 Core Adjusted Funds From Operations $ 705,540 $ 426,034 Jumpstart Our Business Startups Act (“JOBS Act”) In April 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law.
GIPVA 2510 and GIPVA 130 (the “Virginia SPEs”) hold the Company’s Norfolk, Virginia properties.
GIPVA 2510 and GIPVA 130 (the “Virginia SPEs”) hold the Company’s Norfolk, Virginia properties.
We currently qualify as an emerging growth company, but will no longer qualify after the earliest of: • the last day of the fiscal year during which we have annual total gross revenues of $1.07 billion or more; • the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in an offering registered under the Securities Act; • the date on which we issue more than $1 billion in non-convertible debt securities during a previous three-year period; or • the date on which we become a large accelerated filer, which generally is a company with a public float of at least $700 million (Exchange Act Rule 12b-2).
We currently qualify as an emerging growth company, but will no longer qualify after the earliest of: • the last day of the fiscal year during which we have annual total gross revenues of $1.07 billion or more; • the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in an offering registered under the Securities Act; • the date on which we issue more than $1 billion in non-convertible debt securities during a previous three-year period; or 45 • the date on which we become a large accelerated filer, which generally is a company with a public float of at least $700 million (Exchange Act Rule 12b-2).
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 39 fixed interest rate of 9%, simple interest. Interest is payable monthly.
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%, simple interest. Interest is payable monthly.
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 held in the tenancy-in-common investment at an interest rate of 3.85% from April 1, 2022 through and until March 31, 2027.
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.
The proceeds from the sale of the SPE Preferred Units were distributed to the Operating Partnership to fund the Operating Partnership’s redemption obligations from two members of the Operating Partnership who redeemed a total of 123,965 units both on January 27, 2023 at $20 per unit in the aggregate amount of $2,479,301 and to fund general corporate expenses of the Operating Partnership.
The proceeds from the sale of the SPE Preferred Units were distributed to the Operating Partnership to fund the Operating Partnership’s redemption obligations from two members of the Operating Partnership who redeemed a total of 123,965 units both on January 27, 2023 at $20 per unit in the aggregate amount of $2,479,299 and to fund general corporate expenses of the Operating Partnership.
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 December 31, 2022: • Creditworthy Tenants .
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 December 31, 2023: • Creditworthy Tenants .
Average effective annual rental per square foot is $16.07. Given the nature of our leases, our tenants either pay the real estate taxes directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance.
Average effective annual rental per square foot is $16.02. Given the nature of our leases, our tenants either pay the real estate taxes directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance.
BBB+ 4.2 1 x 5 Yes $ 353,061 $ 11.50 Medical-Retail Chicago, IL 10,947 Fresenius Medical Care Holdings, Inc.
BBB+ 3.2 1 x 5 Yes $ 353,061 $ 11.50 Medical-Retail Chicago, IL 10,947 Fresenius Medical Care Holdings, Inc.
Our President and CEO has personally guaranteed the repayment of the $11.0 million due under the 7-11 - Washington, DC; Starbucks-South Tampa, FL; and Pratt & Whitney-Huntsville, AL loan as well as the $1.3 million loan secured by our Sherwin-Williams - Tampa, FL mortgage loan.
Our President and CEO has personally guaranteed the repayment of the $10.8 million due under the 7-11 - Washington, DC; Starbucks-South Tampa, FL; and Pratt & Whitney-Huntsville, AL loan as well as the $1.3 million loan secured by our Sherwin-Williams - Tampa, FL 40 mortgage loan.
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 team of the leases as amortization expense.
The fair value of the in-place leases is 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 Company’s CEO entered into a guaranty 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.
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.
Approximately 64% of our portfolio’s annualized rent as of December 31, 2022 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of “BBB-” or better.
Approximately 68% of our portfolio’s annualized rent as of December 31, 2023 was derived from tenants that have (or whose parent company has) an investment grade credit rating from a recognized credit rating agency of “BBB-” or better.
(3) BB+ 4.7 1 x 5 Yes $ 765,136 $ 21.96 Retail Tampa, FL 3,500 Sherwin Williams Company BBB 5.6 5 x 5 Yes $ 126,788 $ 36.23 Office Manteo, NC 7,543 General Services Administration-FBI AA+ 6.1 1 x 5 Yes $ 161,346 $ 21.39 Office Plant City, FL 7,826 Irby Construction BBB- 2.0 2 x 5 Yes $ 160,437 $ 20.50 Retail Grand Junction, CO 30,701 Best Buy Co., Inc.
(3) BB+ 3.7 1 x 5 Yes $ 765,136 $ 21.96 Retail Tampa, FL 3,500 Sherwin Williams Company BBB 4.6 5 x 5 Yes $ 126,788 $ 36.23 Office Manteo, NC 7,543 General Services Administration-FBI AA+ 5.1 1 x 5 Yes $ 161,346 $ 21.39 Office Plant City, FL 7,826 Irby Construction BBB- 1.0 2 x 5 Yes $ 170,865 $ 21.83 Retail Grand Junction, CO 30,701 Best Buy Co., Inc.
The table below presents an overview of the properties in our portfolio as of December 31, 2022: 35 Property Type Location Rentable Square Feet Tenant S&P Credit Rating (1) Remaining Term (Yrs) Options (Number x Yrs) Contractual Rent Escalations (7) ABR (2) ABR per Sq. Ft.
The table below presents an overview of the properties in our portfolio as of December 31, 2023: 36 Property Type Location Rentable Square Feet Tenant S&P Credit Rating (1) Remaining Term (Yrs) Options (Number x Yrs) Contractual Rent Escalations (5) ABR (2) ABR per Sq. Ft.
Our portfolio is 100% leased and occupied. • Contractual Rent Growth . 93% of the leases in our current portfolio (based on annualized base rent as of December 31, 2022) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot .
Our portfolio is 96% leased and occupied. • Contractual Rent Growth . 84% of the leases in our current portfolio (based on annualized base rent as of December 31, 2023) provide for increases in contractual base rent during future years of the current term or during the lease extension periods. • Average Effective Annual Rental per Square Foot .
Retail Washington, D.C 3,000 7-Eleven Corporation A 3.2 2 x 5 Yes $ 129,804 $ 43.27 Retail Tampa, FL 2,200 Starbucks Corporation BBB+ 5.2 4 x 5 Yes $ 182,500 $ 82.95 Industrial Huntsville, AL 59,091 Pratt & Whitney Automation, Inc.
Retail Washington, D.C. 3,000 7-Eleven Corporation A 2.2 2 x 5 Yes $ 129,804 $ 43.27 Retail Tampa, FL 2,200 Starbucks Corporation BBB+ 4.2 4 x 5 Yes $ 200,750 $ 91.25 Industrial Huntsville, AL 59,091 Pratt & Whitney Automation, Inc.
Net Loss Attributable to Common Shareholders For the twelve months ended December 31, 2022 and 2021, we generated a net loss attributable to our common shareholders of $3,237,640 and $1,226,014, respectively. Liquidity and Capital Resources We require capital to fund our investment activities and operating expenses.
Net Loss Attributable to Common Shareholders For the twelve months ended December 31, 2023 and 2022, we generated a net loss attributable to our common shareholders of $6,192,262 and $3,237,640, respectively. Liquidity and Capital Resources We require capital to fund our investment activities and operating expenses.
On April 1, 2022, we entered into two loan agreements with an aggregate balance of $13.5 million as of December 31, 2022 to refinance seven of the Company's properties.
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.
Not Rated 4.8 4 x 5 Yes $ 366,600 $ 23.98 Tenants - All Properties 338,142 $ 5,434,259 $ 16.07 (1) Tenant, or tenant parent, rated entity. (2) Annualized cash base rental income in place as of December 31, 2022. Our leases do not include tenant concessions or abatements.
Not Rated 3.8 4 x 5 Yes $ 366,600 $ 23.98 Tenants - All Properties 539,827 $ 8,647,766 $ 16.02 (1) Tenant, or tenant parent, rated entity. (2) Annualized cash base rental income in place as of December 31, 2023. Our leases do not include tenant concessions or abatements.
Also on February 8, 2023, both of the Virginia SPEs and the Purchaser entered into Unit Purchase Agreements in which GIPVA 2510 issued and sold to the Purchaser 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 to the Purchaser 120,000 Class A Preferred units at a price of $10.00 per unit for 36 an aggregate price of $1,200,000.
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.
Net Loss For the twelve months ended December 31, 2022 and 2021, we generated a net loss of $2,747,178 and $712,433, respectively.
Net Loss For the twelve months ended December 31, 2023 and 2022, we generated a net loss of $4,441,465 and 2,747,178, respectively.
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. 42 We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT").
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.
(6) A- 6.1 2 x 5 Yes $ 684,996 $ 11.59 Office Norfolk, VA 49,902 General Services Administration-Navy AA+ 5.7 N/A Yes $ 926,923 $ 18.57 Office Norfolk, VA 22,247 Maersk Shipping (5) BBB+ 0.1 1 x 5 N/A $ 375,588 $ 16.88 Office Norfolk, VA 34,847 PRA Holdings, Inc.
(4) A- 0.1 N/A N/A $ 684,996 $ 11.59 Office Norfolk, VA 49,902 General Services Administration-Navy (7) AA+ 4.7 N/A Yes $ 926,923 $ 18.57 Office Norfolk, VA 22,247 VACANT (7) N/A - N/A N/A $ - $ - Office Norfolk, VA 34,847 PRA Holdings, Inc.
(6) Tenant has the right to terminate the lease on January 31, 2024 subject to certain conditions. (7) Includes rent escalations available from lease renewal options.
(3) Tenant has the right to terminate the lease on August 31, 2024 subject to certain conditions. (4) Tenant terminated the lease and vacated on January 31, 2024. (5) Includes rent escalations available from lease renewal options.
Our capital sources may include net proceeds from offerings of our equity securities, cash flow from operations and borrowings under credit facilities. As of December 31, 2022, we had total cash (unrestricted and restricted) of $3,752,996, properties with a cost basis of $56,917,321 and outstanding debt of $36,733,878.
Our capital sources may include net proceeds from offerings of our equity securities, cash flow from operations and borrowings under credit facilities. As of December 31, 2023, we had total cash (unrestricted and restricted) of $3,151,946, properties with a cost basis of $104,912,421 and outstanding debt of $56,817,310.
Our ability to increase assets under management is affected by our ability to raise borrowings and/or capital, coupled with our ability to identify appropriate investments. 37 Our results of operations for the twelve months ended December 31, 2022 and 2021 are not indicative of those expected in future periods, as we expect that rental income, interest expense, rental operating expense, general and administrative expense, and depreciation and amortization will significantly change in future periods as a result of growth through future acquisitions of real estate related investments.
Our results of operations for the twelve months ended December 31, 2023 and 2022 are not indicative of those expected in future periods, as we expect that rental income, interest expense, rental operating expense, general and administrative expense, and depreciation and amortization will significantly change in future periods as a result of growth through future acquisitions of real estate related investments.
The vested share restrictions will be removed upon the first annual anniversary of the award. Results of Operations Our management team’s evaluation of operating results includes an assessment of our ability to generate cash flow necessary to pay operating expenses, general and administrative expenses, debt service, and to fund dividends to our stockholders.
Results of Operations Our management team’s evaluation of operating results includes an assessment of our ability to generate cash flow necessary to pay operating expenses, general and administrative expenses, debt service, and to fund dividends to our stockholders.
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.
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.
As such, we recorded an Other payable - related party in the amount of $2,912,300 upon execution of the Redemption Agreement entered into July 20, 2022 and made the first installment payment of $325,000 on September 13, 2022 with a remaining balance of $2,587,300 outstanding as of December 31, 2022.
As such, we recorded an Other payable - related party in the amount of $2,912,300 upon execution of the Redemption Agreement entered into July 20, 2022 and have made installment payments to date of $1,102,460 with a remaining balance of $1,809,840 outstanding as of December 31, 2023.
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 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. 44 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.
In addition, our President and CEO has also provided a guaranty of the Borrower’s nonrecourse carveout liabilities and obligations in favor of the lender for the GSA & MAERSK and PRA Holdings, Inc. - Norfolk, VA mortgage loans with an aggregate principal amount of $12.3 million as well as six mortgage loans secured by the remaining properties within the portfolio with an aggregate principal amount of 11.4 million.
In addition, our President and CEO has also provided a guaranty of the Borrower’s nonrecourse carveout liabilities and obligations in favor of the lender for the GSA and PRA Holdings, Inc. - Norfolk, VA mortgage loans with an aggregate principal amount of $11.9 million. On August 9, 2022, we entered a Redemption Agreement with a unit holder.
Minimum required principal payments on our outstanding debt for subsequent years ending December 31 are as follows: 40 Mortgage Loans Other Payable - Related Party Loan Payable - Related Party Total as of December 31, 2022 2023 $ 785,524 $ 777,460 $ - $ 1,562,984 2024 12,427,090 1,809,840 1,500,000 15,736,930 2025 546,280 - - 546,280 2026 568,514 - - 568,514 2027 591,656 - - 591,656 Thereafter 21,032,195 - - 21,032,195 $ 35,951,259 $ 2,587,300 $ 1,500,000 $ 40,038,559 On February 8, 2023, the Operating Partnership entered into new Amended and Restated Limited Liability Company Agreements for GIPVA 2510 and GIPVA 130 in which the Operating Partnership, as the sole member of GIPVA 2510 and GIPVA 130, admitted a new member, Brown Family Enterprises, LLC (the "Purchaser"), a preferred equity partner and therefore a related party, through the issuance to Purchaser of membership interests in the form of Class A Preferred Units of GIPVA 2510 and GIPVA 130.
Minimum required principal payments on our outstanding debt for subsequent years ending December 31 are as follows: 42 Mortgage Loans Other Payable - Related Party Loan Payable - Related Party Total as of December 31, 2023 2024 12,780,776 1,809,840 - 14,590,616 2025 926,633 - - 926,633 2026 976,467 - 5,500,000 6,476,467 2027 1,033,322 - - 1,033,322 2028 21,341,791 - - 21,341,791 Thereafter 21,084,683 - - 21,084,683 $ 58,143,672 $ 1,809,840 $ 5,500,000 $ 65,453,512 On February 8, 2023, the Operating Partnership entered into new Amended and Restated Limited Liability Company Agreements for GIPVA 2510 and GIPVA 130 in which the Operating Partnership, as the sole member of GIPVA 2510 and GIPVA 130, admitted a new member, Brown Family Enterprises, LLC (the "Purchaser"), a preferred equity partner and therefore a related party, through the issuance to Purchaser of membership interests in the form of Class A Preferred Units of GIPVA 2510 and GIPVA 130.
Results of Operations for the Years Ended December 31, 2022 and 2021 Revenue For twelve months ended December 31, 2022, total revenue from operations was $5,432,462 as compared to $3,900,096 for the twelve months ended December 31, 2021.
Results of Operations for the Years Ended December 31, 2023 and 2022 Revenue For Twelve months ended December 31, 2023, total revenue from operations was $7,632,600 as compared to $5,432,462 for the twelve months ended December 31, 2022. Revenue increased by $2,200,138 for the twelve-months ended December 31, 2022 from the Modiv acquisition in August 2023.
As of December 31, 2022 and December 31, 2021, we had total current liabilities that consists of accounts payable, accrued expenses, insurance payable of $714,354 and $369,902, respectively.
As of December 31, 2023 and December 31, 2022, we had accounts payable, accrued expenses and insurance payable totaling $1,813,231 and $714,354, respectively.
The decrease is primarily due to the net proceeds from debt financing in 2022 of $7,844,271 as compared to the proceeds from the issuance of common stock and warrants in 2021 of $14,375,857. 41 Future Rental Payments 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 December 31, 2022 2023 $ 4,759,066 2024 4,785,452 2025 4,635,711 2026 4,513,724 2027 3,919,117 Thereafter 5,210,921 27,823,991 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.
Future Rental Payments 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: 43 As of December 31, 2023 2024 $ 8,048,449 2025 7,798,628 2026 7,458,648 2027 5,835,157 2028 4,376,385 Thereafter 8,669,905 $ 42,187,172 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.
Cash from Financing Activities Net cash provided by financing activities was $5,826,284 and $13,606,159 for the twelve months ended December 31, 2022 and 2021, respectively.
Cash from Financing Activities Net cash provided by financing activities was $32,701,579 and $5,826,284 for the twelve months ended December 31, 2023 and 2022, respectively. The change is primarily due to the acquisition of the Modiv portfolio in August 2023.
We funded the redemption obligations per the terms of the contribution agreement on February 9, 2023. 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.
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.
The change is primarily due to an increase in accrued expenses as well as an increase in non-cash adjustments such as depreciation and amortization and the gain on sale of property in August 2021. Cash from Investing Activities Net cash used in investing was $13,281,248 and $3,930,685 for the twelve months ended December 31, 2022 and 2021, respectively.
Cash from Investing Activities Net cash used in investing was $33,314,974 and $13,281,248 for the twelve months ended December 31, 2023 and 2022, respectively. The change is primarily due to the acquisition of the Modiv portfolio in August 2023.
Our largest tenants are the General Service Administration, PRA Holdings, Inc., Pratt & Whitney Automation, Inc., and Kohl's Corporation and contributed approximately 62% of our portfolio’s annualized base rent as of December 31, 2022. • 100% Occupied .
Our largest tenants are the General Service Administration, Dollar General, and the City of San Antonio, who collectively contributed approximately 39% of our portfolio’s annualized base rent as of December 31, 2023. • 96% Occupied .
As such, 10,648 shares of common stock were issued upon exercise. • Agreements with Brown Family Enterprises, LLC On February 8, 2023, the Operating Partnership entered into new Amended and Restated Limited Liability Company Agreements for 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 member, Brown Family Enterprises, LLC (the "Purchaser"), through the issuance to Purchaser of membership interests in the form of Class A Preferred Units of GIPVA 2510 and GIPVA 130.
Because we have not yet generated a cumulative profit, distributions have been made from proceeds from prior capital raises. • Series A Preferred Stock Redemption On January 29, 2024 the Company exchanged all shares of its Series A Redeemable Preferred Stock to 2,794,597 shares of our common stock according to the following allocation: • 2,623,153 shares out of the 2,794,597 shares of our common stock were distributed by Modiv OP and subsequently distributed by Modiv to the holders of its common stock; • the remaining 171,444 shares of our common stock issued to Modiv OP will be held by Modiv OP. 38 Recent Partnership Developments • Agreements with Brown Family Enterprises, LLC On February 8, 2023, the Operating Partnership entered into Amended and Restated Limited Liability Company Agreements for 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.
Income on Investment in Tenancy in Common For the twelve months ended December 31, 2022 and 2021, our share of earnings on our investment in tenancy in common acquired in August of 2021 and accounted for under the equity method generated income of $37,298 and $12,495, respectively. 38 Net Loss Attributable to Non-controlling Interests For the twelve months ended December 31, 2022 and 2021, we allocated net income attributable to non-controlling interest of $490,462 and $513,581, respectively.
Income on Investment in Tenancy in Common For the twelve months ended December 31, 2023 and 2022, our share of earnings on our investment in tenancy in common and accounted for under the equity method generated income of $32,773 and $37,298, respectively. On September 7, 2023, the Company purchased the remaining tenancy-in-common ("TIC") interest and assumed control of the property.
Cash from Operations Activities Net cash provided by operations was $583,884 and used in operations was $173,762 during the twelve months ended December 31, 2022 and 2021, respectively.
Cash from Operations Activities Net cash provided by operations was $12,345 and $583,884 during the twelve months ended December 31, 2023 and 2022, respectively. The change is primarily due to the year over year increases in Accounts receivable, Escrow deposits and other assets, and Prepaid expenses driven by the doubling of the property portfolio in August 2023.
The Purchaser will be paid an annual 7% preferred return on the preferred units of the Virginia SPEs (the “SPE Preferred Units”), payable on a monthly basis, and will share in approximately 16% of the equity in each of the Virginia SPEs.
Pursuant to the agreement, the Company is 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.
Additionally, during the twelve months ended December 31, 2022, we incurred a guaranty fee expense payable to our President and CEO of $128,901 which was recorded to interest expense.
Additionally, during the twelve months ended December 31, 2023, we incurred a guaranty fee expense of $290,416 payable to our President and CEO of which $177,347 remained payable as of December 31, 2023. • Compensation costs remained flat, with the exception of a one-time payment of approximately $58,000 paid to the former CFO, who departed in November 2023.
As a result of this transaction, the Company may be required to reimburse federal, state and local income taxes incurred by the remaining partner as per a tax protection agreement although the Company is continuing to evaluate such impact, if any. • Agreement with LMB Owenton I, LLC O n February 7, 2023, the Operating Partnership entered into a Unit Issuance Agreement and Amendment to Contribution and Subscription Agreement (the "LMB Agreement") with LMB Owenton I LLC, the contributor of the Company’s Tampa Starbucks property located at 10002 N Dale Mabry (the “Contributor”), in which the Operating Partnership and the Contributor agreed to delay the Contributor’s right to require the redemption of the Contributor’s common units in the Operating Partnership until the third anniversary of the closing of the contribution of the Tampa Starbucks property, January 14, 2025, and for a reduced redemption price of $7.15 per common unit.
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 December 31, 2023. • Agreement with LMB Owenton I, LLC On February 7, 2023, the Operating Partnership entered into a Unit Issuance Agreement and Amendment to Contribution and Subscription Agreement with LMB Owenton I LLC in which the Operating Partnership and LMB Owenton I LLC agreed to delay the Contributor’s right to require the redemption of the Contributor’s GIP LP Units in the Operating Partnership until after 36 months on January 14th, 2025 and for a reduced redemption price of $7.15 per GIP LP Unit.
Expenses During the twelve months ended December 31, 2022 and 2021 expenses incurred were as follows: Twelve months ended December 31, 2022 2021 Change General and administrative expense $ 1,647,987 $ 1,111,029 $ 536,958 Building expenses 1,208,192 768,182 440,010 Depreciation and amortization 2,110,975 1,508,340 602,635 Interest expense, net 1,620,237 1,310,950 309,287 Compensation costs 1,310,796 849,701 461,095 Total expenses $ 7,898,187 $ 5,548,202 $ 2,349,985 • General and administrative expense increased by $536,958 due to an increase in legal and audit expense, an increase in corporate filing fees incurred for our first annual report and shareholders' meeting, an increase in insurance expense, and an increase in investor relations expense offset by a decrease in consulting services. • Building expenses increased by $440,010 due to an increase in tenant reimbursable expenses incurred on behalf of tenants from the acquisition of four additional properties.
Expenses During the twelve months ended December 31, 2023 and 2022 expenses incurred were as follows: 39 Twelve Months Ended December 31, 2023 2022 Change General and administrative expense $ 1,734,134 $ 1,647,987 $ 86,147 Building expenses 1,699,200 1,208,192 491,008 Depreciation and amortization 3,539,569 2,110,975 1,428,594 Interest expense, net 2,744,406 1,620,237 1,124,169 Compensation costs 1,372,539 1,310,796 61,743 Total expenses $ 11,089,848 $ 7,898,187 $ 3,191,661 • General and administrative expense increased by $86,147, or 5%, driven by increases in audit fees, insurance, and partially offset by reductions in stock issuance costs and professional services. • Building expenses increased by $491,008, or 41%, due to the acquisition of 13 properties from Modiv in August 2023. • Depreciation and amortization increased by $1,427,594, or 68%, from the acquisition of 13 properties from Modiv in August 2023. • Interest expense, net increased by $1,124,169, or 69%, due to interest on mortgage loans secured by the 13 property portfolio acquired from Modiv in August 2023.
Removed
BBB- 3.8 2 x 5 Yes $ 228,902 $ 20.91 Retail Tampa, FL 2,642 Starbucks Corporation BBB+ 4.2 2 x 5 Yes $ 148,216 $ 56.10 Retail Tucson, AZ 88,408 Kohl's Corporation BB+ 7.1 7 x 5 Yes $ 823,962 $ 9.32 Tenants - Consolidated Properties 322,854 $ 5,067,659 $ 15.70 Retail (4) Rockford, IL 15,288 La-Z-Boy Inc.
Added
BBB 2.8 2 x 5 Yes $ 228,902 $ 20.91 Retail Tampa, FL 2,642 Starbucks Corporation BBB+ 3.2 2 x 5 Yes $ 148,216 $ 56.10 Retail Tucson, AZ 88,408 Kohl's Corporation BB 6.1 7 x 5 Yes $ 823,962 $ 9.32 Retail San Antonio, TX 50,000 City of San Antonio (PreK) AAA 5.6 1 x 8 Yes $ 924,000 $ 18.48 Retail Bakersfield, CA 18,827 Dollar General Market BBB 4.6 3 x 5 Yes $ 361,075 $ 19.18 Retail Big Spring, TX 9,026 Dollar General BBB 6.5 3 x 5 Yes $ 86,040 $ 9.53 Retail Castalia, OH 9,026 Dollar General BBB 11.4 3 x 5 Yes $ 79,320 $ 8.79 Retail East Wilton, ME 9,100 Dollar General BBB 6.6 3 x 5 Yes $ 112,440 $ 12.36 Retail Lakeside, OH 9,026 Dollar General BBB 11.4 3 x 5 Yes $ 81,036 $ 8.98 Retail Litchfield, ME 9,026 Dollar General BBB 6.8 3 x 5 Yes $ 92,964 $ 10.30 Retail Mount Gilead, OH 9,026 Dollar General BBB 6.5 3 x 5 Yes $ 85,920 $ 9.52 Retail Thompsontown, PA 9,100 Dollar General BBB 6.8 3 x 5 Yes $ 86,004 $ 9.45 Retail Morrow, GA 10,906 Dollar Tree Stores, Inc.
Removed
(3) Tenant has the right to terminate the lease on August 31, 2024 subject to certain conditions. (4) The Company’s pro-rata share is 50% of the tenancy-in-common investment. (5) Tenant did not exercise the renewal option as of the required exercise date of April 1, 2022 and vacated on January 31, 2023.
Added
BBB 1.6 3 x 5 Yes $ 103,607 $ 9.50 Office Maitland, FL 33,118 exp U.S. Services Inc.
Removed
Recent Developments • On January 3, 2023, we announced that our Board of Directors authorized a distribution of $0.039 per share or per unit monthly cash distribution for shareholders and unitholders of record of our common stock and partnership units, respectively, as of January 15, 2023, February 15, 2023 and March 15, 2023.
Added
Not Rated 2.9 1 x 5 Yes $ 835,346 $ 25.22 Office Vacaville, CA 11,014 General Services Administration AA+ 2.6 N/A No $ 343,665 $ 31.20 Retail Santa Maria, CA 14,490 Walgreens (6) BBB 8.3 N/A No $ 369,000 $ 25.47 Retail Rockford, IL 15,288 La-Z-Boy Inc.
Removed
January and February distributions were paid on January 30, 2023 and February 28, 2023 respectively, and we expect to pay March dividends on or about March 30, 2023. • Subsequent to December 31, 2022 but before the filing of this Annual Report on Form 10-K, 106,480 Investor Warrants were exercised on a cashless basis for 10% of the shares of Common Stock underlying the Investor Warrant, as the volume-weighted average trading price of the Company’s shares of Common Stock on Nasdaq was below the then-effective exercise price of the Investor Warrant for 10 consecutive trading days as of the date the Investor Warrants became exercisable.
Added
(6) Tenant has the right to terminate the lease as of March 31, 2032, March 31, 2037, March 31, 2042, March 31, 2047, March 31, 2052, and March 31, 2057. (7) Two tenants occupy this single property.
Removed
We funded the redemption obligations per the terms of the contribution agreement on February 9, 2023.
Added
Recent Developments • Portfolio Acquisition On August 10, 2023, we and our Operating Partnership entered into an Agreement of Purchase and Sale with Modiv Inc., now known as Modiv Industrial, Inc., a Maryland corporation (“Modiv”) and certain of its indirect subsidiaries(together with Modiv, the “Seller”), pursuant to which we purchased a portfolio of 13 properties from the Seller (the “Portfolio Purchase”) for a purchase price of $42.0 million, excluding estimated transaction costs and expenses of $1.9 million consisting of $30.0 million in cash and 2,400,000 shares of a new series of preferred stock designated as Series A Redeemable Preferred Stock (the "Series A Preferred Stock"), par value $0.01 per share.
Removed
Such agreement was made in consideration of the issuance to Contributor of an additional 44,228 common units in the Operating Partnership (the “Additional OP Units”), resulting in Contributor owning an aggregate of 157,771 common units in the Operating Partnership. • Purchase and Sale Agreement On February 10, 2023, the Operating Partnership entered into a Purchase and Sale Agreement with Harbor Terrace Limited Partnership to acquire an approximately 48,000 square foot single-tenant retail building in Overland Park, KS for total consideration of $8,200,000, which is expected to be funded with approximately 50% mortgage debt and 50% equity.
Added
We funded the cash portion of the purchase price and the transaction expenses with a combination of cash on hand, $21.0 million in new secured mortgage debt, and a $12.0 million preferred equity investment by LC2-NNN Pref, LLC, a Florida limited liability company and affiliate of Loci Capital Partners (“LC2”), as summarized below: We, through a newly formed subsidiary, entered into a loan agreement with Valley National Bank in the amount of $21.0 million, which is secured by the Portfolio Purchase and eight other properties held by subsidiaries of GIP VB SPE, LLC, a Delaware limited liability company (“GIP SPE”) that had outstanding loans with Valley National Bank.
Removed
The building is occupied by Best Buy, Inc., who holds an investment grade credit rating of BBB+ on the S&P scale, and has approximately two years remaining on the current lease term, with one additional five year renewal option. The annual rent for the property is $630,994.
Added
All of the mortgaged properties cross collateralize the loan, and the loan is guaranteed by the Operating Partnership and the subsidiaries of GIP Borrower that hold the properties that comprise the Portfolio Purchase.
Removed
The transaction is subject to customary closing conditions and due diligence. • Restricted Stock Issuances On March 1, 2023, the board granted and the Company issued 98,593 restricted shares to directors, officers and employees effective March 1, 2023 valued at $5.68 per share that vest one-third on each anniversary of the grant date.
Added
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. To secure a fixed interest rate on this new debt, we entered into an interest rate swap agreement fixing the interest rate to 7.47%.
Removed
Revenue increased by $1,532,366 for the twelve-months ended December 31, 2022 from the acquisition of four additional properties partially offset by the revenue generated from one property sold in August 2021.
Added
Our Chief Executive Officer, David Sobelman, entered into a guarantee 37 agreement for $7.5 million 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.
Removed
Reimbursement revenues included in Rental income offset related Building expense. • Depreciation and amortization increased by $602,635 from the acquisition of four additional properties offset in part by the expense incurred by one property sold in August 2021. • Interest expense, net increased by $309,287 due to interest on the mortgage loans from the four additional properties offset by the reduction in interest expense due from the mortgage loans refinanced or adjusted to a lower interest rate and further offset by the interest expense from the mortgage loan associated with the one property sold in August 2021.
Added
On August 10, 2023, we, through GIP SPE entered into an agreement (the “Amended and Restated LLC Agreement”) whereas LC2 purchased a preferred equity interest (the "Preferred Interest") in GIP SPE, providing proceeds of an initial capital contribution of $12.0 million, together with a commitment to make an additional $2.1 million contribution upon the acquisition of our tenant-in-common investment.
Removed
No guaranty fee expense was incurred during the twelve months ended December 31, 2021. • Compensation costs increased by $461,095 primarily due to an increase in restricted stock unit compensation expense related to accelerated vesting schedules for the former CFO upon his departure and the Board of Directors' restricted stock issuances in 2022.
Added
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.
Removed
We also incurred additional salary expense for the increase in our President and CEO salary effective June 2022. Gain on Disposal of Property On August 31, 2021 we sold our 15,000-square-foot, single tenant Walgreens in Cocoa Beach, Florida purchased in September 2019 for total net consideration of approximately $5.2 million and recognized a gain on the sale of $923,178.
Added
The Preferred Interest has a cumulative accruing distribution preference of 15.5% per year, compounded monthly (the “Preferred Return”), a portion of which in the amount of 5% per annum, compounded monthly, is deemed to be a "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.” We must redeem the Preferred Interest by August 10, 2025, with two options to extend for an additional 12 months upon payment of an extension fee and an increased preferred rate of return of 18%.
Removed
The decrease is attributable to a decrease in the redeemable non-controlling interest for the property sold in August 2021 and a reduction for partners who redeemed certain non-controlling interests during the year. The decrease was offset by an increase from additional redeemable non-controlling interests issued to finance the acquisition of properties.
Added
LC2 also received a 1% equity fee at closing and will receive a .5% equity fee upon redemption of the Preferred Interest . LC2 will have approval rights to major decisions as defined by the Amended and Restated LL Agreement. See Note 6 “Non-Controlling Interests – LC2-NNN Pref, LLC” to our consolidated financial statements for more information.
Removed
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.
Added
On August 10, 2023, we filed Articles Supplementary (the "Articles Supplementary"), with the State Department of Assessments and Taxation of the State of Maryland, to our Articles of Amendment and Restatement, as amended, classifying and designating 2,400,000 shares of our authorized capital stock as shares of Series A Redeemable Preferred Stock.
Removed
On October 26, 2021, the Operating Partnership entered into a Commitment Letter with American Momentum Bank (the “Lender”) for a $25 million master commitment credit facility (the “Facility”) to be used for the acquisition of income producing real estate properties.
Added
We issued 2,400,000 shares of Series A Preferred Stock to Modiv on August 10, 2023, to fund a portion of the purchase price of the Portfolio Purchase.
Removed
Borrowings under the Facility will accrue interest at a variable rate equal to the Wall Street Journal Prime rate, adjusted monthly, subject to a floor interest rate of 3.25% per annum.
Added
As set forth in the Articles Supplementary, the Series A Preferred Stock ranks, with respect to dividend rights and rights upon our voluntary or involuntary liquidation, dissolution or winding up, senior to all classes or series of our common stock, par value $0.01 per share (the “Common Stock”).
Removed
On May 9, 2022, the Operating Partnership amended the Facility with the Lender, by entering into a new Facility, to increase the available borrowings from $25.0 million to $50.0 million to be used for the acquisition of income producing real estate properties under the same terms as provided by the agreement entered into on October 26, 2021.

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