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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 9, 2022
GENERATION INCOME PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland |
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001-40771 |
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47-4427295 |
(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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401 East Jackson Street, Suite 3300 Tampa, Florida |
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33602 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (813)-448-1234
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
Common Stock, par value $0.01 per share
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GIPR |
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The Nasdaq Stock Market LLC |
Warrants to purchase Common Stock |
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GIPRW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On September 9, 2022, Generation Income Properties L.P. (the “Operating Partnership”), the operating partnership of Generation Income Properties, Inc. (the “Company”), amended and restated its previously disclosed Commitment Letters with American Momentum Bank (the “Lender”). Such previously disclosed Commitment Letters consisted of a Commitment Letter, dated October 25, 2021, for a $25 million credit commitment (the “October 2021 Commitment Letter”), and a Commitment Letter, dated May 9, 2022) for an increased credit facility in the amount of $50 million contingent on the Company raising an additional $25 million or more of capital in the future (the "May 2022 Commitment Letter"). The Company and Lender have combined the October 2021 Commitment Letter and May 2022 Commitment Letter into a single Commitment Letter, dated as of September 9, 2022 (the “Revised Commitment Letter”). The Revised Commitment Letter does not materially modify the substantive terms set forth in the October 2021 Commitment Letter and May 2022 Commitment Letter except as follows: The Revised Commitment Letter amended the rate index used for borrowing to be a variable rate equal to the 30-Day CME Term SOFR Rate, plus a margin of 2.40%, adjusted monthly, subject to a floor interest rate of 3.25% per annum. All other terms under the prior Commitment Letters remained materially the same.
The foregoing description of the Revised Commitment Letter does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Revised Commitment Letter, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligations or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information contained under Item 1.01 above is hereby incorporated by reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities
As previously disclosed by the Company in its Quarterly Report on Form 10-Q filed on August 15, 2022, on August, 9, 2022, the Company and the Operating Partnership entered a Redemption Agreement with Thomas E. Robinson (the “Holder”) providing that the Holder’s common units in the Operating Partnership would be redeemed by the Operating Partnership as follows: (i) on or before September 15, 2022, 16,250 of the units would be redeemed for an aggregate of $325,000 in cash and 60,000 of the units would be redeemed in exchange for the issuance of 200,000 shares of the Company’s common stock (the “Common Shares”), and (ii) the remaining 129,365 units would be redeemed for $20 per unit in cash in one tranche of 16,250 units on March 15, 2023 and five tranches of 22,623 units each on September 15, 2023, March 15, 2024, June 15, 2024, September 15, 2024, and December 15, 2024.
On September 12, 2022, the Company issued the Common Shares to Holder in redemption of 60,000 common units in the Operating Partnership. The offer and sale of the Common Shares was pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, including pursuant to Rule 506 thereunder. Such offer and sale was made solely to an “accredited investor” under Rule 506 and was made without any form of general solicitation and with full access to any information requested by the Holder regarding the Company and the Common Shares.
On September 13, 2022, the Company paid the Holder $325,000 with cash on hand to redeem 16,250 units per the Redemption Agreement.
Item 7.01. Regulation FD Disclosure.
On September 14, 2022, the Company issued a press release announcing the entry into the Revised Commitment Letter. A copy of the press release is being filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information provided in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
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Exhibits.
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Exhibit No. |
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Description |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Forward-Looking Statements
This Current Report on Form 8-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Investors are cautioned that there can be no assurance actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors. Please refer to the risks detailed from time to time in the reports we file with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC, as well as other filings on Form 10-Q and periodic filings on Form 8-K, for additional factors that could cause actual results to differ materially from those stated or implied by such forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GENERATION INCOME PROPERTIES, INC. |
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Date: September 14, 2022 |
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By: |
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/s/ Allison Davies |
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Allison Davies |
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Chief Financial Officer |
August 31, 2022
Generation Income Properties, Inc.
Attention: David Sobelman
401 E. Jackson Street, Suite 3300
Tampa, Florida 33602
RE: COMMITMENT FOR $25,000,000.00 MASTER CREDIT FACILITY
Dear Mr. Sobelman:
American Momentum Bank (hereinafter referred to as “Bank”) is pleased to offer its commitment to make a master credit facility available to Generation Income Properties, L.P., a Delaware limited partnership (“GIP”) in the amount of $25,000,000.00 (the “Facility”), subject to the terms and conditions herein. The Facility shall be utilized to fund the acquisition of income producing real estate properties (each a “Loan” and collectively the “Loans”).
This letter does not set forth all the terms and conditions of the Facility offered herein. Rather, it is only an outline, in summary format, of the major points of understanding which shall be the basis of the final loan documentation (all of which are collectively referred to as the “Loan Documents”), most of which are described below. The date upon which each Loan is consummated and the last of the Loan Documents for each Loan is executed and delivered is hereinafter referred to as a “Closing Date.” The Loan Documents will have various terms and conditions not set forth herein, including but not limited to conditions precedent, representations and warranties, affirmative covenants, negative covenants, events of default, definition of terms, and other provisions customary to financing (1) by Bank generally and (2) of the type contemplated by this letter.
Purpose. Proceeds of the Facility shall be used to fund the acquisition of income producing real estate properties (each a “Property” and collectively, the “Properties”). Each Property will be owned or ground leased by a single purpose entity, formed by GIP for the sole purpose of taking title to the Property and entering into the Loan with Bank (each a “Borrower” and collectively, the “Borrowers”). Each Borrower shall be a subsidiary of, and controlled by, the Entity Guarantor (as defined herein). Entity Guarantor, by its joinder of this Letter, hereby certifies that all Loan proceeds will be used by each respective Borrower for private commercial purposes, as described herein.
Facility Term. All Loans under the Facility shall be closed prior to December 28, 2023.
Interest Rate. Interest on each Loan shall accrue at a variable rate equal to the 30-Day CME Term SOFR Rate, plus a margin of 2.40% (the “Applicable Rate”), adjusted monthly; provided, however, each Loan will include an interest rate floor of 3.25% per annum. All interest will be computed and charged for the actual number of days elapsed on the basis of a year consisting of three hundred sixty (360) days. Interest on all past due amounts or during the occurrence of an event of default under the Loan shall accrue at the maximum rate permitted by law. The term “30-Day Term SOFR Rate” shall mean the forward-looking SOFR rate administered by CME Group, Inc. (or other successor administrator) and published on the applicable Bloomberg LP screen page (or such other commercially available source providing such quotations as may be selected by Bank) relating to quotations for one month, fixed by the administrator two business days prior to such date of determination (provided, however, that if the Term SOFR rate is not published for such business day, then the Term SOFR rate shall be determined by reference to the
immediately preceding business day on which such rate is published), rounded upwards, if necessary, to the next 1/8th of 1%, all as determined by Bank.
Fees/Costs. At each Loan closing, the applicable Borrower shall make payment of a commitment fee equal to 0.50% of the applicable Loan amount. In addition, the applicable Borrower shall pay all legal fees, recording fees, excise taxes, title insurance premiums, appraisal fees, and other costs incurred by Bank in connection with the making, documenting and closing of each Loan.
Repayment Terms. Each Loan will have an interest-only payment term of twenty-four (24) months from the applicable Loan Closing Date, based upon the Applicable Rate. For each Loan, outstanding principal and accrued outstanding interest shall be due and payable in full on the date that is two (2) years from the applicable Closing Date.
Prepayment Premium. None
Collateral. To secure payment of each Loan, each Borrower shall grant, pledge, or convey to Bank the following collateral customary for the type of loan, including but not limited to the following:
Guarantees. Each Loan shall be guaranteed by GIP (in such capacity, the “Entity Guarantor”) and David Sobelman (the “Individual Guarantor” and together with the Entity Guarantor, collectively the “Guarantors”). The guaranty provided by the Entity Guarantor shall be unlimited. The guaranty provided by the Individual Guarantor shall be non-recourse, subject to customary bad-boy carve-outs, to be negotiated during the closing of the initial Loan under the Facility.
Deposit Account(s). Each Borrower agrees to establish and maintain its primary operating account(s) with Bank as long as any part of the applicable Loan remains outstanding.
Conditions Precedent to each Loan. For each Loan, the following conditions precedent must be satisfied by the applicable Borrower prior to the respective Closing Date:
Each insurance policy shall include a provision that such policy will not be cancelled, altered or in any way limited in coverage or reduced in amount unless Bank is notified in writing at least thirty (30) days prior to such cancellation or change. Each insurance policy will be written on such forms as are reasonably acceptable to Bank by insurance companies authorized or licensed to do business in the state in which the Property is located having financial size and rating acceptable to Bank.
General Covenants. In addition to other affirmative and negative covenants as are typically required by Bank for this type of Facility and the Loan, the Loan Documents will contain the following additional covenants:
Financial Information. During the term of the Loan, each Borrower and Guarantors shall provide Bank, in form and content acceptable to Bank, the following financial information:
Loan Documents. Bank’s attorney shall prepare the necessary documentation in order to comply with all the terms and conditions of this Letter. All documentation must be satisfactory to Bank in Bank’s discretion.
Non-Assignability or Modification of Commitment. The commitment evidenced by this Letter shall not be assignable by GIP. The terms of this Letter may not be waived or modified unless such waiver or modification is expressly stated as such and specifically agreed to by the parties in writing and shall be enforceable by Bank and its successors and assigns. The Loan Documents when executed shall evidence the final commitment to each Borrower, and upon said execution, this letter shall have no further force or effect as to the closed Loan.
Confidentiality. GIP shall keep the contents of this Letter confidential and shall not use it or its contents as a representation of GIP’s credit worthiness. Third parties are cautioned against relying on the contents hereof in extending credit to GIP.
Basis of Commitment. The undersigned acknowledge that this Letter is based materially upon financial information provided to it by GIP and others, and the undersigned hereby warrant and represent that such information was true and correct in all material respects when rendered and that no material change has occurred therein through the date of the execution of this commitment. All material facts relating to the Facility or to the assets, business, profits, prospects, or conditions (financial or otherwise) of GIP have been disclosed to Bank by GIP and the Guarantors.
Voidability of Commitment. This Commitment shall be voidable at the option of Bank should any of the following events occur:
Acceptance and Closing Date. This Letter shall expire if not accepted or extended in writing by the close of business on September 9, 2022 (the “Commitment Expiration Date”). GIP acknowledges that the interest rate and other terms of the Facility outlined in this Letter are based upon acceptance of this Letter and closing of the initial Loan within the time periods set forth above and that these time periods are material factors in Bank offering this Letter. Borrower shall retain the obligation, if the Letter has been accepted, to pay any fees or expenses incurred by Bank in connection with the negotiation and preparation of this Letter, including without limitation appraisal fees, attorney’s fees, flood hazard report costs, UCC search and filing fees, environmental report costs, and title commitment costs.
Prior Letters. Pursuant to a commitment letter dated October 25, 2021 (the “Existing Commitment Letter”), the Bank extended, to GIP, a commitment for an existing facility, along in the amount of $25,000,000.00 (the “Existing $25,000,000 Facility”). GIP, Guarantors and Bank acknowledge and agree that, upon mutual execution of this commitment letter, this letter and the Facility (as defined herein) shall serve to supercede, in its entirety, the Existing Commitment Letter, and any funding to GIP, after the date of this effective date of this letter, shall be funded accordingly to the terms and conditions of this letter. Further, pursuant to a commitment letter dated May 9, 2022 (the “May 2022 Commitment Letter”), the Bank extended to GIP, a commitment for an increased facility, in the amount of $50,000,000.00 (the “Proposed $50,000,000 Facility”). Funding under the Proposed $50,000,000.00 Facility is expressly conditioned upon satisfaction of the terms and conditions in the May 2022 Commitment Letter, including but not limited to satisfaction of the 2022 Minimum Capital Raise Requirement (as such term is defined in the May 2022 Commitment Letter). Until satisfaction of the 2022 Minimum Capital Raise Requirement, and any other terms and conditions of the May 2022 Commitment Letter, funding to GIP shall be governed by the terms of this letter.
If this letter is acceptable to you, please indicate your acceptance by signing in the space provided below and returning the original letter to me.
We appreciate the opportunity to offer this letter to your company and look forward to establishing a continuing, mutually beneficial relationship.
[signature page follows]
We are pleased to have the opportunity to assist you with this Facility. If you have any questions regarding these terms, please call me at on my direct line at (813) 549-4725.
Sincerely,
AMERICAN MOMENTUM BANK
By: /s/ Porter Smith
Porter Smith
Tampa Bay Market President
Agreed to and accepted this 12 day of September, 2022.
GIP:
GENERATION INCOME PROPETIES, L.P., a Delaware limited partnership
By: GENERATION INCOME PROPERTIES, INC., a Maryland corporation, as its General Partner
By:/s/David Sobelman
David Sobelman, as President
Agreed to and accepted this 9 day of September, 2022
Guarantors:
GENERATION INCOME PROPERTIES, INC., a Maryland corporation
By:/s/ David Sobelman
David Sobelman, as President
Agreed to and accepted this 9 day of September, 2022
/s/ David Sobelman
DAVID SOBELMAN
17285744v2Agreed to and accepted this 9 day of September, 2022
17285744v2Agreed to and accepted this 9 day of September, 2022
FOR IMMEDIATE RELEASE
Generation Income Properties Announces Amended Commitment from American Momentum Bank to Change Rate Index
Tampa, FL, September 14, 2022 – Generation Income Properties, Inc. (NASDAQ: GIPR) (“GIPR” or the “Company”) announced the amendment and restatement of its previously disclosed commitment letters with American Momentum Bank (AMB). The Company and AMB have combined the prior AMB commitment letters entered into in October 2021 and May 2022 into a single Commitment Letter, dated as of September 9, 2022, and have amended the rate index used for borrowing to be a variable rate equal to the 30-Day CME Term SOFR Rate, plus a margin of 2.40%, adjusted monthly, subject to a floor interest rate of 3.25% per annum. All other terms under the prior commitment letters remained materially the same.
David Sobelman, President, and CEO of GIPR noted, "Our long-term relationship with AMB allowed us to successfully amend the rate index used for our debt commitment with them from the U.S. Prime Rate to the Secured Overnight Financing Rate (SOFR) which traditionally has less variability than what we’ve seen in the recent months’ increasing-rate debt markets. By reducing our cost of debt, we have provided GIPR a better chance to be competitive for future acquisitions and to potentially achieve greater returns for our shareholders.”
About Generation Income Properties
Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate corporation formed to acquire and own, directly and jointly, real estate investments focused on retail, office and industrial net lease properties located primarily in densely populated submarkets throughout the United States. Additional information about Generation Income Properties, Inc. can be found at the Company’s corporate website: www.gipreit.com.
About American Momentum Bank
American Momentum Bank, a Texas-chartered banking association with total assets of $2.8 billion as of June 30, 2022, provides comprehensive products and services for businesses and individuals. American Momentum Bank has 18 full-service banking centers in Texas and nine full-service banking centers in Florida. American Momentum Bank’s strong capitalization, superior asset quality and experienced management teams position it as one of the premier banks in each state. Visit www.americanmomentum.bank to learn more.
Forward-Looking Statements:
This press release, whether or not expressly stated, may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. The words “believe,” “intend,” “expect,” “plan,” “should,” “will,” “would,” and similar expressions and all statements, which are not historical facts, are intended to identify forward-looking statements. These statements reflect the Company's expectations regarding future events and economic performance and are forward-looking in nature and, accordingly, are subject to risks and uncertainties. Such forward-looking statements include risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements which are, in some cases, beyond the Company's control and which could have a material adverse effect on the Company's business, financial condition, and results of operations. These risks and uncertainties include the risk that we may not find the transactions or opportunity to avail ourselves of the above-described credit facility commitment, our limited
1 | GENERATION INCOME PROPERTIES | 401 E Jackson St, Suite 3300, Tampa, FL 33602 | (813) 448-1234
operating history, potential changes in the economy in general and the real estate market in particular, the COVID-19 pandemic, and other risks and uncertainties that are identified from time to in our SEC filings, including those identified in our 2021 Annual Report on Form 10-K filed on March 18, 2022, which are available at www.sec.gov. The occurrence of any of these risks and uncertainties could have a material adverse effect on the Company's business, financial condition, and results of operations. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Any forward-looking statement made by us herein speaks only as of the date on which it is made. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as may be required by law.
2 | GENERATION INCOME PROPERTIES