Generation me Properties(GIPR) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the company's unaudited consolidated financial statements for the period ended September 30, 2021 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (Unaudited) | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $52,408,808 | $40,680,740 | | Total investments | $36,885,038 | $38,531,843 | | Cash and cash equivalents | $14,194,639 | $937,564 | | Total Liabilities | $28,094,698 | $30,626,270 | | Mortgage loans, net | $26,765,781 | $28,356,571 | | Total Stockholders' Equity | $14,709,082 | $1,370,039 | - The significant increase in cash and cash equivalents from $0.9 million to $14.2 million is primarily due to the proceeds from the public offering in September 2021[9] Consolidated Statements of Operations Consolidated Statements of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,033,494 | $871,825 | $2,958,572 | $2,630,067 | | Total Expenses | $1,305,594 | $1,275,028 | $3,870,040 | $3,627,182 | | Gain on disposal of property | $923,178 | - | $923,178 | - | | Net Income (Loss) | $655,828 | ($403,203) | $16,460 | ($997,115) | | Net Income (Loss) Attributable to GIP | $456,112 | ($555,226) | ($393,230) | ($1,331,833) | | Basic EPS | $0.49 | ($1.06) | ($0.56) | ($2.54) | - The company reported a net income of $656k for Q3 2021, a significant turnaround from a net loss of $403k in Q3 2020, largely driven by a $923k gain on the disposal of a property[10] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Summary (Unaudited, Nine Months Ended) | Metric | September 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $172,678 | $176,699 | | Net cash provided by (used in) investing activities | $1,002,462 | ($196,016) | | Net cash generated from (used in) financing activities | $11,931,635 | ($756,293) | | Net increase (decrease) in cash | $13,106,775 | ($775,610) | - Financing activities generated $11.9 million in cash for the nine months ended Sep 30, 2021, primarily from the issuance of stock and warrants ($14.4 million), a major reversal from the cash used in financing activities in the same period of 2020[13] Notes to Unaudited Consolidated Financial Statements - The Company is an internally managed real estate investment company focused on acquiring and managing income-producing retail, office, and industrial properties net leased to high-quality tenants[18] - During the nine months ended September 30, 2021, the Company acquired two properties in Manteo, NC and Plant City, FL for a total investment of approximately $3.5 million[44][45] - On August 31, 2021, the Company sold its property in Cocoa Beach, FL for $5.2 million, recognizing a gain of $923 thousand[48] - In September 2021, the Company completed an underwritten public offering, issuing 1,665,000 units (stock and warrants) and generating net proceeds of approximately $14.4 million after including the over-allotment option[66][68] - Subsequent to the quarter end, the Company entered into agreements to acquire four properties/portfolios in Colorado, Illinois, Florida, and Texas for a combined total consideration of approximately $18 million[96][97][98][99] - On October 26, 2021, the Operating Partnership secured a Commitment Letter for a $25 million master credit facility from American Momentum Bank to fund future property acquisitions[100] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial condition, operational results, liquidity, and non-GAAP measures for the period Overview and Portfolio - In September 2021, the company closed an underwritten public offering of 1,665,000 units, generating net proceeds of $14.4 million and its common stock and warrants began trading on the Nasdaq under symbols "GIPR" and "GIPRW"[106] - As of September 30, 2021, the company's property portfolio was 100% occupied[107] - Approximately 78% of the portfolio's annualized rent is derived from tenants with an investment-grade credit rating of 'BBB-' or better[107] Property Portfolio Overview as of September 30, 2021 | Property Type | Location | Tenant(s) | S&P Credit Rating | Annualized Base Rent | % of Total Base Rent | | :--- | :--- | :--- | :--- | :--- | :--- | | Office | Norfolk, VA | General Services Admin. | AA+ | $882,476 | 25.6% | | Office | Norfolk, VA | PRA Holdings, Inc. | BB+ | $742,850 | 21.7% | | Industrial | Huntsville, AL | Pratt & Whitney | A- | $684,996 | 20.0% | | Office | Norfolk, VA | Maersk Line, Limited | BBB | $375,588 | 11.0% | | Other Properties | Various | Various | Various | $742,800 | 21.7% | Results of Operations Revenue Comparison | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $1,033k | $872k | +$162k | | Nine Months Ended Sep 30 | $2,959k | $2,630k | +$329k | - The increase in revenue for both the three and nine-month periods was primarily due to three additional properties acquired in November 2020, February 2021, and April 2021[113][125] - A gain of $923k was recognized on the sale of the Walgreens property in Cocoa, Florida on August 31, 2021, which was a key driver of net income for the third quarter[119][131] Net Income (Loss) Attributable to Shareholders Comparison | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $456k | ($555k) | | Nine Months Ended Sep 30 | ($393k) | ($1,332k) | Liquidity and Capital Resources - As of September 30, 2021, the company had total cash of approximately $14.2 million and outstanding debt of approximately $26.8 million[137] - The company significantly improved its liquidity through a September 2021 public offering that generated net proceeds of $14.4 million[138] - Subsequent to the quarter, the company secured a commitment for a $25 million master credit facility to be used for acquiring income-producing real estate[138][148] - The Company's President has personally guaranteed approximately $14.6 million in loans and provided nonrecourse carveout guarantees for another $12.8 million[145][146] Non-GAAP Financial Measures - The company uses non-GAAP measures such as Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to evaluate operating performance[159] Reconciliation of Net Income (Loss) to FFO and Core AFFO (Unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $655,828 | ($403,203) | $16,460 | ($997,115) | | Gain on disposal of property | ($923,178) | - | ($923,178) | - | | Depreciation and amortization | $388,141 | $363,898 | $1,164,838 | $1,083,917 | | Funds From Operations (FFO) | $120,791 | ($39,305) | $258,120 | $86,802 | | Core Adjusted Funds From Operations (Core AFFO) | $165,027 | $9,051 | $423,435 | $235,227 | Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The company is not required to make disclosures under this item as it qualifies as a smaller reporting company[168] Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures with no material changes - Based on an evaluation as of September 30, 2021, the company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective[170] - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[171] PART II. OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings for the period - There are no material legal proceedings to be disclosed[174] Risk Factors No material changes to previously disclosed risk factors are reported - There have been no material changes from the risk factors previously disclosed in the company's S-11 registration statement[175] Unregistered Sales of Equity Securities and Use of Proceeds Details the use of proceeds from the September 2021 public offering - The company completed a public offering in September 2021, which, including the partial exercise of the over-allotment option, resulted in total net proceeds of approximately $14.4 million[177] - As of October 31, 2021, the company has used $1.1 million of the proceeds from the public offering to repay related party debt[180] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported[181] Mine Safety Disclosures This section is not applicable to the company's operations - None reported, as this section is not applicable[182] Other Information No other information is reported for the period - None reported[183] Exhibits Lists all documents filed as exhibits with the quarterly report - The report includes various exhibits, such as the Representative's Warrant, Form of Investor Warrant, Certifications by the CEO and CFO, and Inline XBRL documents[188]