Item 1.01. Entry into Material Definitive Agreement.
The information discussed under Items 2.01 and 2.03 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.
Item 2.01. Completion of Acquisition or Disposition of Assets.
Colorado Property
OnDecember 28, 2021 ,Generation Income Properties, L.P. , the operating partnership (the "Operating Partnership") ofGeneration Income Properties, Inc. (the "Company"), through a single purpose limited liability company (the "Colorado SPE") of which the Company owns 100% of the membership interests, completed the acquisition of a 30,700 square-foot, single-tenant retail property inGrand Junction, Colorado (the "Colorado Property").The Operating Partnership entered into a Purchase and Sale Agreement, datedOctober 28, 2021 , withOREOF19 BR, LLC , aDelaware limited liability company, for the purchase of theColorado Property at a purchase price of approximately$4,700,000 , excluding transaction costs (the "Colorado Purchase and Sale Agreement"), which was amended onDecember 10, 2021 (the "Colorado First Amendment"). Pursuant to an Assignment and Assumption of Purchase and Sale Agreement, effective as ofDecember 23, 2021 (the "Colorado Assignment Agreement"), theOperating Partnership assigned, and the Colorado SPE assumed, all of theOperating Partnership's right, title and interest in and under the Colorado Purchase and Sale Agreement andColorado First Amendment, giving the Colorado SPE the right to acquire theColorado Property pursuant to the Colorado Purchase and Sale Agreement. The seller of the Colorado Property is not affiliated with the Company or any of the Company's affiliates. The purchase price of the Colorado Property and related transaction costs were funded using cash on hand of approximately$2,350,000 from the Company's initial public offering, which closed inSeptember 2021 , and approximately$2,350,000 of debt financing, as discussed below in Item 2.03. The Colorado Property is 100% leased toBest Buy Stores, L.P. , aVirginia limited partnership, pursuant to a lease, dated as ofFebruary 27, 2006 , between TOYS R US as landlord, andBest Buy Stores, L.P. , as tenant, as amended by that certain first amendment to lease, datedMay 19, 2021 (the "Colorado Lease"). The obligations ofBest Buy Stores, L.P. under the Colorado Lease are guaranteed by Best Buy Co., Inc., aMinnesota corporation, pursuant to a Guaranty, datedFebruary 27, 2006 (the "Best Buy Guaranty"). The term of the Colorado Lease in effect at the time of acquisition commenced onMay 1, 2021 and ended onMarch 31, 2022 . The first extended lease term of the Colorado Lease commenced onApril 1, 2022 and ends onMarch 31, 2027 , with a second option to renew for a five-year term. Under the Colorado Lease,Best Buy Stores, L.P. is responsible for operating expenses, real estate taxes, insurance, repairs, maintenance and capital expenditures, in addition to base rent. In connection with the acquisition of the Colorado Property, the Colorado SPE entered into an Assignment and Assumption of Lease, Security Deposit and Guaranty ("Assignment and Assumption of Colorado Lease") with the seller of the Colorado Property, datedDecember 28, 2021 , pursuant to which the seller assigned and theColorado SPE assumed all of the seller's rights and obligations under the Colorado Lease and related Best Buy Guaranty. The following table provides certain information about the Colorado Property and the Colorado Lease: Annualized Tenant Property Lease Expiration Rentable Base Rent in Renewal Property Type Location Date Square Feet 2022 Options(1) Retail Grand Junction, 3/31/2027 30,700$353,061 One, Colorado five-year renewal option remaining
________________
(1) Annualized base rent escalates to
option commencing
The foregoing descriptions of the Colorado Purchase and Sale Agreement,Colorado First Amendment, Colorado Assignment Agreement, Colorado Lease, Best Buy Guaranty, and Assignment and Assumption of Colorado Lease are only summaries and are qualified in their entirety by reference to the complete text of such documents, which are attached as Exhibits.
Illinois Property
OnJanuary 7, 2022 , theOperating Partnership of the Company, through a single purpose limited liability company (the "Illinois SPE") of which the Company owns 100% of the membership interests, completed the acquisition of a 10,900 square-foot, single-tenant medical retail property inChicago, Illinois (the "Illinois Property").The Operating Partnership entered into a Purchase and Sale Agreement, datedOctober 27, 2021 , withElliott Bay Healthcare Realty, LLC , aDelaware limited liability company, for the purchase of the Illinois Property at a purchase price of approximately$3,100,000 , excluding transaction costs (the "Illinois Purchase and Sale Agreement"), which was amended onDecember 10, 2021 (the "Illinois First Amendment"). Pursuant to an Assignment and Assumption of Purchase -------------------------------------------------------------------------------- and Sale Agreement, effective as ofDecember 23, 2021 (the "Illinois Assignment Agreement"), theOperating Partnership assigned, and the Illinois SPE assumed, all of theOperating Partnership's right, title and interest in and under the Illinois Purchase and Sale Agreement and Illinois First Amendment, giving the Illinois SPE the right to acquire the Illinois Property pursuant to theIllinois Purchase and Sale Agreement.Elliott Bay Healthcare Realty, LLC and theIllinois SPE entered into a Second Amendment to the Illinois Purchase and Sale Agreement, datedJanuary 3, 2022 (the "Illinois Second Amendment"). The seller of the Illinois Property is not affiliated with the Company or any of the Company's affiliates.The Operating Partnership funded the purchase price of theIllinois Property and related transaction costs using cash on hand of approximately$1,550,000 from the Company's initial public offering, which closed inSeptember 2021 , and approximately$1,550,000 of debt financing, as discussed below in Item 2.03. The Illinois Property is 100% leased toWSKC Dialysis Services, Inc. , anIllinois corporation, pursuant to a lease, dated as ofJanuary 24, 2006 , as amended onAugust 16, 2016 , and onNovember 13, 2020 , betweenElliott Bay Healthcare Realty, LLC , as landlord, andWSKC Dialysis Services, Inc. , as tenant (the "Illinois Lease"). The obligations ofWSKC Dialysis Services, Inc. under the Illinois Lease are guaranteed by Fresenius Medical Care Holdings, Inc., aNew York corporation, pursuant to a Guaranty, datedJanuary 24, 2006 (the "Fresenius Guaranty"). The current term of the Illinois Lease at the time of acquisition commenced onNovember 1, 2021 and expires onOctober 31, 2026 , with . . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Financing of Colorado Property
The Operating Partnership partially financed the acquisition of theColorado Property with its existing Master Credit Facility withAmerican Momentum Bank (the "Lender"), datedOctober 26, 2021 (the "Credit Facility"). In connection with the acquisition of the Property, the Colorado SPE entered into a loan agreement and related promissory note onDecember 28, 2021 , for$2,350,000 pursuant to the Credit Facility (the "Colorado Loan"). The Colorado Loan accrues 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. The Colorado Loan has an interest-only payment term for twenty-four months commencingJanuary 28, 2022 , and all interest and principal outstanding is due and payable in full onDecember 28, 2023 . The Colorado Loan permits full or partial prepayment without penalty. The Colorado Loan is secured by the Colorado Property and the associated rental income. Payment is guaranteed by theOperating Partnership andDavid Sobelman , the Company's Chairman, President and Chief Executive Officer. The Colorado Loan also provides that as ofDecember 31, 2022 and continuing on the same date of each year thereafter, the Colorado SPE, as borrower, shall have achieved and maintain a debt service coverage ratio of not less than 1.50 to 1.00 over the remaining term of the Colorado Loan. If, on any such date, the debt service coverage ratio is less than 1.50 to 1.00, the Colorado SPE shall be obligated to pay to the Lender, within ten (10) days after receipt of written notice thereof, a prepayment of principal in an amount such that after giving effect to such prepayment of principal and re-amortization of the Colorado Loan, the debt service coverage ratio shall once again be equal to or greater than 1.50 to 1.00. The Colorado Loan also contains other customary affirmative covenants, negative covenants and events of default.
The foregoing description of the Colorado Loan is only a summary and is qualified in its entirety by reference to the complete text of the promissory note, loan agreement, and guaranty, which are attached hereto as Exhibits.
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Financing of Illinois Property
The Operating Partnership partially financed the acquisition of theIllinois Property with its Credit Facility. In connection with the acquisition of the Illinois Property, the Illinois SPE entered into a loan agreement and related promissory note onJanuary 7, 2022 , for$1,550,000 pursuant to the Credit Facility (the "Illinois Loan"). The Illinois Loan accrues 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. The Illinois Loan has an interest-only payment term for twenty-four months commencingJanuary 2022 , and all interest and principal outstanding is due and payable in full inDecember 2023 . The Illinois Loan permits full or partial prepayment without penalty. TheIllinois Loan is secured by the Illinois Property and the associated rental income. Payment is guaranteed by theOperating Partnership andDavid Sobelman , the Company's Chairman, President and Chief Executive Officer. The Illinois Loan also provides that as ofDecember 31, 2022 and continuing on the same date of each year thereafter, the Illinois SPE, as borrower, shall have achieved and maintain a debt service coverage ratio of not less than 1.50 to 1.00 over the remaining term of the Illinois Loan. If, on any such date, the debt service coverage ratio is less than 1.50 to 1.00, the Illinois SPE shall be obligated to pay to the Lender, within ten (10) days after receipt of written notice thereof, a prepayment of principal in an amount such that after giving effect to such prepayment of principal and re-amortization of the Illinois Loan, the debt service coverage ratio shall once again be equal to or greater than 1.50 to 1.00. The Illinois Loan also contains other customary affirmative covenants, negative covenants and events of default.
The foregoing description of the Illinois Loan is only a summary and is qualified in its entirety by reference to the complete text of the Promissory Note, the Loan Agreement, and the Guaranty, which are attached hereto as Exhibits.
Item 7.01. Regulation FD Disclosure.
The Company issued a press release onJanuary 4, 2022 , announcing the completion of the acquisition of the Colorado Property and onJanuary 11, 2022 , announcing the completion of the acquisition of the Illinois Property. A copy of such press releases are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. The information in this Item 7.01 and the related information in Exhibits 99.1 and 99.2 attached hereto 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 and shall not be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended or the Exchange Act except as set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
The historical financial statements listed in Item 9.01(a) present the results of operations of each of the Colorado Property and the Illinois Property during periods prior to their acquisition by us and exclude, as permitted by Rule 3-14 of Regulation S-X, items of expense which we expect may not be comparable to our expected future operations.
(a) Financial Statements of Businesses Acquired.
The following financial statements of the Colorado Property are attached hereto as Exhibit 99.3 and incorporated by reference herein:
Independent Auditor's Report Statement of Revenues and Certain Operating Expenses for the for the nine months endedSeptember 30, 2021 (audited) Notes to Statement of Revenues and Certain Operating Expenses
The following financial statements of the Illinois Property are attached hereto as Exhibit 99.4 and incorporated by reference herein:
Independent Auditor's Report Statement of Revenues and Certain Operating Expenses for the for the year endedDecember 31, 2021 (audited) Notes to Statement of Revenues and Certain Operating Expenses (b) Pro Forma Financial Information.
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The Unaudited Pro Forma Consolidated Statement of Operations for the Company
giving effect to the acquisitions of each of the Colorado Property and the
Illinois Property as if such acquisitions occurred on
The Unaudited Pro Forma Balance Sheet for the Company giving effect to the
acquisitions of the Illinois Property as if the acquisition occurred on
The Unaudited Pro Forma Statement of Taxable Operating Results and Cash to be Made Available by Operations for the Company giving effect to the acquisitions of theColorado and Illinois Property as if such acquisitions occurred onJanuary 1, 2021 is attached as Exhibit 99.5 and incorporated by reference herein.
(c) Exhibits
The exhibits filed as part of this Current Report on Form 8-K are identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by reference. --------------------------------------------------------------------------------
Exhibit Index Exhibit No. Description 10.1 Purchase and Sale Agreement, datedOctober 28, 2021 , between
reference to Exhibit 10.1 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.2 First Amendment to Purchase and Sale Agreement, effective as ofDecember 10, 2021 , betweenGeneration Income Properties, LP and OREOF19
Form 10-Q filed on
10.3 Assignment and Assumption of Purchase and Sale Agreement, effective as
of
and GIPCO 585 24 ½
of the Company's Form 10-Q filed onMay 16, 2022 ). 10.4 Lease Agreement, dated as ofFebruary 27, 2006 , between OREOF19 BR,
LLC, as landlord, and
that certain first amendment to lease, dated
by reference to Exhibit 10.4 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.5 Guaranty, datedFebruary 27, 2006 , by Best Buy Co., Inc. in favor ofOREOF BR, LLC . (incorporated by reference to Exhibit 10.5 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.6 Purchase and Sale Agreement, datedOctober 27, 2021 , between
(incorporated by reference to Exhibit 10.6 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.7 First Amendment to Purchase and Sale Agreement, datedDecember 10, 2021 , betweenGeneration Income Properties, LP and Elliott Bay
the Company's Form 10-Q filed on
10.8 Assignment and Assumption of Purchase and Sale Agreement, effective as
of
and GIPIL 3134 W 76thStreet, LLC . (incorporated by reference to Exhibit 10.8 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.9 Second Amendment to Purchase and Sale Agreement, effective as ofJanuary 3, 2022 , betweenElliott Bay Healthcare Realty, LLC and GIPIL3134 W 76th Street , LLC. (incorporated by reference to Exhibit 10.9 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.10 Lease Agreement, dated as ofJanuary 24, 2006 , between Elliott BayHealthcare Realty, LLC , as landlord, andWSKC Dialysis Services, Inc. , as tenant, as amended onAugust 16, 2016 , and onNovember 13, 2020 .
10.11 Assignment and Assumption of Lease, Security Deposit and Guaranty,
datedDecember 28, 2022 , by and betweenOREOF19 BR, LLC and GIPCO 585 24 1/2Road, LLC . 10.12 Promissory Note, datedDecember 28, 2021 , issued by GIPCO 585 24 ½ROAD, LLC , as borrower, in favor ofAmerican Momentum Bank , as lender.
Guaranty, dated
Inc. in favor of
reference to Exhibit 10.12 of the Company's Form 10-Q filed onMay 16, 2022 ).
10.13 Loan Agreement, dated
by Fresenius Medical Care Holdings, Inc. in favor of Elliott Bay
the Company's Form 10-Q filed on
10.14 Absolute Guaranty of Payment and Performance, dated
by
the Company's Form 10-Q filed onMay 16, 2022 ). 10.15 Promissory Note, dated [December 28, 2021 ], issued by GIPIL 3134 W
lender. (incorporated by reference to Exhibit 10.15 of the Company's
Form 10-Q filed onMay 16, 2022 ).
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10.16 Loan Agreement, dated
to Exhibit 10.16 of the Company's Form 10-Q filed onMay 16, 2022 ). 10.17 Absolute Guaranty of Payment and Performance, dated [December 28, 2021 ], byDavid Sobelman andGeneration Income Properties , LP in favor ofAmerican Momentum Bank . (incorporated by reference to Exhibit 10.17 of the Company's Form 10-Q filed onMay 16, 2022 ). 99.1 Press Release datedJanuary 4, 2022 . 99.2 Press Release datedJanuary 11, 2022 . 99.3* Financial Statements of the Colorado Property. 99.4* Financial Statements of the Illinois Property . 99.5* Unaudited Pro Forma Consolidated Financial Statements . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * Filed herewith ** Certain schedules have been omitted from this Exhibit pursuant to Item 601(a)(5) of Regulation S-K.The Company will furnish a copy of the omitted schedule to theU.S. Securities and Exchange Commission or its staff upon request.
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