Alpine Income Property Trust, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report; comparisons below are primarily to fiscal 2022.
Business context
Alpine Income Property Trust (NYSE: PINE) is an externally managed REIT focused on U.S. commercial net-lease properties, primarily retail, and commercial real estate loans. At year-end, it owned 138 properties in 35 states, totaling approximately 3.8 million square feet. The portfolio was 99% occupied, with a 7.0-year weighted-average remaining lease term. The company also held three commercial loans. It had no employees and was managed by a subsidiary of CTO Realty Growth.
Financial and operating performance
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $45.6 million | $45.2 million |
| Lease income | $45.0 million | $45.2 million |
| Net income | $3.3 million | $34.0 million |
| Net income attributable to PINE | $2.9 million | $29.7 million |
| Diluted earnings per share | $0.19 | $2.17 |
| FFO / diluted share | $22.9 million / $1.47 | $23.7 million / $1.73 |
| AFFO / diluted share | $23.2 million / $1.49 | $24.2 million / $1.77 |
| Cash from operating activities | $25.6 million | $24.7 million |
Revenue increased 1.0%, reflecting $0.6 million of loan interest income that was absent in 2022, partly offset by a $0.2 million decline in lease income. Net income fell sharply mainly because gains on property sales decreased to $9.3 million from $33.8 million. The company sold 24 properties for $108.3 million in 2023, versus 16 properties for $154.6 million in 2022. Operating expenses rose 20.3% to $41.9 million, including a $3.2 million impairment provision and higher real estate and depreciation expenses. Interest expense increased 6.6% to $10.2 million. FFO and AFFO per diluted share also declined year over year.
The company declared and paid $1.10 per share in dividends in 2023, compared with $1.09 in 2022. It repurchased 899,011 shares for $14.6 million during 2023.
Balance sheet, debt and liquidity
- Total assets were $564.6 million and total equity was $275.6 million at December 31, 2023. Long-term debt had a carrying value of $275.7 million and face value of $276.5 million, compared with $267.1 million carrying value at year-end 2022.
- Debt comprised $76.5 million drawn on a $250 million revolving credit facility and two $100 million term loans. The weighted-average stated rate was 3.84%; interest-rate swaps fixed rates on the term loans and $50 million of the revolver. The company reported compliance with debt covenants.
- No principal payments were due within one year; $100 million is scheduled for 2026 and $176.5 million for 2027. The revolving facility matures in January 2027, with a one-year extension option.
- Cash and restricted cash totaled $13.7 million, including $4.0 million unrestricted cash and $9.7 million restricted cash. The restricted balance included $7.5 million held for reinvestment through a like-kind exchange and $2.2 million in loan-related reserves.
- Undrawn credit-facility capacity was $173.5 million, and $109.5 million remained available under the ATM equity program. Management stated it expected liquidity to be sufficient for operations, capital needs and debt service over the next 12 months and foreseeable future.
Portfolio changes, loans and unusual items
- The company acquired 14 properties for $82.9 million and sold 24 for $108.3 million in 2023. Operating cash flow was $25.6 million; investing activities used $13.6 million and financing activities used $11.4 million.
- It originated three fixed-rate commercial loans with total commitments of $38.6 million; year-end carrying value was $35.1 million. The portfolio included two construction loans and one first mortgage note. Management reported the loans were current and performing. The two construction loans had $3.0 million of remaining funding commitments.
- A tenant that leased seven convenience-store properties entered bankruptcy; its leases were rejected in August 2023. PINE recorded a $2.9 million impairment for those properties, which were being evaluated for sale or reletting. The properties were included in year-end assets held for sale of $4.4 million.
- The company recorded a separate $0.3 million expected-credit-loss provision for its commercial loans, bringing total impairment expense to $3.2 million.
- Walgreens contributed 11% of 2023 income-property lease income. Tenants with investment-grade ratings accounted for 65% of annualized base rent; 35% was attributable to unrated or non-investment-grade tenants.
Outlook, risks and other disclosures
No specific earnings, FFO, acquisition or dividend guidance was provided. Management said it intended to continue investing in net-leased properties, using raised capital and available borrowing capacity to grow the income-producing portfolio. The board retains discretion over future dividends, repurchases and reinvestment.
Key risks include tenant default or bankruptcy, retail-sector and consumer-spending weakness, tenant and geographic concentration, lease renewal and reletting costs, rising interest rates and refinancing or capital-market access. The company also highlights credit and construction risks in its loan portfolio, environmental and climate-related exposures, and conflicts arising from its external management and relationships with CTO. CTO-related management fees were $4.3 million in 2023; no incentive fee was due for 2023. The filing reports no pending or threatened legal proceedings believed likely to have a material adverse effect and no reportable subsequent events through February 8, 2024. Management concluded disclosure controls and internal control over financial reporting were effective; the independent auditor did not attest to internal control effectiveness.
Most important facts for investors to verify
- Whether the seven former convenience-store properties are sold or re-leased, and whether proceeds and values align with the impairment assumptions.
- The credit quality, collateral, construction progress and remaining funding needs of the three commercial loans, including the two loans to the same borrower.
- Liquidity available for general use: distinguish unrestricted cash from restricted cash, and confirm availability and terms of the credit facility and ATM program.
- Debt costs and refinancing exposure as swaps expire and the 2026–2027 maturities approach; confirm continued covenant compliance.
- Tenant concentration and lease performance, particularly Walgreens’ 11% contribution and the 35% of rent from unrated or non-investment-grade tenants.
- Whether operating cash flow and AFFO support the dividend and planned capital allocation without relying on asset sales or additional equity issuance.