We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section above entitled "Cautionary Note Regarding Forward-Looking Statements and Summary Risk Factors." Certain risk factors may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see Item 1A, "Risk Factors."
We are an internally managed,
Marylandcorporation focused on acquiring retail, office and industrial real estate located in major U.S.markets. We initiated operations during the year ended December 31, 2015and we intend to elect to be taxed as a REIT for federal income tax purposes commencing with our taxable year ending December 31, 2021.
Public offering and Nasdaq listing
September 2021, the Company closed an underwritten public offering of 1,665,000 units at a price to the public of $10per unit generating net proceeds of $13.8 millionincluding issuance costs incurred during the years ended December 31, 2021and 2020. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock at an exercise price equal to $10per share. The common stock and warrants included in the units (which were separated into one share of common stock and one warrant) currently trade on the Nasdaq Capital Market ("Nasdaq") under the symbols "GIPR" and "GIPRW," respectively.
Here are the characteristics of our properties at
(excluding our Tenants in Co-ownership):
• Creditworthy tenants. Around 80% of the annualized income of our portfolio
came from tenants who have (or whose parent company has) a
investment grade credit rating from a recognized rating agency
“BBB-” or better. Our largest tenants are General Services
Administration, PRA Group and
credit rating or better than
approximately 65% of the annualized base rent of our portfolio in December
31, 2021. • 100% Occupied. Our portfolio is 100% leased and occupied.
• Contractual growth in rents. Approximately 77% of the leases in our current portfolio
portfolio (based on an annualized rent at
increases in the contractual base rent in future years from the current
term or during extension periods of the lease.
• Average effective annual rent per square foot. Average annual workforce
the rental per square foot is
linearly over a period of 26 to 50 years.
Given the nature of our leases, our tenants either pay the real estate taxes directly or reimburse us for such costs. We believe all of our properties are adequately covered by insurance. 36
The table below provides an overview of the nine properties in our portfolio at
S&P Tenant Base Rentable Credit Lease Remaining Options Contractual Annualized Annualized Rent Property Property Square Rating Expiration Term (Number Rent Base Rent Base Rent as a % of Type Location Feet Tenant(s) (1) Date (Years) x Years) Escalations (2) Sq. Ft. Total Washington, 7-Eleven Retail DC 3,000 Corporation A 3/31/2026 4.2 2 x 5 Yes
$ 129,804 $ 43.273.4 %
$ 182,500 $ 82.954.8 % Huntsville, Pratt & Whitney Industrial AL 59,091 Automation, Inc. A- 1/31/2029 7.1 2 x 5 Yes $ 684,996 $ 11.5918.1 % General Services Administration of the United Norfolk, States of America Office VA 49,902 and AA+ 9/17/2028 6.7 - No $ 882,476 $ 17.6823.3 % Norfolk, Maersk Line, VA 22,247 Limited BBB 12/31/2022 1.0 1 x 5 Yes $ 386,795 $ 17.3910.2 % Norfolk, PRA Holdings, Office VA 34,847 Inc.(3) BB+ 8/31/2027 5.7 1 x 5 Yes $ 742,850 $ 21.3219.6 % Retail Tampa, FL 3,500 Sherwin-Williams BBB 7/31/2028 6.6 5 x 5 Yes $ 120,750 $ 34.503.2 % General Services Administration of the United Office Manteo, NC 7,543 States of America AA+ 2/20/2029 7.1 1 x 5 Yes $ 161,346 $ 21.394.3 % Irby Construction Office Tampa, FL 7,826 Company BBB- 12/31/2024 3.0 2 x 5 Yes $ 148,200 $ 18.943.9 % Grand Junction, Retail CO 30,701 BestBuy BBB+ 3/31/2027 5.2 1 x 5 Yes $ 353,061 $ 11.509.3 % Total 220,857 $ 3,792,778Tenancy in Common Ownership Retail Rockford, La-Z-Boy IL 15,288 Corporation NR 10/31/2027 5.8 4 x 5 Yes $ 360,100 $ 23.55
(1) Lessee, or parent lessee, rated entity.
(2) Annualized cash rental income in place at
do not include tenant concessions or abatements.
(3) The lessee has the right to terminate the lease on
Acquisitions of property after
• A single-tenant medical building (approximately 10,900 square feet)
leased to Fresenius Medical Care (NYSE: FMS) and located
• A single tenant retail stand-alone property (approximately 2,600 square feet) located in
Tampa, Floridawith a corporate Starbucks Coffee(NASDAQ: SBUX) as the tenant acquired in January 2022.
• A leasehold interest in a land lease and the corresponding assignment of a
single tenant retail stand-alone property (approximately 88,700 square feet) located in
Tucson, Arizonawith a Kohl's (NASDAQ: KSS) as the tenant acquired in March 2022.
Property disposals in 2021
August 31, 2021we sold our 15,100-square-foot, single tenant Walgreens in Cocoa, Floridapurchased in September 2019for total net consideration of approximately $5.2 million. The acquisition was initially funded with a Redeemable Non-Controlling Interest contribution to one of our subsidiaries of $1.2 millionand by debt financing of approximately $3.4 million. We also repaid the Redeemable Non-Controlling Interest of $1.2 millionand the $3.4 milliondebt from the sales proceeds. 37
Our management team's evaluation of operating results includes an assessment of our ability to generate cash flow necessary to pay operating expenses, general and administrative expenses, debt service, and to fund dividends to our stockholders. As a result, our management team's assessment of operating results gives less emphasis to the effects of unrealized gains and losses and other non-cash charges, such as depreciation and amortization and impairment charges, which may cause fluctuations in net income for comparable periods but have no impact on cash flows. Our management team's evaluation of our potential for generating cash flow includes on-going assessments of our existing portfolio of properties, our non-stabilized properties, long-term sustainability of our real estate portfolio, our future operating cash flow from anticipated acquisitions, and the proceeds from the sales of our real estate assets. In addition, our management team evaluates our portfolio and individual properties' results of operations with a primary focus on increasing and enhancing the value, quality and quantity of properties in our real estate holdings. Our management team focuses its efforts on improving underperforming assets through re-leasing efforts, including negotiation of lease renewals and rental rates. Properties that have reached goals in occupancy and rental rates are evaluated for potential added value appreciation and, if lacking such potential, are sold with the equity reinvested in properties that have better potential without foregoing cash flow. Our ability to increase assets under management is affected by our ability to raise borrowings and/or capital, coupled with our ability to identify appropriate investments. Our results of operations for the years ended
December 31, 2021and 2020 are not indicative of those expected in future periods, as we expect that rental income, interest expense, rental operating expense, general and administrative expense, and depreciation and amortization will significantly change in future periods as a result of growth through future acquisitions of real estate related investments.
Results of operations for the years ended
For the year ended
December 31, 2021, total revenue from operations were $3,900 thousandas compared to $3,520 thousandfor the year ended period ended December 31, 2020. Revenue increased approximately $380 thousanddue to three additional properties generating revenue for the twelve-months ended December 31, 2021that were purchased in February 2021, April 2021and December 2021as well as $45 thousandin commission revenue offset in part by the sale of a property in August 2021.
For the year ended
December 31, 2021and 2020, we incurred total expenses of $5,548 thousandand $4,865 thousand, respectively which included total general, administrative and organizational expenses ("GAO") of $1,111 thousandfor 2021 and $818 thousandfor 2020. The $293 thousandincrease in GAO expenses is due to increased legal fees of $139 thousand, insurance of $54 thousand, executive recruiting fees of $55 thousand, rent expense of $15 thousand, and a net increase in other expenses of $88 thousandoffset in part by a decrease in audit and audit-related fees of approximately $58 thousand.
For the year ended
partly offset by a reduction in the management costs of the real estate assets of
For the year ended
December 31, 2021and 2020, we incurred depreciation and amortization expense of $1,508 thousandand $1,453 thousand, respectively. The $55 thousandincrease is due to the additional properties acquired offset in part by the sale of a property in August 2021. For the year ended December 31, 2021and 2020, we incurred interest expense and amortization of debt issuance costs of $1,311 thousandand $1,400 thousandrespectively. The $89 thousanddecrease in interest expense incurred is the result of $3.4 millionof loans in which the interest rates changed based on 30 day LIBOR, the payoff of a $3.4 millionloan in conjunction with the sale of a property in August 2021, the interest rate reduction for the $7.8 millionloan and the $4.9 millionloan from 4.25% to 3.50% in March 2021, and the payoff of the $1.1 millionrelated party loan, offset in part by interest on the debt used to acquire new properties.
For the year ended
Gain on disposal of property
August 31, 2021we sold our 15,100-square-foot property, occupied by a single tenant Walgreens, in Cocoa, Floridapurchased in September 2019for total net consideration of approximately $5.2 millionand recognized a gain on the sale of $923 thousand. Income Tax Benefit We did not record an income tax benefit for the for the year ended December 31, 2021or 2020 because we have been in a net loss situation since inception and have recorded a valuation allowance to offset any tax benefits generated by the operating losses. Net Loss
For the year ended
Income on investment in joint tenancy
For the year ended
December 31, 2021, our share of earnings on our investment generated income of $12 thousandas we purchased a property in 2021 in which we own 36.8% interest. The Company accounts for the property under the equity method.
Net income attributable to non-controlling interests
For the year ended
December 31, 2021, we allocated net income attributable to non-controlling interest of $530 thousandas compared to $487 thousandfor the year ended December 31, 2020. The increase is attributable to the distributions provided to the additional redeemable non-controlling interests that were used to finance the acquisition of properties in 2021.
Net loss attributable to shareholders
For the year ended
Cash and capital resources
We require capital to fund our investment activities and operating expenses. Our capital sources may include net proceeds from offerings of our equity securities, cash flow from operations and borrowings under credit facilities. As of
December 31, 2021, we had total cash (unrestricted and restricted) of approximately $10.6 million, properties with a cost basis of $44.0 millionand outstanding debt of approximately $29.0 million. In September 2021, we closed an underwritten public offering of 1,665,000 units at a price to the public of $10per unit generating net proceeds of $13.8 millionincluding issuance costs incurred during the years ended December 31, 2021and 2020. On October 26, 2021, the Operating Partnershipentered into a Commitment Letter with American Momentum Bank(the "Lender") for a $25 millionmaster commitment credit facility (the "Facility") to be used for the acquisition of income producing real estate properties. Borrowings under the Facility will accrue interest at a variable rate equal to the Wall StreetJournal Prime rate, adjusted monthly, subject to a floor interest rate of 3.25% per annum. We currently obtain the capital required to invest in and manage a diversified portfolio of commercial net lease real estate investments and conduct our operations from the proceeds of equity offerings, debt financings, preferred minority interest obtained from third parties and from any undistributed funds from our operations. We anticipate that our current cash on hand and availability under the Facility combined with the revenue generated from investment properties and proceeds from debt arrangements will provide sufficient liquidity to meet future funding commitments for at least the next 12 months. As of December 31, 2021and 2020, we had total current liabilities (excluding the current portion of the acquired lease intangible liability) which consists of accounts payable, accrued expenses, insurance payable of $370 thousandand $565 thousand, respectively. As of December 31, 2021, current mortgage loan payments due within 12 months total $0.6 million. Outstanding indebtedness consisted of the following as of December 31, 2021and 2020: 39 --------------------------------------------------------------------------------
As of As of December 31, December 31, 2021 2020 Interest Rate Maturity Date Promissory note issued for
$1,286,664by a financial institution, interest only payments due monthly of approximately $3,800until December 2023. Note was originally issued on January 15, 2015and assumed and modified on November 3.72% fixed rate 30, 2020 and can be prepaid at any after using SWAP time without penalty. Secured by whereas the loan out Tampa Sherwin-Williams is LIBOR plus property. 2.75% 8/10/2028 1,286,664 1,286,664 Promissory note issued for $1,275,000by a financial institution. Note was issued on February 4, 2021and can be prepaid at any time without Wall Street penalty. Secured by our Journal Prime Rate GSA-Manteo, North Carolina with minimum of property. 3.25% 2/4/2023 1,275,000 - Promissory note issued for Wall Street $850,000by a financial Journal Prime Rate
institution. The note was issued at minus 0.5% with
for first 24 Secured by our Irby - Plant City, months; FL property. thereafter, weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of three tears on April 21, 2023, plus 2.75% with a minimum of 3.25% 12/31/2024 850,000 - Promissory note issued for
$2,350,000by a financial institution. Note was issued on December 28, 2021 and can be Wall Street
prepaid at any time without Journal Prime Rate penalty. Secured by our Best Buy – with a minimum of
3.25% 12/28/2023 2,350,000 - Promissory note issued for
$8,260,000by a financial institution, interest and principal payments due monthly of approximately $41,500. Note was issued on September 30, 2019and can be prepaid at any time without penalty. Secured by our GSA/Maersk - Norfolk, Virginiaproperty. The interest rate was reduced in March 2021 from 4.25% to 3.5%. 3.50% 9/30/2024 7,805,524 8,022,271 Promissory note issued for $5,216,749by a financial institution, interest and principal payments due monthly of approximately $27,400. Note was originally issued on October 23, 2017and modified on September 30, 2019and can be prepaid at any time without penalty. Secured by our PRA - Norfolk, Virginiaproperty. The interest rate was reduced in March 2021from 4.25% to 3.5%. 3.50% 10/23/2024 4,889,670 5,041,935 Promissory note issued for $1,900,000to a Clearlake Preferred Member, secured by all of the personal and fixture property of the Operating Partnership, interest payments due monthly. Note was issued on December 16, 2019and was prepaid without penalty on September 30, 2021. 10.00% 12/16/2021 - 1,100,000 Promissory note issued for $11,287,500by a financial institution, interest only payment is approximately $39,000and starting April 6, 2021, interest and principal payments due monthly of approximately $55,000. Note was issued on February 11, 2020. Secured by our Washington, DC, Tampa, FLand Huntsville, ALproperties. It cannot be prepaid without a penalty. 4.17% 3/6/2030 11,150,130 11,287,500 Promissory note issued for $3,407,391by a financial institution. Note was issued on September 11, 2019and prepaid without penalty upon the sale of 30-day LIBOR the Walgreen-Cocoa, Florida adjusted monthly
points 9/11/2021 $ -
$ 3,407,391Less: debt issuance costs, net (637,693 ) (689,190 ) $ 28,969,295 $ 29,456,57140
The Company has amortized the costs of issuing loans during the twelve months ended
December 31, 2021, we had three promissory notes totaling approximately $23.8 millionrequire Debt Service Coverage Ratios (also known as "DSCR") of 1.25:1.0, one promissory note totaling $1.3 millionrequire DSCR of 1.20:1.0, one promissory note totaling $0.9 millionrequire DSCR of 1.15:1.0, one promissory note totaling $1.3 millionrequire DSCR of 1.30:1.0, and one promissory note totaling $2.4 millionrequire DSCR of 1:50:1.0. We were in compliance with all covenants as of December 31, 2021. As of March 9, 2022, we added three new promissory notes with one totaling approximately $1.6 millionrequiring DSCR of 1.50:1.0, one new promissory note totaling $1.1 millionwith no required DSCR, and one totaling approximately $3.7 millionrequiring DSCR of 1.50:1.0. As of December 31, 2021, the Company's President has personally guaranteed the repayment of the $11.1 milliondue under the DC/ Tampa/ Huntsvilleloan, the $1.3 millionloan secured by our Tampa Sherwin Williamsproperty, the $0.9 millionloan secured by our Irby property, the $1.3 millionloan secured by our GSA Manteo NC property and the $2.4 millionloan secured by our Best Buy Grand Junction, COproperty. The aggregate guaranteed principal amount of these loans total approximately $16.9 million. The Company's President has also provided a guaranty of the Borrower's nonrecourse carveout liabilities and obligations in favor of the lender for the Norfolk, Virginiaproperty loans (the "Bayport loans"), with an aggregate principal amount of approximately $12.7 million. On October 26, 2021, the Operating Partnershipentered into a Commitment Letter with the Lender for the $25 millionFacility to be used for the acquisition of income producing real estate properties. Borrowings under the Facility will accrue interest at a variable rate equal to the Wall Street Journal Prime rate, adjusted monthly, subject to a floor interest rate of 3.25% per annum. At each loan closing under the Facility, the borrower shall pay the Lender a commitment fee equal to 0.50% of the applicable loan amount. Each loan will have an interest-only payment term for twenty-four months from the applicable loan closing date and all interest and principal outstanding shall be due and payable in full two years from the applicable loan closing date. Each loan will be secured by the real estate property acquired and the associated rental income and payment will be guaranteed by the Operating Partnership. David Sobelman, the Company's President, will be required to execute a non-recourse guarantee in connection with each loan that is subject to standard "bad-boy" carve out provisions. Each loan agreement under the Facility will require the borrower to maintain a debt service coverage ratio of not less than 1.50 to 1.00 over the term of the loan and will contain customary affirmative covenants, negative covenants and events of default. Should any event of default occur, the loan commitments under the Facility may be terminated and any outstanding borrowings, together with accrued interest, could be declared immediately due and payable. All loans under the Facility must close by October 26, 2023. The Facility is voidable at the option of the Lender in specified circumstances, including a material adverse change in the Company's financial condition and upon any changes in management of the Company that are unacceptable to the Lender. As of December 31, 2021, we have borrowed approximately $2.4 millionunder the Facility.
Required minimum principal payments on the Company’s debt at
As of December 31, 2021 2022
$ 580,7402023 4,240,446 2024 12,981,450 2025 251,011 2026 261,675 2027 and beyond 11,291,666 $ 29,606,988The acquisition of the Manteo, NCproperty in February 2021, was funded with a Redeemable Non-Controlling Interest contribution to one of our subsidiaries of approximately $0.5 millionand by debt financing of approximately $1.3 million. The Company modified the Bayport loans in February 2021for no fees and reduced the associated interest rate from 4.25% to 3.5%. The Company determined that the debt modification was not substantial under ASC 470-50. The acquisition of the Plant City, FLproperty in April 2021, was funded with a Redeemable Non-Controlling Interest contribution to one of our subsidiaries of approximately $1.0 millionand by debt financing of approximately $0.9 million. The acquisition of the Rockford, ILTenants in Common property in August 2021, was funded with a Redeemable Non-Controlling Interest contribution to one of our subsidiaries of $0.7 million. 41
The acquisition of the
The primary objective of our financing strategy is to maintain financial flexibility using retained cash flows, long-term debt and common and perpetual preferred stock to finance our growth. We intend to have a lower-leveraged portfolio over the long-term after we have acquired an initial substantial portfolio of diversified investments. During the period when we are acquiring our current portfolio, we will employ greater leverage on individual assets (that will also result in greater leverage of the current portfolio) in order to quickly build a diversified portfolio of assets.
Net cash used by operations was
$174 thousandduring the year ended December 31, 2021compared with cash provided by operations of $257 thousandduring the year ended December 31, 2020.
Cash from investing activities
For the year ended
December 31, 2021net cash used in investing activities was $3.9 millionas compared to net cash used in investing activities of $273 thousandfor the year ended December 31, 2020. The change is due to the purchase of $8.3 millionin properties during the year offset in part by the proceeds from the sale of our Walgreen- Cocoa, Floridaproperty for $5.2 millionduring the year ended December 31, 2021versus a roofing project costing $196 thousandassociated with our GSA/Maersk - Norfolk, Virginiabuilding in the year ended December 31, 2020.
Cash provided by financing activities
Net cash generated by financing activities was
$13.6 millionfor the year ended December 31, 2021compared to net cash used in financing activities of $260 thousandfor the year ended December 31, 2020. The change is the result of the proceeds from the sale of units in an underwritten offering of $14.4 million, issuance of redeemable non-controlling interests for $2.1 millionand mortgage loan borrowings of $4.5 million, offset in part by $560 thousandof distributions paid to common shareholders and $493 thousandpaid to redeemable non-controlling interests as compared to 2020 activity that includes new mortgage borrowings on three properties for $11.3 millionwhich enabled the company to reduce outstanding debt by $10.0 million, the payment of $333 thousandof dividends to common shareholders, $589 thousandin debt issuance costs and $487 thousanddistribution to redeemable non-controlling interests.
Future rent payment
The following table presents future minimum rental cash payments due to the Company over the next five calendar years and thereafter as of
December 31, 2021: Future Minimum Rent Payments 2022 $ 3,796,0002023 3,427,000 2024 3,432,000 2025 3,296,000 2026 3,211,000 Thereafter 6,298,000 $ 23,460,000
Off-balance sheet arrangements
We do not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
CRITICAL ACCOUNTING METHODS
As a company primarily involved in owning income generating real estate assets, management considers the following accounting policies critical as they reflect our more significant judgments and estimates used in the preparation of our financial statements and 42
-------------------------------------------------------------------------------- because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. Real Estate Assets and Lease Intangibles. Land, buildings and improvements are recorded at cost, including tenant improvements and lease acquisition costs (including leasing commissions, space planning fees, and legal fees). We capitalize any expenditure that replaces, improves, or otherwise extends the economic life of an asset, while ordinary repairs and maintenance are expensed as incurred. We allocate the purchase price of acquired properties between the acquired tangible assets and liabilities (consisting of land, building, tenant improvements, land purchase options, and long-term debt) and identified intangible assets and liabilities (including the value of above-market and below-market leases, the value of in-place leases, unamortized lease origination costs and tenant relationships), based in each case on their respective fair values. We allocate the purchase price to tangible assets of an acquired property based on the estimated fair values of those tangible assets assuming the building was vacant. Estimates of fair value for land, building and building improvements are based on many factors including, but not limited to, comparisons to other properties sold in the same geographic area and independent third party valuations. We also consider information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair values of the tangible and intangible assets and liabilities acquired. The value allocated to acquired lease intangibles is based on management's evaluation of the specific characteristics of each tenant's lease. Characteristics considered by management in allocating these values include the nature and extent of the existing business relationships with the tenant, growth prospects for developing new business with the tenant, the remaining term of the lease and the tenant's credit quality, among other factors. The value allocable to the above-market or below-market market component of an acquired in-place lease is determined based upon the present value (using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining term, and (ii) management's estimate of rents that would be paid using fair market rates over the remaining term of the lease. The value of in-place leases and unamortized lease origination costs are amortized to expense over the remaining term of the respective leases, which range from less than a year to ten years. The amount allocated to acquire in-place leases is determined based on management's assessment of lost revenue and costs incurred for the period required to lease the "assumed vacant" property to the occupancy level when purchased. The amount allocated to unamortized lease origination costs is determined by what we would have paid to a third party to secure a new tenant reduced by the expired term of the respective lease.
Non-GAAP Financial Measures
Our reported results are presented in accordance with GAAP. We also disclose funds from operations (FFO) and adjusted funds from operations (AFFO) both of which are non-GAAP financial measures. We believe these two 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 AFFO 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 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 Governorsof the National Association of Real Estate Investment Trustsor NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss 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 amortization of deferred financing costs, non-cash stock compensation, public company consulting fees, and non-recurring litigation expenses and settlements to calculate Core Funds From Operations, or Core FFO. We use FFO and Core FFO as measures of our performance when we formulate corporate goals. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses, such as amortization of deferred financing costs, amortization of capitalized lease incentives, and above- and below-market lease related intangibles. We then adjust AFFO for noncash stock compensation, public company consulting fees, and 43
-------------------------------------------------------------------------------- non-recurring litigation expenses and settlements to calculate Core Adjusted Funds From Operations, or Core AFFO. We use AFFO and Core AFFO as measures of our performance when we formulate corporate goals. 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 noncash expenses and certain other expenses that are not directly related to real estate operations. Because 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, development activities, general and administrative expenses and interest costs, providing a perspective not immediately apparent from net income. In addition, our management team believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs. 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 are significant economic costs and could materially impact our results from operations. Nor does it reflect distributions paid to redeemable non-controlling interests (See Note 6 of our Consolidated Financial Statements included herein).
The following tables reconcile net income (loss), which we believe is the most comparable GAAP measure, to FFO, Core FFO, AFFO and Core AFFO:
Twelve Months Ended Dec 31, 2021 2020 Net Loss
$ (712,433 ) $ (1,344,615 )Gain on disposal of property (923,178 ) - Depreciation and amortization 1,508,340 1,452,556 Funds From Operations (127,271 ) 107,941 Amortization of deferred financing costs 120,343 134,898 Public company consulting fees - 60,000 Non-cash stock compensation 314,122 101,645 Adjustments From Operations 434,465 296,543 Core Funds From Operations $ 307,194 $ 404,484Net Loss $ (712,433 ) $ (1,344,615 )Gain on disposal of property (923,178 ) - Depreciation and amortization 1,508,340 1,452,556 Amortization of deferred financing costs 120,343 134,898 Below-market lease related intangibles (147,228 ) (109,496 ) Adjustments From Operation 558,277 1,477,958 Adjusted Funds From Operations (154,156 ) 133,343 Non-cash stock compensation 314,122 101,645 Public company consulting fees - 60,000 Adjustments From Operations 314,122 161,645
Adjusted Base Funds from Operations
Jumpstart Our Business Startups Act (“JOBS Act”)
April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things, exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years. In general, under the JOBS Act a company is an emerging growth company if its initial public offering ("IPO") of common equity securities was effected after December 8, 2011and the company had less than $1.07 billionof total annual gross revenues during its last completed fiscal year. We currently qualify as an emerging growth company, but will no longer qualify after the earliest of:
• the last day of the financial year in which we have the annual gross total
$1.07 billionor more; • the last day of the fiscal year following the fifth anniversary of the
first sale of our common equity securities under a registered offer
under the Securities Act;
• the date on which we issue more than
securities during a previous three-year period; or
• the date we become an accelerated large filer, which is generally
a company with a public float of at least
$700 million(Exchange Act Rule 12b-2).
As an emerging growth company, we are eligible to include the required audited financial statements for only two fiscal years and limited information on executive compensation.
Consistent with the relief provided to emerging growth companies under the JOBS Act, our independent registered public accounting firm is not required to file an attestation report on our internal controls over financial reporting and is exempt from the mandatory auditor rotation rules.
In addition, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standard. The decision by companies to "opt out" of the extended transition period for complying with new or revised accounting standards is irrevocable. We are not electing to opt out of the JOBS Act extended accounting transition period. We intend to take advantage of the extended transition period provided under the JOBS Act for complying with new or revised accounting standards. To the extent we take advantage of the reduced disclosure requirements afforded by the JOBS Act, investors may be less likely to invest in us or may view our shares as a riskier investment than a similarly situated company that does not take advantage of these provisions.
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