Alpine Income Property Trust Inc

Previous wording

We seek to acquire, own and operate primarily freestanding, commercial retail real estate properties located in the United States primarily leased pursuant to long-term net leases. We target tenants in industries that we believe are favorably impacted by macroeconomic trends that support consumer spending, stable and growing employment, and positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact of the e-commerce retail sector or who use a physical presence as a component of their omnichannel strategy. We also seek to invest in properties that are net leased to tenants that we believe have attractive credit characteristics, stable operating histories, healthy rent coverage levels, are well-located within their respective markets and/or have rents at-or-below market rent levels. Furthermore, we believe that the size of our company allows us, for at least the near term, to focus our investment activities on the acquisition of single properties or smaller portfolios of properties that represent a transaction size that most of our publicly-traded net lease REIT peers will not pursue on a consistent basis.

Current wording

impacted by macroeconomic trends that support consumer spending, stable and growing employment, and positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact of the e-commerce retail sector or who use a physical presence as a component of their omnichannel strategy. We also seek to invest in properties that are net leased to tenants that we believe have attractive credit characteristics, stable operating histories, healthy rent coverage levels, are well-located within their respective markets and/or have rents at-or-below market rent levels. Furthermore, we believe that the size of our company allows us, for at least the near term, to focus our investment activities on the acquisition of single properties or smaller portfolios of properties that represent a transaction size that most of our publicly-traded net lease REIT peers will not pursue on a consistent basis.

Previous wording

As of December 31, 2023, we owned 138 properties with an aggregate gross leasable area of 3.8 million square feet, located in 35 states, with a weighted average remaining lease term of 7.0 years. Our portfolio was 99% occupied as of December 31, 2023.

Current wording

As of December 31, 2024, we owned 134 properties with an aggregate gross leasable area of 3.9 million square feet, located in 35 states, with a weighted average remaining lease term of 8.7 years. Our portfolio was 98% occupied as of December 31, 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. During the year ended December 31, 2023, the Company originated three commercial loans with a total funding commitment of $38.6 million. As of December 31, 2023, the Company’s commercial loan investments portfolio included two construction loans and one mortgage note with a total carrying value of $35.1 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. During the year ended December 31, 2024, the Company invested in three commercial loans with a total funding commitment of $31.1 million. Also during the year ended December 31, 2024, the Company acquired the Tampa Properties for $31.4 million through a sale-leaseback transaction that includes a tenant repurchase option. Due to the existence of the tenant repurchase option, and pursuant to FASB ASC Topic 842,Leases, GAAP requires that the $31.4 million investment be accounted for as a financing arrangement, and accordingly the related assets and corresponding revenue are included in the Company’s commercial loans and investments in the Company’s consolidated balance sheets and consolidated statement of operations. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we have included them in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto. Also during the year ended December 31, 2024, the Company sold a $13.6 million A-1 participation interest in the Company’s initial $23.4 million portfolio loan. As of December 31, 2024, the Company’s commercial loan investments portfolio included five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right, with a total carrying value of $89.6 million.

Previous wording

Revenue from our income properties during the years ended December 31, 2022 and 2021 totaled $45.2 million and $30.1 million, respectively. The increase in revenues is reflective of the Company’s volume of acquisitions, offset by dispositions. The direct costs of revenues for our income properties totaled $5.4 million and $3.7 million during the years ended December 31, 2022 and 2021, respectively. The increase in the direct cost of revenues is also attributable to the Company’s expanded property portfolio.

Current wording

Revenue from our income properties during the years ended December 31, 2024 and 2023 totaled $46.0 million and $45.0 million, respectively. The increase in revenues is reflective of the Company’s volume of acquisitions, offset by dispositions, as well as certain one-time reduced revenues related to tenant credit loss and bankruptcy. The direct costs of revenues for our income properties totaled $7.8 million and $6.6 million during the years ended December 31, 2024 and 2023, respectively. The $1.2 million increase in the direct cost of revenues is reflective of a portion of portfolio expenses being non-recoverable pursuant to tenant leases.

Previous wording

General and administrative expenses totaled $5.8 million and $5.0 million during the years ended December 31, 2022 and 2021, respectively. The $0.8 million increase is primarily attributable to growth in the Company’s equity base, which led to an increase in management fee expense of $0.6 million.

Current wording

General and administrative expenses totaled $6.6 million and $6.3 million during the years ended December 31, 2024 and 2023, respectively. The $0.3 million increase is primarily attributable to a $0.2 million increase in corporate legal and consulting fees and a $0.1 million increase in state tax expenses, partially offset by a $0.1 million decrease in management fee expense due to a decrease in the weighted average of the Company’s equity base.

Previous wording

Depreciation and amortization expense totaled $23.5 million and $15.9 million during the years ended December 31, 2022 and 2021, respectively. The $7.6 million increase in the depreciation and amortization expense is reflective of the Company’s expanded property portfolio.

Current wording

Depreciation and amortization expense totaled $25.6 million and $25.8 million during the years ended December 31, 2024 and 2023, respectively. The $0.2 million decrease in the depreciation and amortization expense is reflective of the Company’s change in portfolio as well as the timing of acquisitions versus dispositions.

Previous wording

Interest expense totaled $9.5 million and $3.7 million during the years ended December 31, 2022 and 2021, respectively. The $5.8 million increase in interest expense is attributable to the higher average outstanding debt balance during the year ended December 31, 2022 as compared to the same period in 2021, as well as increasing rates on the Company’s variable rate Credit Facility indebtedness. The overall increase in the Company’s long-term debt was primarily utilized to fund the acquisition of properties during 2022 and 2021.

Current wording

Interest expense totaled $12.0 million and $10.2 million during the years ended December 31, 2024 and 2023, respectively. The $1.8 million increase in interest expense is attributable to the higher average outstanding debt balance for increased interest expense of $1.2 million as well as $0.6 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note as defined and further described in Note 4, “Commercial Loans and Investments” in the Notes to the Financial Statements. The overall increase in the Company’s long-term debt was primarily utilized to fund the acquisition of properties and commercial loans and investments during 2024.

Previous wording

Revenue from our income properties during the years ended December 31, 2023 and 2022 totaled $45.0 million and $45.2 million, respectively. The decrease in revenues is reflective of the Company’s volume of dispositions, offset by acquisitions, as well as certain one-time reduced revenues related to tenant credit loss and bankruptcy. The direct costs of revenues for our income properties totaled $6.6 million and $5.4 million during the years ended December 31, 2023 and 2022, respectively. The $1.1 million increase in the direct cost of revenues is reflective of a portion of portfolio expenses being non-recoverable pursuant to tenant leases, as well as certain non-recoverable expenses related to transaction costs and legal fees associated with the seven assets leased to one tenant that filed for bankruptcy during the year ended December 31, 2023.

Current wording

Revenue from our income properties during the years ended December 31, 2023 and 2022 totaled $45.0 million and $45.2 million, respectively. The decrease in revenues is reflective of the Company’s volume of dispositions, offset by acquisitions, as well as certain one-time reduced revenues related to tenant credit loss and bankruptcy. The direct costs of revenues for our income properties totaled $6.6 million and $5.4 million during the years ended December 31, 2023 and 2022, respectively. The $1.1 million increase in the direct cost of revenues is reflective of a portion of portfolio expenses being non-recoverable pursuant to tenant leases, as well as certain non-recoverable expenses related to transaction costs and legal fees associated with the seven assets leased to one tenant that filed for bankruptcy protection during the year ended December 31, 2023.

Previous wording

Interest expense totaled $10.1 million and $9.5 million during the years ended December 31, 2023 and 2022, respectively. The $0.6 million increase in interest expense is attributable to the higher average interest rates during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The overall increase in the Company’s

Current wording

Interest expense totaled $10.1 million and $9.5 million during the years ended December 31, 2023 and 2022, respectively. The $0.6 million increase in interest expense is attributable to the higher average interest rates during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The overall increase in the Company’s long-term debt was primarily utilized to fund the acquisition of properties and commercial loans and investments during 2023 and 2022.

Previous wording

Net income totaled $3.3 million and $34.0 million during the years ended December 31, 2023 and 2022, respectively. The decrease in net income is attributable to the factors described above, most significantly to the $24.5 million decrease in gain on disposition of assets during the year ended December 31, 2023. The decreased gain on disposition of assets is the result of reduced disposition activity during the year ended December 31, 2023.

Current wording

Net income totaled $3.3 million and $34.0 million during the years ended December 31, 2023 and 2022, respectively. The decrease in net income is attributable to the factors described above, most significantly to the $24.5 million decrease in gain on disposition of assets during the year ended December 31, 2023. The decreased gain on disposition of assets is the result of reduced disposition activity during the year ended December 31, 2023 compared to 2022.

Previous wording

*Cash and Cash Equivalents and Restricted Cash.*Cash totaled $13.7 million at December 31, 2023, including restricted cash of $9.7 million. See Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash in the Notes to the Financial Statements for the Company’s disclosure related to its restricted cash balance at December 31, 2023.

Current wording

*Cash and Cash Equivalents and Restricted Cash.*Cash totaled $8.0 million at December 31, 2024, including restricted cash of $6.4 million. See Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash in the Notes to the Financial Statements for the Company’s disclosure related to its restricted cash balance at December 31, 2024.

Previous wording

Our total cash balance at December 31, 2023, reflected net cash provided by our operating activities totaling $25.6 million during the year ended December 31, 2023, compared to net cash provided by operating activities totaling $24.6 million for the year ended December 31, 2022, an increase of $1.0 million. The increase of $1.0 million is primarily related to the cash reserves received from the borrowers associated with the Company’s commercial loans and investments, as well as increased interest income earned on deposits at financial institutions.

Current wording

Our net cash provided by our operating activities totaled $25.6 million during each of the years ended December 31, 2024 and 2023.

Previous wording

Our net cash used in investing activities totaled $13.6 million for the year ended December 31, 2023, compared to net cash used in investing activities of $38.8 million for the year ended December 31, 2022, a decrease of $25.2 million. The decrease in net cash used in investing activities of $25.2 million is primarily related to a net decrease in cash outflows of $60.6 million during the year ended December 31, 2023 related to the timing of income property acquisitions versus dispositions, which decrease in cash outflows was partially offset by $35.4 million in additional cash outflows related to investments in the Company’s commercial loans and investment portfolio for which there were no such outflows during the year ended December 31, 2022.

Current wording

Our net cash used in investing activities totaled $57.8 million for the year ended December 31, 2024, compared to net cash used in investing activities of $13.6 million for the year ended December 31, 2023, an increase in cash outflows of $44.2 million. The increase in net cash used in investing activities of $44.2 million is primarily related to a net $36.2 million increase in acquisitions versus dispositions during the year ended December 31, 2024, in addition to a net $8.0 million increase related to investments in the Company’s commercial loans and investment portfolio.

Previous wording

Our net cash used in financing activities totaled $11.4 million for the year ended December 31, 2023, compared to net cash provided by financing activities of $17.7 million for the year ended December 31, 2022, for a decrease in cash inflows from financing activities of $29.1 million. The decrease of $29.1 million is primarily related to a $9.0 million decrease in net proceeds from long-term debt during the year ended December 31, 2023 as well as $2.0 million less cash paid for loan fees the year ended December 31, 2023. These amounts were offset by $23.5 million less proceeds received from sales of common stock under the Company’s “at-the-market” equity offering programs during the year ended December 31, 2023 and $14.6 million more cash used to repurchase the Company’s common stock during the year ended December 31, 2023.

Current wording

Our net cash provided by financing activities totaled $26.4 million for the year ended December 31, 2024, compared to net cash used in financing activities of $11.4 million for the year ended December 31, 2023, for an increase in cash inflows from financing activities of $37.8 million. The increase of $37.8 million is primarily related to a $17.3 million increase in net proceeds from long-term debt during the year ended December 31, 2024 as well as $6.5 million more proceeds received from sales of common stock under the Company’s “at-the-market” equity offering programs and $13.8 million less cash used to repurchase the Company’s common stock during the year ended December 31, 2024.

Previous wording

*Long-Term Debt.*As of December 31, 2023, the Company had $173.5 million of undrawn commitments available on its Credit Facility. See Note 12, “Long-Term Debt”in the Notes to the Financial Statementsfor the Company’s disclosure related to its long-term debt balance at December 31, 2023.

Current wording

*Long-Term Debt.*At December 31, 2024, the commitment level under the Credit Facility was $250.0 million and the Company had an outstanding balance of $102.0 million and $89.5 million available capacity. See Note 13, “Long-Term Debt”in the Notes to the Financial Statementsfor the Company’s disclosure related to its long-term debt balance at December 31, 2024.

Previous wording

Acquisitions and Investments. As noted previously, the Company acquired 14 properties during the year ended December 31, 2023, for an aggregate purchase price of $82.9 million, as further described in Note 3 “Property Portfolio” in the Notes to the Financial Statements. The Company also invested in three commercial loans with a total funding commitment of $38.6 million. As of December 31, 2023, the Company’s commercial loan investments portfolio included two construction loans and one mortgage note with a total carrying value of $35.1 million. See Note 4, “Commercial Loans and Investments”in the Notes to the Financial Statementsfor additional disclosures related to the Company’s commercial loans and investments as of December 31, 2023.

Current wording

balance sheets and consolidated statement of operations. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we have included them in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto. The Company also invested in three commercial loans during the year ended December 31, 2024, with a total funding commitment of $31.1 million. As of December 31, 2024, the Company’s commercial loan investments portfolio included five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right, with a total carrying value of $89.6 million. See Note 4, “Commercial Loans and Investments” in the Notes to the Financial Statements for additional disclosures related to the Company’s commercial loans and investments as of December 31, 2024.

Previous wording

*Dispositions.*During the year ended December 31, 2023, the Company sold 24 properties for a total sales price of $108.3 million, generating aggregate gains on sale of $9.3 million, as further described in Note 3 “Property Portfolio” in the Notes to the Financial Statements.

Current wording

*Dispositions.*During the year ended December 31, 2024, the Company sold 15 properties for a total sales price of $62.0 million, generating aggregate gains on sale of $3.4 million, as further described in Note 3 “Property Portfolio” in the Notes to the Financial Statements. Also during the year ended December 31, 2024, the Company sold a $13.6 million A-1 participation interest in the Company’s initial $23.4 million portfolio loan. See Note 4, “Commercial Loans and Investments” in the Notes to the Financial Statements for additional disclosures related to the Company’s commercial loans and investments as of December 31, 2024.

Previous wording

Capital Expenditures. As of December 31, 2023, the Company had no commitments related to capital expenditures.

Current wording

Capital Expenditures. As of December 31, 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 year ended December 31, 2024, the Company is committed to funding $5.0 million in tenant improvements.

Previous wording

The Company is committed to fund two construction loans as described in Note 4, “Commercial Loans and Investments” in the Notes to the Financial Statements. The unfunded portion of the construction loans totaled $3.0 million as of December 31, 2023.

Current wording

The Company is committed to fund five construction loans as described in Note 4, “Commercial Loans and Investments” in the Notes to the Financial Statements. The unfunded portion of the construction loans totaled $7.4 million as of December 31, 2024.

Previous wording

The Company is contractually obligated under its various long-term debt agreements. In the aggregate, the Company is obligated under such agreements to repay $276.5 million on long-term basis, to be repaid in excess of one year, with no payments due within one year.

Current wording

The Company is contractually obligated under its various long-term debt agreements. In the aggregate, the Company is obligated under such agreements to repay $302.0 million on a long-term basis, to be repaid in excess of one year, with no payments due within one year.

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 sales of assets utilizing the reverse like-kind 1031 exchange structure, $109.5 million of availability under the 2022 ATM Program, and $173.5 million of undrawn commitments available on its existing $250.0 million Credit Facility, as of December 31, 2023.

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 sales of assets utilizing the reverse like-kind 1031 exchange structure, $90.4 million of availability under the 2022 ATM Program, and $89.5 million of available capacity on the existing $250.0 million Credit Facility, as of December 31, 2024.

Previous wording

The Board and management consistently review the allocation of capital with the goal of providing the best long-term return for our stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing the Company’s securities, and retaining funds for reinvestment. Annually, the Board reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant. Management’s focus is to continue our strategy of investing in net leased properties by utilizing the capital we raise and available borrowing capacity from the Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.

Current wording

The Board and management consistently review the allocation of capital with the goal of providing the best long-term return for our stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing the Company’s securities, and retaining funds for reinvestment. Annually, the Board reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant. Management’s focus is to continue our strategy of investing in net leased properties and commercial loans and investments by utilizing the capital we raise and available borrowing capacity from the Credit Facility to increase our portfolio of income-producing properties and commercial loan and investments portfolio, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.

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 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 14 properties for a combined purchase price of $82.9 million for the year ended December 31, 2023 and 51 properties for a combined purchase price of $187.4 million for the year ended December 31, 2022.

Current wording

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 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 9 properties for a combined purchase price of $72.2 million for the year ended December 31, 2024 and 14 properties for a combined purchase price of $82.9 million for the year ended December 31, 2023.