|
||||||||||||||||||||||||||
| SEC Info℠ | | | Home | | | Search | | | My Interests | | | Help | | | Sign In | | | Please Sign In | |||||||
|
||||||||||||||||||||||||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/22/21 Alpine Income Prop Trust, Inc. 10-Q 6/30/21 95:11M Toppan Merrill Bridge/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.27M
2: EX-10.3 Material Contract HTML 675K
3: EX-10.4 Material Contract HTML 183K
4: EX-31.1 Certification -- §302 - SOA'02 HTML 31K
5: EX-31.2 Certification -- §302 - SOA'02 HTML 31K
6: EX-32.1 Certification -- §906 - SOA'02 HTML 28K
7: EX-32.2 Certification -- §906 - SOA'02 HTML 27K
14: R1 Document and Entity Information HTML 81K
15: R2 Consolidated Balance Sheets HTML 111K
16: R3 Consolidated Balance Sheets (Parenthetical) HTML 43K
17: R4 Consolidated Statements of Operations HTML 90K
18: R5 Consolidated Statements of Comprehensive Income HTML 44K
19: R6 Consolidated Statements of Stockholders' Equity HTML 72K
20: R7 Consolidated Statements of Shareholders' Equity HTML 27K
(Parenthetical)
21: R8 Consolidated Statements of Cash Flows HTML 97K
22: R9 Consolidated Statements of Cash Flows HTML 37K
(Parenthetical)
23: R10 Business and Organization HTML 37K
24: R11 Summary of Significant Accounting Policies HTML 50K
25: R12 Income Property Portfolio HTML 187K
26: R13 Fair Value of Financial Instruments HTML 76K
27: R14 Intangible Assets and Liabilities HTML 89K
28: R15 Other Assets HTML 44K
29: R16 Long-Term Debt HTML 114K
30: R17 Interest Rate Swap HTML 29K
31: R18 Equity HTML 33K
32: R19 Common Stock and Earnings Per Share HTML 67K
33: R20 Share Repurchases HTML 27K
34: R21 Stock-Based Compensation HTML 63K
35: R22 Related Party Management Company HTML 60K
36: R23 Commitments and Contingencies HTML 28K
37: R24 Assets Held for Sale HTML 34K
38: R25 Subsequent Events HTML 27K
39: R26 Summary of Significant Accounting Policies HTML 77K
(Policies)
40: R27 Income Property Portfolio (Tables) HTML 184K
41: R28 Fair Value of Financial Instruments (Tables) HTML 76K
42: R29 Intangible Assets and Liabilities (Tables) HTML 93K
43: R30 Other Assets (Tables) HTML 45K
44: R31 Accounts Payable, Accrued Expenses, and Other HTML 41K
Liabilities (Tables)
45: R32 Long-Term Debt (Tables) HTML 115K
46: R33 Common Stock and Earnings Per Share (Tables) HTML 66K
47: R34 Stock-Based Compensation (Tables) HTML 60K
48: R35 Related Party Management Company (Tables) HTML 38K
49: R36 Assets Held for Sale (Tables) HTML 36K
50: R37 BUSINESS AND ORGANIZATION - Business (Details) HTML 34K
51: R38 BUSINESS AND ORGANIZATION - Organization (Details) HTML 92K
52: R39 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - HTML 27K
General Information (Details)
53: R40 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - HTML 35K
Restricted Cash (Details)
54: R41 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - HTML 52K
Concentration of Risk (Details)
55: R42 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - HTML 32K
Reclassifications (Details)
56: R43 INCOME PROPERTY PORTFOLIO - Portfolio Information HTML 28K
(Details)
57: R44 INCOME PROPERTY PORTFOLIO - Leasing Revenue HTML 32K
(Details)
58: R45 INCOME PROPERTY PORTFOLIO - Minimum Future Base HTML 40K
Rental Revenue on Non-cancelable Leases (Details)
59: R46 INCOME PROPERTY PORTFOLIO - Properties Acquired - HTML 53K
General Information (Details)
60: R47 INCOME PROPERTY PORTFOLIO - Properties Acquired - HTML 203K
Tabular Disclosure (Details)
61: R48 FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying HTML 39K
Value and Estimated Fair Value (Details)
62: R49 FAIR VALUE OF FINANCIAL INSTRUMENTS - Measured on HTML 51K
a Recurring Basis (Details)
63: R50 INTANGIBLE ASSETS AND LIABILITIES - Components HTML 54K
(Details)
64: R51 INTANGIBLE ASSETS AND LIABILITIES - Amortization HTML 32K
(Details)
65: R52 INTANGIBLE ASSETS AND LIABILITIES - Summary of HTML 80K
Estimated Amortization and Accretion (Details)
66: R53 Other Assets (Details) HTML 44K
67: R54 Accounts Payable, Accrued Expenses, and Other HTML 38K
Liabilities (Details)
68: R55 LONG-TERM DEBT - Outstanding Indebtedness HTML 67K
(Details)
69: R56 LONG-TERM DEBT - Credit Facility (Details) HTML 62K
70: R57 LONG-TERM DEBT - Term Loan (Details) HTML 36K
71: R58 LONG-TERM DEBT - Mortgage Notes Payable (Details) HTML 38K
72: R59 LONG-TERM DEBT - Components (Details) HTML 49K
73: R60 LONG-TERM DEBT - Payments Applicable to Reduction HTML 43K
of Principal (Details)
74: R61 LONG-TERM DEBT - Carrying Value (Details) HTML 37K
75: R62 LONG-TERM DEBT - Interest Expense (Details) HTML 34K
76: R63 Interest Rate Swap (Details) HTML 52K
77: R64 EQUITY - Shelf Registration & ATM Program HTML 45K
(Details)
78: R65 EQUITY - Follow-on Public offering (Details) HTML 34K
79: R66 EQUITY - Noncontrolling Interest (Details) HTML 43K
80: R67 EQUITY - Dividends (Details) HTML 33K
81: R68 Common Stock and Earnings Per Share (Details) HTML 75K
82: R69 Share Repurchases (Details) HTML 40K
83: R70 Stock-Based Compensation - Ipo (Details) HTML 38K
84: R71 STOCK-BASED COMPENSATION - Compensation Expense HTML 29K
(Details)
85: R72 STOCK-BASED COMPENSATION - Non-Vested Restricted HTML 57K
Shares (Details)
86: R73 STOCK-BASED COMPENSATION - Unrecognized HTML 34K
Compensation (Details)
87: R74 STOCK-BASED COMPENSATION - General Information HTML 38K
(Details)
88: R75 STOCK-BASED COMPENSATION - Stock Compensation HTML 34K
Expense (Details)
89: R76 RELATED PARTY MANAGEMENT COMPANY - General HTML 74K
Information (Details)
90: R77 RELATED PARTY MANAGEMENT COMPANY - Due from the HTML 35K
Company to CTO (Details)
91: R78 Assets Held for Sale (Details) HTML 44K
93: XML IDEA XML File -- Filing Summary XML 169K
13: XML XBRL Instance -- pine-20210630x10q_htm XML 2.21M
92: EXCEL IDEA Workbook of Financial Reports XLSX 111K
9: EX-101.CAL XBRL Calculations -- pine-20210630_cal XML 208K
10: EX-101.DEF XBRL Definitions -- pine-20210630_def XML 681K
11: EX-101.LAB XBRL Labels -- pine-20210630_lab XML 1.52M
12: EX-101.PRE XBRL Presentations -- pine-20210630_pre XML 1.13M
8: EX-101.SCH XBRL Schema -- pine-20210630 XSD 222K
94: JSON XBRL Instance as JSON Data -- MetaLinks 398± 598K
95: ZIP XBRL Zipped Folder -- 0001558370-21-009099-xbrl Zip 425K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-Q
i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended i June 30, 2021
OR
i ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number i 001-39143
i ALPINE INCOME PROPERTY TRUST, INC.
(Exact name of registrant as specified in its charter)
| | |
i Maryland |
| i 84-2769895 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
| | |
i 1140 N. Williamson Blvd., i Suite 140 | | |
i Daytona Beach, i Florida | | i 32114 |
(Address of principal executive offices) | | (Zip Code) |
( i 386) i 274-2202
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol |
| Name of each exchange on which registered: |
i COMMON STOCK, $0.01 PAR VALUE | | i PINE | | i NYSE |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | |
| | | | |
Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ |
| | | | |
i Non-accelerated Filer | ☒ | | Smaller Reporting Company | i ☒ |
| | | | |
| | | Emerging Growth Company | i ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. i ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
The number of shares of the registrant’s common stock outstanding on July 15, 2021 was i 11,299,548.
INDEX
| | |
| | Page |
|
| No. |
PART I—FINANCIAL INFORMATION | | |
| | |
| 3 | |
| | |
Consolidated Balance Sheets – June 30, 2021 (Unaudited) and December 31, 2020 | | 3 |
| | |
| 4 | |
| | |
| 5 | |
| | |
| 6 | |
| | |
Consolidated Statements of Cash Flows – Six months ended June 30, 2021 and 2020 (Unaudited) | | 7 |
| | |
| 9 | |
| | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 28 |
| | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | | 37 |
| | |
| 37 | |
| | |
| 37 | |
| | |
| 37 | |
| | |
| 37 | |
| | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | | 37 |
| | |
| 37 | |
| | |
| 37 | |
| | |
| 38 | |
| | |
| 39 | |
| | |
| 40 |
2
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| | | | | |
| As of | ||||
| (Unaudited) June 30, 2021 |
| |||
ASSETS | | | | ||
Real Estate: | | | | | |
Land, at cost | $ | i 115,410 | | $ | i 83,210 |
Building and Improvements, at cost | | i 199,279 | | | i 142,679 |
Total Real Estate, at cost | | i 314,689 | | | i 225,889 |
Less, Accumulated Depreciation | | ( i 10,577) | | | ( i 6,550) |
Real Estate—Net | | i 304,112 | | | i 219,339 |
Assets Held for Sale | | i 3,082 | | | — |
Cash and Cash Equivalents | | i 6,294 | | | i 1,894 |
Restricted Cash | | i 2,190 | | | — |
Intangible Lease Assets—Net | | i 47,805 | | | i 36,881 |
Straight-Line Rent Adjustment | | i 1,925 | | | i 2,045 |
Other Assets | | i 2,089 | | | i 2,081 |
Total Assets | $ | i 367,497 | | $ | i 262,240 |
LIABILITIES AND EQUITY | | | | | |
Liabilities: | | | | | |
Accounts Payable, Accrued Expenses, and Other Liabilities | $ | i 2,422 | | $ | i 1,984 |
Prepaid Rent and Deferred Revenue | | i 1,175 | | | i 1,055 |
Intangible Lease Liabilities—Net | | i 4,654 | | | i 3,299 |
Long-Term Debt | | i 140,806 | | | i 106,809 |
Total Liabilities | | i 149,057 | | | i 113,147 |
Commitments and Contingencies—See Note 15 | | | | | |
Equity: | | | | | |
Preferred Stock, $ i i 0.01 / par value per share, i i 100 / million shares authorized, i i no / shares issued and outstanding as of June 30, 2021 and December 31, 2020 | | — | | | — |
Common Stock, $ i i 0.01 / par value per share, i i 500 / million shares authorized, i 11,296,023 shares issued and outstanding as of June 30, 2021 and i 7,458,755 shares issued and outstanding as of December 31, 2020 | | i 113 | | | i 75 |
Additional Paid-in Capital | | i 197,978 | | | i 132,878 |
Dividends in Excess of Net Income | | ( i 9,689) | | | ( i 5,713) |
Accumulated Other Comprehensive Income (Loss) | | i 180 | | | ( i 481) |
Stockholders' Equity | | i 188,582 | | | i 126,759 |
Noncontrolling Interest | | i 29,858 | | | i 22,334 |
Total Equity | | i 218,440 | | | i 149,093 |
Total Liabilities and Equity | $ | i 367,497 | | $ | i 262,240 |
The accompanying notes are an integral part of these consolidated financial statements.
3
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share, per share and dividend data)
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Revenues: | | | | | | | | | | | | |
Lease Income | | $ | i 6,597 | | $ | i 4,591 | | $ | i 12,487 | | $ | i 8,762 |
Total Revenues | | | i 6,597 | | | i 4,591 | | | i 12,487 | | | i 8,762 |
Operating Expenses: | | | | | | | | | | | | |
Real Estate Expenses | | | i 824 | | | i 550 | | | i 1,475 | | | i 1,150 |
General and Administrative Expenses | | | i 1,286 | | | i 1,132 | | | i 2,316 | | | i 2,416 |
Depreciation and Amortization | | | i 3,463 | | | i 2,286 | | | i 6,606 | | | i 4,309 |
Total Operating Expenses | | | i 5,573 | | | i 3,968 | | | i 10,397 | | | i 7,875 |
Net Income from Operations | | | i 1,024 | | | i 623 | | | i 2,090 | | | i 887 |
Interest Expense | | | i 678 | | | i 344 | | | i 1,233 | | | i 593 |
Net Income | | | i 346 | | | i 279 | | | i 857 | | | i 294 |
Less: Net Income Attributable to Noncontrolling Interest | | | ( i 42) | | | ( i 39) | | | ( i 113) | | | ( i 41) |
Net Income Attributable to Alpine Income Property Trust, Inc. | | $ | i 304 | | $ | i 240 | | $ | i 744 | | $ | i 253 |
| | | | | | | | | | | | |
Per Common Share Data: | | | | | | | | | | | | |
Net Income Attributable to Alpine Income Property Trust, Inc. | | | | | | | | | | | | |
Basic | | $ | i 0.03 | | $ | i 0.03 | | $ | i 0.09 | | $ | i 0.03 |
Diluted | | $ | i 0.03 | | $ | i 0.03 | | $ | i 0.08 | | $ | i 0.03 |
Weighted Average Number of Common Shares: | | | | | | | | | | | | |
Basic | | | i 8,853,259 | | | i 7,544,991 | | | i 8,212,902 | | | i 7,721,835 |
Diluted | | | i 10,081,783 | | | i 8,768,845 | | | i 9,439,104 | | | i 8,945,689 |
| | | | | | | | | | | | |
Dividends Declared and Paid | | $ | i 0.25 | | $ | i 0.20 | | $ | i 0.49 | | $ | i 0.40 |
The accompanying notes are an integral part of these consolidated financial statements.
4
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| |
| |
| ||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | | $ | i 304 | | $ | i 240 | | $ | i 744 | | $ | i 253 |
Other Comprehensive Income (Loss) | | | | | | | | | | | | |
Cash Flow Hedging Derivative - Interest Rate Swaps | | | ( i 15) | | | ( i 647) | | | i 661 | | | ( i 647) |
Total Other Comprehensive Income (Loss) | | | ( i 15) | | | ( i 647) | | | i 661 | | | ( i 647) |
Total Comprehensive Income (Loss) | | $ | i 289 | | $ | ( i 407) | | $ | i 1,405 | | $ | ( i 394) |
The accompanying notes are an integral part of these consolidated financial statements.
5
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except per share data)
For the three months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | |
|
| Common |
| Additional |
| Dividends in |
| Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | |||||||
Balance April 1, 2021 | | $ | i 79 | | $ | i 140,591 | | $ | ( i 7,169) | | $ | i 195 | | $ | i 133,696 | | $ | i 22,112 | | $ | i 155,808 |
Net Income | | | — | | | — | | | i 304 | | | — | | | i 304 | | | i 42 | | | i 346 |
Stock Issuance to Directors | | | — | | | i 73 | | | — | | | — | | | i 73 | | | — | | | i 73 |
Stock Issuance, Net of Equity Issuance Costs | | | i 34 | | | i 57,314 | | | — | | | — | | | i 57,348 | | | — | | | i 57,348 |
Operating Units Issued | | | — | | | — | | | — | | | — | | | | | | i 8,010 | | | i 8,010 |
Cash Dividend ($ i 0.25 per share) | | | — | | | — | | | ( i 2,824) | | | — | | | ( i 2,824) | | | ( i 306) | | | ( i 3,130) |
Other Comprehensive Loss | | | — | | | — | | | — | | | ( i 15) | | | ( i 15) | | | — | | | ( i 15) |
Balance June 30, 2021 | | $ | i 113 | | $ | i 197,978 | | $ | ( i 9,689) | | $ | i 180 | | $ | i 188,582 | | $ | i 29,858 | | $ | i 218,440 |
For the three months ended June 30, 2020:
| | | | | | | | | | | | | | | | | | | | | |
|
| Common |
| Additional |
| Dividends in |
| Accumulated | | Stockholders' |
| Noncontrolling |
| Total Equity | |||||||
Balance April 1, 2020 | | $ | i 79 | | $ | i 137,393 | | $ | ( i 2,063) | | $ | — | | $ | i 135,409 | | $ | i 22,933 | | $ | i 158,342 |
Net Income | | | — | | | — | | | i 240 | | | — | | | i 240 | | | i 39 | | | i 279 |
Stock Repurchase | | | — | | | ( i 4,421) | | | — | | | — | | | ( i 4,421) | | | — | | | ( i 4,421) |
Stock Issuance to Directors | | | — | | | i 66 | | | — | | | — | | | i 66 | | | — | | | i 66 |
Cash Dividend ($ i 0.20 per share) | | | — | | | — | | | ( i 1,490) | | | — | | | ( i 1,490) | | | ( i 245) | | | ( i 1,735) |
Other Comprehensive Loss | | | — | | | — | | | — | | | ( i 647) | | | ( i 647) | | | — | | | ( i 647) |
Balance June 30, 2020 | | $ | i 79 | | $ | i 133,038 | | $ | ( i 3,313) | | $ | ( i 647) | | $ | i 129,157 | | $ | i 22,727 | | $ | i 151,884 |
For the six months ended June 30, 2021:
| | | | | | | | | | | | | | | | | | | | | |
|
| Common |
| Additional |
| Dividends in | | Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | |||||||
Balance January 1, 2021 | | $ | i 75 | | $ | i 132,878 | | $ | ( i 5,713) | | $ | ( i 481) | | $ | i 126,759 | | $ | i 22,334 | | $ | i 149,093 |
Net Income | | | — | | | — | | | i 744 | | | — | | | i 744 | | | i 113 | | | i 857 |
Stock Issuance to Directors | | | — | | | i 139 | | | — | | | — | | | i 139 | | | — | | | i 139 |
Stock Issuance, Net of Equity Issuance Costs | | | i 38 | | | i 64,961 | | | — | | | — | | | i 64,999 | | | — | | | i 64,999 |
Operating Units Issued | | | — | | | — | | | — | | | — | | | — | | | i 8,010 | | | i 8,010 |
Cash Dividend ($ i 0.49 per share) | | | — | | | — | | | ( i 4,720) | | | — | | | ( i 4,720) | | | ( i 599) | | | ( i 5,319) |
Other Comprehensive Income | | | — | | | — | | | — | | | i 661 | | | i 661 | | | — | | | i 661 |
Balance June 30, 2021 | | $ | i 113 | | $ | i 197,978 | | $ | ( i 9,689) | | $ | i 180 | | $ | i 188,582 | | $ | i 29,858 | | $ | i 218,440 |
For the six months ended June 30, 2020:
| | | | | | | | | | | | | | | | | | | | | |
|
| Common |
| Additional |
| Dividends in |
| Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | |||||||
Balance January 1, 2020 | | $ | i 79 | | $ | i 137,948 | | $ | ( i 498) | | $ | — | | $ | i 137,529 | | $ | i 23,176 | | $ | i 160,705 |
Net Income | | | — | | | — | | | i 253 | | | — | | | i 253 | | | i 41 | | | i 294 |
Stock Repurchase | | | — | | | ( i 5,013) | | | — | | | — | | | ( i 5,013) | | | — | | | ( i 5,013) |
Stock Issuance to Directors | | | — | | | i 103 | | | — | | | — | | | i 103 | | | — | | | i 103 |
Cash Dividend ($ i 0.40 per share) | | | — | | | — | | | ( i 3,068) | | | — | | | ( i 3,068) | | | ( i 490) | | | ( i 3,558) |
Other Comprehensive Loss | | | — | | | — | | | — | | | ( i 647) | | | ( i 647) | | | — | | | ( i 647) |
Balance June 30, 2020 | | $ | i 79 | | $ | i 133,038 | | $ | ( i 3,313) | | $ | ( i 647) | | $ | i 129,157 | | $ | i 22,727 | | $ | i 151,884 |
The accompanying notes are an integral part of these consolidated financial statements.
6
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| | | | | | |
| | Six Months Ended | ||||
| | | ||||
Cash Flow from Operating Activities: | | | | | | |
Net Income | | $ | i 857 | | $ | i 294 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | | | | | | |
Depreciation and Amortization | | | i 6,606 | | | i 4,309 |
Amortization of Intangible Lease Assets and Liabilities to Lease Income | | | ( i 91) | | | ( i 48) |
Amortization of Deferred Financing Costs to Interest Expense | | | i 149 | | | i 88 |
Non-Cash Compensation | | | i 152 | | | i 135 |
Decrease (Increase) in Assets: | | | | | | |
Straight-Line Rent Adjustment | | | ( i 264) | | | ( i 937) |
COVID-19 Rent Repayments | | | i 385 | | | ( i 625) |
Other Assets | | | i 46 | | | ( i 497) |
Increase (Decrease) in Liabilities: | | | | | | |
Accounts Payable, Accrued Expenses, and Other Liabilities | | | i 906 | | | ( i 55) |
Prepaid Rent and Deferred Revenue | | | i 120 | | | i 883 |
Net Cash Provided By Operating Activities | | | i 8,866 | | | i 3,547 |
Cash Flow from Investing Activities: | | | | | | |
Acquisition of Real Estate, Including Capitalized Expenditures | | | ( i 65,930) | | | ( i 76,087) |
Net Cash Used In Investing Activities | | | ( i 65,930) | | | ( i 76,087) |
Cash Flow from Financing Activities: | | | | | | |
Proceeds from Long-Term Debt | | | i 85,621 | | | i 70,000 |
Payments on Long-Term Debt | | | ( i 80,809) | | | — |
Cash Paid for Loan Fees | | | ( i 838) | | | ( i 4) |
Repurchase of Common Stock | | | — | | | ( i 5,013) |
Proceeds From Stock Issuance, net | | | i 64,999 | | | — |
Dividends Paid | | | ( i 5,319) | | | ( i 3,558) |
Net Cash Provided By Financing Activities | | | i 63,654 | | | i 61,425 |
Net Increase (Decrease) in Cash and Cash Equivalents | | | i 6,590 | | | ( i 11,115) |
Cash and Cash Equivalents, Beginning of Period | | | i 1,894 | | | i 12,342 |
Cash and Cash Equivalents, End of Period | | $ | i 8,484 | | $ | i 1,227 |
| | | | | | |
Reconciliation of Cash to the Consolidated Balance Sheets: | | | | | | |
Cash and Cash Equivalents | | $ | i 6,294 | | $ | i 1,227 |
Restricted Cash | | | i 2,190 | | | — |
Total Cash | | $ | i 8,484 | | $ | i 1,227 |
The accompanying notes are an integral part of these consolidated financial statements.
7
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited, in thousands)
| | | | | | |
| | Six Months Ended | ||||
| | | ||||
Supplemental Disclosure of Cash Flow Information: | | | | | | |
Cash Paid for Interest | | $ | i 1,105 | | $ | i 501 |
| | | | | | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | | | | | | |
Unrealized Gain (Loss) on Cash Flow Hedge | | $ | i 661 | | $ | ( i 647) |
Operating Units Issued in Exchange for Real Estate | | $ | i 8,010 | | $ | — |
Underwriting Discounts on Capital Raised Through Issuance of Common Stock | | $ | i 2,866 | | $ | — |
Assumption of Mortgage Note Payable | | $ | i 30,000 | | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
iNOTE 1. BUSINESS AND ORGANIZATION
BUSINESS
Alpine Income Property Trust, Inc. (the “Company” or “PINE”) is a real estate company that owns and operates a high-quality portfolio of commercial net lease properties. The terms “us,” “we,” “our,” and “the Company” as used in this report refer to Alpine Income Property Trust, Inc. together with our consolidated subsidiaries.
Our portfolio consists of i 71 net leased retail and office properties located in i 49 markets in i 22 states. The properties in our portfolio are subject to long-term, primarily triple-net leases, which generally require the tenant to pay all of the property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance and certain capital expenditures.
The Company has i no employees and is externally managed by Alpine Income Property Manager, LLC, a Delaware limited liability company and a wholly owned subsidiary of CTO Realty Growth, Inc. (our “Manager”). CTO Realty Growth, Inc. (NYSE: CTO) is a Maryland corporation that is a publicly traded diversified REIT and the sole member of our Manager (“CTO”).
ORGANIZATION
The Company is a Maryland corporation that was formed on August 19, 2019. On November 26, 2019, the Company closed its initial public offering (“IPO”) of shares of its common stock (the “Offering”) as well as a concurrent private placement of shares of common stock to CTO. Net proceeds from the Offering and the concurrent CTO Private Placement (defined below) were used to purchase i 15 properties from CTO. Additionally, CTO contributed to Alpine Income Property OP, LP, the Company’s operating partnership (the “Operating Partnership”), i five additional properties in exchange for operating partnership units (“OP Units”).
The price per share paid in the Offering and the concurrent private placement was $ i 19.00 (the “IPO Price”). The Offering raised $ i 142.5 million in gross proceeds from the issuance of i 7,500,000 shares of our common stock. We also raised $ i 7.5 million from the concurrent private placement to CTO from the issuance of i 394,737 shares of our common stock (“CTO Private Placement”). Included in the Offering was CTO’s purchase of i 421,053 shares of our common stock for $ i 8.0 million, representing a cash investment by CTO of $ i 15.5 million. A total of $ i 125.9 million of proceeds from the Offering were utilized to acquire i 15 properties in our initial portfolio. The remaining i five properties in our initial portfolio were contributed by CTO in exchange for i 1,223,854 OP Units for a value of $ i 23.3 million based on the IPO Price. The Company incurred a total of $ i 12.0 million of transaction costs, which included underwriting fees of $ i 9.4 million. Upon completion of the Offering, the CTO Private Placement, and the other transactions executed at the time of our listing on the New York Stock Exchange (the “NYSE”) under the symbol “PINE” (collectively defined as the “Formation Transactions”), CTO owned i 22.3% of our outstanding common stock (assuming the OP Units issued to CTO in the Formation Transactions are exchanged for shares of our common stock on a i one-for-one basis).
We conduct the substantial majority of our operations through, and substantially all of our assets are held by, the Operating Partnership. Our wholly owned subsidiary, Alpine Income Property GP, LLC (“PINE GP”), is the sole general partner of the Operating Partnership. As of June 30, 2021, we have a total ownership interest in the Operating Partnership of i 87.3%, with CTO holding, directly and indirectly, a i 9.4% ownership interest in the Operating Partnership. The remaining i 3.3% ownership interest is held by an unrelated third party in connection with the issuance of i 424,951 OP Units valued at $ i 8.0 million in the aggregate, or $ i 18.85 per unit, based on the Company’s trailing ten day average closing share price at the time of issuance. The i 424,951 OP Units were issued as partial consideration for the portfolio of i nine net lease properties acquired on June 30, 2021 (see Note 3, “Income Property Portfolio”). Our interest in the Operating Partnership generally entitles us to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to our percentage ownership. We, through PINE GP, generally have the exclusive power under the partnership agreement to manage and conduct the business and affairs of the Operating Partnership, subject to certain approval and voting rights of the limited partners. Our Board of Directors (the “Board”) manages our business and affairs.
/9
The Company has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least i 90% of the Company’s annual REIT taxable income, without regard to the dividends paid deduction or net capital gain, to its stockholders (which is computed and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles). As a REIT, the Company is generally not subject to U.S. federal corporate income tax to the extent of its distributions to stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income at regular corporate rates and generally will not be permitted to qualify for treatment as a REIT for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. Even if the Company qualifies for taxation as a REIT, the Company may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income.
COVID-19 PANDEMIC
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has continued to cause significant volatility in the U.S. and international markets, and in many industries, business activity has experienced periods of almost complete shutdown. There continues to be uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies.
Contractual Base Rent (“CBR”) represents the amount owed to the Company under the current terms of its lease agreements. As a result of the COVID-19 Pandemic, during the year ended December 31, 2020, the Company agreed to defer or abate certain CBR in exchange for additional lease term or other lease enhancing additions. Repayments of the remaining balance of deferred CBR began in the third quarter of 2020, with payments continuing, in some cases, through mid-year 2022.
iNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
iUSE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period presented. Actual results could differ from those estimates.
Among other factors, fluctuating market conditions that can exist in the national real estate markets and the volatility and uncertainty in the financial and credit markets make it possible that the estimates and assumptions, most notably those related to PINE’s investment in income properties, could change materially due to continued volatility in the real estate and financial markets, or as a result of a significant dislocation in those markets.
iLONG-LIVED ASSETS
The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 360-10, Property, Plant, and Equipment in conducting its impairment analyses. The Company reviews the recoverability of long-lived assets, primarily real estate, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Examples of situations considered to be triggering events include: a substantial decline in operating cash flows during the period, a current or projected loss from operations, an income property not fully leased or leased at rates that are less than current market rates, and any other quantitative or qualitative events deemed significant by management. Long-lived assets are evaluated for impairment by using an undiscounted cash flow approach, which considers future estimated capital expenditures. Impairment of long-lived assets is measured at fair value less cost to sell.
/10
PURCHASE ACCOUNTING FOR ACQUISITIONS OF REAL ESTATE SUBJECT TO A LEASE
Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. We evaluate each acquisition transaction to determine whether the acquired asset meets the definition of a business. Under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
In accordance with FASB guidance, 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 capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the management believes that it is likely that the tenant will renew the lease upon expiration, in which case the Company amortizes the value attributable to the renewal over the renewal period. The value of in-place leases and leasing costs are amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.
i
INCOME PROPERTY LEASE REVENUE
The rental arrangements associated with the Company’s income property portfolio are classified as operating leases. The Company recognizes lease income on these properties on a straight-line basis over the term of the lease. Accordingly, contractual lease payment increases are recognized evenly over the term of the lease. The periodic difference between lease income recognized under this method and contractual lease payment terms (i.e., straight-line rent) is recorded as a deferred operating lease receivable and is included in straight-line rent adjustment on the accompanying consolidated balance sheets. The Company’s leases provide for reimbursement from tenants for variable lease payments including common area maintenance, insurance, real estate taxes and other operating expenses. A portion of our variable lease payment revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred and accrued.
The collectability of tenant receivables and straight-line rent adjustments is determined based on, among other things, the aging of the tenant receivable, management’s evaluation of credit risk associated with the tenant and industry of the tenant, and a review of specifically identified accounts using judgment. As of June 30, 2021 and December 31, 2020, the Company had recorded an allowance for doubtful accounts of $ i i 0.1 / million.
/i
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, bank demand accounts, and money market accounts having original maturities of 90 days or less. The Company’s bank balances as of June 30, 2021 and December 31, 2020 include certain amounts over the Federal Deposit Insurance Corporation limits. The carrying value of cash and cash equivalents is reported at Level 1 in the fair value hierarchy, which represents valuation based upon quoted prices in active markets for identical assets or liabilities.
11
RESTRICTED CASH
Restricted cash totaled $ i 2.2 million at June 30, 2021, of which $ i 0.6 million is being held in a capital replacement reserve account in connection with our financing of i six income properties and $ i 1.6 million is being held in an escrow account for the repayment of the $ i 1.6 million in mortgage notes which were repaid on July 1, 2021.
/
iDERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY
Interest Rate Swaps. The Company accounts for its cash flow hedging derivatives in accordance with FASB ASC Topic 815-20, Derivatives and Hedging. Depending upon the hedge’s value at each balance sheet date, the derivatives are included in either other assets or accounts payable, accrued expenses, and other liabilities on the consolidated balance sheet at its fair value. On the date each interest rate swap was entered into, the Company designated the derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt liabilities.
The Company documented the relationship between the hedging instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transactions. At the hedges’ inception, the Company formally assessed whether the derivatives that are used in hedging the transactions are highly effective in offsetting changes in cash flows of the hedged items, and we will continue to do so on an ongoing basis. As the terms of the interest rate swaps and the associated debts are identical, both hedging instruments qualify for the shortcut method, therefore, it is assumed that there is no hedge ineffectiveness throughout the entire term of the hedging instruments.
Changes in fair value of the hedging instruments that are highly effective and designated and qualified as cash-flow hedges are recorded in other comprehensive income and loss, until earnings are affected by the variability in cash flows of the designated hedged items (see Note 9, “Interest Rate Swaps”).
iFAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company’s financial assets and liabilities including cash and cash equivalents, restricted cash, accounts receivable included in other assets, accounts payable, and accrued expenses and other liabilities at June 30, 2021 and December 31, 2020, approximate fair value because of the short maturity of these instruments. The carrying value of the Company’s Credit Facility, hereinafter defined, as of June 30, 2021 and December 31, 2020, approximates current market rates for revolving credit arrangements with similar risks and maturities. The Company estimates the fair value of its mortgage notes payable and Term Loan, hereinafter defined, based on incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument.
iFAIR VALUE MEASUREMENTS
The Company’s estimates of fair value of financial and non-financial assets and liabilities is based on the framework established by GAAP. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. GAAP describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:
| ● | Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
12
| ● | Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
iCONCENTRATION OF RISK
Certain of the tenants in the portfolio of i i 71 / properties accounted for more than 10% of total revenues during the six months ended June 30, 2021 and 2020.
During the six months ended June 30, 2021, the properties leased to Wells Fargo Bank, NA represented i 15% of total revenues. During the six months ended June 30, 2020, the properties leased to Wells Fargo Bank, NA and Hilton Grand Vacations represented i 21% and i 14% of total revenues, respectively.
As of June 30, 2021 and December 31, 2020, based on square footage, i 13% and i 17%, respectively, of the Company’s real estate portfolio was located in the State of Florida and i 12% and i 15%, respectively, of the Company’s real estate portfolio was located in the State of North Carolina. Additionally, as of June 30, 2021, more than i i 10 / %of the Company’s real estate portfolio, based on square footage, was located in the State of Texas and more than i 10% of the Company’s real estate portfolio was located in the States of Oregon and Michigan as of December 31, 2020.
/
iRECLASSIFICATIONS
Certain items in the consolidated balance sheet as of December 31, 2020 have been reclassified to conform to the presentation as of March 31, 2021. Specifically, in the first quarter of 2021, the Company reclassified deferred financing costs, net of accumulated amortization, as a component of other assets on the accompanying consolidated balance sheet. Accordingly, deferred financing costs of $ i 0.9 million, net of accumulated amortization of $ i 0.2 million, were reclassified from long-term debt to other assets as of December 31, 2020. Additionally, in the second quarter of 2021, the Company increased non-cash compensation for the six months ended June 30, 2020 by $ i 0.03 million through a reclassification from accounts payable, accrued expenses, and other liabilities within operating activities on the accompanying consolidated statements of cash flows which is the result of timing related to the issuance of shares for director retainers.
/
iNOTE 3. INCOME PROPERTY PORTFOLIO
As of June 30, 2021, the Company’s income property portfolio consisted of i 71 properties with total square footage of i 2.3 million.
Leasing revenue consists of long-term rental revenue from retail and office income properties, which is recognized as earned, using the straight-line method over the life of each lease.
iThe components of leasing revenue are as follows (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended |
| Six Months Ended | ||||||||
| | | | | ||||||||
Lease Income | | | | | | | | | | | | |
Lease Payments | | $ | i 5,986 | | $ | i 4,229 | | $ | i 11,432 | | $ | i 8,041 |
Variable Lease Payments | | | i 611 | | | i 362 | | | i 1,055 | | | i 721 |
Total Lease Income | | $ | i 6,597 | | $ | i 4,591 | | $ | i 12,487 | | $ | i 8,762 |
/13
Minimum Future Rental Receipts. Minimum future rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to June 30, 2021, are summarized as follows (in thousands):
| | | |
Year Ending December 31, |
| Amounts | |
Remainder of 2021 | | $ | i 14,397 |
2022 | | | i 28,593 |
2023 | | | i 28,472 |
2024 | | | i 28,042 |
2025 | | | i 27,164 |
2026 and thereafter (cumulative) | | | i 103,482 |
Total | | $ | i 230,150 |
2021 Activity. During the six months ended June 30, 2021, the Company acquired i 23 income properties for a combined purchase price of $ i 103.2 million, or an acquisition cost of $ i 103.8 million including capitalized acquisition costs. Of the total acquisition cost, $ i 34.1 million was allocated to land, $ i 57.5 million was allocated to buildings and improvements, $ i 13.9 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $ i 1.5 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was i 8.3 years at acquisition. i No income properties were disposed of during the six months ended June 30, 2021.
14
The net lease income properties acquired during the six months ended June 30, 2021 are described below:
i | | | | | | | | | | | |
Description | | Location | | Date of Acquisition | | Square-Feet | | Purchase Price ($000's) | | Remaining Lease Term at Acquisition Date (in years) | |
Dollar General | | Cut and Shoot, TX | | i 1/25/2021 | | i 9,096 | | $ | i 1,727 | | i 14.8 |
Dollar General | | Del Rio, TX | | i 1/25/2021 | | i 9,219 | | | i 1,403 | | i 14.0 |
Dollar General | | Seguin, TX | | i 1/25/2021 | | i 9,155 | | | i 1,290 | | i 14.1 |
At Home | | Canton, OH | | i 3/9/2021 | | i 89,902 | | | i 8,571 | (1) | i 8.4 |
Pet Supplies Plus | | Canton, OH | | i 3/9/2021 | | i 8,400 | | | i 1,135 | (1) | i 6.6 |
Salon Lofts | | Canton, OH | | i 3/9/2021 | | i 4,000 | | | i 694 | (1) | i 7.0 |
Sportsman Warehouse | | Albuquerque, NM | | i 3/29/2021 | | i 48,974 | | | i 7,100 | | i 8.4 |
Burlington Stores, Inc. | | North Richland Hills, TX | | i 4/23/2021 | | i 70,891 | | | i 11,528 | | i 7.8 |
Academy Sports | | Florence, SC | | i 6/22/2021 | | i 58,410 | | | i 7,650 | | i 7.7 |
Big Lots | | Durant, OK | | i 6/25/2021 | | i 36,794 | | | i 1,836 | (2) | i 5.5 |
Orscheln | | Durant, OK | | i 6/25/2021 | | i 37,965 | | | i 2,017 | (2) | i 1.7 |
Lowe's | | Katy, TX | | i 6/30/2021 | | i 131,644 | | | i 14,672 | | i 11.1 |
Harris Teeter | | Charlotte, NC | | i 6/30/2021 | | i 45,089 | | | i 8,273 | | i 6.8 |
Rite Aid | | Renton, WA | | i 6/30/2021 | | i 16,280 | | | i 7,200 | | i 5.1 |
Walgreens | | Clermont, FL | | i 6/30/2021 | | i 13,650 | | | i 5,085 | | i 7.2 |
Big Lots | | Germantown, MD | | i 6/30/2021 | | i 25,589 | | | i 4,670 | | i 9.6 |
Big Lots | | Phoenix, AZ | | i 6/30/2021 | | i 34,512 | | | i 4,599 | | i 9.6 |
Circle K | | Indianapolis, IN | | i 6/30/2021 | | i 4,283 | | | i 2,800 | (3) | i 3.4 |
Burger King | | Plymouth, NC | | i 6/30/2021 | | i 3,142 | | | i 1,736 | (3) | i 6.8 |
Dollar Tree | | Demopolis, AL | | i 6/30/2021 | | i 10,159 | | | i 1,615 | (3) | i 8.7 |
Firestone | | Pittsburgh, PA | | i 6/30/2021 | | i 10,629 | | | i 1,468 | (3) | i 7.8 |
Advance Auto Parts | | Ware, MA | | i 6/30/2021 | | i 6,889 | | | i 1,396 | (3) | i 3.6 |
Grease Monkey | | Stockbridge, GA | | i 6/30/2021 | | i 1,846 | | | i 1,318 | (3) | i 12.3 |
Hardee's | | Boaz, AL | | i 6/30/2021 | | i 3,542 | | | i 1,185 | (3) | i 9.4 |
Schlotzsky's | | Sweetwater, TX | | i 6/30/2021 | | i 2,431 | | | i 1,147 | (3) | i 14.0 |
Advance Auto Parts | | Athens, GA | | i 6/30/2021 | | i 6,871 | | | i 1,127 | (3) | i 3.6 |
| | Total / Weighted Average | | i 699,362 | | $ | i 103,242 | | i 8.8 | ||
| (1) | Tenants represent the acquisition of i one property for a purchase price of $ i 10.4 million which was allocated based on cash base rent in place at the time of acquisition. |
| (2) | Tenants represent the acquisition of i one property for a purchase price of $ i 3.9 million which was allocated based on cash base rent in place at the time of acquisition. |
| (3) | The aggregate purchase price of $ i 13.8 million was funded through the partial consideration issuance of i 424,951 OP Units valued at $ i 8.0 million, see Note 10, “Equity.” |
2020 Activity. During the six months ended June 30, 2020, the Company acquired i 11 income properties for a combined purchase price of $ i 75.4 million, or an acquisition cost of $ i 76.0 million including capitalized acquisition costs. Of the total acquisition cost, $ i 22.5 million was allocated to land, $ i 42.2 million was allocated to buildings and improvements, $ i 12.4 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $ i 1.1 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was i 9.3 years at acquisition. i No income properties were disposed of during the six months ended June 30, 2020.
15
The net lease income properties acquired during the six months ended June 30, 2020 are described below:
| | | | | | | | | | | |
Description | | Location | | Date of Acquisition | | Square-Feet | | Purchase Price ($000's) | | Remaining Lease Term at Acquisition Date (in years) | |
7-Eleven | | Austin, TX | | i 1/13/2020 | | i 6,400 | | $ | i 5,762 | | i 15.0 |
7-Eleven | | Georgetown, TX | | i 1/13/2020 | | i 7,726 | | | i 4,301 | | i 15.0 |
Conn's HomePlus | | Hurst, TX | | i 1/10/2020 | | i 37,957 | | | i 6,100 | | i 11.6 |
Lehigh Gas Wholesale Services, Inc. | | Highland Heights, KY | | i 2/03/2020 | | i 2,578 | | | i 4,250 | | i 10.8 |
American Multi-Cinema, Inc. | | Tyngsborough, MA | | i 2/19/2020 | | i 39,474 | | | i 7,055 | | i 10.1 |
Hobby Lobby | | Tulsa, OK | | i 2/28/2020 | | i 84,180 | | | i 12,486 | | i 10.8 |
Long John Silver's | | Tulsa, OK | | i 2/28/2020 | | i 3,000 | | | i 264 | | N/A |
Old Time Pottery | | Orange Park, FL | | i 2/28/2020 | | i 84,180 | | | i 6,312 | | i 10.4 |
Freddy's Frozen Custard | | Orange Park, FL | | i 2/28/2020 | | i 3,200 | | | i 303 | | i 6.8 |
Hobby Lobby | | Arden, NC | | i 6/24/2020 | | i 55,000 | | | i 7,987 | | i 11.2 |
Walmart | | Howell, MI | | i 6/30/2020 | | i 214,172 | | | i 20,590 | | i 6.6 |
| | Total / Weighted Average | | i 537,867 | | $ | i 75,410 | | i 10.2 | ||
iNOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS
iThe following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at June 30, 2021 and December 31, 2020 (in thousands):
| | | | | | | | | | | | |
| | | ||||||||||
|
| Carrying Value |
| Estimated Fair Value |
| Carrying Value |
| Estimated Fair Value | ||||
Cash and Cash Equivalents - Level 1 | | $ | i 6,294 | | $ | i 6,294 | | $ | i 1,894 | | $ | i 1,894 |
Restricted Cash - Level 1 | | $ | i 2,190 | | $ | i 2,190 | | $ | — | | $ | — |
Long-Term Debt - Level 2 | | $ | i 140,806 | | $ | i 143,516 | | $ | i 106,809 | | $ | i 106,809 |
The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
iThe following tables present the fair value of assets (liabilities) measured on a recurring basis by Level as of June 30, 2021 and December 31, 2020 (in thousands):
| | | | | | | | | | | | |
| | | | | Fair Value at Reporting Date Using | |||||||
|
| Fair Value |
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
| Significant Other Observable Inputs (Level 2) |
| Significant Unobservable Inputs (Level 3) | ||||
| | | | | | | | | | | | |
Credit Facility Interest Rate Swap (1) | | $ | i 151 | | $ | — | | $ | i 151 | | $ | — |
Term Loan Interest Rate Swap (2) | | $ | i 29 | | $ | — | | $ | i 29 | | $ | — |
| | | | | | | | | | | | |
Credit Facility Interest Rate Swap (1) | | $ | ( i 481) | | $ | — | | $ | ( i 481) | | $ | — |
Term Loan Interest Rate Swap (2) | | $ | — | | $ | — | | $ | — | | $ | — |
| (1) | Effective April 30, 2020, the Company utilized an interest rate swap to achieve a fixed interest rate of i 0.48% plus the applicable spread on $ i 50.0 million of the outstanding balance on the Credit Facility (hereinafter defined). |
| (2) | Effective May 21, 2021, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of i 0.81% plus the applicable spread on the $ i 60.0 million outstanding Term Loan (hereinafter defined) balance. |
16
NOTE 5. INTANGIBLE ASSETS AND LIABILITIES
iIntangible assets and liabilities consist 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 fair values. Intangible assets and liabilities consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
| | | | | | |
| | As of | ||||
| | | ||||
Intangible Lease Assets: | | | | | | |
Value of In-Place Leases | | $ | i 37,281 | | $ | i 27,494 |
Value of Above Market In-Place Leases | | | i 2,558 | | | i 2,187 |
Value of Intangible Leasing Costs | | | i 14,803 | | | i 11,459 |
Sub-total Intangible Lease Assets | | | i 54,642 | | | i 41,140 |
Accumulated Amortization | | | ( i 6,837) | | | ( i 4,259) |
Sub-total Intangible Lease Assets—Net | | | i 47,805 | | | i 36,881 |
Intangible Lease Liabilities: | | | | | | |
Value of Below Market In-Place Leases | | | ( i 5,236) | | | ( i 3,674) |
Sub-total Intangible Lease Liabilities | | | ( i 5,236) | | | ( i 3,674) |
Accumulated Amortization | | | i 582 | | | i 375 |
Sub-total Intangible Lease Liabilities—Net | | | ( i 4,654) | | | ( i 3,299) |
Total Intangible Assets and Liabilities—Net | | $ | i 43,151 | | $ | i 33,582 |
iThe following table reflects the net amortization of intangible assets and liabilities during the three and six months ended June 30, 2021 and 2020 (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Amortization Expense | | $ | i 1,303 | | $ | i 847 | | $ | i 2,498 | | $ | i 1,608 |
Increase to Income Properties Revenue | | | ( i 50) | | | ( i 29) | | | ( i 91) | | | ( i 48) |
Net Amortization of Intangible Assets and Liabilities | | $ | i 1,253 | | $ | i 818 | | $ | i 2,407 | | $ | i 1,560 |
iThe estimated future amortization expense (income) related to net intangible assets and liabilities is as follows (in thousands):
| | | | | | | | | |
Year Ending December 31, | | Future Amortization Expense | | Future Accretion to Income Property Revenue | | Net Future Amortization of Intangible Assets and Liabilities | |||
Remainder of 2021 | | $ | i 3,213 | | $ | ( i 156) | | $ | i 3,057 |
2022 | | | i 6,426 | | | ( i 312) | | | i 6,114 |
2023 | | | i 6,424 | | | ( i 312) | | | i 6,112 |
2024 | | | i 6,194 | | | ( i 300) | | | i 5,894 |
2025 | | | i 5,740 | | | ( i 275) | | | i 5,465 |
2026 and thereafter | | | i 17,639 | | | ( i 1,130) | | | i 16,509 |
Total | | $ | i 45,636 | | $ | ( i 2,485) | | $ | i 43,151 |
/As of June 30, 2021, the weighted average amortization period of both the total intangible assets and liabilities was i 8.9 years.
/17
iNOTE 6. OTHER ASSETS
iOther assets consisted of the following (in thousands):
| | | | | | |
| | As of | ||||
| | | ||||
Tenant Receivables | | $ | i 46 | | $ | i 164 |
Accrued Unbilled Tenant Receivables—Net of Allowance for Doubtful Accounts (1) | | | i 552 | | | i 119 |
Prepaid Insurance | | | i 251 | | | i 606 |
Deposits on Acquisitions | | | i 350 | | | i 100 |
Prepaid and Deposits—Other | | | i 187 | | | i 442 |
Deferred Financing Costs—Net | | | i 523 | | | i 650 |
Interest Rate Swaps | | | i 180 | | | — |
Total Other Assets | | $ | i 2,089 | | $ | i 2,081 |
| (1) | As of June 30, 2021 and December 31, 2020, includes $ i i 0.1 / million allowance for doubtful accounts. |
NOTE 7. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
iAccounts payable, accrued expenses and other liabilities consisted of the following (in thousands):
| | | | | | |
| | As of | ||||
| | | ||||
Accounts Payable | | $ | i 246 | | $ | i 450 |
Accrued Expenses | | | i 895 | | | i 474 |
Due to CTO | | | i 1,281 | (1) | | i 579 |
Interest Rate Swap | | | — | | | i 481 |
Total Accounts Payable, Accrued Expenses, and Other Liabilities | | $ | i 2,422 | | $ | i 1,984 |
| (1) | As of June 30, 2021, includes $ i 0.6 million due to CTO for the transference of funds held in a capital replacement reserve account associated with the financing of i six net lease properties (the “CMBS Portfolio”) acquired from CTO on June 30, 2021. |
iNOTE 8. LONG-TERM DEBT
iAs of June 30, 2021, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):
| | | | | | | |
| | Face Value Debt | | Stated Interest Rate | | Maturity Date | |
Credit Facility (1) | | $ | i 50,000 | |
30-Day LIBOR + | | November 2023 |
Term Loan (2) | | | i 60,000 | | 30-Day LIBOR + | | May 2026 |
Mortgage Note Payable – CMBS Portfolio | | | i 30,000 | | i 4.33% | | October 2034 |
Mortgage Notes Payable | | | i 1,622 | | N/A | | July 2021 (3) |
Total Debt/Weighted-Average Rate | | $ | i 141,622 | | i 2.50% | | |
| (1) | Effective April 30, 2020, the Company utilized an interest rate swap to achieve a fixed interest rate of i 0.48% plus the applicable spread on $ i 50.0 million of the outstanding balance on the Credit Facility (hereinafter defined). |
| (2) | Effective May 21, 2021, the Company utilized an interest rate swap to achieve a weighted average fixed interest rate of i 0.81% plus the applicable spread on the $ i 60.0 million Term Loan (hereinafter defined) balance. |
| (3) | Mortgage notes payable assumed in connection with the acquisition of i two net lease properties during the three months ended June 30, 2021 which was repaid on July 1, 2021. |
/18
Credit Facility. On November 26, 2019, the Company and the Operating Partnership entered into a credit agreement (the “Credit Facility Credit Agreement”) with a group of lenders for a senior unsecured revolving credit facility (the “Credit Facility”) in the maximum aggregate initial original principal amount of up to $ i 100.0 million. The Credit Facility includes an accordion feature that may allow the Operating Partnership to increase the availability under the Credit Facility by an additional $ i 50.0 million, subject to meeting specified requirements and obtaining additional commitments from lenders. BMO Capital Markets Corp. and Raymond James Bank, N.A. are joint lead arrangers and joint bookrunners, with Bank of Montreal (“BMO”) as administrative agent. The Credit Facility has a base term of i four years, with the ability to extend the base term for i one year.
On June 30, 2020, the Company and the Operating Partnership executed the first amendment to the Credit Facility Credit Agreement whereby the tangible net worth covenant was adjusted to be more reflective of market terms.
On October 16, 2020, the Company and the Operating Partnership executed the second amendment to the Credit Facility (the “Second Amendment”), with the addition of i two lenders, Huntington National Bank and Truist Bank. As a result of the Second Amendment, the Credit Facility has a total borrowing capacity of $ i 150.0 million with the ability to increase that capacity up to $ i 200.0 million during the term, utilizing an accordion feature, subject to lender approval.
On May 19, 2021, the Company and the Operation Partnership executed the third amendment to the Credit Facility (the “Third Amendment”). Among other things, the Third Amendment revised the Credit Facility Credit Agreement to provide that as of the last day of each fiscal quarter, the Operating Partnership shall not permit the ratio of Unsecured Indebtedness to Borrowing Base Value (as defined in the Credit Facility Credit Agreement) to be greater than i 0.60 to 1:00. Prior to the Third Amendment, the Credit Facility Credit Agreement provided that as of the last day of each fiscal quarter, the Operating Partnership could not permit the ratio of Unsecured Indebtedness to Total Asset Value (as defined in the Credit Facility Credit Agreement) to be greater than i 0.60 to 1:00.
Pursuant to the Credit Facility Credit Agreement, the indebtedness outstanding under the Credit Facility accrues at a rate ranging from the 30-day LIBOR plus i 135 basis points to the 30-day LIBOR plus i 195 basis points, based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Operating Partnership, as defined in the Credit Agreement. The Credit Facility also accrues a fee of i 15 to i 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than i 50% of the total borrowing capacity.
The Operating Partnership is subject to customary restrictive covenants under the Credit Facility and the Term Loan (hereinafter defined), including, but not limited to, limitations on the Operating Partnership’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. The Credit Facility and Term Loan also contain financial covenants covering the Operating Partnership, including but not limited to, tangible net worth and fixed charge coverage ratios.
At June 30, 2021, the current commitment level under the Credit Facility was $ i 150.0 million and the Company had an outstanding balance of $ i 50.0 million.
Term Loan. On May 21, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a term loan credit agreement (the “Term Loan Credit Agreement”) for a term loan (the “Term Loan”) in an aggregate principal amount of $ i 60.0 million with a maturity of i five years. Truist Securities, Inc. is acting as sole lead arranger and sole book runner, with Truist Bank, N.A. as administrative agent. Truist Bank, N.A., Bank of Montreal, Raymond James Bank, N.A. and Stifel Bank are lenders under the Term Loan. In addition, the Operating Partnership may request up to i three incremental term loan commitments in an aggregate amount not to exceed $ i 100.0 million.
Mortgage Notes Payable. On June 30, 2021, in connection with the acquisition of the CMBS Portfolio from CTO, the Company assumed an existing $ i 30.0 million secured mortgage, which bears a fixed interest rate of i 4.33%. The mortgage note matures in October 2034 and is prepayable without penalty beginning in October 2024. Additionally, on June 30, 2021, in connection with the acquisition of i two net lease properties from an unrelated third party, the Company assumed mortgage notes totaling an aggregate of $ i 1.6 million, which balance was repaid on July 1, 2021.
19
Long-term debt as of June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
| | | | | | | | | | | | |
| | | ||||||||||
|
| Total |
| Due Within One Year |
| Total |
| Due Within One Year | ||||
Credit Facility | | $ | i 50,000 | | $ | — | | $ | i 106,809 | | $ | — |
Term Loan | | | i 60,000 | | | — | | | — | | | — |
Mortgage Note Payable – CMBS Portfolio | | | i 30,000 | | | — | | | — | | | — |
Mortgage Notes Payable | | | i 1,622 | (1) | | i 1,622 | | | — | | | — |
Financing Costs, net of accumulated amortization | | | ( i 816) | | | — | | | — | | | — |
Total Long-Term Debt | | $ | i 140,806 | | $ | i 1,622 | | $ | i 106,809 | | $ | — |
| (1) | Mortgage notes payable assumed in connection with the acquisition of i two net lease properties during the three months ended June 30, 2021 which was repaid on July 1, 2021. |
iPayments applicable to reduction of principal amounts as of June 30, 2021 will be required as follows (in thousands):
| | | |
Year Ending December 31, |
| Amount | |
Remainder of 2021 | | $ | i 1,622 |
2022 | | | i — |
2023 | | | i 50,000 |
2024 | | | i — |
2025 | | | i — |
2026 and thereafter | | | i 90,000 |
Total Long-Term Debt - Face Value | | $ | i 141,622 |
iThe carrying value of long-term debt as of June 30, 2021 consisted of the following (in thousands):
| | | |
|
| Total | |
Current Face Amount | | $ | i 141,622 |
Financing Costs, net of accumulated amortization | | | ( i 816) |
Total Long-Term Debt | | $ | i 140,806 |
In addition to the $ i 0.8 million of financing costs, net of accumulated amortization included in the table above, as of June 30, 2021, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $ i 0.5 million which is included in other assets on the consolidated balance sheets. These costs are amortized on a straight-line basis over the term of the Credit Facility and are included in interest expense in the Company’s accompanying consolidated statements of operations.
iThe following table reflects a summary of interest expense incurred and paid during the three and six months ended June, 2021 and 2020 (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Interest Expense | | $ | i 594 | | $ | i 301 | | $ | i 1,084 | | $ | i 505 |
Amortization of Deferred Financing Costs to Interest Expense | | | i 84 | | | i 43 | | | i 149 | | | i 88 |
Total Interest Expense | | $ | i 678 | | $ | i 344 | | $ | i 1,233 | | $ | i 593 |
| | | | | | | | | | | | |
Total Interest Paid | | $ | i 623 | | $ | i 337 | | $ | i 1,105 | | $ | i 501 |
The Company was in compliance with all of its debt covenants as of June 30, 2021.
20
NOTE 9. INTEREST RATE SWAPS
During April 2020, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for $ i 50.0 million of the outstanding balance on the Credit Facility as discussed in Note 8, “Long-Term Debt.” During the six months ended June 30, 2021, the interest rate swap agreement was i 100% effective. Accordingly, the change in fair value on the interest rate swap has been included in accumulated other comprehensive income (loss). As of June 30, 2021, the fair value of our interest rate swap agreement, which was a gain of approximately $ i 0.15 million, was included in other assets on the consolidated balance sheets. The interest rate swap was effective on April 30, 2020 and matures on November 26, 2024. The interest rate swap fixed the variable rate debt on the notional amount of related debt of $ i 50.0 million to a fixed rate of i 0.48% plus the applicable spread.
During May 2021, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for the $ i 60.0 million outstanding balance on the Term Loan as defined in Note 8, “Long-Term Debt.” During the six months ended June 30, 2021, the interest rate swap agreement was i 100% effective. Accordingly, the change in fair value on the interest rate swap has been included in accumulated other comprehensive income (loss). As of June 30, 2021, the fair value of our interest rate swap agreement, which was a gain of $ i 0.03 million, was included in other assets on the consolidated balance sheets. The interest rate swap was effective on May 21, 2021 and matures on May 21, 2026. The interest rate swap fixed the variable rate debt on the notional amount of related debt of $ i 60.0 million to a fixed rate of i 0.81% plus the applicable spread.
/ iNOTE 10. EQUITY
SHELF REGISTRATION
On December 1, 2020, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, warrants, rights, and units with a maximum aggregate offering price of up to $ i 350.0 million. The Securities and Exchange Commission declared the Form S-3 effective on December 11, 2020.
ATM PROGRAM
On December 14, 2020, the Company implemented a $ i 100.0 million “at-the-market” equity offering program (the “2020 ATM Program”) pursuant to which the Company may sell, from time to time, shares of the Company’s common stock. During the three months ended June 30, 2021, the Company sold i 176,028 shares under the 2020 ATM Program for $ i 3.2 million at a weighted average price of $ i 18.06 per share, generating net proceeds of $ i 3.1 million after deducting fees totaling $ i 0.05 million paid on the sales. During the six months ended June 30, 2021, the Company sold i 610,229 shares under the 2020 ATM Program for $ i 11.1 million at a weighted average price of $ i 18.19 per share, generating net proceeds of $ i 10.9 million after deducting fees totaling $ i 0.2 million paid on the sales.
FOLLOW-ON PUBLIC OFFERING
In June 2021, the Company completed a follow-on public offering of i 3,220,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional i 420,000 shares of common stock. Upon closing, the Company issued i 3,220,000 shares and received net proceeds of $ i 54.3 million, after deducting the underwriting discount and expenses.
NONCONTROLLING INTEREST
As of June 30, 2021, CTO holds, directly and indirectly, a i 9.4% noncontrolling ownership interest in the Operating Partnership as a result of i 1,223,854 OP Units issued to CTO at the time of the Company’s Formation Transactions, as further described in Note 1, “Business and Organization.” An additional i 3.3% noncontrolling ownership interest is held by an unrelated third party in connection with the issuance of i 424,951 OP Units valued at $ i 8.0 million, reflecting $ i 18.85 per unit, based on the Company’s trailing ten day average closing share price at the time of issuance. The i 424,951 OP Units were issued as partial consideration for the portfolio of i nine net lease properties acquired on June 30, 2021.
/21
DIVIDENDS
The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code. To qualify as a REIT, the Company must annually distribute, at a minimum, an amount equal to i 90% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and must distribute i 100% of its taxable income (including net capital gains) to eliminate corporate federal income taxes payable by the Company. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows. During the three and six months ended June 30, 2021, the Company declared and paid cash dividends on its common stock and OP Units of $ i 0.25 per share and $ i 0.49 per share, respectively.
iNOTE 11. COMMON STOCK AND EARNINGS PER SHARE
Basic earnings per common share are computed by dividing net income attributable to the Company for the period by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share are determined based on the assumption of the conversion of OP Units on a one-for-one basis using the treasury stock method at average market prices for the periods.
i
The following is a reconciliation of basic and diluted earnings per common share (in thousands, except share and per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | | $ | i 304 | | $ | i 240 | | $ | i 744 | | $ | i 253 |
| | | | | | | | | | | | |
Weighted Average Number of Common Shares Outstanding | | | i 8,853,259 | | | i 7,544,991 | | | i 8,212,902 | | | i 7,721,835 |
Common Shares Applicable to OP Units using Treasury Stock Method (1) | | | i 1,228,524 | | | i 1,223,854 | | | i 1,226,202 | | | i 1,223,854 |
Total Shares Applicable to Diluted Earnings per Share | | | i 10,081,783 | | | i 8,768,845 | | | i 9,439,104 | | | i 8,945,689 |
| | | | | | | | | | | | |
Per Common Share Data: | | | | | | | | | | | | |
Net Income Attributable to Alpine Income Property Trust, Inc. | | | | | | | | | | | | |
Basic | | $ | i 0.03 | | $ | i 0.03 | | $ | i 0.09 | | $ | i 0.03 |
Diluted | | $ | i 0.03 | | $ | i 0.03 | | $ | i 0.08 | | $ | i 0.03 |
| (1) | Represents the weighted average impact of i 1,648,805 shares underlying OP units including (i) i 1,223,854 shares underlying OP Units issued to CTO in connection with our Formation Transactions and (ii) i 424,951 shares underlying OP Units issued to an unrelated third party in connection with the acquisition of i nine net lease properties during the three months ended June 30, 2021. |
iNOTE 12. SHARE REPURCHASES
In March 2020, the Board approved a $ i 5.0 million stock repurchase program (the “$ i 5.0 Million Repurchase Program”). During the first half of 2020, the Company repurchased i 456,237 shares of its common stock on the open market for a total cost of $ i 5.0 million, or an average price per share of $ i 11.02 which completed the $ i 5.0 Million Repurchase Program. There were i no repurchases of the Company’s common stock during the six months ended June 30, 2021.
/22
NOTE 13. STOCK-BASED COMPENSATION
In connection with the closing of the IPO, the Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans. The purpose of the Equity Incentive Plans is to provide equity incentive opportunities to members of the Manager’s management team and employees who perform services for the Company, the Company’s independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to the Manager.
On November 26, 2019, in connection with the closing of the IPO, the Company granted restricted shares of common stock to each of the non-employee directors under the Individual Plan. Each of the non-employee directors received an award of i 2,000 restricted shares of common stock on November 26, 2019. The restricted shares will vest in substantially equal installments on each of the first, second and third anniversaries of the grant date. As of June 30, 2021, the first increment of this award had vested, leaving i 5,336 shares unvested. In addition, the restricted shares are subject to a holding period beginning on the grant date and ending on the date that the grantee ceases to serve as a member of the Board (the “Holding Period”). During the Holding Period, the restricted shares may not be sold, pledged or otherwise transferred by the grantee. Except for the grant of these i 8,000 restricted shares of Common Stock, the Company has not made any grants under the Equity Incentive Plans. Any future grants under the Equity Incentive Plans will be approved by the compensation committee of the Board. The 2019 non-employee director share awards had an aggregate grant date fair value of $ i 0.2 million. The Company’s determination of the grant date fair value of the i three-year vest restricted stock awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is recognized on a straight-line basis over the vesting period and is included in general and administrative expenses in the Company’s consolidated statements of operations. Award forfeitures are accounted for in the period in which they occur. During each of the three months ended June 30, 2021 and 2020, the Company recognized stock compensation expense totaling $ i i 0.01 / million. During each of the six months ended June 30, 2021 and 2020, the Company recognized stock compensation expense totaling $ i i 0.03 / million.
A summary of activity for these awards during the six months ended June 30, 2021 is presented below:
i
| | | | | | |
Non-Vested Restricted Shares | |
| Shares |
| Wtd. Avg. Fair Value | |
Outstanding at January 1, 2021 | | | i 5,336 | | $ | i 18.80 |
Granted | | | i — | | | i — |
Vested | | | i — | | | i — |
Expired | | | i — | | | i — |
Forfeited | | | i — | | | i — |
Non-Vested at June 30, 2021 | | | i 5,336 | | $ | i 18.80 |
As of June 30, 2021, there was $ i 0.07 million of unrecognized compensation cost related to the i three-year vest restricted shares, which will be recognized over a remaining period of i 1.4 years.
Each member of the Board has the option to receive his or her annual retainer in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer payment due to such director by the trailing i 20-day average price of the Company’s common stock as of the last business day of the calendar quarter, rounded down to the nearest whole number of shares. During the six months ended June 30, 2021, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $ i 0.1 million, or i 6,978 shares, of which i 3,453 shares were issued on April 1, 2021 and i 3,525 shares were issued on July 1, 2021. During the six months ended June 30, 2020, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $ i 0.1 million, or i 7,512 shares, of which i 4,098 shares were issued on April 1, 2020 and i 3,414 shares were issued on July 1, 2020.
i
/23
Stock compensation expense for the three and six months ended June 30, 2021 and 2020 is summarized as follows (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Stock Compensation Expense – Director Restricted Stock | | $ | i 13 | | $ | i 13 | | $ | i 25 | | $ | i 26 |
Stock Compensation Expense – Director Retainers Paid in Stock | | | i 66 | | | i 55 | | | i 127 | | | i 109 |
Total Stock Compensation Expense (1) | | $ | i 79 | | $ | i 68 | | $ | i 152 | | $ | i 135 |
| (1) | Director retainers are issued through additional paid in capital in arrears. Therefore, the change in additional paid in capital during the six months ended June 30, 2021 reported on the consolidated statements of stockholders’ equity does not agree to the total non-cash compensation reported on the consolidated statements of cash flows. |
iNOTE 14. RELATED PARTY MANAGEMENT COMPANY
We are externally managed by the Manager, a wholly owned subsidiary of CTO. In addition to the CTO Private Placement, CTO purchased from us $ i 8.0 million in shares of our common stock, or i 421,053 shares, in the IPO. Upon completion of the Formation Transactions, CTO owned i 22.3% of our outstanding common stock (assuming the OP Units issued to CTO in the Formation Transactions are exchanged for shares of our common stock on a i one-for-one basis).
On November 26, 2019, we entered into the Management Agreement with the Manager (the “Management Agreement”). Pursuant to the terms of the Management Agreement, our Manager manages, operates and administers our day-to-day operations, business and affairs, subject to the direction and supervision of the Board and in accordance with the investment guidelines approved and monitored by the Board. We pay our Manager a base management fee equal to i 0.375% per quarter of our “total equity” (as defined in the Management Agreement and based on a i 1.5% annual rate), calculated and payable in cash, quarterly in arrears.
Our Manager has the ability to earn an annual incentive fee based on our total stockholder return exceeding an i 8% cumulative annual hurdle rate (the “Outperformance Amount”) subject to a high-water mark price. We would pay our Manager an incentive fee to with respect to each annual measurement period in the amount of the greater of (i) $ i 0.00 and (ii) the product of (a) i 15% multiplied by (b) the Outperformance Amount multiplied by (c) the weighted average shares. i No incentive fee was due for the year ended December 31, 2020.
The initial term of the Management Agreement will expire on November 26, 2024 and will automatically renew for an unlimited number of successive i one-year periods thereafter, unless the agreement is not renewed or is terminated in accordance with its terms.
Our independent directors will review our Manager’s performance and the management fees annually and, following the initial term, the Management Agreement may be terminated annually upon the affirmative vote of two-thirds of our independent directors or upon a determination by the holders of a majority of the outstanding shares of our common stock, based upon (i) unsatisfactory performance by the Manager that is materially detrimental to us or (ii) a determination that the management fees payable to our Manager are not fair, subject to our Manager’s right to prevent such termination due to unfair fees by accepting a reduction of management fees agreed to by two-thirds of our independent directors. We may also terminate the Management Agreement for cause at any time, including during the initial term, without the payment of any termination fee, with i 30 days’ prior written notice from the Board. During the initial term of the Management Agreement, we may not terminate the Management Agreement except for cause.
We will pay directly or reimburse our Manager for certain expenses, if incurred by our Manager. We will not reimburse any compensation expenses incurred by our Manager or its affiliates. Expense reimbursements to our Manager will be made in cash on a quarterly basis following the end of each quarter. In addition, we will pay all of our operating expenses, except those specifically required to be borne by our Manager pursuant to the Management Agreement.
/24
During the three and six months ended June 30, 2021, the Company incurred management fee expenses which totaled $ i 0.7 million and $ i 1.4 million, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of the Manager in the amount of $ i 0.5 million and $ i 1.0 million for the three and six months ended June 30, 2021, respectively. During the three and six months ended June 30, 2020, the Company incurred management fee expenses which totaled $ i 0.6 million and $ i 1.3 million, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of the Manager in the amount of $ i 0.4 million and $ i 0.8 million for the three and six months ended June 30, 2020, respectively.
iThe following table represents amounts due from the Company to CTO (in thousands):
| | | | | | |
| | As of | ||||
Description |
|
| ||||
Management Fee due to CTO | | $ | i 721 | | $ | i 631 |
Other | | | i 560 | (1) | | ( i 52) |
Total (2) | | $ | i 1,281 | | $ | i 579 |
| (1) | Includes $ i 0.6 million due to CTO for the transference of funds held in a capital replacement reserve account associated with the financing of the CMBS Portfolio acquired from CTO on June 30, 2021. |
| (2) | Included in Accrued Expenses, see Note 7, “Accounts Payable, Accrued Expenses, and Other Liabilities”. |
Exclusivity and ROFO Agreement
On November 26, 2019, we also entered into an exclusivity and right of first offer (“ROFO”) agreement with CTO. During the term of the exclusivity and ROFO agreement, CTO will not, and will cause each of its affiliates (which for purposes of the exclusivity and ROFO agreement will not include our company and our subsidiaries) not to, acquire, directly or indirectly, a single-tenant, net leased property, unless CTO has notified us of the opportunity and we have affirmatively rejected the opportunity to acquire the applicable property or properties.
The terms of the exclusivity and ROFO agreement do not restrict CTO or any of its affiliates from providing financing for a third party’s acquisition of single-tenant, net leased properties or from developing and owning any single-tenant, net leased property.
Pursuant to the exclusivity and ROFO agreement, neither CTO nor any of its affiliates (which for purposes of the exclusivity and ROFO agreement does not include our company and our subsidiaries) may sell to any third party any single-tenant, net leased property that was owned by CTO or any of its affiliates as of the closing date of the IPO or that is developed and owned by CTO or any of its affiliates after the closing date of the IPO, without first offering us the right to purchase such property.
The term of the exclusivity and ROFO agreement will continue for so long as the Management Agreement with our Manager is in effect.
On April 6, 2021, the Company entered into a purchase and sale agreement with a certain subsidiary of CTO for the purchase of i one net lease property (the “Single Property”) for $ i 11.5 million. The acquisition of the Single Property was completed on April 23, 2021.
On April 2, 2021, the Company entered into a separate purchase and sale agreement with certain subsidiaries of CTO for the purchase of the CMBS Portfolio. The terms of the purchase and sale agreement, as amended on April 20, 2021, provided a total purchase price of $ i 44.5 million for the CMBS Portfolio. The acquisition of the CMBS Portfolio was completed on June 30, 2021.
The entry into the purchase and sale agreements, and subsequent completion of acquisitions, are a result of the Company exercising its right to purchase the Single Property and CMBS Portfolio under the ROFO agreement.
25
Conflicts of Interest
Conflicts of interest may exist or could arise in the future with CTO and its affiliates, including our Manager, the individuals who serve as our executive officers and executive officers of CTO, any individual who serves as a director of our company and as a director of CTO and any limited partner of the Operating Partnership. Conflicts may include, without limitation: conflicts arising from the enforcement of agreements between us and CTO or our Manager; conflicts in the amount of time that executive officers and employees of CTO, who are provided to us through our Manager, will spend on our affairs versus CTO’s affairs; and conflicts in future transactions that we may pursue with CTO and its affiliates. We do not generally expect to enter into joint ventures with CTO, but if we do so, the terms and conditions of our joint venture investment will be subject to the approval of a majority of disinterested directors of the Board.
In addition, we are subject to conflicts of interest arising out of our relationships with our Manager. Pursuant to the Management Agreement, our Manager is obligated to supply us with our senior management team. However, our Manager is not obligated to dedicate any specific CTO personnel exclusively to us, nor are the CTO personnel provided to us by our Manager obligated to dedicate any specific portion of their time to the management of our business. Additionally, our Manager is a wholly owned subsidiary of CTO. All of our executive officers are executive officers and employees of CTO and one of our officers (John P. Albright) is also a member of CTO’s board of directors. As a result, our Manager and the CTO personnel it provides to us may have conflicts between their duties to us and their duties to, and interests in, CTO.
We may acquire or sell single-tenant, net leased properties in which our Manager or its affiliates have or may have an interest. Similarly, our Manager or its affiliates may acquire or sell single-tenant, net leased properties in which we have or may have an interest. Although such acquisitions or dispositions may present conflicts of interest, we nonetheless may pursue and consummate such transactions. Additionally, we may engage in transactions directly with our Manager or its affiliates, including the purchase and sale of all or a portion of a portfolio asset. If we acquire a single-tenant, net leased property from CTO or one of its affiliates or sell a single-tenant, net leased property to CTO or one of its affiliates, the purchase price we pay to CTO or one of its affiliates or the purchase price paid to us by CTO or one of its affiliates may be higher or lower, respectively, than the purchase price that would have been paid to or by us if the transaction were the result of arms’ length negotiations with an unaffiliated third party.
In deciding whether to issue additional debt or equity securities, we will rely, in part, on recommendations made by our Manager. While such decisions are subject to the approval of the Board, our Manager is entitled to be paid a base management fee that is based on our “total equity” (as defined in the Management Agreement). As a result, our Manager may have an incentive to recommend that we issue additional equity securities at dilutive prices.
All of our executive officers are executive officers and employees of CTO. These individuals and other CTO personnel provided to us through our Manager devote as much time to us as our Manager deems appropriate. However, our executive officers and other CTO personnel provided to us through our Manager may have conflicts in allocating their time and services between us, on the one hand, and CTO and its affiliates, on the other. During a period of prolonged economic weakness or another economic downturn affecting the real estate industry or at other times when we need focused support and assistance from our Manager and the CTO executive officers and other personnel provided to us through our Manager, we may not receive the necessary support and assistance we require or that we would otherwise receive if we were self-managed.
Additionally, the exclusivity and ROFO agreement does contain exceptions to CTO’s exclusivity for opportunities that include only an incidental interest in single-tenant, net leased properties. Accordingly, the exclusivity and ROFO agreement will not prevent CTO from pursuing certain acquisition opportunities that otherwise satisfy our then-current investment criteria.
Our directors and executive officers have duties to our company under applicable Maryland law in connection with their management of our company. At the same time, PINE GP has fiduciary duties, as the general partner, to the Operating Partnership and to the limited partners under Delaware law in connection with the management of the Operating Partnership. These duties as a general partner to the Operating Partnership and its partners may come into conflict with the duties of our directors and executive officers to us. Unless otherwise provided for in the relevant partnership agreement, Delaware law generally requires a general partner of a Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest duties of loyalty and care and which generally prohibits such general partner from taking any action or engaging in any transaction as to which it has a conflict of interest. The partnership agreement provides that in the event of a conflict between the interests of our stockholders on the one hand and the limited
26
partners of the Operating Partnership on the other hand, PINE GP will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that so long as we own a controlling interest in the Operating Partnership, any such conflict that we, in our sole and absolute discretion, determine cannot be resolved in a manner not adverse to either our stockholders or the limited partners of the Operating Partnership shall be resolved in favor of our stockholders, and we shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the limited partners in connection with such decisions.
iNOTE 15. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of business. The Company is not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on the Company’s business or financial condition.
iNOTE 16. ASSETS HELD FOR SALE
The following is a summary of assets held for sale as of June 30, 2021 (in thousands). i One income property was classified as held for sale as of June 30, 2021. There were i no liabilities held for sale as of June 30, 2021. Additionally, there were i no assets or liabilities held for sale as of December 31, 2020.
i
| | | |
| | As of June 30, 2021 | |
Real Estate-Net | | $ | i 2,858 |
Intangible Lease Assets—Net | | | i 332 |
Intangible Lease Liabilities—Net | | | ( i 108) |
Total Assets Held for Sale | | $ | i 3,082 |
/
iNOTE 17. SUBSEQUENT EVENTS
The Company reviewed all subsequent events and transactions through July 22, 2021, the date the consolidated financial statements were issued. There were no reportable subsequent events or transactions.
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
When we refer to “we,” “us,” “our,” “PINE,” or “the Company,” we mean Alpine Income Property Trust, Inc. and its consolidated subsidiaries. References to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of Alpine Income Property Trust, Inc. included in this Quarterly Report on Form 10-Q. Some of the comments we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain factors that could cause actual results or events to differ materially from those the Company anticipates or projects are described in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Special Note Regarding Forward-Looking Statements
This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Certain statements contained in this report (other than statements of historical fact) are forward-looking statements. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Forward-looking statements are made based upon management’s expectations and beliefs concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.
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. These risks and uncertainties include, but are not limited to, the strength of the real estate market; the impact of a prolonged recession or downturn in economic conditions; our ability to successfully execute acquisition or development strategies; any loss of key management personnel; changes in local, regional, and national economic conditions affecting the real estate development business and income properties; the impact of competitive real estate activity; the loss of any major income property tenants; the ultimate geographic spread, severity and duration of pandemics such as the outbreak of COVID-19, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and our financial condition and results of operations; and the availability of capital. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.
See “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of these risks. Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
OVERVIEW
We are a real estate company that owns and operates a high-quality portfolio of commercial properties located in the United States. Our properties are generally leased on a long-term basis and located primarily in, or in close proximity to major metropolitan statistical areas, or MSAs, and in growth markets and other markets in the United States with favorable economic and demographic conditions. Our properties are primarily leased to industry leading, creditworthy tenants, many of which operate in industries we believe are resistant to the impact of e-commerce or defensive in nature against economic uncertainty or disruption. The properties in our portfolio are primarily triple-net leases which generally require the tenant to pay all of the property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance and certain capital expenditures. Our portfolio consists of 71 net leased retail and office properties located in 49 markets in 22 states. Twenty of these properties, representing our initial portfolio, were acquired
28
from CTO Realty Growth, Inc. (“CTO”) in the formation transactions, utilizing $125.9 million of proceeds from our initial public offering of our common stock (the “IPO”) and the issuance of 1,223,854 units of our operating partnership (the “OP Units”) that had an initial value of $23.3 million based on the IPO price of $19.00 per share (the “IPO Price”). The remaining 51 properties were acquired subsequent to the year ended December 31, 2019. Four properties in our portfolio are long-term ground leases where we are the lessor to the tenant.
We seek to acquire, own and operate primarily freestanding, commercial real estate properties primarily located in our target markets leased primarily pursuant to triple-net, long-term leases. Within our target markets, we will focus on investments primarily in retail properties. We will target tenants in industries that we believe are favorably impacted by current macroeconomic trends that support consumer spending, such as strong and growing employment and positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact of the growing e-commerce retail sector. We also will seek to invest in properties that are net leased to tenants that we determine have attractive credit characteristics, stable operating histories and healthy rent coverage levels, are well-located within their market and have rent levels at or below market rent levels. Furthermore, we believe that the size of our company will, for at least the near term, allow us 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.
Our objective is to maximize cash flow and value per share by generating stable and growing cash flows and attractive risk-adjusted returns through owning, operating and growing a diversified portfolio of high-quality net leased commercial properties with strong long-term real estate fundamentals. The 71 properties in our portfolio are 100% occupied and represent 2.3 million of gross rentable square feet. As of June 30, 2021, our leases have a weighted-average remaining lease term of 8.0 years based on annualized base rent.
Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals and target markets, including major markets or those markets experiencing significant economic growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g., location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing tenant(s) (e.g., credit-worthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other market-specific conditions (e.g., tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g., strategic fit of the asset type, property management needs, alignment with the Company’s structure, etc.).
The Company has no employees and is externally managed by Alpine Income Property Manager, LLC, a Delaware limited liability company and a wholly owned subsidiary of CTO (our “Manager”). CTO is a Maryland corporation that is a publicly traded diversified REIT and the sole member of our Manager.
COVID-19 PANDEMIC
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has continued to cause significant volatility in the U.S. and international markets, and in many industries, business activity has experienced periods of almost complete shutdown. There continues to be uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies.
Contractual Base Rent (“CBR”) represents the amount owed to the Company under the current terms of its lease agreements. As a result of the COVID-19 Pandemic, during the year ended December 31, 2020, the Company agreed to defer or abate certain CBR in exchange for additional lease term or other lease enhancing additions. Repayments of the remaining balance of deferred CBR began in the third quarter of 2020, with payments continuing, in some cases, through mid-year 2022.
29
As of June 30, 2021, the Company owned 71 income properties in 22 states. The following is a summary of these properties:
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Type | | Description | | S&P Credit Rating (1) | | Location | | Rentable Square Feet | | Remaining Term (Years) | | Contractual Rent Escalations | | Annualized Base Rent ($000's) (2) | |
Office | | Wells Fargo | | A+ | | Portland, OR | | 212,363 | | 4.5 | | Yes | | $ | 3,137 |
Office | | Hilton Grand Vacations | | BB | | Orlando, FL | | 102,019 | | 5.4 | | Yes | | | 1,825 |
Retail | | Walmart | | AA | | Howell, MI | | 214,172 | | 5.6 | | No | | | 1,369 |
Retail | | LA Fitness | | CCC+ | | Brandon, FL | | 45,000 | | 10.8 | | Yes | | | 958 |
Retail | | Lowe's | | BBB+ | | Katy, TX | | 131,644 | | 10.6 | | No | | | 917 |
Retail | | Burlington Stores, Inc. | | BB+ | | North Richland Hills, TX | | 70,891 | | 7.6 | | Yes | | | 859 |
Retail | | Kohl's | | BBB- | | Glendale, AZ | | 87,875 | | 8.6 | | Yes | | | 844 |
Retail | | Hobby Lobby | | N/A | | Tulsa, OK | | 84,180 | | 9.5 | | Yes | | | 842 |
Retail | | At Home (6) | | B | | Canton, OH | | 89,902 | | 8.1 | | Yes | | | 801 |
Retail | | Harris Teeter | | BBB | | Charlotte, NC | | 45,089 | | 6.8 | | Yes | | | 768 |
Retail | | At Home | | B | | Raleigh, NC | | 116,334 | | 11.3 | | Yes | | | 732 |
Retail | | Container Store | | B | | Phoenix, AZ | | 23,329 | | 8.7 | | Yes | | | 726 |
Retail | | Cinemark | | B | | Reno, NV | | 52,474 | | 3.3 | | Yes | | | 693 |
Office | | Hilton Grand Vacations | | BB | | Orlando, FL | | 31,895 | | 5.4 | | Yes | | | 684 |
Retail | | Live Nation Entertainment, Inc. | | B | | East Troy, WI | | — | (3) | 11.8 | | Yes | | | 634 |
Retail | | Academy Sports | | B+ | | Florence, SC | | 58,410 | | 7.8 | | Yes | | | 629 |
Retail | | Sportsman Warehouse | | N/A | | Albuquerque, NM | | 48,974 | | 8.2 | | Yes | | | 573 |
Retail | | Hobby Lobby | | N/A | | Winston-Salem, NC | | 55,000 | | 8.8 | | Yes | | | 562 |
Retail | | Rite Aid | | CCC+ | | Renton, WA | | 16,280 | | 5.1 | | Yes | | | 558 |
Retail | | Hobby Lobby | | N/A | | Arden, NC | | 55,000 | | 10.2 | | Yes | | | 546 |
Retail | | American Multi-Cinema, Inc. | | CCC+ | | Tyngsborough, MA | | 39,474 | | 11.8 | | Yes | | | 507 |
Retail | | Dick's Sporting Goods | | N/A | | McDonough, GA | | 46,315 | | 2.6 | | No | | | 473 |
Retail | | Jo-Ann Fabric | | B | | Saugus, MA | | 22,500 | | 7.6 | | Yes | | | 468 |
Retail | | Conn's HomePlus | | B | | Hurst, TX | | 37,957 | | 10.2 | | Yes | | | 452 |
Retail | | Old Time Pottery | | N/A | | Orange Park, FL | | 84,180 | | 9.1 | | Yes | | | 439 |
Retail | | 7-Eleven | | A | | Austin, TX | | 6,400 | | 13.8 | | Yes | | | 377 |
Retail | | Walgreens | | BBB | | Birmingham, AL | | 14,516 | | 7.8 | | No | | | 364 |
Retail | | Walgreens | | BBB | | Alpharetta, GA | | 15,120 | | 4.3 | | No | | | 363 |
Retail | | Best Buy | | BBB+ | | McDonough, GA | | 30,038 | | 4.8 | | Yes | | | 338 |
Retail | | Big Lots | | N/A | | Germantown, MD | | 25,589 | | 9.6 | | Yes | | | 334 |
Retail | | Big Lots | | N/A | | Phoenix, AZ | | 34,512 | | 9.6 | | Yes | | | 329 |
Retail | | Lehigh Gas Wholesale Services, Inc. | | N/A | | Highland Heights, KY | | 2,578 | | 9.4 | | Yes | | | 329 |
Retail | | Walgreens | | BBB | | Clermont, FL | | 13,650 | | 7.8 | | No | | | 328 |
Retail | | 7-Eleven | | A | | Georgetown, TX | | 7,726 | | 14.5 | | Yes | | | 276 |
Retail | | Walgreens | | BBB | | Tacoma, WA | | 14,125 | | 9.1 | | No | | | 259 |
Retail | | Walgreens | | BBB | | Albany, GA | | 14,770 | | 11.6 | | No | | | 258 |
Retail | | Outback Steakhouse | | B+ | | Charlotte, NC | | 6,297 | | 10.3 | | Yes | | | 220 |
Retail | | Circle K | | BBB | | Indianapolis, IN | | 4,283 | | 3.4 | | Yes | | | 210 |
Retail | | Scrubbles Car Wash (4) | | N/A | | Jacksonville, FL | | 4,512 | | 16.3 | | Yes | | | 189 |
Retail | | Cheddar's (4) | | BBB- | | Jacksonville, FL | | 8,146 | | 6.3 | | Yes | | | 186 |
Retail | | Family Dollar | | BBB | | Lynn, MA | | 9,228 | | 2.8 | | Yes | | | 160 |
Retail | | Orscheln (7) | | AA (8) | | Durant, OK | | 37,965 | | 1.7 | | No | | | 160 |
Retail | | Advanced Auto Parts | | BBB- | | Severn, MD | | 6,876 | | 13.7 | | Yes | | | 148 |
Retail | | Big Lots (7) | | AA (8) | | Durant, OK | | 36,794 | | 5.5 | | No | | | 142 |
Retail | | Dollar General | | BBB | | Kermit, TX | | 10,920 | | 14.2 | | Yes | | | 126 |
Retail | | Burger King | | N/A | | Plymouth, NC | | 3,142 | | 6.8 | | Yes | | | 125 |
Retail | | Dollar General | | BBB | | Chazy, NY | | 9,277 | | 10.3 | | Yes | | | 119 |
Retail | | Dollar General | | BBB | | Odessa, TX | | 9,127 | | 14.1 | | Yes | | | 117 |
Retail | | Dollar General | | BBB | | Willis, TX | | 9,138 | | 14.1 | | Yes | | | 114 |
Retail | | Dollar General | | BBB | | Winthrop, NY | | 9,167 | | 10.2 | | Yes | | | 113 |
Retail | | Advance Auto Parts | | BBB- | | Ware, MA | | 6,889 | | 3.5 | | Yes | | | 112 |
Retail | | Dollar General | | BBB | | Cut and Shoot, TX | | 9,096 | | 14.3 | | Yes | | | 112 |
Retail | | Dollar General | | BBB | | Milford, ME | | 9,128 | | 12.3 | | Yes | | | 110 |
Retail | | Dollar Tree | | BBB | | Demopolis, AL | | 10,159 | | 8.6 | | Yes | | | 110 |
Retail | | Pet Supplies Plus (6) | | N/A | | Canton, OH | | 8,400 | | 6.3 | | Yes | | | 110 |
Retail | | Dollar General | | BBB | | Salem, NY | | 9,199 | | 12.2 | | Yes | | | 105 |
Retail | | Dollar General | | BBB | | Bingham, ME | | 9,345 | | 12.3 | | Yes | | | 104 |
Retail | | Dollar General | | BBB | | Harrisville, NY | | 9,309 | | 12.5 | | Yes | | | 104 |
Retail | | Dollar General | | BBB | | Heuvelton, NY | | 9,342 | | 11.3 | | Yes | | | 104 |
Retail | | Firestone | | A | | Pittsburgh, PA | | 10,629 | | 7.8 | | Yes | | | 103 |
Retail | | Dollar General | | BBB | | Barker, NY | | 9,275 | | 12.4 | | Yes | | | 102 |
Retail | | Dollar General | | BBB | | Limestone, ME | | 9,167 | | 12.3 | | Yes | | | 100 |
Retail | | Freddy's Frozen Custard (4) | | N/A | | Orange Park, FL | | 3,200 | | 5.4 | | Yes | | | 99 |
Retail | | Dollar General | | BBB | | Hammond, NY | | 9,219 | | 11.5 | | Yes | | | 98 |
Retail | | Dollar General | | BBB | | Somerville, TX | | 9,252 | | 14.0 | | Yes | | | 96 |
30
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Type | | Description | | S&P Credit Rating (1) | | Location | | Rentable Square Feet | | Remaining Term (Years) | | Contractual Rent Escalations | | Annualized Base Rent ($000's) (2) | |
Retail | | Dollar General | | BBB | | Seguin, TX | | 9,155 | | 13.7 | | Yes | | | 90 |
Retail | | Grease Monkey | | N/A | | Stockbridge, GA | | 1,846 | | 12.3 | | Yes | | | 90 |
Retail | | Schlotzsky's | | N/A | | Sweetwater, TX | | 2,431 | | 14.0 | | Yes | | | 86 |
Retail | | Dollar General | | BBB | | Newtonsville, OH | | 9,290 | | 8.9 | | Yes | | | 83 |
Retail | | Dollar General | | BBB | | Del Rio, TX | | 9,219 | | 13.6 | | Yes | | | 83 |
Retail | | Hardee's | | N/A | | Boaz, AL | | 3,542 | | 9.3 | | Yes | | | 80 |
Retail | | Advance Auto Parts | | BBB- | | Athens, GA | | 6,871 | | 3.5 | | Yes | | | 79 |
Retail | | Salon Lofts (6) | | N/A | | Canton, OH | | 4,000 | | 6.7 | | Yes | | | 72 |
Retail | | Long John Silver's (4) | | N/A | | Tulsa, OK | | 3,000 | | — | (5) | No | | | 24 |
| | | | Total / Weighted Average | | 2,296,116 | | 8.0 | | | | $ | 28,936 | ||
| (1) | Tenant, or tenant parent, credit rating as of June 30, 2021. |
| (2) | Annualized straight-line base rental income in place as of June 30, 2021. |
| (3) | The Alpine Valley Music Theatre, leased to Live Nation Entertainment, Inc., is an entertainment venue consisting of a two-sided, open-air, 7,500-seat pavilion; an outdoor amphitheater with a capacity for 37,000; and over 150 acres of green space. |
| (4) | We are the lessor in a ground lease with the tenant. Rentable square feet represents improvements on the property that revert to us at the expiration of the lease. |
| (5) | Current lease agreement is month-to-month (“MTM”). |
| (6) | Tenants represent the acquisition of one property on March 9, 2021. |
| (7) | Tenants represent the acquisition of one property on June 25, 2021. |
| (8) | The AA S&P Credit Rating is attributable to the Company’s lessee, Walmart, versus the sublessees described herein. |
31
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
The following presents the Company’s results of operations for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020 (in thousands):
| | | | | | | | | | | |
| | Three Months Ended | | | |||||||
| | | | $ Variance | | % Variance | |||||
Revenues: | | | | | | | | | | | |
Lease Income | | $ | 6,597 | | $ | 4,591 | | $ | 2,006 | | 43.7% |
Total Revenues | | | 6,597 | | | 4,591 | | | 2,006 | | 43.7% |
Operating Expenses: | | | | | | | | | | | |
Real Estate Expenses | | | 824 | | | 550 | | | 274 | | 49.8% |
General and Administrative Expenses | | | 1,286 | | | 1,132 | | | 154 | | 13.6% |
Depreciation and Amortization | | | 3,463 | | | 2,286 | | | 1,177 | | 51.5% |
Total Operating Expenses | | | 5,573 | | | 3,968 | | | 1,605 | | 40.4% |
Net Income from Operations | | | 1,024 | | | 623 | | | 401 | | 64.4% |
Interest Expense | | | 678 | | | 344 | | | 334 | | 97.1% |
Net Income | | | 346 | | | 279 | | | 67 | | 24.0% |
Less: Net Income Attributable to Noncontrolling Interest | | | (42) | | | (39) | | | (3) | | 7.7% |
Net Income Attributable to Alpine Income Property Trust, Inc. | | $ | 304 | | $ | 240 | | $ | 64 | | 26.7% |
Revenue and Direct Cost of Revenues
Revenue from our income property operations during the three months ended June 30, 2021 and 2020, totaled $6.6 million and $4.6 million, respectively. The $2.0 million increase in revenues is reflective of the Company’s expanded income property portfolio, including the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020, net of one income property disposition during the third quarter of 2020, in addition to the acquisition of 23 income properties during the six months ended June 30, 2021. The direct costs of revenues for our income property operations totaled $0.8 million and $0.6 million for the three months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in the direct cost of revenues is also attributable to the Company’s expanded income property portfolio.
General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020 (in thousands):
| | | | | | | | | | | |
| | Three Months Ended | | | | | | ||||
| | | | $ Variance | | % Variance | |||||
Management Fee to Manager | | $ | 721 | | $ | 643 | | $ | 78 | | 12.1% |
Director Stock Compensation Expense | | | 79 | | | 68 | | | 11 | | 16.2% |
Director & Officer Insurance Expense | | | 129 | | | 112 | | | 17 | | 15.2% |
Additional General and Administrative Expense | | | 357 | | | 309 | | | 48 | | 15.5% |
Total General and Administrative Expenses | | $ | 1,286 | | $ | 1,132 | | $ | 154 | | 13.6% |
General and administrative expenses totaled $1.3 million and $1.1 million during the three months ended June 30, 2021 and 2020, respectively. The $0.2 million increase is primarily attributable to growth in the Company’s equity base, which led to increased management fee expenses totaling $0.1 million. The management fees that the Company pays to the Manager are based on the Company’s total equity, as defined in the management agreement.
32
Depreciation and Amortization
Depreciation and amortization expense totaled $3.5 million and $2.3 million during the three months ended June 30, 2021 and 2020, respectively. The $1.2 million increase in the depreciation and amortization expense is reflective of the Company’s expanded income property portfolio, as described above.
Interest Expense
Interest expense totaled $0.7 million and $0.3 million during the three months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in interest expense is attributable to the higher average outstanding debt balance during the three months ended June 30, 2021 as compared to the same period in 2020. The overall increase in the Company’s long-term debt was utilized to fund the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020 in addition to the acquisition of 23 income properties during the six months ended June 30, 2021.
Net Income
Net income totaled $0.3 million during each of the three months ended June 30, 2021 and 2020. The increase in net income is attributable to the factors described above.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
The following presents the Company’s results of operations for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020 (in thousands):
| | | | | | | | | | | |
| | Six Months Ended | | | |||||||
| | | | $ Variance | | % Variance | |||||
Revenues: | | | | | | | | | | | |
Lease Income | | $ | 12,487 | | $ | 8,762 | | $ | 3,725 | | 42.5% |
Total Revenues | | | 12,487 | | | 8,762 | | | 3,725 | | 42.5% |
Operating Expenses: | | | | | | | | | | | |
Real Estate Expenses | | | 1,475 | | | 1,150 | | | 325 | | 28.3% |
General and Administrative Expenses | | | 2,316 | | | 2,416 | | | (100) | | (4.1)% |
Depreciation and Amortization | | | 6,606 | | | 4,309 | | | 2,297 | | 53.3% |
Total Operating Expenses | | | 10,397 | | | 7,875 | | | 2,522 | | 32.0% |
Net Income from Operations | | | 2,090 | | | 887 | | | 1,203 | | 135.6% |
Interest Expense | | | 1,233 | | | 593 | | | 640 | | 107.9% |
Net Income | | | 857 | | | 294 | | | 563 | | 191.5% |
Less: Net Income Attributable to Noncontrolling Interest | | | (113) | | | (41) | | | (72) | | 175.6% |
Net Income Attributable to Alpine Income Property Trust, Inc. | | $ | 744 | | $ | 253 | | $ | 491 | | 194.1% |
Revenue and Direct Cost of Revenues
Revenue from our income property operations during the six months ended June 30, 2021 and 2020, totaled $12.5 million and $8.8 million, respectively. The $3.7 million increase in revenues is reflective of the Company’s expanded income property portfolio, including the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020, net of one income property disposition during the third quarter of 2020, in addition to the acquisition of 23 income properties during the six months ended June 30, 2021. The direct costs of revenues for our income property operations totaled $1.5 million and $1.2 million for the six months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in the direct cost of revenues is also attributable to the Company’s expanded income property portfolio.
33
General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020 (in thousands):
| | | | | | | | | | | |
| | Six Months Ended | | | | | | ||||
| | | | $ Variance | | % Variance | |||||
Management Fee to Manager | | $ | 1,359 | | $ | 1,292 | | $ | 67 | | 5.2% |
Director Stock Compensation Expense | | | 152 | | | 135 | | | 17 | | 12.6% |
Director & Officer Insurance Expense | | | 257 | | | 229 | | | 28 | | 12.2% |
Additional General and Administrative Expense | | | 548 | | | 760 | | | (212) | | (27.9)% |
Total General and Administrative Expenses | | $ | 2,316 | | $ | 2,416 | | $ | (100) | | (4.1)% |
General and administrative expenses totaled $2.3 million and $2.4 million during the six months ended June 30, 2021 and 2020, respectively. The $0.1 million decrease is primarily attributable to the recognition of $0.3 million, during the first quarter of 2020, of costs associated with audit services related to the 2019 annual audit, offset by increased management fee expenses totaling $0.1 million attributable to growth in the Company’s equity base. The management fees that the Company pays to the Manager are based on the Company’s total equity, as defined in the management agreement.
Depreciation and Amortization
Depreciation and amortization expense totaled $6.6 million and $4.3 million during the six months ended June 30, 2021 and 2020, respectively. The $2.3 million increase in the depreciation and amortization expense is reflective of the Company’s expanded income property portfolio, as described above.
Interest Expense
Interest expense totaled $1.2 million and $0.6 million during the six months ended June 30, 2021 and 2020, respectively. The $0.6 million increase in interest expense is attributable to the higher average outstanding debt balance during the six months ended June 30, 2021 as compared to the same period in 2020. The overall increase in the Company’s long-term debt was utilized to fund the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020 in addition to the acquisition of 23 income properties during the six months ended June 30, 2021.
Net Income
Net income totaled $0.9 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively. The increase in net income is attributable to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Cash totaled $8.5 million at June 30, 2021, including restricted cash of $2.2 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 at June 30, 2021.
Long-Term Debt. As of June 30, 2021, the Company had $100.0 million available on the Credit Facility. See Note 8, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at June 30, 2021.
Acquisitions and Investments. As noted previously, the Company acquired 23 income properties during the six months ended June 30, 2021 for an aggregate purchase price of $103.2 million, as further described in Note 3, “Income Property Portfolio”.
Dispositions. No income properties were disposed of during the six months ended June 30, 2021.
34
Capital Expenditures. As of June 30, 2021 the Company had no commitments related to capital expenditures.
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 and $100.0 million of available capacity on the existing $150.0 million Credit Facility, based on our current borrowing base of income properties, as of June 30, 2021.
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 income properties by utilizing the capital we raised in the IPO 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.
Non-GAAP Financial Measures
Our reported results are presented in accordance with GAAP. We also disclose Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) both of which are non-GAAP financial measures. We believe these two 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 and AFFO 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 straight-line rental revenue, amortization of deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash compensation. 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.
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 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. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.
35
Reconciliation of Non-GAAP Measures (in thousands, except share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
Net Income | | $ | 346 | | $ | 279 | | $ | 857 | | $ | 294 |
Depreciation and Amortization | | | 3,463 | | | 2,286 | | | 6,606 | | | 4,309 |
Funds from Operations | | $ | 3,809 | | $ | 2,565 | | $ | 7,463 | | $ | 4,603 |
Adjustments: | | | | | | | | | | | | |
Straight-Line Rent Adjustment | | | (117) | | | (614) | | | (264) | | | (937) |
COVID-19 Rent Repayments (Deferrals), Net | | | 114 | | | (625) | | | 385 | | | (625) |
Non-Cash Compensation | | | 79 | | | 68 | | | 152 | | | 135 |
Amortization of Deferred Financing Costs to Interest Expense | | | 84 | | | 43 | | | 149 | | | 88 |
Amortization of Intangible Assets and Liabilities to Lease Income | | | (50) | | | (29) | | | (91) | | | (48) |
Accretion of Tenant Contribution | | | (5) | | | (7) | | | (11) | | | (7) |
Recurring Capital Expenditures | | | (22) | | | (33) | | | (41) | | | (33) |
Adjusted Funds from Operations | | $ | 3,892 | | $ | 1,368 | | $ | 7,742 | | $ | 3,176 |
| | | | | | | | | | | | |
Weighted Average Number of Common Shares: | | | | | | | | | | | | |
Basic | | | 8,853,259 | | | 7,544,991 | | | 8,212,902 | | | 7,721,835 |
Diluted | | | 10,081,783 | | | 8,768,845 | | | 9,439,104 | | | 8,945,689 |
Other Data (in thousands, except per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | | | | ||||||||
FFO | | $ | 3,809 | | $ | 2,565 | | $ | 7,463 | | $ | 4,603 |
FFO per diluted share | | $ | 0.38 | | $ | 0.29 | | $ | 0.79 | | $ | 0.51 |
| | | | | | | | | | | | |
AFFO | | $ | 3,892 | | $ | 1,368 | | $ | 7,742 | | $ | 3,176 |
AFFO per diluted share | | $ | 0.39 | | $ | 0.16 | | $ | 0.82 | | $ | 0.35 |
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
None.
OFF-BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from those estimates.
Our significant accounting policies are summarized in Note 2, “Summary of Significant Accounting Policies” included in this Quarterly Report on Form 10-Q and more fully described in the notes to the consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. During the three months ended
36
June 30, 2021, there have been no material changes to the critical accounting policies affecting the application of those accounting policies as noted in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation, as required by Rules 13a-15 and 15d-15 under the Exchange Act, was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of June 30, 2021, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the three months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of our business. We are not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on our business or financial condition.
ITEM 1A. RISK FACTORS
For a discussion of the Company’s potential risks and uncertainties, see the information under the heading Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company.
As of June 30, 2021, there have been no material changes in our risk factors from those set forth within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
37
ITEM 6. EXHIBITS
| (a) | Exhibits: |
| | |
| | |
Exhibit 2.1 | | |
| | |
Exhibit 2.1a | | |
| | |
Exhibit 3.1 | | |
| | |
Exhibit 3.2 | | |
| | |
Exhibit 4.1 | | |
| | |
Exhibit 10.1 | | |
| | |
Exhibit 10.2 | | |
| | |
| ||
| | |
| ||
| | |
| Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| | |
| Certification filed pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | |
| | |
| ||
| | |
| ||
| | |
Exhibit 101.INS | | XBRL Instance Document |
| | |
| XBRL Taxonomy Extension Schema Document | |
| | |
| XBRL Taxonomy Extension Calculation Linkbase Document | |
| | |
| XBRL Taxonomy Definition Linkbase Document | |
| | |
| XBRL Taxonomy Extension Label Linkbase Document | |
| | |
| XBRL Taxonomy Extension Presentation Linkbase Document | |
| | |
Exhibit 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(2). The omitted information is not material and is the type of information that the Company customarily and actually treats as private and confidential. |
39
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | |
|
| ALPINE INCOME PROPERTY TRUST, INC. | ||
|
| (Registrant) | ||
| | | | |
| By: | | /s/ John P. Albright | |
|
| | | President and Chief Executive Officer (Principal Executive Officer) |
| | | | |
| By: | | ||
|
| | | Matthew M. Partridge, Senior Vice President and Chief Financial Officer and Treasurer (Principal Financial Officer) |
| By: | | /s/ Lisa M. Vorakoun | |
|
| | | Lisa M. Vorakoun, Vice President and Chief Accounting Officer (Principal Accounting Officer) |
| | | | |
40
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 5/21/26 | ||||
| 11/26/24 | ||||
| Filed on: | 7/22/21 | 8-K | ||
| 7/15/21 | ||||
| 7/1/21 | 4 | |||
| For Period end: | 6/30/21 | 8-K | ||
| 6/25/21 | 8-K | |||
| 5/21/21 | ||||
| 5/19/21 | 8-K | |||
| 4/23/21 | ||||
| 4/20/21 | ||||
| 4/6/21 | 8-K | |||
| 4/2/21 | 4, 8-K | |||
| 4/1/21 | 4 | |||
| 3/31/21 | 10-Q | |||
| 3/9/21 | ||||
| 1/1/21 | ||||
| 12/31/20 | 10-K | |||
| 12/14/20 | 424B5, 8-K, EFFECT | |||
| 12/11/20 | 8-K/A, EFFECT | |||
| 12/1/20 | 8-K, 8-K/A, S-3 | |||
| 10/16/20 | 8-K | |||
| 7/1/20 | 4 | |||
| 6/30/20 | 10-Q, 8-K | |||
| 4/30/20 | 8-K | |||
| 4/1/20 | 4 | |||
| 1/1/20 | ||||
| 12/31/19 | 10-K | |||
| 11/26/19 | 4 | |||
| 8/19/19 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/10/22 Alpine Income Prop Trust, Inc. 10-K 12/31/21 105:13M Toppan Merrill Bridge/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/22/21 Alpine Income Prop Trust, Inc. 8-K:5,9 7/21/21 2:176K Toppan Merrill Bridge/FA 5/25/21 Alpine Income Prop Trust, Inc. 8-K:1,2,7,9 5/19/21 4:2.8M Toppan Merrill Bridge/FA 4/22/21 Alpine Income Prop Trust, Inc. 10-Q 3/31/21 89:6.7M Toppan Merrill Bridge/FA 4/06/21 Alpine Income Prop Trust, Inc. 8-K:1,7,9 4/02/21 3:2M Toppan Merrill Bridge/FA 12/03/19 Alpine Income Prop Trust, Inc. 8-K:1,2,3,511/21/19 19:4.7M Toppan Merrill Bridge/FA 10/29/19 Alpine Income Prop Trust, Inc. S-11/A® 18:4.4M Donnelley … Solutions/FA |