Resurgent Realty Trust (RRT) issued an open letter to Generation Income Properties' Board of Directors, highlighting an urgent governance crisis and LOCI default risk. RRT noted a $6 million obligation to LOCI Capital contractually due May 15, 2025, with potential default leading to an 18.5% interest rate and LOCI gaining board appointment rights and a cash sweep.
RRT also pointed to $3 million in preferred equity from Brown Family Enterprises, carrying a 7% IRR and 16% profit share, which RRT stated was actively draining liquidity. The letter criticized CEO David Sobelman's 2024 compensation of over $700,072, including $387,056 in 'guarantee fees,' despite GIPR's history of cumulative net losses.
RRT offered to inject $10 million immediately, pay off LOCI, and recapitalize preferred equity into common stock. The activist shareholder urged the board to convene an emergency meeting, engage with Resurgent, ensure full disclosure in the upcoming Q1 2025 10-Q, and consider new leadership capable of restructuring in crisis.
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