Alpine Income Property Trust Reports Second Quarter 2024 Operating Results
Select Highlights
- Reported Net Income per diluted share attributable to the Company of
$0.01 for the quarter endedJune 30, 2024 . - Reported both FFO and AFFO per diluted share of
$0.43 for the quarter endedJune 30, 2024 , an increase of 16.2% from the comparable prior year period. - Acquired a net lease retail property which is 100% leased to two investment grade tenants for
$14.6 million . - Sold two net lease retail properties leased to non-investment grade rated tenants, for total disposition volume of
$6.6 million at a weighted average exit cash cap rate of 7.0%, generating aggregate gains of$0.9 million . - Originated one first mortgage construction loan with a total funding commitment of
$6.1 million , of which$4.6 million was funded during the quarter endedJune 30, 2024 , at a yield of 11.5%. - Sold a
$13.6 million A-1 participation interest in the Company’s$23.4 million portfolio mortgage loan investment. - Paid a cash dividend for the second quarter of 2024 of
$0.275 per share, representing an annualized yield of 6.5% based on the closing price of the Company’s common stock onJuly 17, 2024 . - Increased full year FFO guidance to
$1.58 to$1.62 per diluted share and full year 2024 AFFO guidance to$1.60 to$1.64 per diluted share, representing a 4.2% increase at the midpoint of these ranges.
CEO Comments
“We are pleased with our investment activity during the quarter which included the acquisition of a two-tenant property for
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 | $ | 12,490 | $ | 11,348 | $ | 1,142 | 10.1 | % | ||||||||
| Net Income | $ | 222 | $ | 90 | $ | 132 | 146.7 | % | ||||||||
| Net Income Attributable to PINE | $ | 204 | $ | 80 | $ | 124 | 155.0 | % | ||||||||
| Net Income per Diluted Share Attributable to PINE | $ | 0.01 | $ | 0.01 | $ | 0.00 | 0.0 | % | ||||||||
| FFO(1) | $ | 6,313 | $ | 5,770 | $ | 543 | 9.4 | % | ||||||||
| FFO per Diluted Share(1) | $ | 0.43 | $ | 0.37 | $ | 0.06 | 16.2 | % | ||||||||
| AFFO(1) | $ | 6,399 | $ | 5,843 | $ | 556 | 9.5 | % | ||||||||
| AFFO per Diluted Share(1) | $ | 0.43 | $ | 0.37 | $ | 0.06 | 16.2 | % | ||||||||
| Dividends Declared and Paid, per Share | $ | 0.275 | $ | 0.275 | $ | 0.000 | 0.0 | % | ||||||||
| (1) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share. |
||||||||||||||||
Year-to-Date Operating Results Highlights
The table below provides a summary of the Company’s operating results for the six months ended
| Six Months Ended |
Six Months Ended |
Variance to Comparable Period in the Prior Year |
||||||||||||||
| Total Revenues | $ | 24,956 | $ | 22,504 | $ | 2,452 | 10.9 | % | ||||||||
| Net Income (Loss) | $ | (61 | ) | $ | 3,835 | $ | (3,896 | ) | (101.6 | %) | ||||||
| Net Income (Loss) Attributable to PINE | $ | (56 | ) | $ | 3,419 | $ | (3,475 | ) | (101.6 | %) | ||||||
| Net Income (Loss) per Diluted Share Attributable to PINE | $ | 0.00 | $ | 0.22 | $ | (0.22 | ) | (100.0 | %) | |||||||
| FFO(1) | $ | 12,443 | $ | 11,397 | $ | 1,046 | 9.2 | % | ||||||||
| FFO per Diluted Share(1) | $ | 0.84 | $ | 0.72 | $ | 0.12 | 16.7 | % | ||||||||
| AFFO(1) | $ | 12,642 | $ | 11,478 | $ | 1,164 | 10.1 | % | ||||||||
| AFFO per Diluted Share(1) | $ | 0.85 | $ | 0.73 | $ | 0.12 | 16.4 | % | ||||||||
| Dividends Declared and Paid, per Share | $ | 0.550 | $ | 0.550 | $ | 0.000 | 0.0 | % | ||||||||
| (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 (Loss) to non-GAAP financial measures, including FFO, FFO per diluted share, AFFO, and AFFO per diluted share. |
||||||||||||||||
Investments
During the three months ended
During the three months ended
During the three months ended
During the six months ended
Dispositions
During the three months ended
During the three months ended
During the three and six months ended
Property Portfolio
The Company’s property portfolio consisted of the following as of
| Number of Properties | 137 |
| Square Feet | 3.8 million |
| Annualized Base Rent | |
| Weighted Average Remaining Lease Term | 6.6 years |
| States where Properties are Located | 34 |
| Occupancy | 99.1% |
| % of Annualized Base Rent Attributable to Investment Grade Rated Tenants (1)(2) | 67% |
| % of Annualized Base Rent Attributable to Credit Rated Tenants (1)(3) | 90% |
| 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 property portfolio included the following top tenants that represent 2.0% or greater of the Company's total ABR as of
| Tenant | Credit Rating (1) | % of Annualized Base Rent | ||
| Walgreens | BBB- / Ba1 | 12 | % | |
| Dick’s Sporting Goods | BBB / Baa3 | 10 | % | |
| Lowe’s | BBB+ / Baa1 | 9 | % | |
| Dollar Tree/Family Dollar | BBB / Baa2 | 8 | % | |
| Best Buy | BBB+ / A3 | 6 | % | |
| Dollar General | BBB / Baa2 | 5 | % | |
| Walmart | AA / Aa2 | 5 | % | |
| At Home | CCC / Caa3 | 4 | % | |
| Home Depot | A / A2 | 3 | % | |
| B/ B2 | 2 | % | ||
| Kohl’s | BB / Ba2 | 2 | % | |
| Burlington | BB+ / Ba2 | 2 | % | |
| NR / NR | 2 | % | ||
| Other | 30 | % | ||
| Total | 100 | % | ||
| Any differences are a result of rounding. (1) Credit Rating is the available rating from |
||||
The Company’s property portfolio consisted of the following industries as of
| Industry | % of Annualized Base Rent | |||
| Dollar Stores | 14 | % | ||
| Sporting Goods | 13 | % | ||
| Pharmacy | 13 | % | ||
| Home Improvement | 13 | % | ||
| Home Furnishings | 7 | % | ||
| Consumer Electronics | 7 | % | ||
| General Merchandise | 5 | % | ||
| Grocery | 5 | % | ||
| Entertainment | 5 | % | ||
| Off-Price Retail | 4 | % | ||
| Health & Fitness | 4 | % | ||
| Specialty Retail | 3 | % | ||
| Automotive Parts | 2 | % | ||
| Convenience Stores | 1 | % | ||
| 1 | % | |||
| 1 | % | |||
| Farm & Rural Supply | 1 | % | ||
| Casual Dining | < 1 | % | ||
| < 1 | % | |||
| Other(1) | < 1 | % | ||
| Total | 23 Industries | 100 | % | |
| Any differences are a result of rounding. (1) Includes four industries collectively representing less than 1% of the Company’s ABR as of |
||||
The Company’s property portfolio included properties in the following states as of
| State | % of Annualized Base Rent | |||
| 12 | % | |||
| 9 | % | |||
| 8 | % | |||
| 7 | % | |||
| 7 | % | |||
| 7 | % | |||
| 5 | % | |||
| 5 | % | |||
| 4 | % | |||
| 3 | % | |||
| 3 | % | |||
| 3 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 2 | % | |||
| 1 | % | |||
| 1 | % | |||
| 1 | % | |||
| 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| < 1 | % | |||
| Total | 34 States | 100 | % | |
| Any differences are a result of rounding. |
||||
Balance Sheet
The following table provides a summary of the Company’s long-term debt as of
| Component of Long-Term Debt | Principal | Stated Interest Rate | Wtd. Avg. Rate as of |
Maturity Date | ||||||
| 2026 Term Loan (1) | $ | 100.0 million | SOFR + 10 bps + [1.35% - 1.95%] |
3.65 | % | |||||
| 2027 Term Loan (2) | 100.0 million | SOFR + 10 bps + [1.25% - 1.90%] |
2.73 | % | ||||||
| Revolving Credit Facility (3) | 69.0 million | SOFR + 10 bps + [1.25% - 2.20%] |
5.39 | % | ||||||
| Total Debt/Weighted-Average Rate | $ | 269.0 million | 3.75 | % | ||||||
| (1) As of (2) As of (3) As of |
||||||||||
As of
As of
Dividend
On
2024 Outlook
The Company has increased its FFO and AFFO outlook for 2024 to take into account the Company’s year-to-date performance. The Company’s outlook for 2024 assumes continued stability in economic activity, stable or positive business trends related to each of our tenants, and other significant assumptions.
The Company’s revised outlook for 2024 is as follows:
| Change from Prior Outlook |
|||||||||||
| Low | High | Low | High | ||||||||
| Investments | to | - | to | - | |||||||
| Dispositions | to | - | to | - | |||||||
| FFO per Diluted Share | to | $0.07 | to | $0.06 | |||||||
| AFFO per Diluted Share | to | $0.07 | to | $0.06 | |||||||
| Weighted Average Diluted Shares Outstanding |
14.9 million | to | 14.9 million | - | to | - | |||||
Second Quarter 2024 Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter 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/5pd8tuhj |
| Dial-In: |
https://register.vevent.com/register/BI3cfad882e4f24cdfaa296cedba617ae8 |
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, credit risk associated with the Company investing in first mortgage investments, 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 further 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 impairments associated with the implementation of current expected credit losses on commercial loans and investments at the time of origination and/or payoff, 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, other non-cash income or expense, and other non-recurring items such as disposition management fees and commission fees. 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 | ||||||||
| (Unaudited) |
||||||||
| ASSETS | ||||||||
| Real Estate: | ||||||||
| Land, at Cost | $ | 152,678 | $ | 149,314 | ||||
| Building and Improvements, at Cost | 334,312 | 328,993 | ||||||
| 486,990 | 478,307 | |||||||
| Less, Accumulated Depreciation | (41,879 | ) | (34,714 | ) | ||||
| Real Estate—Net | 445,111 | 443,593 | ||||||
| Assets Held for Sale | 3,943 | 4,410 | ||||||
| Commercial Loans and Investments | 44,730 | 35,080 | ||||||
| Cash and Cash Equivalents | 3,260 | 4,019 | ||||||
| Restricted Cash | 3,136 | 9,712 | ||||||
| Intangible Lease Assets—Net | 45,761 | 49,292 | ||||||
| Straight-Line Rent Adjustment | 1,545 | 1,409 | ||||||
| Other Assets | 18,291 | 17,045 | ||||||
| Total Assets | $ | 565,777 | $ | 564,560 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts Payable, Accrued Expenses, and Other Liabilities | $ | 7,238 | $ | 5,736 | ||||
| Prepaid Rent and Deferred Revenue | 3,216 | 2,627 | ||||||
| Intangible Lease Liabilities—Net | 5,017 | 4,907 | ||||||
| Obligation Under Participation Agreement | 13,632 | — | ||||||
| Long-Term Debt | 268,320 | 275,677 | ||||||
| Total Liabilities | 297,423 | 288,947 | ||||||
| Commitments and Contingencies | ||||||||
| Equity: | ||||||||
| Preferred Stock, |
— | — | ||||||
| Common Stock, |
136 | 137 | ||||||
| 243,019 | 243,690 | |||||||
| Dividends in Excess of Net Income | (9,907 | ) | (2,359 | ) | ||||
| Accumulated Other Comprehensive Income | 10,780 | 9,275 | ||||||
| Stockholders' Equity | 244,028 | 250,743 | ||||||
| Noncontrolling Interest | 24,326 | 24,870 | ||||||
| Total Equity | 268,354 | 275,613 | ||||||
| Total Liabilities and Equity | $ | 565,777 | $ | 564,560 | ||||
Consolidated Statements of Operations (Unaudited) (In thousands, except share, per share and dividend data) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| Revenues: | ||||||||||||||||
| Lease Income | $ | 11,330 | $ | 11,348 | $ | 22,794 | $ | 22,504 | ||||||||
| Interest Income from Commercial | ||||||||||||||||
| Loans and Investments | 986 | — | 1,889 | — | ||||||||||||
| Other Revenue | 174 | — | 273 | — | ||||||||||||
| Total Revenues | 12,490 | 11,348 | 24,956 | 22,504 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Real Estate Expenses | 1,800 | 1,575 | 3,728 | 3,009 | ||||||||||||
| General and Administrative Expenses | 1,602 | 1,656 | 3,144 | 3,171 | ||||||||||||
| Provision for Impairment | 657 | — | 688 | — | ||||||||||||
| Depreciation and Amortization | 6,352 | 6,423 | 12,734 | 12,758 | ||||||||||||
| Total Operating Expenses | 10,411 | 9,654 | 20,294 | 18,938 | ||||||||||||
| Gain on Disposition of Assets | 918 | 743 | 918 | 5,196 | ||||||||||||
| Gain on Extinguishment of Debt | — | — | — | 23 | ||||||||||||
| Net Income from Operations | 2,997 | 2,437 | 5,580 | 8,785 | ||||||||||||
| Investment and Other Income | 56 | 91 | 125 | 101 | ||||||||||||
| Interest Expense | (2,831 | ) | (2,438 | ) | (5,766 | ) | (5,051 | ) | ||||||||
| Net Income (Loss) | 222 | 90 | (61 | ) | 3,835 | |||||||||||
| Less: Net (Income) Loss Attributable to Noncontrolling Interest | (18 | ) | (10 | ) | 5 | (416 | ) | |||||||||
| Net Income (Loss) Attributable to |
$ | 204 | $ | 80 | $ | (56 | ) | $ | 3,419 | |||||||
| Per Common Share Data: | ||||||||||||||||
| Net Income (Loss) Attributable to |
||||||||||||||||
| Basic | $ | 0.01 | $ | 0.01 | $ | 0.00 | $ | 0.24 | ||||||||
| Diluted | $ | 0.01 | $ | 0.01 | $ | 0.00 | $ | 0.22 | ||||||||
| Weighted Average Number of Common Shares: | ||||||||||||||||
| Basic | 13,624,932 | 14,059,173 | 13,623,070 | 14,030,025 | ||||||||||||
| Diluted (1) | 14,848,786 | 15,762,667 | 14,846,924 | 15,733,519 | ||||||||||||
| Dividends Declared and Paid | $ | 0.275 | $ | 0.275 | $ | 0.550 | $ | 0.550 | ||||||||
| (1) Includes the weighted average of 1,223,854 shares during the three and six months ended |
||||||||||||||||
Non-GAAP Financial Measures Funds From Operations and Adjusted Funds From Operations (Unaudited) (In thousands, except per share data) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| Net Income (Loss) | $ | 222 | $ | 90 | $ | (61 | ) | $ | 3,835 | |||||||
| Depreciation and Amortization | 6,352 | 6,423 | 12,734 | 12,758 | ||||||||||||
| Provision for Impairment | 657 | — | 688 | — | ||||||||||||
| Gain on Disposition of Assets | (918 | ) | (743 | ) | (918 | ) | (5,196 | ) | ||||||||
| Funds from Operations | $ | 6,313 | $ | 5,770 | $ | 12,443 | $ | 11,397 | ||||||||
| Adjustments: | ||||||||||||||||
| Gain on Extinguishment of Debt | — | — | — | (23 | ) | |||||||||||
| Amortization of Intangible Assets and Liabilities to Lease Income | (115 | ) | (102 | ) | (225 | ) | (189 | ) | ||||||||
| Straight-Line Rent Adjustment | (89 | ) | (109 | ) | (154 | ) | (274 | ) | ||||||||
| Non-Cash Compensation | 80 | 79 | 159 | 159 | ||||||||||||
| Amortization of Deferred Financing | ||||||||||||||||
| Costs to Interest Expense | 180 | 177 | 360 | 351 | ||||||||||||
| Other Non-Cash Expense | 30 | 28 | 59 | 57 | ||||||||||||
| Adjusted Funds from Operations | $ | 6,399 | $ | 5,843 | $ | 12,642 | $ | 11,478 | ||||||||
| FFO per Diluted Share | $ | 0.43 | $ | 0.37 | $ | 0.84 | $ | 0.72 | ||||||||
| AFFO per Diluted Share | $ | 0.43 | $ | 0.37 | $ | 0.85 | $ | 0.73 | ||||||||
Non-GAAP Financial Measures Reconciliation of Net Debt to Pro Forma EBITDA (Unaudited) (In thousands) |
||||
| Three Months Ended | ||||
| Net Income | $ | 222 | ||
| Adjustments: | ||||
| Depreciation and Amortization | 6,352 | |||
| Provision for Impairment | 657 | |||
| Gains on Disposition of Assets | (918 | ) | ||
| Straight-Line Rent Adjustment | (89 | ) | ||
| Non-Cash Compensation | 80 | |||
| Amortization of Deferred Financing Costs to Interest Expense | 180 | |||
| Amortization of Intangible Assets and Liabilities to Lease Income | (115 | ) | ||
| Other Non-Cash Expense | 30 | |||
| Other Non-Recurring Items | (99 | ) | ||
| Interest Expense, Net of Deferred Financing Costs Amortization | 2,557 | |||
| EBITDA | $ | 8,857 | ||
| Annualized EBITDA | $ | 35,428 | ||
| Pro Forma Annualized Impact of Current Quarter Investment Activity (1) | 456 | |||
| Pro Forma EBITDA | $ | 35,884 | ||
| Total Long-Term Debt | $ | 268,320 | ||
| Financing Costs, Net of Accumulated Amortization | 680 | |||
| Cash and Cash Equivalents | (3,260 | ) | ||
| Net Debt | $ | 265,740 | ||
| Net Debt to Pro Forma EBITDA | 7.4 | x | ||
| (1) Reflects the pro forma annualized impact on Annualized EBITDA of the Company’s investments and disposition activity during the three months ended |
||||
Contact:
Senior Vice President, Chief Financial Officer and
Treasurer
(407) 904-3324
pmays@alpinereit.com
Source: Alpine Income Property Trust