WINTER PARK, Fla., July 20, 2023 (GLOBE NEWSWIRE) -- Alpine Income Property Trust, Inc. (: PINE) (the “Company” or “PINE”) today announced its operating results and earnings for the quarter ended June 30, 2023.
Select Highlights
- Reported Net Income per diluted share attributable to the Company of $0.01 for the quarter ended June 30, 2023.
- Reported FFO per diluted share of $0.37 for the quarter ended June 30, 2023, a decrease of 21.3% from the comparable prior year period.
- Reported AFFO per diluted share of $0.37 for the quarter ended June 30, 2023, a decrease of 21.3% from the comparable prior year period.
- Acquired nine retail net lease retail properties during the second quarter of 2023 for total acquisition volume of $60.5 million, reflecting a weighted average going-in cash cap rate of 6.8%.
- Sold four retail net lease properties during the second quarter of 2023 for total disposition volume of $22.9 million at a weighted average exit cash cap rate of 6.4%, generating total gains of $0.7 million.
- Increased investment grade-rated tenant exposure to 63% as of June 30, 2023, up from 48% as of June 30, 2022.
- Repurchased 23,889 shares of the Company’s common stock during the second quarter of 2023 for a total cost of $0.4 million, or an average price of $15.22 per share.
- Paid a cash dividend for the second quarter of 2023 of $0.275 per share, a 1.9% increase from the comparable prior year period quarterly dividend, representing an annualized yield of 6.9% based on the closing price of the Company’s common stock on July 19, 2023.
- Book value as of June 30, 2023 increased to $19.30 per share.
- In July 2023, the Board approved a $15.0 million common stock repurchase program.
CEO Comments
"We are pleased to report another strong quarter of asset recycling as we continue to improve the credit quality of our tenant base by strategically reinvesting into well-located, high-quality properties occupied by investment grade-rated tenants," said John P. Albright, President and Chief Executive Officer of Alpine Income Property Trust. "During the quarter, we invested more than $60 million into a number of industry-leading tenants including Lowe’s, Marshalls, Best Buy, Chick-Fil-A, Dick’s Sporting Goods, Starbucks, HomeGoods, and Home Depot at a going in cash cap rate of 6.8%. These strong tenants increased our portfolio’s investment grade tenant exposure to 63%, further strengthening the cash flow supporting our attractive 6.6% dividend yield and the long-term stability of our portfolio.”
Quarterly Operating Results Highlights
The table below provides a summary of the Company’s operating results for the quarter ended June 30, 2023 (in thousands, except per share data):
| Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | ||||||||||
| Total Revenues | $ | 11,439 | $ | 11,280 | $ | 159 | 1.4 | % | ||||
| Net Income | $ | 90 | $ | 16,336 | $ | (16,246 | ) | (99.4 | %) | |||
| Net Income Attributable to PINE | $ | 80 | $ | 14,282 | $ | (14,202 | ) | (99.4 | %) | |||
| Net Income per Diluted Share Attributable to PINE | $ | 0.01 | $ | 1.05 | $ | (1.04 | ) | (99.1 | %) | |||
| FFO (1) | $ | 5,770 | $ | 6,393 | $ | (623 | ) | (9.7 | %) | |||
| FFO per Diluted Share (1) | $ | 0.37 | $ | 0.47 | $ | (0.10 | ) | (21.3 | %) | |||
| AFFO (1) | $ | 5,843 | $ | 6,345 | $ | (502 | ) | (7.9 | %) | |||
| AFFO per Diluted Share (1) | $ | 0.37 | $ | 0.47 | $ | (0.10 | ) | (21.3 | %) | |||
| Dividends Declared and Paid, per Share | $ | 0.275 | $ | 0.27 | $ | 0.005 | 1.9 | % | ||||
| (1) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share. | ||||||||||||
Year-to-Date Operating Results Highlights
The table below provides a summary of the Company’s operating results for the six months ended June 30, 2023 (in thousands, except per share data):
| Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | ||||||||||||
| Total Revenues | $ | 22,605 | $ | 22,079 | $ | 526 | 2.4 | % | ||||||
| Net Income | $ | 3,835 | $ | 17,260 | $ | (13,425 | ) | (77.8 | %) | |||||
| Net Income Attributable to PINE | $ | 3,419 | $ | 15,088 | $ | (11,669 | ) | (77.3 | %) | |||||
| Net Income per Diluted Share Attributable to PINE | $ | 0.22 | $ | 1.12 | $ | (0.90 | ) | (80.4 | %) | |||||
| FFO (1) | $ | 11,397 | $ | 12,989 | $ | (1,592 | ) | (12.3 | %) | |||||
| FFO per Diluted Share (1) | $ | 0.72 | $ | 0.97 | $ | (0.25 | ) | (25.8 | %) | |||||
| AFFO (1) | $ | 11,478 | $ | 12,797 | $ | (1,319 | ) | (10.3 | %) | |||||
| AFFO per Diluted Share (1) | $ | 0.73 | $ | 0.95 | $ | (0.22 | ) | (23.2 | %) | |||||
| Dividends Declared and Paid, per Share | $ | 0.550 | $ | 0.54 | $ | 0.01 | 1.9 | % | ||||||
| (1) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share. | ||||||||||||||
Acquisitions
During the three months and six months ended June 30, 2023, the Company acquired nine high-quality net lease properties for total acquisition volume of $60.5 million, reflecting a weighted average going-in cash cap rate of 6.8%. As of the acquisition date, the properties had a weighted average remaining lease term of 7.5 years, were located in four states, and were leased to tenants operating in nine retail sectors, including the off-price retail, general merchandise, quick service restaurant, casual dining, consumer electronics, sporting goods, home improvement, and dollar stores. Approximately 85% of annualized base rents acquired are generated from a tenant or the parent of a tenant with an investment grade credit rating.
Dispositions
During the three months ended June 30, 2023, the Company sold four properties for total disposition volume of $22.9 million at a weighted average exit cash cap rate of 6.4%, generating total gains of $0.7 million.
During the six months ended June 30, 2023, the Company sold 14 properties for total disposition volume of $79.1 million at a weighted average exit cash cap rate of 6.2%, generating total gains of $5.2 million.
Property Portfolio
The Company’s portfolio consisted of the following as of June 30, 2023:
Number of Properties 143Square Feet3.9 millionAnnualized Base Rent$39.7 millionWeighted Average Remaining Lease Term7.3 yearsStates where Properties are Located 34Occupancy 99.5% % of Annualized Base Rent Attributable to Investment Grade Rated Tenants (1)(2) 63%% of Annualized Base Rent Attributable to Credit Rated Tenants (1)(3) 82% Any differences are a result of rounding.(1) Annualized Base Rent (“ABR”) represents the annualized in-place straight-line base rent required by the tenant’s lease. ABR is a non-GAAP financial measure. We believe this non-GAAP financial measure is useful to investors because it is a widely accepted industry measure used by analysts and investors to compare the real estate portfolios and operating performance of REITs.
(2) The Company defines an Investment Grade Rated tenant as a tenant or the parent of a tenant with a credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners of Baa3, BBB-, or NAIC-2 or higher.
(3) The Company defines a Credit Rated Tenant as a tenant or the parent of a tenant with a credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners.
The Company’s portfolio included the following top tenants that represent 2.0% or greater of the Company's total annualized base rent as of June 30, 2023:
TenantCredit Rating (1)% of Annualized Base RentWalgreensBBB 12%Lowe’sBBB+ 9%Dick’s Sporting GoodsBBB 9%Dollar Tree/Family DollarBBB 8%Dollar GeneralBBB 5%WalmartAA 5%Hobby LobbyN/A 4%Best BuyBBB+ 4%At HomeCCC 4%Home DepotA 3%LA FitnessB- 2%BurlingtonBB+ 2%Other 33% Total 100% Any differences are a result of rounding.(1) Credit rating is from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association of Insurance Commissioners, as applicable, as of June 30, 2023. The Company defines an Investment Grade Rated tenant as a tenant or the parent of a tenant with a credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Associated of Insurance Commissioners of Baa3, BBB-, or NAIC-2 or higher.
The Company’s portfolio consisted of the following industries as of June 30, 2023:
(1) Includes six industries collectively representing less than 1% of the Company’s ABR as of June 30, 2023.
The Company’s portfolio included properties in the following states as of June 30, 2023:
Capital Markets and Balance Sheet
During the quarter ended June 30, 2023, the Company completed the following notable capital markets activity:
Repurchased 23,889 shares of the Company’s common stock on the open market under the previously authorized $5.0 million buyback program for a total cost of $0.4 million, or an average price of $15.22 per share.The following table provides a summary of the Company’s long-term debt as of June 30, 2023:
Component of Long-Term Debt PrincipalInterest RateMaturity Date2026 Term Loan (1) $100.0 million SOFR + 10 bps +
[1.35% - 1.95%] May 20262027 Term Loan (2) $100.0 million SOFR + 10 bps +
[1.25% - 1.90%] January 2027Revolving Credit Facility (3) $50.0 million SOFR + 10 bps +
[1.25% - 2.20%] January 2027Total Debt/Weighted Average Rate $250.0 million
3.36% (1) As of June 30, 2023, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 2.05% plus the SOFR adjustment of 0.10% and the applicable spread for the $100 million 2026 Term Loan balance.
(2) As of June 30, 2023, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 1.18% plus the SOFR adjustment of 0.10% and the applicable spread for the $100 million 2027 Term Loan balance.
(3) As of June 30, 2023, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 3.21% plus the SOFR adjustment of 0.10% and the applicable spread for the $50 million balance on the Company’s Revolving Credit Facility.
As of June 30, 2023, the Company held an 89.2% interest in Alpine Income Property OP, LP, the Company’s operating partnership (the “Operating Partnership” or “OP”). There were 1,703,494 OP Units held by third parties outstanding and 14,045,001 shares of the Company’s common stock outstanding, for total outstanding common stock and OP Units held by third parties of 15,748,495, as of June 30, 2023.
As of June 30, 2023, the Company’s net debt to Pro Forma EBITDA was 6.4 times, and as defined in the Company’s credit agreement, the Company’s fixed charge coverage ratio was 3.3 times. As of June 30, 2023, the Company’s net debt to total enterprise value was 46.5%. The Company calculates total enterprise value as the sum of net debt and the market value of the Company's outstanding common shares and OP Units, as if the OP Units have been converted to common shares.
Dividend
On May 22, 2023, the Company announced a cash dividend for the second quarter of 2023 of $0.275 per share, payable on June 30, 2023 to stockholders of record as of the close of business on June 8, 2023. The second quarter 2023 cash dividend represents a 1.9% increase over the comparable prior year period quarterly dividend and a payout ratio of 74.3% of the Company’s second quarter 2023 FFO per diluted share and AFFO per diluted share.
2023 Outlook
The Company has revised its outlook for 2023 to take into account the Company’s year-to-date performance and revised expectations regarding the Company’s investment activities, forecasted capital markets transactions, and other significant assumptions.
The Company’s revised outlook for 2023 is as follows:
Revised Outlook Range for 2023 Change from Prior Outlook Low High Low HighAcquisitions $100 millionto$125 million -to($25) millionDispositions $100 millionto$125 million $25 millionto - FFO per Diluted Share $1.50to$1.53 -to ($0.02) AFFO per Diluted Share $1.52to$1.55 -to ($0.02) Weighted Average DilutedShares Outstanding 15.5 millionto16.0 million (0.3) millionto(0.3) million
Second Quarter 2023 Earnings Conference Call & Webcast
The Company will host a conference call to present its financial and operating results for the quarter ended June 30, 2023, on Friday, July 21, 2023, at 9:00 AM ET.
A live webcast of the call will be available on the Investor Relations page of the Company’s website at www.alpinereit.com or at the link provided in the event details below. To access the call by phone, please go to the link provided in the event information below and you will be provided with dial-in details.
Webcast:https://edge.media-server.com/mmc/p/nzs8pyib Dial-In:https://register.vevent.com/register/BI1ea680d7359344a78f2070767b24ec7bWe encourage participants to dial into the conference call at least fifteen minutes ahead of the scheduled start time. A replay of the earnings call will be archived and available online through the Investor Relations section of the Company’s website at www.alpinereit.com.
About Alpine Income Property Trust, Inc.
Alpine Income Property Trust, Inc. (: PINE) is a publicly traded real estate investment trust that seeks to deliver attractive risk-adjusted returns and dependable cash dividends by investing in, owning and operating a portfolio of single tenant net leased commercial income properties that are predominately leased to high-quality publicly traded and credit-rated tenants.
We encourage you to review our most recent investor presentation which is available on our website at http://www.alpinereit.com.
Safe Harbor
This press release may contain “forward-looking statements.” Forward-looking statements include statements that may be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include general business and economic conditions, continued volatility and uncertainty in the credit markets and broader financial markets, risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters, the impact of epidemics or pandemics (such as the COVID-19 Pandemic and its variants) on the Company’s business and the business of its tenants and the impact of such epidemics or pandemics on the U.S. economy and market conditions generally, other factors affecting the Company’s business or the business of its tenants that are beyond the control of the Company or its tenants, and the factors set forth under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made in this press release speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Non-GAAP Financial Measures
Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also disclose Funds From Operations (“FFO”) Adjusted Funds From Operations (“AFFO”), and Pro Forma Earnings Before Interest, Taxes, Depreciation and Amortization (“Pro Forma EBITDA”), all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
FFO, AFFO, and Pro Forma EBITDA do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries.
To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as loss on extinguishment of debt, amortization of above- and below-market lease related intangibles, straight-line rental revenue, amortization of deferred financing costs, non-cash compensation, and other non-cash income or expense. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.
To derive Pro Forma EBITDA, GAAP net income or loss is adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries, non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, loss on extinguishment of debt, above- and below-market lease related intangibles, non-cash compensation, and other non-cash income or expense. Cash interest expense is also excluded from Pro Forma EBITDA, and GAAP net income or loss is adjusted for the annualized impact of acquisitions, dispositions and other similar activities.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. We also believe that Pro Forma EBITDA is an additional useful supplemental measure for investors to consider as it allows for a better assessment of our operating performance without the distortions created by other non-cash revenues, expenses or certain effects of the Company’s capital structure on our operating performance. FFO, AFFO, and Pro Forma EBITDA may not be comparable to similarly titled measures employed by other companies.
June 30, 2023December 31, 2022ASSETSReal Estate: Land, at Cost$151,703 $176,857 Building and Improvements, at Cost 332,202 322,510 Total Real Estate, at Cost 483,905 499,367 Less, Accumulated Depreciation (28,569) (22,313)Real Estate—Net 455,336 477,054 Assets Held for Sale 5,488 — Cash and Cash Equivalents 7,755 9,018 Restricted Cash 20,100 4,026 Intangible Lease Assets—Net 53,402 60,432 Straight-Line Rent Adjustment 1,736 1,668 Other Assets 22,868 21,233 Total Assets$566,685 $573,431 LIABILITIES AND EQUITY Liabilities: Accounts Payable, Accrued Expenses, and Other Liabilities$6,547 $4,411 Prepaid Rent and Deferred Revenue 1,776 1,479 Intangible Lease Liabilities—Net 5,062 5,050 Long-Term Debt 249,020 267,116 Total Liabilities 262,405 278,056 Commitments and Contingencies Equity: Preferred Stock, $0.01 par value per share, 100 million shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022 — — Common Stock, $0.01 par value per share, 500 million shares authorized, 14,045,001 shares issued and outstanding as of June 30, 2023 and 13,394,677 shares issued and outstanding as of December 31, 2022 140 134 Additional Paid-in Capital 248,958 236,841 Retained Earnings 5,731 10,042 Accumulated Other Comprehensive Income 16,214 14,601 Stockholders' Equity 271,043 261,618 Noncontrolling Interest 33,237 33,757 Total Equity 304,280 295,375 Total Liabilities and Equity$566,685 $573,431
to Noncontrolling Interest (10) (2,054) (416) (2,172) Net Income Attributable to Alpine Income Property Trust, Inc.$80 $14,282 $3,419 $15,088 Per Common Share Data: Net Income Attributable to Alpine Income Property Trust, Inc. Basic$0.01 $1.21 $0.24 $1.28 Diluted$0.01 $1.05 $0.22 $1.12 Weighted Average Number of Common Shares: Basic14,059,173 11,844,108 14,030,025 11,773,904 Diluted (1)15,762,667 13,547,602 15,733,519 13,457,398 Dividends Declared and Paid$0.275 $0.270 $0.550 $0.540 (1) Includes the weighted average impact of 1,703,494 shares underlying OP units including (i) 1,223,854 shares underlying OP Units issued to CTO Realty Growth, Inc. and (ii) 479,640 shares underlying OP Units issued to an unrelated third party.
Three Months EndedSix Months EndedJune 30, 2023June 30, 2022June 30, 2023June 30, 2022Net Income$90 $16,336 $3,835 $17,260 Depreciation and Amortization 6,423 5,694 12,758 11,366 Gain on Disposition of Assets (743) (15,637) (5,196) (15,637)Funds from Operations$5,770 $6,393 $11,397 $12,989 Adjustments: Straight-Line Rent Adjustment (109) (234) (274) (528)Gain on Extinguishment of Debt — — (23) — COVID-19 Rent Repayments — 22 — 45 Non-Cash Compensation 79 78 159 157 Amortization of Deferred Financing
Costs to Interest Expense 177 132 351 257 Amortization of Intangible Assets
and Liabilities to Lease Income (102) (69) (189) (170)Other Non-Cash Expense 28 23 57 47 Adjusted Funds from Operations$5,843 $6,345 $11,478 $12,797 FFO per Diluted Share$0.37 $0.47 $0.72 $0.97 AFFO per Diluted Share$0.37 $0.47 $0.73 $0.95
Three Months EndedJune 30, 2023Net Income$90 Adjustments: Depreciation and Amortization 6,423 Gains on Disposition of Assets (743)Gain on Extinguishment of Debt — Straight-Line Rent Adjustment (109)Non-Cash Compensation 79 Amortization of Deferred Financing Costs to Interest Expense 177 Amortization of Intangible Assets and Liabilities to Lease Income (102)Other Non-Cash Expense 28 Interest Expense, Net of Deferred Financing Costs Amortization 2,261 EBITDA$8,104 Annualized EBITDA$32,416 Pro Forma Annualized Impact of Current Quarter Acquisitions and Dispositions, Net (1) 2,515 Pro Forma EBITDA$34,931 Total Long-Term Debt 249,020 Financing Costs, Net of Accumulated Amortization 1,350 Cash and Cash Equivalents (7,755)Restricted Cash (20,100)Net Debt$222,515 Net Debt to Pro Forma EBITDA 6.4x (1) Reflects the pro forma annualized impact on Annualized EBITDA of the Company’s investment activity during the three months ended June 30, 2023.
Senior Vice President, Chief Financial Officer & Treasurer
(407) 904-3324
[email protected]
