Company: GIPRW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0000950170-25-046959
Chunk: 47

Company: GENERATION INCOME PROPERTIES, INC.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 47
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ovenants. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property, discontinue insurance coverage, or replace our property manager. These covenants, as well as any future covenants we may enter into through further loan agreements, could limit our operational flexibility and/or could inhibit our financial flexibility in the future and prevent distributions to stockholders. As of December 31, 2024, we were in compliance with all covenants with the exception of one property-level debt service coverage ratio 

 25

("DSCR") covenant for PNC for 15091 SW Alabama 20, LLC. In January 2024, Pratt and Whitney Automation vacated the property at the end of their lease and the property remained vacant for six months, thereafter. In August 2024, the Company entered into a lease with Auburn University for approximately 50 percent of the property's leasable space. During the six months of physical and economic vacancy, the property's mortgage DSCR was below the required 1.25 threshold resulting in a covenant deviation. According to the governing loan documents, failing to meet DSCR coverage requirements is a technical default triggering the risk of forfeiture of the property, accelerating  the repayment of the remaining outstanding balance of the loan at the lender's discretion. Subsequent to the report date, the Company executed a PSA to sell the property for $7.2 million with the transaction expected to close in May 2025 as detailed in the Exhibit 10.68.

Some of our mortgage loans may have “due on sale” provisions, which may impact the manner in which we acquire, sell and/or finance our properties.  

In purchasing properties subject to financing, we may obtain financing with “due-on-sale” and/or “due-on-encumbrance” clauses. Due-on sale clauses in mortgages allow a mortgage lender to demand full repayment of the mortgage loan if the borrower sells the mortgaged property. Similarly, due-on-encumbrance clauses allow a mortgage lender to demand full repayment if the borrower uses the real estate securing the mortgage loan as security for another loan. In such event, we may be required to sell our properties on an all-cash basis, which may make it more difficult to sell the property or reduce the selling price.  

Lenders may be able to recover against our other properties under our mortgage loans.  

In financing our acquisitions, we will seek to obtain secured nonrecourse loans. However, only recourse financing may be available