Financial Performance - Total revenue for the three months ended March 31, 2024, was $2,433,173, an increase of $1,096,134 compared to $1,337,039 for the same period in 2023, driven by the integration of the acquired 13 property portfolio from Modiv[139] - For the three months ended March 31, 2024, the company reported a net loss of $1,879,096, compared to a net loss of $1,190,353 for the same period in 2023, reflecting an increase in losses of approximately 58%[143] - Net loss attributable to common shareholders for the three months ended March 31, 2024, was $2,920,220, up from $1,317,567 in 2023, indicating a year-over-year increase of about 121%[146] - Funds From Operations (FFO) for the three months ended March 31, 2024, was $(1,033,041), compared to $(126,803) in 2023[183] - Core Adjusted Funds From Operations for the three months ended March 31, 2024, was $241,218, compared to $(14,849) in 2023[183] Operating Expenses - Total operating expenses for the three months ended March 31, 2024, were $3,633,825, an increase of $1,598,031 from $2,035,794 in the same period in 2023[142] - The company accrued $0 in other expenses for the three months ended March 31, 2024, compared to $506,000 in 2023, showing a significant reduction in tax-related expenses[144] - General, administrative, and organizational costs increased by $105,650, driven by higher accounting, audit, and tax fees during the three months ended March 31, 2024[149] Portfolio and Leasing - Approximately 65% of the portfolio's annualized base rent (ABR) as of March 31, 2024, was derived from tenants with an investment grade credit rating of "BBB-" or better[135] - The portfolio was 93% leased and occupied as of March 31, 2024[135] - Approximately 91% of the leases in the current portfolio provide for increases in contractual base rent during future years[135] - Average effective annual rental per square foot was $14.75 as of March 31, 2024[135] - The largest tenants contributed approximately 63% of the portfolio's annualized base rent[135] Cash Flow and Liquidity - As of March 31, 2024, the company had total cash of $1,690,320 and outstanding mortgage loans with a principal balance of $57,823,894, indicating a liquidity position that may be insufficient to meet future obligations[147] - Net cash provided by operating activities increased to $25,977 for the three months ended March 31, 2024, compared to a net cash used of $850,964 in the same period of 2023, attributed to the doubling of income-generating assets from the Modiv acquisition[171] - Net cash used in financing activities rose to $1,487,603 for the three months ended March 31, 2024, up from $80,387 in 2023, due to increased mortgage principal repayments and dividend payments[173] Debt and Financing - The company entered into a loan agreement on August 10, 2023, for $21 million to finance the acquisition of the Modiv Portfolio, with a fixed interest rate of 7.47% per annum[152] - The company maintained compliance with all debt service coverage ratios (DSCR), except for one project-level DSCR covenant for 2510 Walmer Ave, which tested at 1.17:1 against a required minimum of 1.25:1[163] - The company reported a debt service coverage ratio requirement of 1.50 for certain mortgage loans, ensuring financial stability[163] - The minimum required principal payments on debt for the next nine months total $13.82 million[164] - The company has a technical default risk for the 2510 Walmer Ave project due to the DSCR covenant breach, but the lender has indicated no immediate action[163] Going Concern and Future Outlook - The company has substantial doubt about its ability to continue as a going concern for at least the next 12 months due to recurring losses and projected cash needs exceeding current liquidity[158] - The company intends to maintain financial flexibility using retained cash flows, long-term debt, and preferred stock to finance growth, aiming for a lower-leveraged portfolio in the long term[170] Preferred Equity - The company entered into new Amended and Restated Limited Liability Company Agreements for its Norfolk, Virginia properties, raising $3 million through the issuance of preferred membership interests[164] - The company is required to pay a 7% internal rate of return (IRR) to the preferred equity member on a monthly basis, with a share of 16% of equity in capital transactions[164] - The Preferred Interest has a cumulative accruing distribution preference of 15.5% per year, compounded monthly, with a portion deemed as the current preferred return at 5% per annum[165] - The Preferred Interest must be redeemed in full by August 10, 2025, at a redemption amount equal to the greater of the LC2 Investment plus accrued preferred return or the Make-Whole Amount[167] Acquisition Activities - The company completed the acquisition of a tenant-in-common interest in Rockford, Illinois for a purchase price of $1.3 million, with an additional capital contribution of $2.1 million made by LC2[165] - A new lease for 2510 Walmer Ave was executed on March 28, 2024, expected to restore full occupancy by May 1, 2024[163]
Generation me Properties(GIPR) - 2024 Q1 - Quarterly Report