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TAMPA - Generation Income Properties, Inc. (NASDAQ:GIPR), a small-cap REIT with a market capitalization of $8 million and currently offering a substantial 31.8% dividend yield according to InvestingPro, has sold two properties for approximately $10.5 million and used the proceeds to pay off debt, the company announced Monday in a business update.
The real estate investment trust completed the sale of an Auburn University-occupied industrial building in Huntsville, Alabama at a 4.06% cap rate ($121.64 per square foot) and a Starbucks-occupied building in Tampa, Florida at a 5.82% cap rate ($1,568.18 per square foot).
GIPR said it sold the properties because they had reached "their highest value, given current market conditions" and to completely pay off a CMBS loan on its balance sheet. Following the transactions, the company’s 7-Eleven property in Washington, DC remains unencumbered.
In June, GIPR secured a new loan for approximately $750,000 (about 50% of the 7-Eleven property’s value) from Valley National Bank.
The company also disclosed it has engaged Cantor Fitzgerald & Co. to evaluate strategic alternatives, which may include a merger, recapitalization, joint venture, potential sale, or continuing as a public REIT under an optimized structure.
"I and the Board of Directors are well aware of the challenges our company faces and have identified a range of potential ways to address these challenges," said David Sobelman, Chief Executive Officer, in the press release statement.
GIPR noted that despite maintaining 100% rent collection and stable cash flows, it faces significant headwinds from elevated interest rates, limited access to public equity capital, and compressed trading multiples affecting small, publicly traded REITs.
The company did not provide a timeline for when its strategic review might conclude.
In other recent news, Generation Income Properties has entered into a $1 million loan agreement with Brown Family Enterprises, LLC. This loan is a secured non-convertible promissory note, as disclosed in a recent SEC filing. The note carries an initial interest rate of 16% per annum on $500,000 of the principal, which is due 90 days after issuance. After this period, the interest rate decreases to 9%, with monthly interest payments required, and the remaining balance due on the 180th day. The loan is backed by the assets of Generation Income Properties L.P., the company’s operating partnership. This financial arrangement allows for early repayment without penalty. The SEC filing included the terms and conditions of the promissory note, providing transparency to investors. Additionally, the filing contains cautionary language typical of forward-looking statements, highlighting potential risks and uncertainties.
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