Alpine Income Property Trust Reports Fourth Quarter and Full Year 2022 Operating Results
Select Highlights
- Reported Net Income per diluted share attributable to the Company of
$0.34 and$2.17 for the quarter and year endedDecember 31, 2022 , respectively. - Reported FFO per diluted share of
$0.37 and$1.73 for the quarter and year endedDecember 31, 2022 , respectively. - Reported AFFO per diluted share of
$0.41 and$1.77 for the quarter and year endedDecember 31, 2022 , respectively. - Acquired seven retail net lease properties during the fourth quarter of 2022 for total acquisition volume of
$41.7 million , reflecting a weighted average going-in cash cap rate of 7.4%. - Sold five net lease properties during the fourth quarter of 2022 for total disposition volume of
$31.4 million at a weighted average exit cash cap rate of 6.5%, generating total gains of$6.6 million . - Increased investment grade-rated tenant exposure to 54% as of
December 31, 2022 , up from 45% as ofDecember 31, 2021 . - Paid a cash dividend for the fourth quarter of 2022 of
$0.275 per share, representing an annualized yield of 5.5% based on the closing price of the Company’s common stock onFebruary 8, 2022 . - During the year ended
December 31, 2022 , the Company acquired 51 net lease properties for total acquisition volume of$187.4 million , reflecting a weighted average going-in cash cap rate of 7.1%. - During the year ended
December 31, 2022 , the Company sold 16 net lease properties for total disposition volume of$154.6 million at a weighted average exit cap rate of 6.5%, generating aggregate gains of$33.8 million . - Paid cash dividends during the full year 2022 of
$1.09 per share, a 7.4% increase over the Company’s full year 2021 cash dividends.
CEO Comments
“We’re very pleased with our performance in 2022 as we proactively recycled assets to drive positive net investment spreads, meaningfully improved our balance sheet, and continued to enhance the quality and diversity of our 100% retail net lease portfolio,”
Quarterly Operating Results Highlights
The table below provides a summary of the Company’s operating results for the quarter ended
| Three Months Ended |
Three Months Ended |
Variance to Comparable Period in the Prior Year | |||||||||
| Total Revenues | $ | 11,595 | $ | 9,470 | $ | 2,125 | 22.4 | % | |||
| Net Income | $ | 5,525 | $ | 9,549 | $ | (4,024 | ) | (42.1 | %) | ||
| Net Income Attributable to PINE | $ | 4,862 | $ | 8,302 | $ | (3,440 | ) | (41.4 | %) | ||
| Net Income per Diluted Share Attributable to PINE | $ | 0.34 | $ | 0.64 | $ | (0.30 | ) | (46.9 | %) | ||
| FFO (1) | $ | 5,304 | $ | 5,443 | $ | (139 | ) | (2.6 | %) | ||
| FFO per Diluted Share (1) | $ | 0.37 | $ | 0.42 | $ | (0.05 | ) | (11.9 | %) | ||
| AFFO (1) | $ | 5,763 | $ | 5,365 | $ | 398 | 7.4 | % | |||
| AFFO per Diluted Share (1) | $ | 0.41 | $ | 0.41 | $ | 0.00 | 0.0 | % | |||
| Dividends Declared and Paid, per Share | $ | 0.275 | $ | 0.270 | $ | 0.005 | 1.9 | % | |||
(1) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share.
Annual Operating Results Highlights
The table below provides a summary of the Company’s operating results for year ended
| Year Ended |
Year Ended |
Variance to Comparable Period in the Prior Year | ||||||||
| Total Revenues | $ | 45,203 | $ | 30,128 | $ | 15,075 | 50.0 | % | ||
| Net Income | $ | 33,955 | $ | 11,462 | $ | 22,493 | 196.2 | % | ||
| Net Income Attributable to PINE | $ | 29,720 | $ | 9,964 | $ | 19,756 | 198.3 | % | ||
| Net Income per Diluted Share Attributable to PINE | $ | 2.17 | $ | 0.89 | $ | 1.28 | 143.8 | % | ||
| FFO (1) | $ | 23,718 | $ | 17,726 | $ | 5,992 | 33.8 | % | ||
| FFO per Diluted Share (1) | $ | 1.73 | $ | 1.58 | $ | 0.15 | 9.5 | % | ||
| AFFO (1) | $ | 24,236 | $ | 17,904 | $ | 6,332 | 35.4 | % | ||
| AFFO per Diluted Share (1) | $ | 1.77 | $ | 1.59 | $ | 0.18 | 11.3 | % | ||
| Dividends Declared and Paid, per Share | $ | 1.090 | $ | 1.015 | $ | 0.075 | 7.4 | % | ||
(1) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share.
Acquisitions
During the three months ended
During the year ended
Dispositions
During the three months ended
During the year ended
Property Portfolio
The Company’s portfolio consisted of the following as of
| Number of Properties | 148 | |
| Square Feet | 3.7 million | |
| Annualized Base Rent | ||
| Weighted Average Remaining Lease Term | 7.6 years | |
| States where Properties are Located | 34 | |
| Occupancy | 99.5 | % |
| % of Annualized Base Rent Attributable to Investment Grade Rated Tenants (1)(2) | 54 | % |
| % of Annualized Base Rent Attributable to Credit Rated Tenants (1)(3) | 79 | % |
Any differences are a result of rounding.
(1) Annualized Base Rent (“ABR”) represents the annualized in-place straight-line base rent required by the tenant’s lease. ABR is a non-GAAP financial measure. We believe this non-GAAP financial measure is useful to investors because it is a widely accepted industry measure used by analysts and investors to compare the real estate portfolios and operating performance of REITs.
(2) The Company defines an Investment Grade Rated tenant as a tenant or the parent of a tenant with a credit rating from
(3) The Company defines a Credit Rated Tenant as a tenant or the parent of a tenant with a credit rating from
The Company’s portfolio included the following top tenants that represent 2.0% or greater of the Company's total annualized base rent as of
| Tenant | Credit Rating (1) | % of Annualized Base Rent | ||
| Walgreens | BBB | 11 | % | |
| Dick’s Sporting Goods | BBB | 7 | % | |
| Dollar Tree/Family Dollar | BBB | 7 | % | |
| Lowe’s | BBB+ | 6 | % | |
| Dollar General | BBB | 5 | % | |
| BB | 5 | % | ||
| B- | 5 | % | ||
| Walmart | AA | 5 | % | |
| N/A | 4 | % | ||
| At Home | B- | 4 | % | |
| Best Buy | BBB+ | 3 | % | |
| Burlington | BB+ | 2 | % | |
| Other | 36 | % | ||
| Total | 100 | % | ||
Any differences are a result of rounding.
(1) Credit rating is from
The Company’s portfolio consisted of the following industries as of
| Industry | % of Annualized Base Rent | |||
| Sporting Goods | 13 | % | ||
| Dollar Stores | 13 | % | ||
| Pharmacy | 12 | % | ||
| Home Furnishings | 9 | % | ||
| Home Improvement | 8 | % | ||
| Grocery | 5 | % | ||
| Consumer Electronics | 5 | % | ||
| Health & Fitness | 5 | % | ||
| Entertainment | 4 | % | ||
| General Merchandise | 4 | % | ||
| Convenience Stores | 3 | % | ||
| Specialty Retail | 3 | % | ||
| Automotive Parts | 2 | % | ||
| 2 | % | |||
| Off-Price Retail | 2 | % | ||
| Casual Dining | 2 | % | ||
| Farm & Rural Supply | 1 | % | ||
| 1 | % | |||
| Financial Services | <1% | |||
| Healthcare Services | < 1% | |||
| < 1% | ||||
| Other (1) | < 1% | |||
| Total | 26 Industries | 100 | % | |
Any differences are a result of rounding.
(1) Includes three industries collectively representing less than 1% of the Company’s ABR as of
The Company’s portfolio included properties in the following states as of
| State | % of Annualized Base Rent | |||
| 17 | % | |||
| 8 | % | |||
| 6 | % | |||
| 6 | % | |||
| 6 | % | |||
| 5 | % | |||
| 5 | % | |||
| 4 | % | |||
| 4 | % | |||
| 3 | % | |||
| 3 | % | |||
| 3 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 1 | % | |||
| 1 | % | |||
| 1 | % | |||
| 1 | % | |||
| 1 | % | |||
| <1% | ||||
| < 1% | ||||
| < 1% | ||||
| < 1% | ||||
| < 1% | ||||
| < 1% | ||||
| Total | 34 States | 100 | % | |
Any differences are a result of rounding.
Capital Markets and Balance Sheet
During the quarter ended
- On
December 1, 2022 , the Company completed the defeasance of its$30.0 million secured mortgage, unencumbering six properties of which the company subsequently sold four of the properties during the fourth quarter. - The Company issued 1,479,241 common shares under its ATM offering program at a weighted average gross price of
$18.81 per share, for total net proceeds of$27.4 million .
During the year ended
- Exercised the accordion options under the Company’s 2026 Term Loan and 2027 Term Loan for
$40.0 million and$20.0 million , respectively, increasing aggregate lender commitments and borrowings under each Term Loan to$100.0 million . - Expanded its revolving credit facility from
$150 million to$250 million and extended the maturity date toJanuary 2027 . - Issued 1,925,408 common shares under its ATM offering program at a weighted average gross price of
$18.96 per share, for total net proceeds of$36.0 million .
The following table provides a summary of the Company’s long-term debt as of
| Component of Long-Term Debt | Principal |
Interest Rate |
Maturity Date |
||||||||||
| 2026 Term Loan (1) | $ | 100.0 million | SOFR + 10 bps + [1.35% - 1.95%] |
||||||||||
| 2027 Term Loan (2) | $ | 100.0 million | SOFR + 10 bps + [1.25% - 1.90%] |
||||||||||
| Revolving Credit Facility | $ | 68.3 million | SOFR + 10 bps + [1.25% - 2.20%] |
||||||||||
| Total Debt/Weighted Average Rate | $ | 268.3 million | 3.98% | ||||||||||
(1) As of
(2) As of
As of
As of
Dividend
On
During the year ended
2023 Outlook
The Company's outlook and guidance for 2023 assumes stable or improving economic activity, strong underlying business trends related to each of our tenants and other significant assumptions.
The Company’s outlook for 2023 is as follows:
| Low | High | ||||
| Acquisitions | to | ||||
| Dispositions | to | ||||
| FFO per Diluted Share | to | ||||
| AFFO per Diluted Share | to | ||||
| Weighted Average Diluted Shares Outstanding | 16.0 million | to | 16.4 million | ||
Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter and year ended
A live webcast of the call will be available on the Investor Relations page of the Company’s website at www.alpinereit.com or at the link provided in the event details below. To access the call by phone, please go to the link provided in the event details below and you will be provided with dial-in details.
Webcast: https://edge.media-server.com/mmc/p/mhzc65zg
Dial-In: https://register.vevent.com/register/BIee12966deeff406abc886ee96f6bae19
We encourage participants to dial into the conference call at least fifteen minutes ahead of the scheduled start time. A replay of the earnings call will be archived and available online through the Investor Relations section of the Company’s website at www.alpinereit.com.
About
We encourage you to review our most recent investor presentation which is available on our website at http://www.alpinereit.com.
Safe Harbor
This press release may contain “forward-looking statements.” Forward-looking statements include statements that may be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the Company’s current expectations and assumptions regarding capital market conditions, the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include general business and economic conditions, continued volatility and uncertainty in the credit markets and broader financial markets, risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters, the impact of epidemics or pandemics (such as the COVID-19 Pandemic and its variants) on the Company’s business and the business of its tenants and the impact of such epidemics or pandemics on the
Non-GAAP Financial Measures
Our reported results are presented in accordance with accounting principles generally accepted in
FFO, AFFO, and Pro Forma EBITDA do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the definition adopted by the
To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as loss on extinguishment of debt, amortization of above- and below-market lease related intangibles, straight-line rental revenue, amortization of deferred financing costs, non-cash compensation, and other non-cash income or expense. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.
To derive Pro Forma EBITDA, GAAP net income or loss is adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries, non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, loss on extinguishment of debt, above- and below-market lease related intangibles, non-cash compensation, and other non-cash income or expense. Cash interest expense is also excluded from Pro Forma EBITDA, and GAAP net income or loss is adjusted for the annualized impact of acquisitions, dispositions and other similar activities.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. We also believe that Pro Forma EBITDA is an additional useful supplemental measure for investors to consider as it allows for a better assessment of our operating performance without the distortions created by other non-cash revenues, expenses or certain effects of the Company’s capital structure on our operating performance. FFO, AFFO, and Pro Forma EBITDA may not be comparable to similarly titled measures employed by other companies.
Consolidated Balance Sheets
(In thousands, except share and per share data)
| As of | |||||||
| ASSETS | |||||||
| Real Estate: | |||||||
| Land, at Cost | $ | 176,857 | $ | 178,172 | |||
| Building and Improvements, at Cost | 322,510 | 266,236 | |||||
| 499,367 | 444,408 | ||||||
| Less, Accumulated Depreciation | (22,313 | ) | (15,419 | ) | |||
| Real Estate—Net | 477,054 | 428,989 | |||||
| Cash and Cash Equivalents | 9,018 | 8,851 | |||||
| Restricted Cash | 4,026 | 646 | |||||
| Intangible Lease Assets—Net | 60,432 | 58,821 | |||||
| Straight-Line Rent Adjustment | 1,668 | 1,838 | |||||
| Other Assets | 21,233 | 6,369 | |||||
| Total Assets | $ | 573,431 | $ | 505,514 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Accounts Payable, Accrued Expenses, and Other Liabilities | $ | 4,411 | $ | 2,363 | |||
| Prepaid Rent and Deferred Revenue | 1,479 | 2,033 | |||||
| Intangible Lease Liabilities—Net | 5,050 | 5,476 | |||||
| Long-Term Debt | 267,116 | 267,740 | |||||
| Total Liabilities | 278,056 | 277,612 | |||||
| Commitments and Contingencies | |||||||
| Equity: | |||||||
| Preferred Stock, |
— | — | |||||
| Common Stock, |
134 | 114 | |||||
| 236,841 | 200,906 | ||||||
| Retained Earnings (Dividends in Excess of Net Income) | 10,042 | (6,419 | ) | ||||
| Accumulated Other Comprehensive Income | 14,601 | 1,922 | |||||
| Stockholders' Equity | 261,618 | 196,523 | |||||
| Noncontrolling Interest | 33,757 | 31,379 | |||||
| Total Equity | 295,375 | 227,902 | |||||
| Total Liabilities and Equity | $ | 573,431 | $ | 505,514 | |||
Consolidated Statements of Operations
(In thousands, except share, per share and dividend data)
| (Unaudited) Three Months Ended |
Year Ended | ||||||||||||||
| Revenues: | |||||||||||||||
| Lease Income | $ | 11,595 | $ | 9,470 | $ | 45,203 | $ | 30,128 | |||||||
| Total Revenues | 11,595 | 9,470 | 45,203 | 30,128 | |||||||||||
| Operating Expenses: | |||||||||||||||
| Real Estate Expenses | 1,242 | 1,284 | 5,435 | 3,673 | |||||||||||
| General and Administrative Expenses | 1,414 | 1,340 | 5,784 | 5,027 | |||||||||||
| Depreciation and Amortization | 6,332 | 5,025 | 23,564 | 15,939 | |||||||||||
| Total Operating Expenses | 8,988 | 7,649 | 34,783 | 24,639 | |||||||||||
| Gain on Disposition of Assets | 6,553 | 9,131 | 33,801 | 9,675 | |||||||||||
| Loss on Extinguishment of Debt | (443 | ) | — | (727 | ) | — | |||||||||
| Net Income from Operations | 8,717 | 10,952 | 43,494 | 15,164 | |||||||||||
| Interest Expense | 3,192 | 1,403 | 9,539 | 3,702 | |||||||||||
| Net Income | 5,525 | 9,549 | 33,955 | 11,462 | |||||||||||
| Less: Net Income Attributable to Noncontrolling Interest | (663 | ) | (1,247 | ) | (4,235 | ) | (1,498 | ) | |||||||
| Net Income Attributable to |
$ | 4,862 | $ | 8,302 | $ | 29,720 | $ | 9,964 | |||||||
| Per Common Share Data: | |||||||||||||||
| Net Income Attributable to |
|||||||||||||||
| Basic | $ | 0.39 | $ | 0.73 | $ | 2.48 | $ | 1.02 | |||||||
| Diluted | $ | 0.34 | $ | 0.64 | $ | 2.17 | $ | 0.89 | |||||||
| Weighted Average Number of Common Shares: | |||||||||||||||
| Basic | 12,500,785 | 11,347,778 | 11,976,001 | 9,781,066 | |||||||||||
| Diluted (1) | 14,204,279 | 13,051,272 | 13,679,495 | 11,246,227 | |||||||||||
| Dividends Declared and Paid | $ | 0.275 | $ | 0.270 | $ | 1.090 | $ | 1.015 | |||||||
(1) Includes the weighted average impact of 1,703,494 shares underlying OP units including (i) 1,223,854 shares underlying OP Units issued to CTO Realty Growth, Inc. and (ii) 479,640 shares underlying OP Units issued to an unrelated third party.
Non-GAAP Financial Measures
Funds From Operations and Adjusted Funds From Operations
(Unaudited)
(In thousands, except per share data)
| Three Months Ended | Year Ended | ||||||||||||||
| Net Income | $ | 5,525 | $ | 9,549 | $ | 33,955 | $ | 11,462 | |||||||
| Depreciation and Amortization | 6,332 | 5,025 | 23,564 | 15,939 | |||||||||||
| Gain on Disposition of Assets | (6,553 | ) | (9,131 | ) | (33,801 | ) | (9,675 | ) | |||||||
| Funds from Operations | $ | 5,304 | $ | 5,443 | $ | 23,718 | $ | 17,726 | |||||||
| Adjustments: | |||||||||||||||
| Loss on Extinguishment of Debt | 443 | — | 727 | — | |||||||||||
| Amortization of Intangible Assets and Liabilities to Lease Income |
(80 | ) | (89 | ) | (328 | ) | (257 | ) | |||||||
| Straight-Line Rent Adjustment | (198 | ) | (214 | ) | (935 | ) | (607 | ) | |||||||
| COVID-19 Rent Repayments, Net | — | 22 | 45 | 430 | |||||||||||
| Non-Cash Compensation | 74 | 78 | 310 | 309 | |||||||||||
| Amortization of Deferred Financing Costs to Interest Expense |
192 | 126 | 599 | 362 | |||||||||||
| Other Non-Cash (Income) Expense | 28 | (1 | ) | 100 | (18 | ) | |||||||||
| Recurring Capital Expenditures | — | — | — | (41 | ) | ||||||||||
| Adjusted Funds from Operations | $ | 5,763 | $ | 5,365 | $ | 24,236 | $ | 17,904 | |||||||
| FFO per Diluted Share | $ | 0.37 | $ | 0.42 | $ | 1.73 | $ | 1.58 | |||||||
| AFFO per Diluted Share | $ | 0.41 | $ | 0.41 | $ | 1.77 | $ | 1.59 | |||||||
Non-GAAP Financial Measures
Reconciliation of Net Debt to Pro Forma EBITDA
(Unaudited)
(In thousands)
| Three Months Ended | |||
| Net Income | $ | 5,525 | |
| Adjustments: | |||
| Depreciation and Amortization | 6,332 | ||
| Gain on Disposition of Assets | (6,553 | ) | |
| Loss on Extinguishment of Debt | 443 | ||
| Straight-Line Rent Adjustment | (198 | ) | |
| Non-Cash Compensation | 74 | ||
| Amortization of Deferred Financing Costs to Interest Expense | 192 | ||
| Amortization of Intangible Assets and Liabilities to Lease Income | (80 | ) | |
| Other Non-Cash Expense | 28 | ||
| Interest Expense, Net of Deferred Financing Costs Amortization | 2,999 | ||
| EBITDA | $ | 8,762 | |
| Annualized EBITDA | $ | 35,048 | |
| Pro Forma Annualized Impact of Current Quarter Acquisitions and Dispositions, Net (1) | 1,133 | ||
| Pro Forma EBITDA | $ | 36,181 | |
| Total Long-Term Debt | $ | 267,116 | |
| Financing Costs, Net of Accumulated Amortization | 1,518 | ||
| Cash and Cash Equivalents | (9,018 | ) | |
| Restricted Cash | (4,026 | ) | |
| Net Debt | $ | 255,590 | |
| Net Debt to Pro Forma EBITDA | 7.1x | ||
(1) Reflects the pro forma annualized impact on Annualized EBITDA of the Company’s acquisition and disposition activities during the three months ended
Contact:
Senior Vice President, Chief Financial Officer & Treasurer
(407) 904-3324
mpartridge@alpinereit.com
Source: Alpine Income Property Trust