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Generation IncomeProperties, Inc. (NASDAQ:GIPR) ("GIPR" or the"Company") today announced its financial and operating resultsfor the period ended June 30, 2022.
Highlights
(For the 3 months ended June 30, 2022)
- Generated net lossattributable to GIPR of $1.05 million, or ($0.46) per basic anddiluted share.
- Generated Core FFO of ($206) thousand, or($0.09) per basic and diluted share.
- Generated Core AFFO of$36 thousand, or $0.02 per basic and diluted share.
Commenting on thequarter, CEO David Sobelman stated, “This quarter has demonstratedour ability to exercise patience and discipline in this changingmarket environment, while strengthening our balance sheet andstabilizing our capital structure to allow us the platform to focus onacquiring assets accretive to our growth through the latter half ofthe year. We are hyper-focused on identifying new opportunitiesconsistent with our current portfolio of tenants that we believecontinues to prove its resiliency during economic headwinds.”
Core FFO and CoreAFFO are supplemental non-GAAP financial measures used in the realestate industry to measure and compare the operating performance ofreal estate companies. A complete reconciliation containingadjustments from GAAP net income to Core FFO and Core AFFO areincluded at the end of this release.
Portfolio (as of June 30, 2022, unless otherwise stated)
- Approximately 85% of our portfolio’s annualized base rent("ABR") as of June 30, 2022 was derived from tenants that have(or whose parent company has) an investment grade credit rating from arecognized credit rating agency of “BBB-” or better. Our largesttenants are the General Service Administration (Navy & FBI), PRAHoldings, Inc., Pratt and Whitney, and Kohl’s, all who have an‘BB+’ credit rating or better from S&P Global Ratings andcontributed approximately 66% of our portfolio’s annualized baserent.
- The Company’s portfolio is 100% rent paying and hasbeen since our inception.
- Approximately 92% of ourportfolio’s annualized base rent in our current portfolio providefor increases in contractual base rent during future years of thecurrent term or during the lease extension periods.
- Theaverage annualized base rent (ABR) per square foot at the end of thequarter was $15.53.
Liquidity andCapital Resources
- $3.6 million in total cash and cash equivalents as of June30, 2022.
- Total debt, net was $35.5 million as of June 30,2022.
Financial Results
- Totalrevenue from operations was $1.4 million during the three-month periodended June 30, 2022, as compared to $988 thousand for the three-monthperiod ended June 30, 2021. This represents a year-over-year increaseof 40% driven primarily by the acquisition of properties.
- Operating expenses, including G&A, for thesame periods were $2.0 million and $1.3 million, respectively, due toincreases in G&A, recoverable expenses anddepreciation/amortization from recent acquisitions, and compensationcosts.
- Net operating income (“NOI”) for the same periodswas $1.1 million and $824 thousand, a 28% increase from the sameperiod last year, which is a direct result of the acquisition ofproperties.
- Net loss attributableto GIPR for the three months ended June 30, 2022 was $1 million ascompared to $370 thousand for the same period last year.
Distributions
On June 27,2022, the Company’s Board of Directors declared a monthlydistribution of $0.054 per common share and operating partnership unitto be paid monthly to holders of record as of July 15, August 15, andSeptember 15, 2022.
2022 Guidance
The Company is not providing guidance on FFO, CoreFFO, AFFO, Core AFFO, G&A, NOI, or acquisitions and dispositionsat this time. However, the Company will provide timely updates onmaterial events, which will be broadly disseminated in due course. TheCompany’s executives, along with its Board of Directors, continue toassess the advisability and timing of providing such guidance tobetter align GIPR with its industry peers.
Conference Call andWebcast
TheCompany will host its second quarter earnings conference call andaudio webcast on Monday, August 15, 2022, at 9:00 a.m. Eastern Time.
To access thelive webcast, which will be available in listen-only mode, pleasefollow this link. If you prefer to listen via phone, U.S. participantsmay dial: 877-407-3141 (toll free) or 201-689-7803 (local).
A replay of theconference call will be available after the conclusion of the livebroadcast and for 30 days after. U.S. participants may access thereplay at 877-660-6853 (toll free) or 201-612-7415 (local), usingaccess code 13732104.
AboutGeneration Income Properties
Generation Income Properties, Inc., located inTampa, Florida, is an internally managed real estate corporationformed to acquire and own, directly and jointly, real estateinvestments focused on retail, office and industrial net leaseproperties in densely populated submarkets. The Company intends toelect to be taxed as a real estate investment trust. Additionalinformation about Generation Income Properties, Inc. can be found atthe Company's corporate website: www.gipreit.com.
Forward-LookingStatements
This press release, whether or not expressly stated, maycontain "forward-looking" statements as defined in the PrivateSecurities Litigation Reform Act of 1995. The words "believe,""intend," "expect," "plan," "should,""will," "would," and similar expressions and allstatements, which are not historical facts, are intended to identifyforward-looking statements. These statements reflect the Company'sexpectations regarding future events and economic performance and areforward-looking in nature and, accordingly, are subject to risks anduncertainties. Such forward-looking statements include risks anduncertainties that could cause actual results to differ materiallyfrom those expressed or implied by such forward-looking statementswhich are, in some cases, beyond the Company’s control which couldhave a material adverse effect on the Company's business,financial condition, and results of operations. These risks anduncertainties include the risk that we may not be able to timelyidentify and close on acquisition opportunities, our limited operatinghistory, potential changes in the economy in general and the realestate market in particular, the COVID-19 pandemic, and other risksand uncertainties that are identified from time to in our SEC filings,including those identified in our Annual Report on Form 10-K for thefiscal year ended December 31, 2021 filed on March 18, 2022, which areavailable at www.sec.gov. The occurrence of any of these risks anduncertainties could have a material adverse effect on theCompany's business, financial condition, and results ofoperations. For these reasons, among others, investors are cautionednot to place undue reliance upon any forward-looking statements inthis press release. Any forward-looking statement made by us hereinspeaks only as of the date on which it is made. The Company undertakesno obligation to publicly revise these forward-looking statements toreflect events or circumstances that arise after the date hereof,except as may be required by law.
Notice Regarding Non-GAAP Financial Measures
In addition to ourreported results and net earnings per diluted share, which arefinancial measures presented in accordance with GAAP, this pressrelease contains and may refer to certain non-GAAP financial measures,including Funds from Operations ("FFO"), Core Funds FromOperations ("Core FFO"), Adjusted Funds from Operations(“AFFO”), Core Adjusted Funds from Operations ("CoreAFFO"), and Net Operating Income (“NOI”). We believe the useof Core FFO and Core AFFO are useful to investors because they arewidely accepted industry measures used by analysts and investors tocompare the operating performance of REITs. FFO and related measuresincluding NOI should not be considered alternatives to net income as aperformance measure or to cash flows from operations, as reported onour statement of cash flows, or as a liquidity measure, and should beconsidered in addition to, and not in lieu of, GAAP financialmeasures. You should not consider our Core FFO or Core AFFO as analternative to net income or cash flows from operating activitiesdetermined in accordance with GAAP. Our reconciliation of non-GAAPmeasures to the most directly comparable GAAP financial measure andstatements of why management believes these measures are useful toinvestors are included below.
Note 1:
Subsequent to theissuance of the Company’s 2021 Form 10-K and Q1 2022 Form 10-Q,management of the Company identified an immaterial error inapplication of Accounting Standards Codification (ASC) 480-10,Distinguishing Liabilities from Equity. Specifically, the Companyincorrectly classified the partnership interest of GIP Fund 1, LLC asRedeemable non-controlling interest rather than Non-controllinginterest within Equity. The Company has accordingly corrected certainnumbers in the prior year presentation above.
Our reported results arepresented in accordance with GAAP. We also disclose funds fromoperations ("FFO"), adjusted funds from operations("AFFO"), core funds from operations ("Core FFO") andcore adjusted funds of operations ("Core AFFO") all of whichare non-GAAP financial measures. We believe these non-GAAP financialmeasures are useful to investors because they are widely acceptedindustry measures used by analysts and investors to compare theoperating performance of REITs.
FFO and related measures do not represent cashgenerated from operating activities and are not necessarily indicativeof cash available to fund cash requirements; accordingly, they shouldnot be considered alternatives to net income or loss as a performancemeasure or cash flows from operations as reported on our statement ofcash flows as a liquidity measure and should be considered in additionto, and not in lieu of, GAAP financial measures.
We compute FFO inaccordance with the definition adopted by the Board of Governors ofthe National Association of Real Estate Investment Trusts("NAREIT"). NAREIT defines FFO as GAAP net income or lossadjusted to exclude extraordinary items (as defined by GAAP), netgains from sales of depreciable real estate assets, impairmentwrite-downs associated with depreciable real estate assets, and realestate related depreciation and amortization, including the pro ratashare of such adjustments of unconsolidated subsidiaries. We thenadjust FFO for non-cash revenues and expenses such as amortization ofdeferred financing costs, above and below market lease intangibleamortization, straight line rent adjustment where the Company is boththe lessor and lessee, and non-cash stock compensation to calculateCore AFFO.
FFO isused by management, investors, and analysts to facilitate meaningfulcomparisons of operating performance between periods and among ourpeers primarily because it excludes the effect of real estatedepreciation and amortization and net gains on sales, which are basedon historical costs and implicitly assume that the value of realestate diminishes predictably over time, rather than fluctuating basedon existing market conditions. We believe that AFFO is an additionaluseful supplemental measure for investors to consider because it willhelp them to better assess our operating performance without thedistortions created by other non-cash revenues or expenses. FFO andAFFO may not be comparable to similarly titled measures employed byother companies. We believe that Core FFO and Core AFFO are usefulmeasures for management and investors because they further remove theeffect of non-cash expenses and certain other expenses that are notdirectly related to real estate operations. We use each as measures ofour performance when we formulate corporate goals.
As FFO excludesdepreciation and amortization, gains and losses from propertydispositions that are available for distribution to stockholders andextraordinary items, it provides a performance measure that, whencompared year over year, reflects the impact to operations from trendsin occupancy rates, rental rates, operating costs, general andadministrative expenses and interest costs, providing a perspectivenot immediately apparent from net income or loss. However, FFO shouldnot be viewed as an alternative measure of our operating performancesince it does not reflect either depreciation and amortization costsor the level of capital expenditures and leasing costs necessary tomaintain the operating performance of our properties which could besignificant economic costs and could materially impact our resultsfrom operations. Additionally, FFO does not reflect distributions paidto redeemable non-controlling interests.
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