Alpine Income Property Trust, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless stated otherwise. Amounts below are in millions of dollars except per-share data.
Business context
PINE owns and operates U.S. commercial net-lease properties, primarily retail and office, generally under long-term triple-net leases. At quarter-end, its portfolio comprised 53 properties in 38 markets across 19 states, with 1.8 million square feet, 100% occupancy, and an 8.3-year weighted-average remaining lease term. The company is externally managed by a CTO Realty Growth subsidiary.
Financial and operating highlights
| Metric | Q1 2021 | Q1 2020 / prior period |
|---|---|---|
| Lease revenue | $5.890 | $4.171; up 41.2% |
| Net income | $0.511 | $0.015 |
| Net income attributable to PINE | $0.440; $0.06 basic and $0.05 diluted EPS | $0.013; EPS shown as — |
| Operating cash flow | $3.809 | $2.811 |
| FFO / diluted share | $3.654 / $0.42 | $2.038 / $0.22 |
| AFFO / diluted share | $3.850 / $0.44 | $1.808 / $0.20 |
| Dividends declared and paid per share | $0.24 | $0.20 |
Revenue growth primarily reflected acquisitions, including 29 properties acquired during 2020 and five in Q1 2021. Operating expenses were $4.824 million, including $3.143 million of depreciation and amortization; interest expense was $0.555 million. Net income attributable to PINE rose by $0.427 million year over year.
Investing cash outflow was $22.117 million, principally for real estate acquisitions; financing cash inflow was $17.962 million, including $12.5 million of credit-facility draws and $7.8 million of net ATM proceeds. Cash declined by $0.346 million to $1.548 million.
At March 31, 2021, total assets were $280.937 million, total liabilities $125.129 million, and total equity $155.808 million. Long-term debt was $119.309 million, up from $106.809 million at December 31, 2020. The $150 million revolving facility had $30.7 million available; its stated rate was 30-day LIBOR plus 1.35%–1.95%, with a reported weighted-average rate of 1.70%. A $50 million interest-rate swap fixes the base rate on that portion at 0.48% plus the applicable spread. Debt matures in November 2023; the company reported compliance with all covenants.
Material changes, outlook and risks
- Five properties were acquired for a combined purchase price of $21.9 million in Q1 2021, versus nine properties for $46.8 million in Q1 2020. No properties were disposed of in Q1 2021.
- During Q1 2021, PINE sold 434,201 shares through its ATM program at a weighted-average $18.25 per share, generating $7.8 million net proceeds.
- The company collected 100% of contractual base rent due during Q1. Repayments of rent deferred in 2020 were continuing, in some cases through mid-2022; the cash-flow statement includes $0.271 million of COVID-19 rent repayments.
- Management said it expects available cash, operating cash flow, and facility capacity to be sufficient for operations, capital needs, and debt service over the next 12 months and into the foreseeable future. No quantified earnings or acquisition guidance was provided.
- After quarter-end, PINE declared a Q2 dividend of $0.25 per share, a 4.2% increase, payable June 30, 2021. It also signed agreements to acquire six properties for $44.5 million and a separate property for $11.5 million; completion remained subject to conditions and was not assured. The six-property agreement was with CTO affiliates.
- Tenant concentration included Wells Fargo at 14% and Hilton Grand Vacations at 11% of Q1 revenue. The filing also notes COVID-19 uncertainty, tenant and real-estate market risks, interest-rate exposure, and potential conflicts arising from the external management and related-party relationship with CTO. One property had a month-to-month lease.
- No pending or threatened legal proceeding was identified as likely to have a material adverse effect. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Key facts for investors to verify
- Whether the post-quarter CTO-affiliate acquisitions closed, their funding, and the economics and approval process for these related-party transactions.
- Remaining borrowing availability, covenant headroom, refinancing plans for the November 2023 maturity, and the impact of floating rates beyond the $50 million swap hedge.
- Tenant credit quality and concentration, lease rollover exposure, and the status and collectability of deferred rent.
- Whether AFFO and operating cash flow support the increased dividend; FFO and AFFO are non-GAAP measures and are not equivalent to cash available for distribution.
- How ATM share issuance affects per-share results and whether future equity issuance or acquisitions could dilute existing holders.