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Redeemable Non-Controlling Interests | 6 Months Ended
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Jun. 30, 2022
Noncontrolling Interest [Abstract] |
Redeemable Non-Controlling Interests | Note 7 – Non-Controlling Interests Redeemable Non-Controlling Interests (Temporary Equity) As part of the Company’s acquisition of a building for approximately $4,578,800 in Cocoa, FL, one of the Company’s operating subsidiaries entered into a preferred equity agreement with Brown Family Trust on September 11, 2019 pursuant to which the Company’s subsidiary received a capital contribution of $1,200,000. Pursuant to the agreement, the Company was required to pay the preferred equity member a 10% internal rate of return (“IRR”) on a monthly basis and redeem the entire amount due after 24 months at the option of the preferred equity member. The Operating Partnership, Generation Income Properties, LP, was the general manager of the subsidiary while Brown Family Trust was a preferred member. Because of the redemption right, the non-controlling interest was presented as temporary equity at redemption value. The Company redeemed the Brown Family Trust $1,200,000 Redeemable Non-Controlling Interest upon the sale of the property in August 2021. As part of the Company’s acquisition of a building for approximately $1,737,800 in Manteo, NC, one of the Company’s operating subsidiaries entered into a preferred equity agreement with Brown Family Trust on February 11, 2021 pursuant to which the Company’s subsidiary received a capital contribution of $500,000. Pursuant to the agreement, the Company will pay the preferred equity member a 9% IRR on a monthly basis and redeem the entire amount due after 24 months at the option of the preferred equity member. The Operating Partnership, Generation Income Properties, LP, is the general manager of the subsidiary while Brown Family Trust is a preferred member. Because of the redemption right, the non-controlling interest is presented as temporary equity at redemption value. The current redemption amount is $500,000. Distributable operating funds are distributed first to Brown Family Trust until the unpaid preferred return is paid off and then to the Company. As part of the Company’s acquisition of a building for approximately $1,757,300 in Plant City, FL, one of the Company’s operating subsidiaries entered into a preferred equity agreement with Irby Prop Partners on April 21, 2021 pursuant to which the Company’s subsidiary received a capital contribution of $950,000. Pursuant to the agreement, the Company will pay the preferred equity member a 12% total IRR with an 8% IRR paid on a monthly basis and the deferred IRR will be paid at the end of 24 months along with the entire $950,000 amount due after 24 months at the option of the preferred equity member. The Operating Partnership, Generation Income Properties, LP, is the general manager of the subsidiary. Because of the redemption right, the non-controlling interest is presented as temporary equity at redemption value. The current redemption amount is approximately $995,600. Distributable operating funds are distributed first to the preferred equity partners until the unpaid preferred return is paid off and then to the Company. As part of the Company’s investment in a tenant in common entity for approximately $724,800 in Rockford, IL, one of the Company’s operating subsidiaries entered into a preferred equity agreement with preferred equity partner (Mr. Hornstrom) on August 2, 2021 pursuant to which the Company’s subsidiary received a capital contribution of $650,000. Pursuant to the agreement, the Company will pay the preferred equity member a 12% total IRR with an 8% IRR paid on a monthly basis and the deferred IRR will be paid at the end of 24 months along with the entire $650,000 amount due after 24 months at the option of the preferred equity member. The Operating Partnership, Generation Income Properties, LP, is the general manager of the subsidiary. Because of the redemption right, the non-controlling interest is presented as temporary equity at redemption value. The current redemption amount is approximately $672,900. Distributable operating funds are distributed first to the preferred equity partners until the unpaid preferred return is paid off and then to the Company. Each of the preferred members described above may redeem their interest on or after the Redemption date (second year anniversary of the Closing), at the discretion of such preferred member, as applicable, all or a portion thereof, of such preferred member’s pro-rata share of the Redemption Price in the form of GIPLP UNITS. Such GIPLP UNITS shall be subject to all such restrictions, such as with respect to transferability, as reasonably imposed by GIPLP. The number of GIPLP UNITS issued to any preferred member shall be determined by dividing the total amount of the Redemption Price that such preferred member shall receive in GIPLP UNITS by a 15% discount of the average 30-day market price of Generation Income Properties, Inc. Units shall then be convertible into common stock of Generation Income Properties, Inc. on a 1:1 basis in accordance with the Partnership Agreement of Generation Income Properties, L.P. As part of the Company’s acquisition of two buildings for approximately $19,134,400 on September 30, 2019 in Norfolk, VA, the Operating Partnership entered into contribution agreements with two entities (Greenwal, L.C. and Riverside Crossing, L.C.) that resulted in the issuance of 349,913 common units in the Operating Partnership at $20.00 per share for a total value of $6,998,251. Greenwal, L.C and Riverside Crossing, L.C. have since been dissolved and the common units now are directly owned by the former members of the two entities. Beginning on the first anniversary of the closing, the contribution agreements allow for the two investors to require the Operating Partnership to redeem, all or a portion of its units for either (i) the Redemption Amount (within the meaning of the Operating Partnership’s Partnership Agreement), or (ii) until forty-nine (49) months from date of closing, cash in an agreed-upon Value (within the meaning of the Operating Partnership’s Partnership Agreement) of $20.00 per share, as set forth on the Notice of Redemption. As such, the Company has determined their equity should be classified as a temporary equity at redemption value. On March 21, 2022, the Company received notice from an Operating Partnership common unit holder to redeem 10,166.3 units at $20.00 per unit for a total of $203,326 and paid the unit holder on June 24, 2022. On April 25, 2022, the Company received notice from another Operating Partnership common unit holder to redeem 10,166.3 units at $20 per unit for a total of $203,326 and paid the unit holder on July 25, 2022. The redemption has been accrued for as of June 30, 2022 by reclass for the redemption amount from temporary equity to accrued expenses. As part of the Company’s acquisition of one building on January 14, 2022 for approximately $2,264,000 in Tampa, FL, the Operating Partnership entered into a contribution agreement with one entity (LMB Owenton I LLC) that resulted in the issuance of 110,957 common units in the Operating Partnership at $10.00 per share for a total value of $1,109,570. Beginning on the second anniversary of the Closing, the contribution agreement allows for the investor to require the Operating Partnership to redeem, all or a portion of its units for either (i) the Redemption Amount (within the meaning of the Partnership Agreement), or (ii) until forty nine (49) months from date of Closing, cash in an agreed-upon Value (within the meaning of the Partnership Agreement) of $10.00 per share. As such, the Company has determined their equity should be classified as temporary equity at redemption value. Non-Controlling Interest (Permanent Equity) As part of the Company’s acquisition of one building on November 30, 2020 for $1,847,700 in Tampa, FL, the Operating Partnership entered into a contribution agreement with one entity (GIP Fund 1, LLC) that resulted in the issuance of 24,309 common units in Operating Partnership at $20.00 per share for a total value of $486,180. At the time of the acquisition the Company’s President owned 11% of GIP Fund 1. GIP Fund 1 has since been dissolved and the common units now are directly owned by the former members of GIP Fund 1. Beginning on the first anniversary of the Closing, the contribution agreement allows for the investor to require the Operating Partnership to redeem, all or a portion of its units for common stock of the Company. As such, the Company has determined their equity should be classified as a Non-controlling interest. Following these transactions as of June 30, 2022, the Company owned 83% of the common units in the Operating Partnership and outside investors owned 17%. The following table reflects the Company's Redeemable Non-Controlling Interests and Non-Controlling Interest:
|  | Brown Family Trust |  |  | Irby Prop Partners |  |  | Richard Hornstrom |  |  | LMB Owenton I LLC |  |  | Former Greenwal, L.C. and Riverside Crossing, L.C. Members |  |  | Total Redeemable Non-Controlling Interest |  | Non-Controlling Interest - Former GIP Fund 1 Members |
Balance, December 31, 2020 (As corrected, see Note 2) |  | $ | 1,200,000 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 6,998,251 |  |  | $ | 8,198,251 |  | $ | 486,180 |
Issuance of Redeemable Operating Partnership Units for property acquisition |  |  | 500,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 500,000 |  |  | - |
Distribution on Non-Controlling Interest |  |  | (37,104 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (113,722 | ) |  |  | (150,826 | ) |  | - |
Net income (loss) for the quarter (As corrected, see Note 2) |  |  | 37,104 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 113,722 |  |  |  | 150,826 |  |  | (4,646 | )
Balance, March 31, 2021 (As corrected, see Note 2) |  | $ | 1,700,000 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 6,998,251 |  |  | $ | 8,698,251 |  | $ | 481,534 |
Issuance of Redeemable Operating Partnership Units for property acquisition |  |  | - |  |  |  | 950,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 950,000 |  |  | - |
Distribution on Non-Controlling Interest |  |  | (41,125 | ) |  |  | (15,275 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (56,400 | ) |  | (2,748 | )
Net income (loss) for the quarter (As corrected, see Note 2) |  |  | 41,125 |  |  |  | 15,275 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 56,400 |  |  | (4,076 | )
Balance, June 30, 2021 (As corrected, see Note 2) |  | $ | 1,700,000 |  |  | $ | 950,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 6,998,251 |  |  | $ | 9,648,251 |  | $ | 474,710 |
Balance, December 31, 2021 (As corrected, see Note 2) |  | $ | 500,000 |  |  | $ | 976,756 |  |  | $ | 659,972 |  |  | $ | - |  |  | $ | 6,998,251 |  |  | $ | 9,134,979 |  | $ | 469,712 |
Issuance of Redeemable Operating Partnership Units for property acquisition |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,109,570 |  |  |  | - |  |  |  | 1,109,570 |  |  | - |
Distribution on Non-Controlling Interest |  |  | (11,260 | ) |  |  | (19,001 | ) |  |  | (13,087 | ) |  |  | (15,269 | ) |  |  | (56,686 | ) |  |  | (115,303 | ) |  | (3,938 | )
Net income (loss) for the quarter (As corrected, see Note 2) |  |  | 11,260 |  |  |  | 28,370 |  |  |  | 19,498 |  |  |  | 15,269 |  |  |  | 56,686 |  |  |  | 131,083 |  |  | (1,120 | )
Balance, March 31, 2022 (As corrected, see Note 2) |  | $ | 500,000 |  |  | $ | 986,125 |  |  | $ | 666,383 |  |  | $ | 1,109,570 |  |  | $ | 6,998,251 |  |  | $ | 10,260,329 |  | $ | 464,654 |
Redemption of Redeemable Non-Controlling Interest |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (406,652 | ) |  |  | (406,652 | ) |  | - |
Distribution on Non-Controlling Interest |  |  | (11,260 | ) |  |  | (19,000 | ) |  |  | (13,086 | ) |  |  | (17,975 | ) |  |  | (57,235 | ) |  |  | (118,556 | ) |  | (3,938 | )
Net income (loss) for the quarter |  |  | 11,260 |  |  |  | 28,471 |  |  |  | 19,569 |  |  |  | 17,975 |  |  |  | 57,235 |  |  |  | 134,510 |  |  | (4,329 | )
Balance, June 30, 2022 |  | $ | 500,000 |  |  | $ | 995,596 |  |  | $ | 672,866 |  |  | $ | 1,109,570 |  |  | $ | 6,591,599 |  |  | $ | 9,869,631 |  | $ | 456,387 |

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