{"id":14595,"date":"2025-06-01T11:39:14","date_gmt":"2025-06-01T16:39:14","guid":{"rendered":"https:\/\/1reason.com\/re\/resurgent-realty-trust-issues-open-letter-to-generation-income-properties-inc-gipr\/14595\/"},"modified":"2025-06-02T06:39:14","modified_gmt":"2025-06-02T11:39:14","slug":"resurgent-realty-trust-issues-open-letter-to-generation-income-properties-inc-gipr","status":"publish","type":"post","link":"https:\/\/1reason.com\/re\/resurgent-realty-trust-issues-open-letter-to-generation-income-properties-inc-gipr\/14595\/","title":{"rendered":"Resurgent Realty Trust Issues Open Letter to Generation Income Properties, Inc. (\u201cGIPR\u201d)"},"content":{"rendered":"
(NASDAQ: GIPR) (\u201cGIPR\u201d or the \u201cCompany\u201d), issued an open letter requesting the Board of Directors fulfill its fiduciary duty by engaging with RRT to discuss the non-binding term sheet RRT submitted to GIPR\u2019s Board of Directors (the \u201cBoard\u201d) on January 30, 2025. As a shareholder of GIPR, RRT continues to believe significant, unrealized value exists and has continued to make efforts to establish a constructive dialogue with GIPR management and Board. RRT is proposing to acquire majority ownership of GIPR, thereby allowing it to effect a change in Board composition, senior management and the Company\u2019s strategic direction. <\/p>\n

The full text of the open letter presented to GIPR is as follows:<\/p>\n

Open Letter to Generation Income Properties, Inc. (NASDAQ: GIPR)<\/u><\/strong><\/p>\n

Urgent Governance Crisis, LOCI Default Risk, and Immediate Call to Action<\/strong><\/p>\n

May 12, 2025<\/p>\n\n\n\n\n
To:<\/strong><\/td>\nBenjamin Adams, Gena Cheng, Stuart Eisenberg, and Patrick Quilty<\/strong><\/td>\n<\/tr>\n
\nBoard of Directors \u2013 Generation Income Properties, Inc.<\/strong><\/td>\n<\/tr>\n
\n<\/tr>\n<\/table>\n

Dear Directors,<\/p>\n

This is Jon Wheeler. As with many times in the past, I\u2019ve written to you in good faith, offering capital, experience, and cooperation. But with only days remaining until a contractual governance default, I must now speak plainly & directly.<\/p>\n

1. <\/strong>LOCI Capital: $6 Million Due in Just Four Days<\/u><\/strong><\/p>\n

Your amended 10-K confirms a $6 million obligation to LOCI Capital, contractually due May 15, 2025.<\/p>\n

If not redeemed:<\/p>\n

\u201cThe Partnership is required to redeem the Series A Preferred Units on the Redemption Date. If not redeemed, LOCI has the right to appoint one or more members of the Board and to implement a cash sweep. The interest rate increases to 18.5% upon default.\u201d
(10-K\/A, Note 7 \u2013 April 30, 2025)<\/em><\/p>\n

This is not merely financial – it is a governance trigger. If payment is not made, GIPR forfeits board control and loses access to operational cash. Common shareholders will be wiped out.<\/em><\/p>\n

2. <\/strong>Brown Family Enterprises: Ongoing Senior Drain<\/u><\/strong><\/p>\n

GIPR carries $3 million in preferred equity from Brown Family Enterprises:
– 7% IRR paid monthly
– 16% profit share upon liquidity
– Extended maturity to 2027, but actively draining liquidity today
(10-K\/A, Note 9)<\/em><\/p>\n

3. <\/strong>Q1 10-Q Due May 15<\/u><\/strong>th<\/u><\/strong><\/sup>: A Key Moment of Truth<\/u><\/strong><\/p>\n

Your Q1 2025 Form 10-Q is not yet overdue. But as that date coincides with the LOCI redemption deadline, it becomes a crucial benchmark. If the Q1 filing fails to provide clarity on:
– The LOCI payoff plan
– Current cash and liquidity
– Status of preferred equity restructuring
– Continued executive bonuses or \u201cguarantee fees\u201d<\/p>\n

\u2026it will signal to the market that the company has either lost control – or lost the will to communicate transparently.<\/em><\/p>\n

4. <\/strong>Executive Compensation: Misaligned and Undisclosed<\/u><\/strong><\/p>\n

CEO David Sobelman received over $700,072 in 2024, including:
– $200,000 salary
– $70,000 bonus
– $387,056 in \u201cguarantee fees\u201d \u2014 a rarely seen structure in public REITs that is highly unusual
(10-K\/A, Item 11)<\/u><\/em><\/p>\n

Bonus\u2019 (cash & stock grants) paid in Q1 2025 for year-end 2024 will be reflected in Q1 2025 Form 10-Q driving the $700,000 number closer to $1,500,000.<\/p>\n

Yet, the company recorded a cumulative net loss of $8.6 million through 2022 with more extensive losses in 2023 & 2024 – GIPR has never been profitable.
(10-K, filed March 28, 2023, L776-L779)<\/em>, and continues funding distributions from equity offerings (10-K, L896-L912)<\/em>.<\/p>\n

5. <\/strong>Portfolio Concerns & Operational Red Flags<\/u><\/strong><\/p>\n

– 13 properties totaling 338,000 sq ft
– Top 4 tenants = 62% of base rent
– One Norfolk tenant vacated in early 2023 with no update provided (10-K, L770-L772)<\/em>
– More GSA tenants within the GIPR portfolio have already given notice to not renew per DOGE
– Material weakness in internal controls over financial reporting remains unresolved (10-K, Item 9A)<\/em><\/p>\n

6. <\/strong>Resurgent\u2019s Offer Still Stands<\/u><\/strong><\/p>\n

We are ready to:
– Inject $10 million immediately
– Pay off LOCI
– Recapitalize preferred equity into common
– Partner with the board to stabilize governance<\/p>\n

This is not a takeover. It\u2019s a rescue.<\/em><\/p>\n

7. <\/strong>The Leadership Problem<\/u><\/strong><\/p>\n

Let me be clear: I appreciate David Sobelman\u2019s efforts. But his decisions – particularly the LOCI structure, multiple loans for G&A and not growth, continued guarantee fees, and failure to engage capital partners – have put him in an impossible position. He is now unable to function responsibly in his CEO role as he is completely conflicted with personal interests. His problems have become GIPR\u2019s and vice versa.<\/p>\n

The company needs experienced, objective leadership with significate public real estate operational experiences to navigate what comes next.<\/em><\/p>\n

8. <\/strong>You Must Act – Now<\/u><\/strong><\/p>\n

I respectfully call on you to:
1. Convene an emergency board meeting this week
2. Engage with Resurgent to explore this solution
3. Ensure full disclosure in the May 15th<\/sup> 10-Q
4. Consider new leadership in the C-Suite to include Resurgent capable of restructuring in crisis<\/p>\n

With the 10-Q and LOCI deadline converging, this is your final window. If you fail to lead now, you will be seen as having presided over GIPR\u2019s collapse without lifting a hand with the potential of extreme liability.<\/p>\n

I am standing by.<\/p>\n

Sincerely,<\/p>\n

Investor, Offeror, Willing Ally<\/u><\/em><\/strong><\/p>\n

Resurgent Realty Trust<\/strong><\/p>\n

Jon S. Wheeler
CEO
jon@resurgentrealty.net
(757) 621-2873<\/p>\n

\"\"<\/div>\n","protected":false},"excerpt":{"rendered":"

\n

Calls Out Urgent Governance Crisis and Looming Default Risk; Reiterates Prior Offer and Calls onBoard of Directors to Engage in Good Faith Discussions<\/p>\n

VIRGINIA BEACH, Va., May 12, 2025 (GLOBE NEWSWIRE) — Resurgent Realty Trust (\u201cRRT\u201d), a shareholder of Generation Income Properties, Inc.<\/p>\n<\/div>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/posts\/14595"}],"collection":[{"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/comments?post=14595"}],"version-history":[{"count":92,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/posts\/14595\/revisions"}],"predecessor-version":[{"id":14882,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/posts\/14595\/revisions\/14882"}],"wp:attachment":[{"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/media?parent=14595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/categories?post=14595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/1reason.com\/re\/wp-json\/wp\/v2\/tags?post=14595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}