GIPR

• Purchased a $42 million net lease portfolio in August, increasing key metrics: 26 net lease assets (100% increase), ~540,000 sq ft commercial properties (60% increase), 96% occupancy (3% increase), 4.5-year average lease term (8% increase), and adjusted base rent to ~$8.6 million (70% increase).
• Reduced general and administrative expenses by 6% excluding legal costs from preferred equity investment, embracing a lean REIT model.
• Hired Ron Cook as Vice President of Accounting to lead accounting team.
• Shareholders approved the issuance of common stock to redeem preferred shares from the Modiv transaction, with next step being SEC registration for the shares.

• Pipeline for acquisitions is strong, having reviewed ~$2.3 billion in assets and 300 properties from Jan 2022 to Aug 2023, with offers on ~$140 million worth but waiting for right pricing and market conditions.
• Anticipate satisfying SEC registration for share redemption to increase investor base and public float by approximately 100%.

Total revenue from operations was $1.9 million in the third quarter of 2023 compared to $1.5 million in the prior year, primarily driven by rental income from the Modiv portfolio. Operating expenses were $3.1 million, a $1 million increase compared to the same period last year, due to higher depreciation, amortization, and interest expenses from acquired assets. Net operating income was $1.4 million versus $1.2 million in the prior year. Net loss attributable to common stockholders was $1.8 million compared to $639,000 in the prior year, related to income from non-controlling interest of new preferred equity partners. Core AFFO was a loss of $29,000 compared to income of $358,000 in the prior year, primarily due to increased interest expense.

• Cap rates are increasing, leading to fewer buyers for net lease properties.
• Higher interest rates and reduced 1031 exchange buyers impact the market.
• Industry dislocations due to recent focus on selling to less sophisticated private investors pose challenges.

Q: Could you give an indication of how many properties the pipeline has?

A: From January 2022 to August 2023, we looked at about $2.3 billion in assets, which were about 300 properties. We sent out offers on about $140 million worth but bought nothing due to pricing, and the pipeline remains robust.

Q: Comment on dividend coverage and impact of redeeming preferred for common?

A: Dividend coverage is a priority; the Modiv transaction helped trend to 100% dividend coverage. Redeeming preferred would increase potential float by ~100% and reduce preferred shares by 20%.