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Commenting on the quarter, a letter from CEO David Sobelman:

To the Shareholders and my colleagues at Generation Income Properties, Inc.,

The third quarter of this year presented challenges for our stock price, which reached an all-time low despite the significant transitional events we've achieved to position the company for long-term growth and sustainability. I recognize that some shareholders have expressed concerns, indicating that the company's recent dividend suspension holds more weight for them than our long-term outlook. It's clear that many of our shareholders view their investment primarily for the monthly dividend and the regular income it provides, rather than the intrinsic value of our growing assets. I understand this perspective, especially given that "income" is part of our company name. REITs are fundamentally structured to provide dividends, a practice established since their inception in the 1950s and 1960s, offering a transparent way for investors to engage in real estate markets that might otherwise be inaccessible.

I recently finished reading "Watch That Rat Hole: And Witness the REIT Revolution" by Kenneth D. Campbell, one of the early analysts in the REIT industry. The book discusses how REITs were created to fund single-family home developers, providing the necessary short-term debt for their projects in the post-WWII era. This initiative arose from a pressing need in the United States, as developers struggled to secure funding from traditional banks for their short-term projects. Over time, the REIT structure evolved to include funding not only for debt but also for a variety of property types.

This historical context highlights that, since the industry's inception, many investments have focused on short-term returns. Campbell's book also notes that economic changes can impact these short-term strategies. When conditions shift - such as interest rate increases or changes in consumer behavior - companies may face significant adjustments, sometimes leading to drastic decisions like asset sales or restructuring.

At GIPR, we have always maintained a long-term, generational outlook to avoid succumbing to short-term market pressures. We believe that our approach has proven effective over the years in the industry generally, and we remain committed to making decisions that prioritize sustainable growth for the future.

I recognize that long-term thinking can be challenging for many investors, and I share a sense of impatience regarding various aspects of my life, including the growth of GIPR. However, it's important to reflect on our progress. Approximately this time last year, we were half our current size, and we've made substantial strides since then. I also understand that many of our shareholders may not thoroughly review our public filings, so I'd like to highlight some key events from the previous quarter:

• July 2, 2024- We successfully raised $2.5 million in new capital through preferred units from a new investor.

• July 3, 2024 - We made the difficult but strategic decision to suspend our dividend in order to focus on growth, with plans to prioritize reinstating the dividend when feasible.

• July 19, 2024 - Due to our ongoing growth and increased complexities, we engaged Cohn Reznick, a top 20 accounting firm, as our independent auditor.

• July 24, 2024 - We extended the redemption date for one of our unit holders from February 8, 2025, to February 8, 2027.

• August 23, 2024 - We acquired an investment-grade tenanted building (Best Buy, NYSE: BBY, S&P: BBB) at an effective cap rate of 8.1%, set to begin in January 2025.

• August 29, 2024 - We extended the maturity date of a loan set to expire in October 2024 to August 30, 2029, with no cash outlay required from the company.

Importantly, we accomplished all this while maintaining the integrity of our current portfolio, with 100% rent collection from our tenants.

I don't intend to paint this as solely good news. You have the responsibility to assess your investment wisely, and we aim to provide you with transparent information to aid in that decision. This level of transparency is a distinct advantage over private companies, where reporting would be considerably less frequent or detailed. Your access to our updates allows you to make informed decisions based on clarity regarding our activities.

Why Temporarily Suspend the Dividend

Let me start with this; our company is stable, our balance sheet is strong, and our tenants are paying rent as planned. However, our priority is growth, and we constantly require new assets and new capital to achieve that. Without growth, our stock price may experience temporary pressure before it increases in value. Currently, raising public capital would be costly and could dilute existing shareholders, providing better deals to new investors than to current ones. By conserving our cash for new asset acquisitions and debt reduction, we aim to enhance the company's long-term value.

Additionally, while I take the daily news with a grain of salt, it's evident that the economy remains uncertain. Recent reports indicate that bankruptcies in 2024 are expected to surpass those in 2023. Therefore, we are adopting a conservative approach to cash management, ensuring we can sustain this unpredictable period while positioning the company for future growth without making decisions based solely on fleeting market sentiments.

It's also important to recognize that the information you receive from us may not always convey the broader context. Sometimes, we report on specific events without detailing their potential impact on other initiatives. Due to stringent regulations, we strive to provide you with all the information necessary to evaluate your investment in our company and to answer any questions about our decisions.

Our choices are made with the long-term benefit of all shareholders in mind as we navigate this complex real estate market early in our public journey.

In the past, I've noted that analysts typically do not value companies based solely on dividends. Instead, they understand that dividends attract investor interest, which can drive stock prices.

Dividend = positive

No dividend = requires more analysis

While the formulaic approach is standard in securities analysis, ultimately, market sentiment dictates stock prices. Therefore, I cannot predict exactly when our stock price will recover, but it often happens when investors recognize the undervaluation and begin purchasing shares.

Regarding the reinstatement of the dividend, this is another item where I can't give you the exact date that will occur. However, I can assure you that when we made the decision to suspend the dividend, we were already strategizing on how to reverse that decision for the benefit of all shareholders. This process has involved thorough discussions on why the suspension was necessary, what actions we would take during this period, and how we could eventually reinstate the dividend.

How Do We Grow GIPR

While it may seem there's bad news this quarter due to our stock price decline, it's essential to acknowledge our journey. As one of GIPR's top five shareholders, I, too, prefer to see positive returns on investment. Warren Buffett famously stated in a 2008 op-ed, "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price." Over the past three years, shareholders have seen our portfolio grow from eight properties to twenty-seven. We've successfully utilized our shares and operating partnership equity as currency for acquisitions and secured financing when many lenders were hesitant. We started with zero properties, went through our IPO with eight properties and have successfully grown the portfolio to 27 properties with only one public capital raise.

We plan to leverage our resources to acquire properties with partners, as we have done in the past, and we will continue to accept assets through our UPREIT program, requiring minimal cash outlay. Our focus on these growth strategies not only benefits the company but also aligns us with investors who understand our long-term vision.

Subsequent Events and Values

GIPR has no debt obligations due until 2028 and no cash redemptions due until 2026. These changes have been carefully planned and executed in recent months. Our Director of Capital Markets, Emily Hewland, has proactively managed our timelines, ensuring we face no imminent deadlines that limit our options. We adhere to Charlie Munger's principle of "Inversion Thinking", identifying potential pitfalls and proactively preventing them.

GIPR's culture and core values are fundamental to our identity, akin to long-standing companies like Apple and Patagonia. Based in Tampa, FL, we have recently faced significant challenges, including hurricanes that impacted our community.

While our team remained safe, many friends and family experienced devastating losses. Witnessing their struggles has been emotionally difficult. During this time, our Asset Manager, Bobby Rohrlack, led efforts to reach out to tenants who could help those affected in North Carolina and Florida. Leveraging our relationships with major corporations, we coordinated support for those in need.

The outcomes of Bobby's initiatives include:

• Walgreens: We connected their VP of Public Affairs with the ASYMCA to coordinate donations of household items.

• ASYMCA: We established communication with ASYMCA's Executive Director in Fayetteville, NC, to address urgent supply needs.

• Dollar General: Engaged with their VP of Real Estate to forward our outreach to their Community Giving Department.

• Dollar Tree - Connected with their Corporate Marketing Director, who is coordinating internal relief efforts and financial grants for impacted areas.

• PRA Group: Engaged their Facilities & Real Estate VP, who expressed interest in partnering with us.

• Starbucks: Met with local management to explore potential community collaboration.

Conclusion

In delivering this message, my aim is to be honest and transparent while outlining our plans moving forward. I understand that the topics of stock price and dividends weigh heavily on your minds, as they do on mine.

We still have a considerable journey ahead before we can claim the stature of some of our larger peers. However, as we navigate the capital and real estate markets, we are committed to seizing growth opportunities. I believe that the current market could present a favorable buying opportunity for both our shares and the assets we pursue.

As we continue this journey, rest assured that our portfolio remains stable, our tenants are fulfilling their obligations, and our balance sheet is solid.

Sincerely,

David Sobelman

About Generation Income Properties

Generation Income Properties, Inc., located in Tampa, Florida, is an internally managed real estate investment trust formed to acquire and own, directly and jointly, real estate investments focused on retail, office, and industrial net lease properties in densely populated submarkets. Additional information about Generation Income Properties, Inc. can be found at the Company's corporate website: www.gipreit.com.

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, 2023 filed with the SEC on April 8, 2024, 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.

Notice Regarding Non-GAAP Financial Measures

In addition to our reported results and net earnings per diluted share, which are financial measures presented in accordance with GAAP, this press release contains and may refer to certain non-GAAP financial measures, including Funds from Operations ("FFO"), Core Funds From Operations ("Core FFO"), Adjusted Funds from Operations ("AFFO"), Core Adjusted Funds from Operations ("Core AFFO"), and Net Operating Income ("NOI"). We believe the use of Core FFO, Core AFFO and NOIare useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and related measures, including NOI, should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure, and should be considered in addition to, and not in lieu of, GAAP financial measures. You should not consider our Core FFO, Core AFFO, or NOI as an alternative to net income or cash flows from operating activities determined in accordance with GAAP. Our reconciliation of non-GAAP measures to the most directly comparable GAAP financial measure and statements of why management believes these measures are useful to investors are included below.

Consolidated Balance Sheets

Consolidated Statements of Operations
(unaudited)

Reconciliation of Non-GAAP Measures
(unaudited)

The following tables reconcile net income (loss), which we believe is the most comparable GAAP measure, to Net Operating Income ("NOI"):

FFO and Related Measures
(unaudited)

The following tables reconcile net income (loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO, and Core AFFO:

The table above presents FFO in accordance with the most current available NAREIT guidance and in alignment with current industry standards. Presentations of FFO in our prior filings and announcements did not include Loss on held for sale asset valuation as an add-back in calculating FFO, but the data for three and nine months ended September 30, 2023 set forth above has been revised to include Loss on held for sale asset valuation as an add-back.

Our reported results are presented in accordance with GAAP. We also disclose funds from operations ("FFO"), adjusted funds from operations ("AFFO"), core funds from operations ("Core FFO") and core adjusted funds of operations ("Core AFFO") all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO and related measures do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income or loss as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gains from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets, and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. We then adjust FFO for non-cash revenues and expenses such as amortization of deferred financing costs, above and below market lease intangible amortization, straight line rent adjustment where the Company is both the lessor and lessee, and non-cash stock compensation to calculate Core AFFO.

FFO is used by management, investors, and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies. We believe that Core FFO and Core AFFO are useful measures for management and investors because they further remove the effect of non-cash expenses and certain other expenses that are not directly related to real estate operations. We use each as measures of our performance when we formulate corporate goals.

As FFO excludes depreciation and amortization, gains and losses from property dispositions that are available for distribution to stockholders and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, providing a perspective not immediately apparent from net income or loss. However, FFO should not be viewed as an alternative measure of our operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties which could be significant economic costs and could materially impact our results from operations. Additionally, FFO does not reflect distributions paid to redeemable non-controlling interests.

Investor Contacts

Investor Relations
ir@gipreit.com

SOURCE: Generation Income Properties

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