Alpine Income Property Trust Inc

Previous wording

As of June 30, 2024, we owned 137 properties with an aggregate gross leasable area of 3.8 million square feet, located in 34 states, with a weighted average remaining lease term of 6.6 years. Our portfolio was 99% occupied as of June 30, 2024.

Current wording

As of September 30, 2024, we owned 133 properties, including the three properties classified as commercial loans and investments, with an aggregate gross leasable area of 3.6 million square feet, located in 34 states, with a weighted average remaining lease term of 8.8 years. Our portfolio was 99% occupied as of September 30, 2024.

Previous wording

We may also acquire or originate commercial loans and investments associated with commercial real estate located in the United States. Our investments in commercial loans are generally secured by real estate or the borrower’s pledge of its ownership interest in an entity that owns real estate. As of June 30, 2024, the Company’s commercial loan investments portfolio included four construction loans and one mortgage note with a total carrying value of $44.7 million.

Current wording

We may also acquire or originate commercial loans and investments associated with commercial real estate located in the United States. Our investments in commercial loans are generally secured by real estate or the borrower’s pledge of its ownership interest in an entity that owns real estate. As of September 30, 2024, the Company’s commercial loan investments portfolio had a total carrying value of $86.5 million and was comprised of five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right.

Previous wording

Revenue from our property operations totaled $11.3 million during the three months ended June 30, 2024 and 2023. Our relatively flat revenues is primarily due to the Company’s recycling of assets during the periods. The direct costs of revenues for our income properties totaled $1.8 million and $1.6 million during the three months ended June 30, 2024 and 2023, respectively. The $0.2 million increase in the direct cost of revenues is reflective of increased reimbursable expenses as well as a portion of portfolio expenses being non-recoverable pursuant to tenant leases and certain vacancies in our properties currently held for sale.

Current wording

Revenue from our property operations totaled $11.7 million and $11.4 million during the three months ended September 30, 2024 and 2023, respectively. The $0.3 million increase in lease income is primarily attributable to an increase in reimbursable revenue. The direct costs of revenues for our income properties totaled $1.8 million and $1.7 million during the three months ended September 30, 2024 and 2023, respectively. The $0.1 million increase in the direct cost of revenues is reflective of increased reimbursable expenses.

Previous wording

Other revenue totaled $0.3 million for the six months ended June 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related Party Management Company” in the Notes to the Financial Statements. There were no revenue sharing agreements generating income during the six months ended June 30, 2023.

Current wording

Other revenue totaled $0.1 million for the three months ended September 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related

Previous wording

During the three months ended June 30, 2024, the Company recorded a $0.7 million impairment charge of which $0.1 million represents the current expected credit losses (“CECL”) reserve related to our commercial loans and investments and $0.6 million represents the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”. There were no impairment charges on the Company’s income property portfolio or CECL reserve charges during the three months ended June 30, 2023.

Current wording

During the three months ended September 30, 2024, the Company recorded a $0.4 million impairment charge which represents the current expected credit losses (“CECL”) reserve related to our commercial loans and investments. During the three months ended September 30, 2023, the Company recorded a $2.9 million impairment charge representing the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”.

Previous wording

Interest expense totaled $2.8 million and $2.4 million during the three months ended June 30, 2024 and 2023, respectively. The $0.4 million increase in interest expense is attributable to the higher average outstanding debt balance as well as $0.1 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note during the three months ended June 30, 2024.

Current wording

Interest expense totaled $3.2 million and $2.4 million during the three months ended September 30, 2024 and 2023, respectively. The $0.8 million increase in interest expense is attributable to the higher average outstanding debt balance for increased interest expense of $0.4 million as well as $0.3 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note during the three months ended September 30, 2024.

Previous wording

Net income totaled $0.2 million and $0.1 million during the three months ended June 30, 2024 and 2023, respectively. The $0.1 million increase in net income is attributable to the factors described above, most notably the increase in the gain on disposition of assets of $0.2 million.

Current wording

Net income totaled $3.4 million during the three months ended September 30, 2024 as compared to a net loss of $0.9 million during the three months ended September 30, 2023. The $4.3 million increase in net income is attributable to the factors described above, most notably the decrease in the provision for impairment of $2.4 million and the increase in the gain on disposition of assets of $0.8 million.

Previous wording

The following presents the Company’s results of operations for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):

Current wording

The following presents the Company’s results of operations for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 (in thousands):

Previous wording

Revenue from our property operations during the six months ended June 30, 2024 and 2023, totaled $22.8 million and $22.5 million, respectively. The $0.3 million increase in lease income is reflective of the Company’s volume of property acquisitions during the six months ended June 30, 2024 and the year ended December 31, 2023, partially offset by property sales during the same period. The direct costs of revenues for our income properties totaled $3.7 million and $3.0 million during the six months ended June 30, 2024 and 2023, respectively. The $0.7 million increase in the direct cost of revenues is reflective of increased reimbursable expenses as well as a portion of portfolio expenses being non-recoverable pursuant to tenant leases and certain vacancies in our properties currently held for sale.

Current wording

Revenue from our property operations during the nine months ended September 30, 2024 and 2023, totaled $34.5 million and $33.9 million, respectively. The $0.6 million increase in lease income is reflective of the Company’s volume of property acquisitions during the nine months ended September 30, 2024 and the year ended December 31, 2023, partially offset by property sales during the same period. The direct costs of revenues for our income properties totaled $5.5 million and $4.7 million during the nine months ended September 30, 2024 and 2023, respectively. The $0.8 million increase in the direct cost of revenues is reflective of increased reimbursable expenses as well as a portion of portfolio expenses being non-recoverable pursuant to tenant leases and certain vacancies in our properties currently held for sale.

Previous wording

Other revenue totaled $0.2 million for the three months ended June 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related Party Management Company” in the Notes to the Financial Statements. There were no revenue sharing agreements generating income during the three months ended June 30, 2023.

Current wording

Other revenue totaled $0.4 million for the nine months ended September 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related Party Management Company” in the Notes to the Financial Statements. There were no revenue sharing agreements generating income during the nine months ended September 30, 2023.

Previous wording

The following table represents the Company’s general and administrative expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):

Current wording

The following table represents the Company’s general and administrative expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 (in thousands):

Previous wording

General and administrative expenses totaled $3.1 million and $3.2 million during the six months ended June 30, 2024 and 2023, respectively. The $0.1 million decrease in the management fee is attributable to a decrease in the Company’s equity base as the result of recent share repurchases. The $0.1 million increase in additional general and administrative expense is primarily the result of additional state and local tax payments, as the result of the Company owning more properties in states with franchise tax fees.

Current wording

General and administrative expenses totaled $5.0 million and $4.8 million during the nine months ended September 30, 2024 and 2023, respectively, for an increase of $0.2 million. The $0.1 million decrease in the management fee is attributable to a decrease in the Company’s equity base as the result of share repurchases, primarily made during the three months ended December 31, 2023, which were partially offset by the ATM sales made during the three months ended September 30, 2024. The $0.3 million increase in additional general and administrative expenses is due to a $0.2 million increase in corporate legal and consulting fees as well as increases in additional state and local tax payments, as the result of the Company owning more properties in states with franchise tax fees.

Previous wording

During the six months ended June 30, 2024, the Company recorded a $0.7 million impairment charge of which $0.1 million represents the CECL reserve related to our commercial loans and investments and $0.6 million represents the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”. There were no impairment charges on the Company’s income property portfolio during the six months ended June 30, 2023.

Current wording

During the nine months ended September 30, 2024, the Company recorded a $1.0 million impairment charge of which $0.4 million represents the CECL reserve related to our commercial loans and investments and $0.6 million represents the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”. During the nine months ended September 30, 2023, the Company recorded a $2.9 million impairment charge representing the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”.

Previous wording

Investment and other income totaled $0.1 million during the six months ended June 30, 2024 and 2023. Investment and other income is attributable to interest earned on bank deposits.

Current wording

Investment and other income totaled $0.2 million during the nine months ended September 30, 2024 and 2023. Investment and other income is attributable to interest earned on bank deposits.

Previous wording

Interest expense totaled $5.8 million and $5.1 million during the six months ended June 30, 2024 and 2023, respectively. The $0.7 million increase in interest expense is attributable to the higher average outstanding debt balance as well as $0.1 million of interest expense resulting from the sale of participation interest in the Company’s $23.3 million Mortgage Note during the six months ended June 30, 2024.

Current wording

Interest expense totaled $8.9 million and $7.5 million during the nine months ended September 30, 2024 and 2023, respectively. The $1.4 million increase in interest expense is attributable to the higher average outstanding debt balance for increased interest expense of $1.0 million as well as $0.4 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note during the nine months ended September 30, 2024.

Previous wording

Net loss totaled $0.1 million and net income totaled $3.8 million during the six months ended June 30, 2024 and 2023, respectively. The $3.9 million decrease in net income is attributable to the factors described above, most notably the decrease in the gain on disposition of assets of $4.3 million.

Current wording

Net income totaled $3.3 million and $2.9 million during the nine months ended September 30, 2024 and 2023, respectively. The $0.4 million increase in net income is attributable to the factors described above, most notably the increase in interest revenue from commercial loans and investments of $3.4 million and a lower provision for impairment, offset by higher interest expense and lower gains on disposition of assets.

Previous wording

Cash totaled $6.4 million as of June 30, 2024, including restricted cash of $3.1 million. See Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance as of June 30, 2024.

Current wording

Cash totaled $28.1 million as of September 30, 2024, including restricted cash of $25.5 million. See Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance as of September 30, 2024.

Previous wording

*Long-Term Debt.*As of June 30, 2024, the Company had an outstanding balance of $69.0 million on the $250 million revolving Credit Facility. The Company also had $200.0 million in term loans outstanding as of June 30, 2024. See Note 13, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at June 30, 2024.

Current wording

*Long-Term Debt.*As of September 30, 2024, the Company had an outstanding balance of $79.5 million on the $250 million revolving Credit Facility. The Company also had $200.0 million in term loans outstanding as of September 30, 2024. See Note 13, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at September 30, 2024.

Previous wording

*Acquisitions and Dispositions.*As further described in Note 3, “Property Portfolio,” the Company acquired two properties for a combined purchase price of $15.6 million, or a cost of $15.7 million including capitalized acquisition costs, and sold two properties for an aggregate sales price of $6.6 million, generating aggregate gains on sale of $0.9 million.

Current wording

*Acquisitions and Dispositions.*As further described in Note 3, “Property Portfolio,” the Company acquired six properties for a combined purchase price of $53.1 million, or a cost of $53.2 million including capitalized acquisition costs, and sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million. Of the six properties acquired, the three Tampa Properties (previously defined in Note 1, “Business and Organization”), which were purchased during the three months ended September 30, 2024 through a sale-leaseback transaction that includes a tenant repurchase option are, for GAAP purposes, accounted for as a financing arrangement. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we include the Tampa Properties in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto.

Previous wording

*ATM Program.*During the six months ended June 30, 2024, the Company sold 3,350 shares under the 2022 ATM Program for gross proceeds of $0.1 million at a weighted average price of $16.02 per share, generating net proceeds of $0.1 million.

Current wording

*ATM Program.*During the nine months ended September 30, 2024, the Company sold 623,526 shares under the 2022 ATM Program for gross proceeds of $11.3 million at a weighted average price of $18.08 per share, generating net proceeds of $11.1 million.

Previous wording

*Capital Expenditures.*As of June 30, 2024, the Company had no commitments related to capital expenditures for the maintenance of fixed assets, such as land, buildings, and equipment. The Company is committed to fund four construction loans as described in Note 4, “Commercial Loans and Investments”. The unfunded portion of the construction loans totaled $5.9 million as of June 30, 2024.

Current wording

*Capital Expenditures.*As of September 30, 2024, the Company had no commitments related to capital expenditures for the maintenance of fixed assets, such as land, buildings, and equipment. Pursuant to a certain lease agreement executed during the three months ended September 30, 2024, the Company is committed to funding $5.0 million in tenant

Previous wording

We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, proceeds from the completion of the sale of assets utilizing the reverse like-kind 1031 exchange structure, $109.5 million of availability remaining under the 2022 ATM Program, and $181.0 million of available capacity on the existing $250.0 million Credit Facility.

Current wording

We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, proceeds from the completion of the sale of assets utilizing the reverse like-kind 1031 exchange structure, $98.3 million of availability remaining under the 2022 ATM Program, and $53.5 million of available capacity on the existing $250.0 million Credit Facility.

Previous wording

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon

Current wording

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable

Previous wording

under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled two properties fora combined purchase price of $15.6 million for the six months ended June 30, 2024 and nine properties for a combined purchase price of $60.5 million for the six months ended June 30, 2023.

Current wording

sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled three properties fora combined purchase price of $21.7 million for the nine months ended September 30, 2024 and 12 properties for a combined purchase price of $79.9 million for the nine months ended September 30, 2023.