Alpine Income Property Trust, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This annual filing reports full-year results, not standalone fourth-quarter results. PINE is an externally managed U.S. REIT focused primarily on retail net-lease properties, generally under long-term triple-net leases.
Business context and portfolio
- At year-end, the portfolio comprised 148 properties across 106 markets and 34 states, totaling 3.7 million square feet; it was 99% leased, with a 7.6-year weighted-average remaining lease term.
- All leases, measured by annualized straight-line base rent, were with retail businesses. Investment-grade tenants contributed 54% of annualized base rent; 46% came from tenants or parent companies that were unrated or below investment grade.
- No tenant contributed more than 10% of 2022 revenue. Texas represented 19% of portfolio square footage.
Financial performance
| Metric | 2022 | 2021 | Change / context |
|---|---|---|---|
| Revenue | $45.2 million | $30.1 million | Up 50.0%, primarily reflecting acquisitions, partially offset by dispositions. |
| Net income | $34.0 million | $11.5 million | Up 196.2%; included $33.8 million of disposition gains versus $9.7 million in 2021. |
| Net income attributable to PINE | $29.7 million | $10.0 million | Diluted EPS was $2.17 versus $0.89. |
| FFO | $23.7 million | $17.7 million | Diluted FFO per share was $1.73 versus $1.58. |
| AFFO | $24.2 million | $17.9 million | Diluted AFFO per share was $1.77 versus $1.59. |
| Cash from operations | $24.7 million | $17.2 million | Cash flow increased year over year. |
| Cash dividends declared and paid | $1.09 per share | $1.015 per share | 2022 cash dividends paid were $15.1 million, including payments on OP units. |
Operating expenses were $34.8 million, including $23.6 million of depreciation and amortization. Interest expense rose to $9.5 million from $3.7 million, reflecting higher average debt and rising rates on variable-rate borrowings. Management reported no recurring capital expenditure commitments at year-end.
Balance sheet, debt, and liquidity
- Total assets were $573.4 million, total liabilities $278.1 million, and total equity $295.4 million at December 31, 2022. Cash and restricted cash totaled $13.0 million, of which $4.0 million was held in escrow for reinvestment through like-kind exchanges.
- Debt had a $268.3 million face value and $267.1 million carrying value. The weighted-average stated rate was 3.98%; the debt consisted of a $68.3 million revolving facility balance and two $100 million term loans. Interest-rate swaps fixed SOFR on the term loans, subject to applicable spreads.
- The $250 million unsecured revolving facility matures in January 2027, with a one-year extension option. Unused capacity was $181.8 million at year-end. No principal payments were due within one year; scheduled maturities are $100 million in 2026 and $168.3 million in 2027.
- The company said available cash, operating cash flow, and revolver capacity should provide sufficient liquidity for operations and debt service over the next 12 months and into the foreseeable future. It reported compliance with debt covenants at year-end.
Material changes and unusual items
- PINE acquired 51 properties for $187.4 million during 2022, compared with 68 properties for $260.3 million in 2021. It sold 16 properties for $154.6 million, generating $33.8 million in gains; 2021 sales were three properties for $28.3 million, generating $9.7 million in gains.
- Disposition gains materially lifted GAAP net income. FFO excludes gains on sales, and AFFO is also a non-GAAP measure; neither is equivalent to cash generated from operations.
- A $0.7 million loss on extinguishment of debt resulted from writing off unamortized financing costs associated with the CMBS loan defeasance and termination of the prior revolving facility. The CMBS loan was defeased, unencumbering the portfolio; four of the six properties were subsequently sold.
- PINE raised $36.0 million net through ATM share sales in 2022, issuing 1.93 million shares. It also increased term-loan commitments and transitioned variable-rate debt from LIBOR to SOFR, and established a new $250 million revolver.
Outlook, risks, and other disclosures
- No specific earnings, acquisition, or distribution guidance was provided. Management said it intends to continue acquiring net-lease properties, using raised capital and available borrowing capacity, while targeting stabilized cash flows and risk-adjusted returns.
- Key risks include tenant default or bankruptcy, retail-sector and e-commerce pressures, lease renewals and re-leasing costs, geographic exposure, inflation and rising interest rates, access to capital, property valuation and environmental liabilities, and the ability to maintain REIT qualification.
- The company is externally managed by a CTO Realty Growth subsidiary. Management fees were $3.8 million in 2022; the manager receives a base fee based on total equity, while no incentive fee was due for 2022. The filing highlights potential conflicts of interest and the manager’s role in allocating personnel between PINE and CTO.
- Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. The auditor issued an unqualified opinion on the financial statements and was not engaged to opine on internal control effectiveness. PINE reported no material legal proceedings and no reportable subsequent events through February 9, 2023.
Important facts for investors to verify
- How much of reported earnings growth reflects recurring rent and operations versus property-sale gains; review FFO, AFFO, and operating cash flow reconciliations.
- Tenant credit quality and rent exposure by tenant, industry, and market, including the 46% of base rent tied to unrated or non-investment-grade tenants and the Texas concentration.
- Exposure to variable interest rates after hedges, the applicable loan spreads, covenant headroom, and the 2026–2027 refinancing or maturity needs.
- Whether the stated liquidity outlook remains supported by operating cash generation, available borrowing capacity, and planned acquisitions, dispositions, and dividends.
- Share dilution and capital allocation following 2022 ATM issuance, and the economic terms and oversight of related-party management and property transactions.