Alpine Income Property Trust, Inc. (NYSE: PINE) — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual filing, not a standalone fourth-quarter report. Comparisons with 2019 are limited: PINE began operations on November 26, 2019, and earlier 2019 figures reflect predecessor operations under CTO Realty Growth.
Business context and portfolio
PINE is an externally managed REIT focused on single-tenant, primarily triple-net retail and office properties. At year-end it owned 48 properties across 34 markets in 18 states, totaling about 1.6 million rentable square feet. The portfolio was 100% occupied, with an 8.4-year weighted-average remaining lease term; no material leases expired before January 31, 2024. PINE owned 85.9% of its operating partnership, with CTO holding the remaining 14.1%.
- 46% of annualized base rent came from tenants with investment-grade credit ratings. Wells Fargo contributed 15% of annualized base rent and 19% of 2020 revenue; Hilton Grand Vacations contributed 12% of 2020 revenue.
- During 2020 PINE acquired 29 properties for $116.6 million at a 6.9% weighted-average going-in cash cap rate and sold one property for $5.1 million. It reported a $0.3 million gain on the sale.
Financial results and liquidity
| Metric | FY 2020 |
|---|---|
| Lease revenue | $19.2 million |
| Operating expenses | $16.9 million, including $9.9 million depreciation and amortization |
| Net income | $1.1 million; $985,000 attributable to PINE; diluted EPS $0.11 |
| FFO / AFFO | $10.8 million / $9.2 million; diluted per share $1.23 / $1.04 |
| Cash from operations | $9.4 million |
| Cash and cash equivalents | $1.9 million at year-end |
| Long-term debt | $106.8 million face value; $106.2 million net carrying value |
| Total assets / total equity | $261.6 million / $149.1 million |
| Dividends declared and paid | $0.82 per share for 2020 |
Operating cash flow was more than offset by $113.9 million of net investing outflows, principally property acquisitions. Financing activities provided $94.0 million, including $115.5 million of credit-facility draws, offset by repayments, share repurchases, and dividends. FFO and AFFO are non-GAAP measures and are not substitutes for operating cash flow or net income.
The $150 million revolving credit facility had $106.8 million outstanding and $43.2 million of available capacity at year-end, based on the borrowing base. It matures in November 2023. The weighted-average stated rate was 1.71%; a swap fixed the rate component at 0.48% plus the applicable spread on $50 million of borrowings. PINE reported compliance with debt covenants and stated it expected liquidity to cover operations, capital needs, and debt service over the next 12 months.
Changes versus prior periods
- Revenue increased to $19.2 million in 2020, primarily reflecting 29 acquisitions. The 2019 company-period revenue was $1.4 million for only November 26–December 31; predecessor revenue was $11.8 million for January 1–November 25. These are not full-year, directly comparable PINE results.
- Interest expense rose to $1.5 million as PINE used its credit facility to fund acquisitions; year-end debt increased from zero in 2019 to $106.8 million face value.
- Cash declined from $12.3 million at year-end 2019 to $1.9 million at year-end 2020. Real estate at cost increased from $128.5 million to $225.9 million.
- PINE repurchased 456,237 shares for $5.0 million in the first half of 2020, at an average $11.02 per share. It also established a $100 million ATM program but had not sold shares under it by year-end.
Outlook, management commentary, and risks
Management said 2020 operating results were in line with expectations and described continued investment in single-tenant net-leased properties as its strategy. No formal earnings or acquisition guidance for 2021 is provided in the filing. Subsequent to year-end, PINE acquired three Dollar General properties in Texas for $4.4 million at a 6.5% weighted-average going-in cash cap rate. It declared a first-quarter 2021 dividend of $0.24 per share, a 9.1% increase from the fourth quarter of 2020.
- PINE collected 100% of contractual base rent due in the fourth quarter of 2020 and reported the same collection rate for January and February 2021. It agreed to defer or abate rent equal to 6% of contractual rents in place when the agreements were made, in exchange for lease extensions or other enhancements; some deferred payments were scheduled through 2021.
- Key risks include COVID-19 effects on tenants and rent collections, single-tenant default exposure, tenant and geographic concentration, retail-sector and e-commerce pressures, and the ability to re-lease properties on favorable terms.
- PINE is externally managed by a CTO subsidiary. The filing highlights potential conflicts of interest, reliance on CTO personnel, and management fees based on total equity. 2020 management fees were $2.6 million; no incentive fee was due.
- Other risks include variable-rate borrowing and the LIBOR transition, environmental and property-related liabilities, REIT qualification and distribution requirements, and access to external capital. The company reported no material pending or threatened legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Review rent collection and repayment of deferred rent after February 2021, including the effect of any subsequent tenant concessions.
- Assess tenant concentration and credit quality, particularly Wells Fargo and Hilton Grand Vacations, alongside the substantial share of unrated or non-investment-grade tenants.
- Check debt-facility covenants, borrowing-base availability, refinancing needs at the November 2023 maturity, and exposure to floating rates and benchmark-rate changes.
- Compare dividend payments with AFFO and operating cash flow, and examine the effect of acquisitions, share repurchases, and potential ATM issuance on per-share returns.
- Interpret year-over-year earnings cautiously because 2019 includes short company and predecessor periods with different accounting bases; confirm any subsequent-event information in later filings.