SEC Filing - Alpine Income Property Trust

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	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 001-39143

ALPINE INCOME PROPERTY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland		84-2769895
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

369 N. New York Avenue, Suite 201
Winter Park, Florida		32789
(Address of principal executive offices)		(Zip Code)

(386) 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:
COMMON STOCK, $0.01 PAR VALUE	PINE	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. 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). 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	☐

Non-accelerated Filer	☒	Smaller Reporting Company	☒

		Emerging Growth Company	☒

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. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding on October 10, 2024 was 14,272,978.

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INDEX


		Page
		No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements		3

Consolidated Balance Sheets – September 30, 2024 (Unaudited) and December 31, 2023		3

Consolidated Statements of Operations – Three and nine months ended September 30, 2024 and 2023 (Unaudited)		4

Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2024 and 2023 (Unaudited)		5

Consolidated Statements of Stockholders’ Equity – Three and nine months ended September 30, 2024 and 2023 (Unaudited)		6

Consolidated Statements of Cash Flows – Nine months ended September 30, 2024 and 2023 (Unaudited)		8

Notes to Consolidated Financial Statements (Unaudited)		10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3. Quantitative and Qualitative Disclosures About Market Risk		46

Item 4. Controls and Procedures		46

PART II—OTHER INFORMATION		46

Item 1. Legal Proceedings		46

Item 1A. Risk Factors		46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		46

Item 3. Defaults Upon Senior Securities		47

Item 4. Mine Safety Disclosures		47

Item 5. Other Information		47

Item 6. Exhibits		48

SIGNATURES		49

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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
	September 30, 2024 (Unaudited)		December 31, 2023
ASSETS
Real Estate:
Land, at Cost	$	132,433	$	149,314
Building and Improvements, at Cost		317,260		328,993
Total Real Estate, at Cost		449,693		478,307
Less, Accumulated Depreciation		(42,302)		(34,714)
Real Estate—Net		407,391		443,593
Assets Held for Sale		4,100		4,410
Commercial Loans and Investments		86,549		35,080
Cash and Cash Equivalents		2,560		4,019
Restricted Cash		25,495		9,712
Intangible Lease Assets—Net		40,574		49,292
Straight-Line Rent Adjustment		1,366		1,409
Other Assets		10,951		17,045
Total Assets	$	578,986	$	564,560
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities	$	7,279	$	5,736
Prepaid Rent and Deferred Revenue		3,319		2,627
Intangible Lease Liabilities—Net		4,358		4,907
Obligation Under Participation Agreement		13,178		—
Long-Term Debt		278,898		275,677
Total Liabilities		307,032		288,947
Commitments and Contingencies—See Note 20
Equity:
Preferred Stock, $0.01 par value per share, 100 million shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023		—		—
Common Stock, $0.01 par value per share, 500 million shares authorized, 14,251,933 shares issued and outstanding as of September 30, 2024 and 13,659,207 shares issued and outstanding as of December 31, 2023		143		137
Additional Paid-in Capital		254,110		243,690
Dividends in Excess of Net Income		(10,652)		(2,359)
Accumulated Other Comprehensive Income		4,641		9,275
Stockholders' Equity		248,242		250,743
Noncontrolling Interest		23,712		24,870
Total Equity		271,954		275,613
Total Liabilities and Equity	$	578,986	$	564,560

The accompanying notes are an integral part of these consolidated financial statements.

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Revenues:
Lease Income	$	11,718	$	11,447	$	34,512	$	33,951
Interest Income from Commercial Loans and Investments		1,663		112		3,552		112
Other Revenue		99		—		372		—
Total Revenues		13,480		11,559		38,436		34,063
Operating Expenses:
Real Estate Expenses		1,841		1,722		5,569		4,731
General and Administrative Expenses		1,843		1,652		4,987		4,823
Provision for Impairment		422		2,864		1,110		2,864
Depreciation and Amortization		6,340		6,528		19,074		19,286
Total Operating Expenses		10,446		12,766		30,740		31,704
Gain on Disposition of Assets		3,426		2,586		4,344		7,782
Gain on Extinguishment of Debt		—		—		—		23
Net Income From Operations		6,460		1,379		12,040		10,164
Investment and Other Income		61		125		186		226
Interest Expense		(3,167)		(2,443)		(8,933)		(7,494)
Net Income (Loss)		3,354		(939)		3,293		2,896
Less: Net (Income) Loss Attributable to Noncontrolling Interest		(274)		102		(269)		(314)
Net Income (Loss) Attributable to Alpine Income Property Trust, Inc.	$	3,080	$	(837)	$	3,024	$	2,582

Per Common Share Data:
Net Income (Loss) Attributable to Alpine Income Property Trust, Inc.
Basic	$	0.22	$	(0.06)	$	0.22	$	0.18
Diluted	$	0.21	$	(0.05)	$	0.20	$	0.16

Weighted Average Number of Common Shares:
Basic		13,744,232		13,946,194		13,663,752		14,001,774
Diluted		14,968,086		15,649,688		14,887,606		15,705,268

The accompanying notes are an integral part of these consolidated financial statements.

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income (Loss)	$	3,354	$	(939)	$	3,293	$	2,896
Other Comprehensive Income (Loss)
Cash Flow Hedging Derivative - Interest Rate Swaps		(6,686)		1,492		(5,046)		3,105
Total Other Comprehensive Income (Loss)		(6,686)		1,492		(5,046)		3,105
Total Comprehensive Income (Loss)	$	(3,332)	$	553	$	(1,753)	$	6,001
Less: Comprehensive (Income) Loss Attributable to Noncontrolling Interest
Net (Income) Loss Attributable to Noncontrolling Interest		(274)		102		(269)		(314)
Other Comprehensive (Income) Loss Attributable to Noncontrolling Interest		547		—		412		—
Comprehensive (Income) Loss Attributable to Noncontrolling Interest		273		102		143		(314)
Comprehensive Income (Loss) Attributable to Alpine Income Property Trust, Inc.	$	(3,059)	$	655	$	(1,610)	$	5,687

The accompanying notes are an integral part of these consolidated financial statements.

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except per share data)

For the three months ended September 30, 2024:


	Common Stock at Par		Additional Paid-in Capital		Dividends in Excess of Net Income		Accumulated Other Comprehensive Income		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance July 1, 2024	$	136	$	243,019	$	(9,907)	$	10,780	$	244,028	$	24,326	$	268,354
Net Income		—		—		3,080		—		3,080		274		3,354
Stock Issuance to Directors		—		79		—		—		79		—		79
Stock Issuance, Net of Equity Issuance Costs		7		11,012		—		—		11,019		—		11,019
Cash Dividends ($0.280 per share)		—		—		(3,825)		—		(3,825)		(341)		(4,166)
Other Comprehensive Loss		—		—		—		(6,139)		(6,139)		(547)		(6,686)
Balance September 30, 2024	$	143	$	254,110	$	(10,652)	$	4,641	$	248,242	$	23,712	$	271,954

For the three months ended September 30, 2023:


	Common Stock at Par		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance July 1, 2023	$	140	$	248,958	$	5,731	$	16,214	$	271,043	$	33,237	$	304,280
Net Loss		—		—		(837)		—		(837)		(102)		(939)
Stock Repurchases		(2)		(4,709)		—		—		(4,711)		—		(4,711)
Stock Issuance to Directors		—		79		—		—		79		—		79
Payment of Equity Issuance Costs		—		(28)		—		—		(28)		—		(28)
Cash Dividends ($0.275 per share)		—		—		(3,819)		—		(3,819)		(469)		(4,288)
Other Comprehensive Income		—		—		—		1,492		1,492		—		1,492
Balance September 30, 2023	$	138	$	244,300	$	1,075	$	17,706	$	263,219	$	32,666	$	295,885

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited, in thousands, except per share data)

For the nine months ended September 30, 2024:


	Common Stock at Par		Additional Paid-in Capital		Dividends in Excess of Net Income		Accumulated Other Comprehensive Income		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance January 1, 2024	$	137	$	243,690	$	(2,359)	$	9,275	$	250,743	$	24,870	$	275,613
Net Income		—		—		3,024		—		3,024		269		3,293
Stock Repurchases		(1)		(774)		—		—		(775)		—		(775)
Stock Issuance to Directors		—		238		—		—		238		—		238
Stock Issuance, Net of Equity Issuance Costs		7		10,956		—		—		10,963		—		10,963
Cash Dividends ($0.830 per share)		—		—		(11,317)		—		(11,317)		(1,015)		(12,332)
Other Comprehensive Loss		—		—		—		(4,634)		(4,634)		(412)		(5,046)
Balance September 30, 2024	$	143	$	254,110	$	(10,652)	$	4,641	$	248,242	$	23,712	$	271,954

For the nine months ended September 30, 2023:


	Common Stock at Par		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance January 1, 2023	$	134	$	236,841	$	10,042	$	14,601	$	261,618	$	33,757	$	295,375
Net Income		—		—		2,582		—		2,582		314		2,896
Stock Repurchases		(3)		(5,073)		—		—		(5,076)		—		(5,076)
Stock Issuance to Directors		—		224		—		—		224		—		224
Stock Issuance, Net of Equity Issuance Costs		7		12,308		—		—		12,315		—		12,315
Cash Dividends ($0.825 per share)		—		—		(11,549)		—		(11,549)		(1,405)		(12,954)
Other Comprehensive Income		—		—		—		3,105		3,105		—		3,105
Balance September 30, 2023	$	138	$	244,300	$	1,075	$	17,706	$	263,219	$	32,666	$	295,885

The accompanying notes are an integral part of these consolidated financial statements

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended
	September 30, 2024		September 30, 2023
Cash Flow From Operating Activities:
Net Income	$	3,293	$	2,896
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		19,074		19,286
Amortization of Intangible Lease Assets and Liabilities to Lease Income		(361)		(299)
Amortization of Deferred Financing Costs to Interest Expense		540		530
Accretion of Commercial Loans and Investments Origination Fees		(111)		(4)
Gain on Disposition of Assets		(4,344)		(7,782)
Provision for Impairment		1,110		2,864
Non-Cash Compensation		238		238
Decrease (Increase) in Assets:
Straight-Line Rent Adjustment		(370)		(386)
Other Assets		65		(237)
Increase (Decrease) in Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities		1,179		1,233
Prepaid Rent and Deferred Revenue		692		405
Net Cash Provided By Operating Activities		21,005		18,744
Cash Flow From Investing Activities:
Acquisition of Real Estate, Including Capitalized Expenditures		(22,523)		(81,395)
Proceeds from Disposition of Assets		53,702		97,919
Acquisition of Commercial Loans and Investments		(52,993)		(6,870)
Principal Payments Received on Commercial Loan Investments		14,292		—
Net Cash Provided By (Used In) Investing Activities		(7,522)		9,654
Cash Flow from Financing Activities:
Proceeds from Long-Term Debt		67,900		4,750
Payments on Long-Term Debt		(64,900)		(23,000)
Cash Paid for Loan Fees		(15)		(46)
Repurchase of Common Stock		(775)		(5,076)
Proceeds From Stock Issuance, Net		10,963		12,315
Dividends Paid		(12,332)		(12,954)
Net Cash Provided By (Used In) Financing Activities		841		(24,011)
Net Increase in Cash and Cash Equivalents		14,324		4,387
Cash and Cash Equivalents and Restricted Cash, Beginning of Period		13,731		13,044
Cash and Cash Equivalents and Restricted Cash, End of Period	$	28,055	$	17,431

Reconciliation of Cash to the Consolidated Balance Sheets:
Cash and Cash Equivalents	$	2,560	$	6,265
Restricted Cash		25,495		11,166
Total Cash	$	28,055	$	17,431

The accompanying notes are an integral part of these consolidated financial statements.

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited, in thousands)


	Nine Months Ended
	September 30, 2024		September 30, 2023
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	$	8,996	$	6,924

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Unrealized Gain (Loss) on Cash Flow Hedge	$	(5,046)	$	3,105

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BUSINESS AND ORGANIZATION

BUSINESS

Alpine Income Property Trust, Inc. (the “Company” or “PINE”) is a real estate investment trust (“REIT”) 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 property portfolio consists of 133 net leased properties located in 34 states. The properties in our portfolio are primarily subject to long-term, net leases, which generally require the tenant to pay directly or reimburse us for property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance and certain capital expenditures. The Company may also acquire or originate commercial loans and investments. Our investments in commercial loans are generally secured by real estate or the borrower’s pledge of its ownership interest in an entity that owns real estate. As more fully described in Note 4, “Commercial Loans and Investments,” the three Tampa Properties (defined in Note 4 below), which were purchased during the three months ended September 30, 2024 through a sale-leaseback transaction that includes a tenant repurchase option are, for GAAP purposes, accounted for as a financing arrangement. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we include the Tampa Properties in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto.

The Company operates in two primary business segments: income properties and commercial loans and investments.

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 Realty Growth, Inc. (our “Manager”). CTO Realty Growth, Inc. (NYSE: CTO) is a Maryland corporation that is a publicly traded REIT and the sole member of our Manager (“CTO”). All of our executive officers also serve as executive officers of CTO, and one of our executive officers and directors, John P. Albright, also serves as an executive officer and director of 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”). We conduct the substantial majority of our operations through Alpine Income Property OP, LP (the “Operating Partnership”). Our wholly owned subsidiary, Alpine Income Property GP, LLC (“PINE GP”), is the sole general partner of the Operating Partnership. Substantially all of our assets are held by, and our operations are conducted through, the Operating Partnership. As of September 30, 2024, we have a total ownership interest in the Operating Partnership of 92.1%, with CTO holding, directly and indirectly, a 7.9% ownership interest in the Operating Partnership. 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”) oversees our business and affairs.

The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gain, to its stockholders (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

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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.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and other entities in which we have a controlling interest. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements.

SEGMENT REPORTING

Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 280, Segment Reporting, establishes standards related to the manner in which enterprises report operating segment information. The Company operates in two primary business segments including income properties and commercial loans and investments, as further discussed within Note 21, “Business Segment Data”. The Company has no other reportable segments. The Company’s chief executive officer, who is the Company’s chief operating decision maker, reviews financial information on a disaggregated basis for purposes of allocating and evaluating financial performance.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with 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 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.

REAL ESTATE

The Company’s real estate assets are comprised of the properties in its portfolio, and are stated at cost, less accumulated depreciation, and amortization. Such properties are depreciated on a straight-line basis over their estimated useful lives. Renewals and betterments are capitalized to the applicable property accounts. The cost of maintenance and repairs is expensed as incurred. The cost of property retired or otherwise disposed of, and the related accumulated depreciation or amortization, are removed from the accounts, and any resulting gain or loss is recorded in the statement of operations. The amount of depreciation of real estate, exclusive of amortization related to intangible assets, recognized for the three months ended September 30, 2024 and September 30, 2023, was $4.2 million and $4.3 million, respectively. The amount of depreciation of real estate, exclusive of amortization related to intangible assets, recognized for the nine months ended September 30, 2024 and September 30, 2023, was $12.7 million and $12.6 million, respectively.

LONG-LIVED ASSETS

The Company follows 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, and real estate held for sale, 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, a 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.

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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 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.

ASSETS HELD FOR SALE

Investments in real estate which are determined to be “held for sale” pursuant to FASB Topic 360-10, Property, Plant, and Equipment are reported separately on the consolidated balance sheets at the lesser of carrying value or fair value, less costs to sell. Real estate investments classified as held for sale are not depreciated.

SALES OF REAL ESTATE

When properties are disposed of, the related cost basis of the real estate, intangible lease assets, and intangible lease liabilities, net of accumulated depreciation and/or amortization, and any accrued straight-line rental income balance for the underlying operating leases are removed, and gains or losses from the dispositions are reflected in net income within gains on dispositions of assets. In accordance with the FASB guidance, gains or losses on sales of real estate are generally recognized using the full accrual method.

PROPERTY LEASE REVENUE

The rental arrangements associated with the Company’s 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.

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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 September 30, 2024 and December 31, 2023, the Company’s allowance for doubtful accounts totaled $0.2 million and $0.4 million, respectively.

COMMERCIAL LOANS AND INVESTMENTS

Investments in commercial loans and investments held for investment are recorded at historical cost, net of unaccreted origination costs and current expected credit losses (“CECL”) reserve.

Pursuant to ASC 326, Financial Instruments - Credit Losses, the Company measures and records a provision for CECL each time a new investment is made, or a loan is repaid, as well as if changes to estimates occur during a quarterly measurement period. We are unable to use historical data to estimate expected credit losses as we have incurred no losses to date. Management utilizes a loss-rate method and considers macroeconomic factors to estimate its CECL allowance, which is calculated based on the amortized cost basis of the commercial loans.

Sales of participations in commercial loans and investments are evaluated for achievement of the characteristics of participating interest pursuant to ASC 860, Transfers and Servicing. If the sale of a participation has all of the characteristics of a participating interest, it achieves sale accounting, and the commercial loan or investment is presented net of the participating interest. If the sale of a participation does not have all of the characteristics of a participating interest, it does not achieve sale accounting and is treated as a secured borrowing. As of September 30, 2024, the Company’s participation in commercial loans and investments purchased by a third-party did not achieve sale accounting and has been presented as an Obligation under Participation Agreement within the liabilities portion of the Company’s consolidated balance sheet.

RECOGNITION OF INTEREST INCOME FROM COMMERCIAL LOANS AND INVESTMENTS

Interest income on commercial loans and investments includes interest payments made by the borrower and the accretion of loan origination fees, offset by the amortization of loan costs, if any. Interest payments are accrued based on the actual coupon rate and the outstanding principal balance and purchase discounts and loan origination fees are accreted into income using the effective yield method, adjusted for prepayments.

OPERATING LAND LEASE EXPENSE

The Company is the lessee under operating land leases for certain of its properties, which leases are classified as operating leases pursuant to FASB ASC Topic 842, Leases. The corresponding lease expense is recognized on a straight-line basis over the term of the lease and is included in real estate expenses in the accompanying consolidated statements of operations.

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 September 30, 2024 and December 31, 2023 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.

RESTRICTED CASH

Restricted cash totaled $25.5 million as of September 30, 2024, of which $22.4 million is being held in multiple escrow accounts to be reinvested through the like-kind exchange structure into other income properties and $3.1 million is being held in interest, real estate tax, insurance, and/or capital expenditure reserve accounts related to the Company’s portfolio of commercial loans and investments.

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY

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 accompanying 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 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 will continue to do so on a quarterly basis.

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 14, “Interest Rate Swaps”).

FAIR 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 September 30, 2024 and December 31, 2023, approximate fair value because of the short maturity of these instruments. The carrying value of the Credit Facility, hereinafter defined, approximates current market rates for revolving credit arrangements with similar risks and maturities. The Company estimates the fair value of its commercial loans and investments and term loans 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.

FAIR 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.

●

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.

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CONCENTRATION OF CREDIT RISK

Certain individual tenants in the Company’s portfolio of properties accounted for more than 10% of lease income from the Company’s income properties during the nine months ended September 30, 2024 and 2023.

During the nine months ended September 30, 2024 and 2023, Walgreens accounted for 11% of lease income revenue.

As of September 30, 2024, 12%, 12%, and 11% of the Company’s real estate portfolio, based on square footage, was located in the states of New Jersey, Michigan, and Ohio, respectively. As of December 31, 2023, 13%, 11%, and 11% of the Company’s real estate portfolio, based on square footage, was located in the states of Texas, New Jersey, and Michigan, respectively.

RECLASSIFICATIONS

Certain items in the prior period’s consolidated balance sheet and consolidated statement of operations have been reclassified to conform to the presentation for the three and nine months ended September 30, 2024. Specifically, tax, insurance, and capital expenditure reserve accounts related to the Company’s commercial loans and investments were previously included within prepaid rent and deferred revenue and are now included within accounts payable, accrued expenses, and other liabilities on the accompanying consolidated balance sheets. There was no impact to retained earnings as a result of the reclassification.

RECENTLY ISSUED ACCOUNTING STANDARDS

Segment Reporting. In November 2023, the FASB issued ASU 2023-07 which enhances segment disclosure requirements for entities required to report segment information in accordance with FASB ASC 280, Segment Reporting. The amendments in this update are effective for annual reporting periods beginning after December 15, 2023.

Income Taxes. In December 2023, the FASB issued ASU 2023-09 which enhances income tax disclosure requirements in accordance with FASB ASC 740, Income Taxes. The amendments in this update are effective for annual reporting periods beginning after December 15, 2023.

NOTE 3. PROPERTY PORTFOLIO

As of September 30, 2024, the Company’s property portfolio consisted of 133 properties, including three properties classified as commercial loans and investments, with total square footage of 3.6 million.

Leasing revenue consists of long-term rental revenue from net leased commercial properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are comprised of percentage rent payments and reimbursements from tenants for common area maintenance, insurance, real estate taxes, and other operating expenses.

The components of leasing revenue are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Lease Income
Lease Payments	$	10,051	$	10,049	$	29,815	$	30,187
Variable Lease Payments		1,667		1,398		4,697		3,764
Total Lease Income	$	11,718	$	11,447	$	34,512	$	33,951

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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 September 30, 2024, are summarized as follows (in thousands):


Year Ending December 31,	Amounts
Remainder of 2024	$	9,174
2025		36,512
2026		35,968
2027		32,365
2028		28,696
2029		23,708
2030 and Thereafter (Cumulative)		77,609
Total	$	244,032

2024 Activity. During the nine months ended September 30, 2024, the Company acquired six properties for a combined purchase price of $53.1 million, or a cost of $53.2 million including capitalized acquisition costs. The properties are located in four different states, leased to three different tenants, and had a weighted average remaining lease term of 21.7 years at the time of acquisition. Of the total acquisition cost, $5.7 million was allocated to land, $15.0 million was allocated to buildings and improvements, $2.0 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $0.9 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 4.8 years at acquisition. The remaining $31.4 million of acquisition costs is attributable to the three Tampa Properties (defined in Note 4 below), of the acquired properties which were purchased during the three months ended September 30, 2024 through a sale-leaseback transaction that includes a tenant repurchase option. Due to the existence of the tenant repurchase option, and pursuant to FASB ASC Topic 842, Leases, GAAP requires that the $31.4 million investment be accounted for as a financing arrangement, and accordingly the related assets and corresponding revenue are included in the Company’s commercial loans and investments in the accompanying consolidated balance sheets and consolidated statement of operations. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we include the Tampa Properties in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto.

During the nine months ended September 30, 2024, the Company sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million.

2023 Activity. During the nine months ended September 30, 2023, the Company acquired 12 properties for a combined purchase price of $79.9 million, or a cost of $81.2 million including capitalized acquisition costs. The properties are located in seven different states and had a weighted average remaining lease term of 8.7 years at the time of acquisition. Of the total acquisition cost, $22.1 million was allocated to land, $53.0 million was allocated to buildings and improvements, $8.0 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $0.9 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 9.6 years at acquisition.

During the nine months ended September 30, 2023, the Company sold 22 properties for an aggregate sales price of $99.6 million, generating aggregate gains on sale of $7.8 million.

NOTE 4. COMMERCIAL LOANS AND INVESTMENTS

2024 Activity. On January 30, 2024, the Company originated a construction loan secured by the property and improvements to be constructed thereon for six retail outparcels in Lawrenceville, Georgia for $7.2 million. The construction loan matures on January 30, 2026, bears a fixed interest rate of 11.25% and requires interest-only payments

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prior to maturity. Funding of the loan will occur as the borrower completes the underlying construction. As of September 30, 2024, the Company has disbursed $6.6 million to the borrower, leaving a remaining commitment of $0.6 million.

On May 31, 2024, the Company sold a $13.6 million A-1 participation interest (the “Loan Participation Sale”) in its $23.4 million Mortgage Note (hereinafter defined) originated in 2023. The senior participation of $13.6 million is entitled to an 8.0% yield on its respective portion of the outstanding principal balance and has priority preference with respect to all principal and interest payments of the Mortgage Note. After adjusting for the Loan Participation Sale, the Company’s remaining investment in the Mortgage Note is $9.7 million. This sale did not achieve sale accounting pursuant to ASC 860, Transfers and Servicing, and accordingly, is treated as a secured borrowing. See Note 12, “Obligation Under Participation Agreement” for further information.

On June 14, 2024, the Company originated a construction loan secured by the property and improvements to be constructed thereon for a 6-acre land development project anchored by Wawa and McDonalds in Mount Carmel, Ohio for $6.1 million. The construction loan matures on September 14, 2025, bears a fixed interest rate of 11.50% and requires interest-only payments prior to maturity. Funding of the loan will occur as the borrower completes the underlying construction. As of September 30, 2024, the Company has disbursed $5.0 million to the borrower, leaving a remaining commitment of $1.1 million.

On August 1, 2024, the Company acquired three single-tenant income properties (the “Tampa Properties”) in the greater Tampa Bay, Florida area for a combined purchase price of $31.4 million. The Tampa Properties consist of three restaurants, leased to a subsidiary of Beachside Hospitality Group, located in Bradenton Beach, Florida, Longboat Key, Florida, and Anna Maria, Florida. The acquisition was structured as a sale-leaseback transaction whereby the Company entered into three new 30-year lease agreements which include annual base rent escalations and a repurchase right by the tenant upon completion of the fifth lease year, i.e., on August 1, 2029. Pursuant to FASB ASC Topic 842, Leases, the future repurchase rights present in the lease agreements preclude the transaction from being accounted for as a real estate acquisition. Accordingly, for GAAP purposes, the acquisition of the Tampa Properties is accounted for as a financing arrangement, and the related assets and corresponding revenue are included in the Company’s commercial loans and investments on its consolidated balance sheets and consolidated statements of operations. The Company has imputed interest on the 30-year leases which is recognized as interest income from commercial loans and investments on the accompanying consolidated statement of operations.

On September 18, 2024, the Company originated a construction loan secured by the property and improvements to be constructed thereon for an 11-acre land development project anchored by Publix in Charlotte, North Carolina for $17.8 million. The construction loan matures on September 18, 2025, bears a fixed interest rate of 10.25% that increases by 0.25% each month subject to a maximum rate of 11.0%. Upon satisfaction of certain conditions outlined in the loan agreement, the interest rate will be reduced to 9.50%. The loan requires interest-only payments prior to maturity. Funding of the loan will occur as the borrower completes the underlying construction. As of September 30, 2024, the Company has disbursed $10.0 million to the borrower, leaving a remaining commitment of $7.8 million.

2023 Activity. On July 25, 2023, the Company originated a construction loan secured by the property and improvements to be constructed thereon for a 33-acre Wawa-anchored land development project in Greenwood, Indiana for $7.8 million. The construction loan matures on July 25, 2025, bears a fixed interest rate of 8.50% that increased to 9.25% on July 25, 2024, and requires interest-only payments prior to maturity. Funding of the loan will occur as the borrower completes the underlying construction. As of September 30, 2024, the Company has disbursed $7.1 million to the borrower, leaving a remaining commitment of $0.7 million.

On October 30, 2023, the Company originated a construction loan secured by the property and improvements to be constructed thereon for a 5-acre land development project anchored by Wawa and McDonalds in Antioch, Tennessee for $6.8 million with the same borrower as the construction loan secured by the 33-acre Wawa-anchored land development project in Greenwood, Indiana. The construction loan matures on October 30, 2025, bears a fixed interest rate of 11.00% that decreases to 9.50% on October 30, 2024, and requires interest-only payments prior to maturity. Funding of the loan will occur as the borrower completes the underlying construction. As of September 30, 2024, the Company has disbursed $4.7 million to the borrower, leaving a remaining commitment of $2.1 million.

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On November 15, 2023, the Company originated a $24.0 million first mortgage secured by a portfolio of 41 assets and related improvements (the “Mortgage Note”). The Mortgage Note matures on November 15, 2026, has two one-year extension options, bears a fixed interest rate of 8.75% at the time of acquisition, will increase by 0.25% annually during the initial term, and requires interest-only payments prior to maturity. During the nine months ended September 30, 2024, the Company received $1.1 million in principal repayments from the borrower.

The Company’s commercial loans and investments were comprised of the following at September 30, 2024 (in thousands):


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Construction Loan – Wawa Land Development – Greenwood, IN	July 2023	July 2025	$	7,800	$	7,149	$	7,133	9.25%
Construction Loan – Wawa Land Development – Antioch, TN	October 2023	October 2025		6,825		4,683		4,655	11.00%
Mortgage Note – Portfolio	November 2023	November 2026		24,000		22,915		22,830	8.75%
Construction Loan – Retail Outparcels – Lawrenceville, GA	January 2024	January 2026		7,200		6,618		6,558	11.25%
Construction Loan – Wawa Land Development – Mount Carmel, OH	June 2024	September 2025		6,127		5,023		4,976	11.50%
Sale-Leaseback - Bradenton Beach, FL	August 2024	August 2029 ⁽¹⁾		9,608		9,599		9,599	8.30%
Sale-Leaseback - Anna Maria, FL	August 2024	August 2029 ⁽¹⁾		16,408		16,392		16,392	8.30%
Sale-Leaseback - Long Boat Key, FL	August 2024	August 2029 ⁽¹⁾		5,408		5,402		5,402	8.30%
Construction Loan – Publix Land Development – Charlotte, NC	September 2024	September 2025		17,760		9,967		9,881	10.25%
			$	101,136	$	87,748	$	87,426
CECL Reserve								(877)
Total Commercial Loans and Investments							$	86,549

(1)	The maturity date reflects the date the tenant’s repurchase right first becomes exercisable pursuant to the lease agreement.

The Company’s commercial loans and investments were comprised of the following at December 31, 2023 (in thousands):


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Construction Loan – Wawa Land Development – Greenwood, IN	July 2023	July 2025	$	7,800	$	7,014	$	6,984	8.50%
Construction Loan – Wawa Land Development – Antioch, TN	October 2023	October 2025		6,825		4,615		4,568	11.00%
Mortgage Note – Portfolio	November 2023	November 2026		24,000		24,000		23,885	8.75%
			$	38,625	$	35,629	$	35,437
CECL Reserve								(357)
Total Commercial Loans and Investments							$	35,080

The carrying value of the commercial loans and investments consisted of the following at September 30, 2024 and December 31, 2023 (in thousands).


	As of
	September 30, 2024		December 31, 2023
Current Face Amount	$	87,748	$	35,629
Unaccreted Origination Fees		(322)		(192)
CECL Reserve		(877)		(357)
Total Commercial Loans and Investments	$	86,549	$	35,080

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NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The 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 September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash and Cash Equivalents - Level 1	$	2,560	$	2,560	$	4,019	$	4,019
Restricted Cash - Level 1	$	25,495	$	25,495	$	9,712	$	9,712
Commercial Loans and Investments - Level 2	$	86,549	$	94,302	$	35,080	$	36,288
Obligation Under Participation Agreement - Level 2	$	13,178	$	13,510	$	—	$	—
Long-Term Debt - Level 2	$	278,898	$	267,786	$	275,677	$	258,613

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.

The following tables present the fair value of assets measured on a recurring basis by level as of September 30, 2024 and December 31, 2023 (in thousands). See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.


			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)
September 30, 2024
2026 Term Loan Interest Rate Swap ⁽¹⁾	$	2,404	$	—	$	2,404	$	—
2027 Term Loan Interest Rate Swap ⁽²⁾	$	3,231	$	—	$	3,231	$	—
Credit Facility Interest Rate Swap ⁽³⁾	$	141	$	—	$	141	$	—
December 31, 2023
2026 Term Loan Interest Rate Swap ⁽¹⁾	$	4,314	$	—	$	4,314	$	—
2027 Term Loan Interest Rate Swap ⁽²⁾	$	5,793	$	—	$	5,793	$	—
Credit Facility Interest Rate Swap ⁽³⁾	$	716	$	—	$	716	$	—

(1)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 2.05% plus 0.10% and the applicable spread on the $100.0 million 2026 Term Loan (hereinafter defined) balance. See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

(2)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 1.18% plus 0.10% and the applicable spread on the $100.0 million 2027 Term Loan (hereinafter defined) balance. See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps. The $3.2 million fair value includes $2.9 million attributable to an $80.0 million forward starting swap effective November 29, 2024 as seen in Note 14, “Interest Rate Swaps”.

(3)

As of September 30, 2024, the Company utilized an interest rate swap to fix SOFR and achieve a fixed interest rate of 3.21% plus 0.10% and the applicable spread on $50.0 million of the outstanding balance on the Credit Facility (hereinafter defined). See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

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NOTE 6. INTANGIBLE ASSETS AND LIABILITIES

Intangible 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 September 30, 2024 and December 31, 2023 (in thousands):


	As of
	September 30, 2024		December 31, 2023
Intangible Lease Assets:
Value of In-Place Leases	$	44,988	$	48,267
Value of Above Market In-Place Leases		2,093		2,942
Value of Intangible Leasing Costs		17,532		18,865
Sub-total Intangible Lease Assets		64,613		70,074
Accumulated Amortization		(24,039)		(20,782)
Sub-total Intangible Lease Assets—Net		40,574		49,292
Intangible Lease Liabilities:
Value of Below Market In-Place Leases		(6,312)		(6,770)
Sub-total Intangible Lease Liabilities		(6,312)		(6,770)
Accumulated Amortization		1,954		1,863
Sub-total Intangible Lease Liabilities—Net		(4,358)		(4,907)
Total Intangible Assets and Liabilities—Net	$	36,216	$	44,385

The following table reflects the net amortization of intangible assets and liabilities during the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Amortization Expense	$	2,077	$	2,218	$	6,361	$	6,721
Accretion to Properties Revenue		(136)		(110)		(361)		(299)
Net Amortization of Intangible Assets and Liabilities	$	1,941	$	2,108	$	6,000	$	6,422

The 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 Property Revenue		Net Future Amortization of Intangible Assets and Liabilities
Remainder of 2024	$	1,972	$	(146)	$	1,826
2025		7,529		(558)		6,971
2026		7,188		(572)		6,616
2027		5,876		(599)		5,277
2028		4,875		(499)		4,376
2029		3,827		(246)		3,581
2030 and Thereafter		8,076		(507)		7,569
Total	$	39,343	$	(3,127)	$	36,216

As of September 30, 2024, the weighted average amortization period of both the total intangible assets and liabilities was 8.7 years.

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NOTE 7. PROVISION FOR IMPAIRMENT

Income Properties. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of long-lived assets required to be assessed for impairment is determined on a non-recurring basis using Level 3 inputs in the fair value hierarchy. These Level 3 inputs may include, but are not limited to, letters of intent on specific properties, executed purchase and sale agreements on specific properties, third person valuations, discounted cash flow models, and other model-based techniques.

During the nine months ended September 30, 2024, the Company recorded a $0.6 million impairment charge representing the provision for losses related to three assets within the Company’s income properties segment, which are classified as held for sale. The impairment charge of $0.6 million is equal to the estimated sales prices for these three assets pursuant to a letter of intent for sale executed during the nine months ended September 30, 2024, less the book value of the assets as of September 30, 2024, less estimated costs to sell.

During the three and nine months ended September 30, 2023, the Company recorded a $2.9 million impairment charge representing the provision for losses related to seven assets within our income properties segment. The seven assets were leased to one tenant that filed for bankruptcy during the three months ended March 31, 2023. The seven leases underlying the assets were rejected as a part of the bankruptcy proceedings during August 2023. The Company had executed letters of intent to sell the assets. The impairment charge of $2.9 million is equal to the estimated sales prices for the assets (as set forth in the executed letters of intent), less the book value of the assets as of September 30, 2023, less estimated costs to sell.

Commercial Loans and Investments. The Company evaluates the collectability of its commercial loans and investments on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company accounts for provisions for expected credit losses in accordance with ASC Topic 326, Measurement of Credit Losses on Financial Instruments. Changes in the Company’s allowance for credit losses are presented within change in provision for impairment in the accompanying consolidated statements of operations.

During the nine months ended September 30, 2024, the Company recorded a charge of $0.5 million representing the provision for credit losses related to our commercial loans and investments. The charge of $0.5 million was driven by the initial estimated CECL allowance based on our investment activity during the nine months ended September 30, 2024. We are unable to use historical data to estimate expected credit losses as we have incurred no losses to date. Management utilizes a loss-rate method and considers macroeconomic factors to estimate its CECL allowance, which is calculated based on the amortized cost basis of the commercial loans.

There were no such charges during the nine months ended September 30, 2023.

NOTE 8. OTHER ASSETS

Other assets consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Tenant Receivables—Net of Allowance for Doubtful Accounts⁽¹⁾	$	950	$	809
Prepaid Insurance		34		838
Deposits on Acquisitions		—		60
Prepaid Expenses, Deposits, and Other		1,554		1,757
Deferred Financing Costs—Net		887		1,190
Interest Rate Swaps		6,277		10,957
Operating Leases - Right-of-Use Asset ⁽²⁾		1,249		1,434
Total Other Assets	$	10,951	$	17,045

(1)	Includes a $0.2 million and $0.4 million allowance for doubtful accounts as of September 30, 2024 and December 31, 2023, respectively.

(2)	See Note 9, “Operating Land Leases” for further disclosure related to the Company’s right-of-use asset balance as of September 30, 2024.

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NOTE 9. OPERATING LAND LEASES

The Company is the lessee under operating land leases for certain of its properties. FASB ASC Topic 842, Leases, requires a lessee to recognize right-of-use assets and lease liabilities that arise from leases, whether qualifying as an operating or finance lease. As of September 30, 2024 and December 31, 2023, the Company’s right-of-use assets totaled $1.2 million and $1.4 million, respectively, and the corresponding lease liabilities totaled $1.3 million and $1.5 million, respectively, which balances are reflected within other assets and accounts payable, accrued expenses, and other liabilities, respectively, on the consolidated balance sheets. The right-of-use assets and lease liabilities are measured based on the present value of the lease payments utilizing discount rates estimated to be equal to that which the Company would pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment.

The Company’s operating land leases do not include variable lease payments and generally provide renewal options, at the Company’s election, to extend the terms of the respective leases. Renewal option periods are included in the calculation of the right-of-use assets and corresponding lease liabilities when it is reasonably certain that the Company, as lessee, will exercise the option to extend the lease.

Amortization of right-of-use assets for operating land leases is recognized on a straight-line basis over the term of the lease and is included within real estate expenses in the consolidated statements of operations. Amortization totaled less than $0.1 million during each of the three months ended September 30, 2024 and 2023. Amortization totaled $0.1 million and $0.2 million during the nine months ended September 30, 2024 and 2023, respectively.

The following table reflects a summary of operating land leases, under which the Company is the lessee, for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023

Operating Cash Outflows	$	46		$	64		$	138		$	192
Weighted Average Remaining Lease Term		6.7			7.2			6.7			7.2
Weighted Average Discount Rate		2.0	%		2.0	%		2.0	%		2.0	%

Minimum future lease payments under non-cancelable operating land leases, having remaining terms in excess of one year subsequent to September 30, 2024, are summarized as follows (in thousands):


Year Ending December 31,
Remainder of 2024	$	46
2025		192
2026		202
2027		202
2028		202
2029		202
2030 and Thereafter		288
Total Lease Payments	$	1,334
Imputed Interest		(56)
Operating Leases – Liability	$	1,278

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NOTE 10. ASSETS HELD FOR SALE

Assets held for sale consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Real Estate—Net	$	6,653	$	6,374
Intangible Lease Assets—Net		749		749
Intangible Lease Liabilities—Net		(39)		(39)
Straight-Line Rent Adjustment		173		173
Other Assets		17		17
Assets Prior to Provision for Impairment	$	7,553	$	7,274
Less Provision for Impairment		(3,453)		(2,864)
Total Assets Held for Sale	$	4,100	$	4,410

NOTE 11. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES

Accounts payable, accrued expenses, and other liabilities consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Accounts Payable	$	19	$	30
Accrued Expenses		3,822		2,449
Tenant Security Deposits		132		78
Due to CTO		921		1,052
Interest Rate Swaps		501		134
Loan Reserves		606		539
Operating Leases - Liability ⁽¹⁾		1,278		1,454
Total Accounts Payable, Accrued Expenses, and Other Liabilities	$	7,279	$	5,736

(1)	See Note 9, “Operating Land Leases” for further disclosure related to the Company’s operating lease liability balance as of September 30, 2024.

NOTE 12. OBLIGATION UNDER PARTICIPATION AGREEMENT

As discussed in Note 2, “Summary of Significant Accounting Policies,” the Company follows the guidance in FASB Topic ASC 860, Transfers and Servicing when accounting for participation in commercial loans and investments. ASC 860 states, if the sale of a participation does not have all of the characteristics of a participating interest, it does not achieve sale accounting and is treated as a secured borrowing and accordingly, the original commercial loan investment remains on the Company’s consolidated balance sheets and the proceeds are recorded as an obligation under participation agreement. As of September 30, 2024, the Company’s obligation under participation agreement had a carrying value of $13.2 million, and the carrying value of the loan that is associated with this obligation under participation agreement was $13.1 million, net of a CECL reserve of $0.1 million. The interest rate on the obligation under participation agreement was 8.0% as of September 30, 2024. As of December 31, 2023, there were no such obligations under participation agreements.

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NOTE 13. LONG-TERM DEBT

As of September 30, 2024, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):


	Face Value Debt		Stated Interest Rate	Wtd. Avg. Rate as of September 30, 2024	Maturity Date
Credit Facility⁽¹⁾	$	79,500	SOFR + 0.10% + [1.25% - 2.20%]	5.31%	January 2027
2026 Term Loan⁽²⁾		100,000	SOFR + 0.10% + [1.35% - 1.95%]	3.50%	May 2026
2027 Term Loan⁽³⁾		100,000	SOFR + 0.10% + [1.25% - 1.90%]	2.58%	January 2027
Total Debt/Weighted-Average Rate	$	279,500		3.68%

(1)

As of September 30, 2024, the Company utilized an interest rate swap to fix SOFR and achieve a fixed interest rate of 3.21% plus 0.10% and the applicable spread on $50 million of the outstanding balance on the Credit Facility (hereinafter defined). See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swap.

(2)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 2.05% plus 0.10% and the applicable spread on the $100 million 2026 Term Loan (hereinafter defined) balance. See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

(3)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 1.18% plus 0.10% and the applicable spread on the $100 million 2027 Term Loan (hereinafter defined) balance. See Note 14, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps. On November 29, 2024, certain swaps will expire and be replaced, and as a result the weighted average fixed interest rate will increase from 1.18% to 2.05% plus 0.10% and the applicable spread.

Credit Facility. On September 30, 2022, the Company and the Operating Partnership entered into a credit agreement (the “2022 Amended and Restated Credit Agreement” or “Credit Facility”) with KeyBank National Association, as administrative agent, and certain other lenders named therein, which amended and restated the 2027 Term Loan Credit Agreement (hereinafter defined) to include, among other things:

●

the origination of a new senior unsecured revolving credit facility in the amount of $250 million which matures on January 31, 2027, with the option to extend for one year;

●

an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments, provided the aggregate amount of revolving loan commitments and term loan commitments shall not exceed $750 million;

●

the amendment of certain financial covenants; and

●

the addition of a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025% based on performance against sustainability performance targets.

Pursuant to the 2022 Amended and Restated Credit Agreement, the indebtedness outstanding under the Credit Facility accrues at a rate ranging from SOFR plus 0.10% plus 125 basis points to SOFR plus 0.10% plus 220 basis points, based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the 2022 Amended and Restated Credit Agreement. The Company may utilize daily simple SOFR or term SOFR, at its election. The Credit Facility also accrues a fee of 15 or 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity.

The Company is subject to customary restrictive covenants under the 2022 Amended and Restated Credit Agreement and the 2026 Term Loan Credit Agreement (hereinafter defined), as amended, collectively referred to herein as the “Credit Agreements”, including, but not limited to, limitations on the Company’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 Agreements also contain financial covenants covering the Company, including but not limited to, tangible net worth and fixed charge coverage ratios.

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At September 30, 2024, the commitment level under the Credit Facility was $250.0 million and the Company had an outstanding balance of $79.5 million. The available borrowing capacity, subject to borrowing base restrictions, was $53.5 million as of September 30, 2024.

2026 Term Loan. On May 21, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a credit agreement (the “2026 Term Loan Credit Agreement”) with Truist Bank, N.A. as administrative agent, and certain other lenders named therein, for a term loan (the “2026 Term Loan”) in an aggregate principal amount of $60.0 million with a maturity of five years. On April 14, 2022, the Company entered into the Amendment, Increase and Joinder to the 2026 Term Loan Credit Agreement (the “2026 Term Loan Amendment”), which increased the term loan commitment under the 2026 Term Loan by $40 million to an aggregate of $100 million. The 2026 Term Loan Amendment also effectuated the transition of the underlying variable interest rate from LIBOR to SOFR.

On October 5, 2022, the Company entered into an amendment which, among other things, amended certain financial covenants and added a sustainability-linked pricing component consistent with what is contained in the 2022 Amended and Restated Credit Agreement (the “2026 Term Loan Second Amendment”), effective September 30, 2022.

2027 Term Loan. On September 30, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a credit agreement (the “2027 Term Loan Credit Agreement”) with KeyBank National Association as administrative agent, and certain other lenders named therein, for a term loan (the “2027 Term Loan”) in an aggregate principal amount of $80.0 million (the “Term Commitment”) maturing in January 2027. On April 14, 2022, the Company entered into the Amendment, Increase and Joinder to the 2027 Term Loan Credit Agreement (the “2027 Term Loan Amendment”), which increased the Term Commitment by $20 million to an aggregate of $100 million. The 2027 Term Loan Amendment also effectuated the transition of the underlying variable interest rate from LIBOR to SOFR.

On September 30, 2022, the Company entered into the 2022 Amended and Restated Credit Agreement which amended and restated the 2027 Term Loan Credit Agreement to include the origination of a new revolving credit facility in the amount of $250.0 million as previously described. The 2022 Amended and Restated Credit Agreement includes an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments not to exceed $750.0 million in the aggregate.

Long-term debt as of September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	September 30, 2024				December 31, 2023
	Total		Due Within One Year		Total		Due Within One Year
Credit Facility	$	79,500	$	—	$	76,500	$	—
2026 Term Loan		100,000		—		100,000		—
2027 Term Loan		100,000		—		100,000		—
Financing Costs, net of Accumulated Amortization		(602)		—		(823)		—
Total Long-Term Debt	$	278,898	$	—	$	275,677	$	—

Payments applicable to reduction of principal amounts as of September 30, 2024 will be required as follows (in thousands):


Year Ending December 31,	Amount
Remainder of 2024	$	—
2025		—
2026		100,000
2027		179,500
2028		—
2029		—
2030 and Thereafter		—
Total Long-Term Debt - Face Value	$	279,500

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The carrying value of long-term debt as of September 30, 2024 consisted of the following (in thousands):


	Total
Current Face Amount	$	279,500
Financing Costs, net of Accumulated Amortization		(602)
Total Long-Term Debt	$	278,898

In addition to the $0.6 million of financing costs, net of accumulated amortization included in the table above, as of September 30, 2024, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $0.9 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 consolidated statements of operations.

The following table reflects a summary of interest expense incurred and paid during the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Interest Expense	$	2,712	$	2,264	$	8,024	$	6,964
Interest Expense from Obligation Under Participation Agreement		275		—		369		—
Amortization of Deferred Financing Costs to Interest Expense		180		179		540		530
Total Interest Expense	$	3,167	$	2,443	$	8,933	$	7,494

Total Interest Paid	$	3,493	$	2,243	$	8,996	$	6,924

The Company was in compliance with all of its debt covenants as of September 30, 2024.

NOTE 14. INTEREST RATE SWAPS

The Company has entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to the below noted borrowings. The interest rate agreements were 100% effective during the three and nine months ended September 30, 2024 and 2023. Accordingly, the changes in fair value on the interest rate swaps have been classified in accumulated other comprehensive income. The fair value of the interest rate swap agreements are included in other assets and accounts payable, accrued expenses and other liabilities, respectively, on the consolidated balance sheets.

Information related to the Company’s interest rate swap agreements is noted below (in thousands):


Hedged Item	Effective Date	Maturity Date	Rate	Amount		Fair Value as of September 30, 2024
2026 Term Loan ⁽¹⁾	5/21/2021	5/21/2026	2.05% + 0.10% + applicable spread	$	100,000	$	2,404
2027 Term Loan⁽²⁾	9/30/2021	11/29/2024	0.51%+ 0.10% + applicable spread	$	80,000	$	573
2027 Term Loan⁽³⁾	9/30/2022	1/31/2027	3.84%+ 0.10% + applicable spread	$	20,000	$	(226)
2027 Term Loan ⁽⁴⁾	11/29/2024	1/31/2027	1.61%+ 0.10% + applicable spread	$	80,000	$	2,884
Credit Facility ⁽⁵⁾	3/1/2023	3/1/2028	3.21%+ 0.10%+ applicable spread	$	50,000	$	141

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(1)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 2.05% plus 0.10% and the applicable spread on the $100.0 million 2026 Term Loan balance. The weighted average fixed interest rate of 2.05%, is comprised of: (i) rate swaps on $60.0 million of the 2026 Term Loan balance effective May 21, 2021, as amended on April 14, 2022 in connection with the 2026 Term Loan Amendment, to fix SOFR (prior to April 14, 2022, the swap was to fix LIBOR), and (ii) a rate swap on $40.0 million of the 2026 Term Loan Balance effective September 30, 2022, to fix SOFR.

(2)

As of September 30, 2024, the Company has utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 0.51% plus 0.10% and the applicable spread on $80.0 million of the $100.0 million 2027 Term Loan balance. The weighted average fixed interest rate of 0.51%, is comprised of two rate swaps on $80.0 million of the 2027 Term Loan balance effective September 30, 2021, as amended on April 14, 2022 in connection with the 2027 Term Loan Amendment, to fix SOFR (prior to April 14, 2022, the swap was to fix LIBOR). The swap matures on November 29, 2024 and will be replaced with the swap as described below in Footnote 4, which becomes effective on November 29, 2024.

(3)	As of September 30, 2024, the Company has utilized an interest rate swap to fix SOFR and achieve a fixed interest rate of 3.84% plus 0.10% and the applicable spread on $20.0 million of the $100.0 million 2027 Term Loan balance.

(4)	The interest rate swap agreement hedges $80.0 million of the $100.0 million 2027 Term Loan balance under different terms and commences concurrent to the interest rate agreements maturing on November 29, 2024 to extend the fixed interest rate through maturity on January 31, 2027.

(5)	As of September 30, 2024, the Company has utilized an interest rate swap to fix SOFR and achieve a fixed interest rate of 3.21% plus 0.10% and the applicable spread on $50.0 million of the outstanding balance on the Credit Facility. The swap was effective on March 1, 2023.

The use of interest rate swap agreements carries risks, including the risk that the counterparties to these agreements are not able to perform. To mitigate this risk, the Company enters into interest rate swap agreements with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not currently anticipate that any of the counterparties to the Company’s interest rate swap agreements will fail to meet their obligations. As of September 30, 2024 and December 31, 2023, there were no events of default related to the Company's interest rate swap agreements.

NOTE 15. 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 $350.0 million (the “2020 Registration Statement”). The Securities and Exchange Commission declared the 2020 Registration Statement effective on December 11, 2020.

On September 27, 2023, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $350.0 million (the “2023 Registration Statement”). The 2020 Registration Statement was terminated concurrently with the filing of the 2023 Registration Statement. The Securities and Exchange Commission declared the 2023 Registration Statement effective on September 29, 2023.

FOLLOW-ON PUBLIC OFFERING

In June 2021, the Company completed a follow-on public offering of 3,220,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 420,000 shares of common stock. Upon closing, the Company issued 3,220,000 shares and received net proceeds of $54.3 million, after deducting the underwriting discount and expenses.

ATM PROGRAM

On December 14, 2020, the Company implemented a $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 year ended December 31, 2022, the Company sold 446,167 shares under the 2020 ATM Program for gross proceeds of $8.7 million at a weighted average price of $19.44 per share, generating net proceeds of $8.6 million after deducting transaction fees totaling $0.1 million. During the year ended December 31, 2021, the Company sold 761,902 shares under the 2020 ATM Program for gross proceeds of $14.0 million at a weighted average price of $18.36 per share, generating net proceeds of $13.8 million after deducting transaction fees totaling $0.2 million. The 2020 ATM Program was terminated in advance of implementing the 2022 ATM Program, hereinafter defined.

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On October 21, 2022, the Company implemented a $150.0 million “at-the-market” equity offering program (the “2022 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 September 30, 2024, the Company sold 620,176 shares under the 2022 ATM Program for gross proceeds of $11.2 million at a weighted average price of $18.09 per share, generating net proceeds of $11.1 million after deducting transaction fees totaling $0.1 million. During the nine months ended September 30, 2024, the Company sold 623,526 shares under the 2022 ATM Program for gross proceeds of $11.3 million at a weighted average price of $18.08 per share, generating net proceeds of $11.1 million after deducting transaction fees totaling $0.2 million. The Company was not active under the 2022 ATM Program during the three months ended September 30, 2023. During the nine months ended September 30, 2023, the Company sold 665,929 shares under the 2022 ATM Program for gross proceeds of $12.6 million at a weighted average price of $18.96 per share, generating net proceeds of $12.4 million after deducting transaction fees totaling $0.2 million. During the year ended December 31, 2023, the Company sold 665,929 shares under the 2022 ATM Program for gross proceeds of $12.6 million at a weighted average price of $18.96 per share, generating net proceeds of $12.4 million after deducting transaction fees totaling $0.2 million. During the year ended December 31, 2022, the Company sold 1,479,241 shares under the 2022 ATM Program for gross proceeds of $27.8 million at a weighted average price of $18.81 per share, generating net proceeds of $27.4 million after deducting transaction fees totaling $0.4 million.

In the aggregate, under the 2020 ATM Program and 2022 ATM Program, during the year ended December 31, 2022, the Company sold 1,925,408 shares for gross proceeds of $36.5 million at a weighted average price of $18.96 per share, generating net proceeds of $36.0 million after deducting transaction fees totaling $0.5 million.

NONCONTROLLING INTEREST

As of September 30, 2024, CTO holds, directly and indirectly, a 7.9% noncontrolling ownership interest in the Operating Partnership as a result of 1,223,854 OP Units issued to CTO at the time of the Company’s IPO.

DIVIDENDS

The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under the Code. To qualify as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate U.S. federal corporate 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 nine months ended September 30, 2024 and 2023, the Company declared and paid cash dividends on its common stock and OP Units of $0.830 and $0.825 per share, respectively.

NOTE 16. 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 redemption of OP Units on a one-for-one basis using the treasury stock method at average market prices for the periods.

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The following is a reconciliation of basic and diluted earnings per common share (in thousands, except share and per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income (Loss) Attributable to Alpine Income Property Trust, Inc.	$	3,080	$	(837)	$	3,024	$	2,582

Weighted Average Number of Common Shares Outstanding		13,744,232		13,946,194		13,663,752		14,001,774
Weighted Average Number of Common Shares Applicable to OP Units using Treasury Stock Method ⁽¹⁾		1,223,854		1,703,494		1,223,854		1,703,494
Total Shares Applicable to Diluted Earnings per Share		14,968,086		15,649,688		14,887,606		15,705,268

Per Common Share Data:
Net Income (Loss) Attributable to Alpine Income Property Trust, Inc.
Basic	$	0.22	$	(0.06)	$	0.22	$	0.18
Diluted	$	0.21	$	(0.05)	$	0.20	$	0.16

(1)

Includes the weighted average of 1,223,854 during the three and nine months ended September 30, 2024 and 1,703,494 shares during the three and nine months ended September 30, 2023, in each case, underlying OP Units including (i) 1,223,854 shares underlying OP Units issued to CTO and (ii) 479,640 shares underlying OP Units issued to an unrelated third party, which OP Units were redeemed by PINE for an equivalent number of shares of common stock of PINE during the three months ended December 31, 2023.

NOTE 17. SHARE REPURCHASES

In May 2023, the Board approved a $5.0 million stock repurchase program (the “2023 $5.0 Million Repurchase Program”). Under the 2023 $5.0 Million Repurchase Program, the Company repurchased 23,889 shares of its common stock on the open market for a total cost of $0.4 million, or an average price per share of $15.22, during the three and nine months ended September 30, 2023.

In July 2023, the Board approved a $15.0 million stock repurchase program (the “2023 $15.0 Million Repurchase Program”). The 2023 $15.0 Million Repurchase Program replaced the 2023 $5.0 Million Repurchase Program. Under the 2023 $15.0 Million Repurchase Program, the Company repurchased 875,122 shares of its common stock on the open market for a total cost of $14.2 million, or an average price per share of $16.26, during the year ended December 31, 2023. Under the 2023 $15.0 Million Repurchase Program, the Company repurchased 45,768 shares of its common stock on the open market for a total cost of $0.8 million, or an average price per share of $16.90, during the three months ended March 31, 2024, which completed the 2023 $15.0 Million Repurchase Program.

There were no repurchases of the Company’s common stock during the three months ended September 30, 2024.

NOTE 18. STOCK-BASED COMPENSATION

Each non-employee member of the Board has the option to receive his or her annual retainer fee in shares of Company common stock rather than cash. The number of shares issued to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer fee payment due to such director by the 20-day trailing average closing 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 nine months ended September 30, 2024, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $0.2 million, or 14,603 shares, of which 5,131 shares were issued on April 1, 2024, 5,168 shares were issued on July 1, 2024, and 4,304 shares were issued on October 1, 2024. During the nine months ended September 30, 2023, the expense recognized for the value of the Company’s

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common stock received by non-employee directors totaled $0.2 million, or 14,464 shares, of which 4,776 shares were issued on April 1, 2023, 4,940 shares were issued on July 3, 2023, and 4,748 shares were issued on October 2, 2023.

Stock compensation expense for the three and nine months ended September 30, 2024 and 2023 is summarized as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Stock Compensation Expense – Director Retainers Paid in Stock	$	79	$	79	$	238	$	238

(1)

Director retainers are issued through additional paid in capital in arrears. Therefore, the change in additional paid in capital during the three and nine months ended September 30, 2024 and 2023 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.

NOTE 19. RELATED PARTY MANAGEMENT COMPANY

We are externally managed by the Manager, a wholly owned subsidiary of CTO. Subsequent to the IPO, through September 30, 2024, CTO has purchased an aggregate of 322,831 shares of PINE common stock in the open market including (i) 29,807 shares purchased during the nine months ended September 30, 2024 for $0.4 million, or an average price per share of $14.97, (ii) 129,271 shares purchased during the year ended December 31, 2023 for $2.1 million, or an average price per share of $16.21, (iii) 155,665 shares purchased during the year ended December 31, 2022 for $2.7 million, or an average price per share of $17.57 and (iv) 8,088 shares purchased during the year ended December 31, 2021 for $0.1 million, or an average price per share of $17.65.

As of September 30, 2024, CTO owns, in the aggregate, 1,223,854 OP Units and 1,138,621 shares of PINE common stock, inclusive of (i) 394,737 shares of common stock totaling $7.5 million issued in connection with a private placement that closed concurrently with the IPO, (ii) 421,053 shares of common stock totaling $8.0 million issued in connection with the IPO, and (iii) 322,831 shares of common stock totaling $5.4 million purchased by CTO subsequent to the IPO. The aggregate 1,223,854 OP Units and 1,138,621 shares of PINE common stock held by CTO represent an investment totaling $43.0 million, or 15.3% of PINE’s outstanding equity, as of September 30, 2024.

Management Agreement

On November 26, 2019, the Operating Partnership and PINE entered into a 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 0.375% per quarter of our “total equity” (as defined in the Management Agreement and based on a 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 8% cumulative annual hurdle rate (the “Outperformance Amount”) subject to a high-water mark price. We would pay our Manager an incentive fee with respect to each annual measurement period in the amount of the greater of (i) $0.00 and (ii) the product of (a) 15% multiplied by (b) the Outperformance Amount multiplied by (c) the weighted average shares. No incentive fee was due for the year ended December 31, 2023.

On July 18, 2024, the Operating Partnership and PINE entered into an amendment (the “Amendment”) to the Management Agreement with the Manager. The Amendment extended the expiration date of the initial term of the Management Agreement from November 26, 2024 to January 31, 2025 and the initial term will automatically renew for an unlimited number of successive one-year periods thereafter, unless the agreement is not renewed or is terminated in accordance with its terms.

Our independent directors 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

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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 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 pay directly or reimburse our Manager for certain expenses, if incurred by our Manager. We do not reimburse any compensation expenses incurred by our Manager or its affiliates. Expense reimbursements to our Manager are made in cash on a quarterly basis following the end of each quarter. In addition, we pay all of our operating expenses, except those specifically required to be borne by our Manager pursuant to the Management Agreement.

The Company incurred management fee expenses totaling $1.1 million and $3.1 million during the three and nine months ended September 30, 2024, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of the Manager in the amount of $0.7 million and $1.9 million for the three and nine months ended September 30, 2024, respectively. The Company incurred management fee expenses totaling $1.1 million and $3.3 million during the three and nine months ended September 30, 2023, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of the Manager in the amount of $0.6 million and $1.9 million for the three and nine months ended September 30, 2023, respectively.

The following table represents amounts due to (from) CTO (in thousands):


	As of
Description	September 30, 2024		December 31, 2023
Management Fee due to CTO	$	1,052	$	1,062
Other		(131)		(10)
Total ⁽¹⁾	$	921	$	1,052

(1)	Included in accrued expenses, see Note 11, “Accounts Payable, Accrued Expenses, and Other Liabilities”.

ROFO Agreement

On November 26, 2019, PINE also entered into an Exclusivity and Right of First Offer Agreement with CTO (the “ROFO Agreement”). During the term of the ROFO Agreement, CTO will not, and will cause each of its affiliates (which for purposes of the 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 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 ROFO Agreement, neither CTO nor any of its affiliates (which for purposes of the 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 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 one net lease property for $11.5 million. The acquisition was completed on April 23, 2021.

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On April 2, 2021, the Company entered into a purchase and sale agreement with certain subsidiaries of CTO for the purchase of six net lease properties (the “CMBS Portfolio”). The terms of the purchase and sale agreement, as amended on April 20, 2021, provided a total purchase price of $44.5 million for the CMBS Portfolio. The acquisition of the CMBS Portfolio was completed on June 30, 2021.

On January 5, 2022, the Company entered into a purchase and sale agreement with a certain subsidiary of CTO for the purchase of one net lease property for $6.9 million. The acquisition was completed on January 7, 2022.

The entry into these purchase and sale agreements, and subsequent completion of the related acquisitions, are a result of the Company exercising its right to purchase the aforementioned properties under the ROFO Agreement.

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, sell, or finance net leased properties that would potentially fit the investment criteria for our Manager or its affiliates. Similarly, our Manager or its affiliates may acquire, sell, or finance net leased properties that would potentially fit our investment criteria. Although such acquisitions or dispositions could 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 of assets. If we acquire a net leased property from CTO or one of its affiliates or sell a 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 arm’s 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.

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Additionally, the 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 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 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.

Revenue Sharing Agreement

On December 4, 2023, CTO entered into an asset management agreement directly with the borrower under the Mortgage Note (as described in Note 4, “Commercial Loans and Investments”) to manage the portfolio of assets secured by the Mortgage Note. The Company entered into a revenue sharing agreement with CTO whereby the Company is expected to receive a share of the asset management fees, disposition management fees, leasing commissions, and other fees related to CTO’s management and administration of the portfolio (the “Revenue Sharing Agreement”). The Company’s share of the fees under the Revenue Sharing Agreement will be based on fees earned by CTO associated with the single tenant properties within the portfolio. The Company recognized $0.1 million and $0.4 million of revenue pursuant to the Revenue Sharing Agreement during the three and nine months ended September 30, 2024, respectively, which is included in other revenue on the Company’s consolidated statement of operations.

NOTE 20. 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.

CONTRACTUAL COMMITMENTS – EXPENDITURES

The Company is committed to fund five construction loans as described in Note 4, “Commercial Loans and Investments”. The unfunded portion of the construction loans totaled $12.3 million as of September 30, 2024.

Pursuant to a certain lease agreement executed during the three months ended September 30, 2024, the Company is committed to funding $5.0 million in tenant improvements for a property which capital expenditure is expected to be funded within one year.

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NOTE 21. BUSINESS SEGMENT DATA

The Company operates in two primary business segments: income properties and commercial loans and investments.

Our income property operations consist of lease income from income producing properties and our business plan is focused on investing in additional income-producing properties. Our income property operations accounted for 79% and 89% of our identifiable assets as of September 30, 2024 and December 31, 2023, respectively, and 90% and 100% of our consolidated revenues for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, our commercial loans investment portfolio consisted of nine commercial loan investments, of which three are related to properties acquired through a sale-leaseback transaction whereby the tenant has a future repurchase right.

The Company’s chief operating decision maker evaluates segment performance based on operating income. The Company’s reportable segments are strategic business units that offer different products. They are managed separately because each segment requires different management techniques, knowledge, and skill.

Information about the Company’s operations in different segments for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Revenues:
Lease Income	$	11,718	$	11,447	$	34,512	$	33,951
Interest Income from Commercial Loans and Investments		1,663		112		3,552		112
Other Revenue		99		—		372		—
Total Revenues	$	13,480	$	11,559	$	38,436	$	34,063
Net Income from Operations:
Lease Income	$	9,877	$	9,725	$	28,943	$	29,220
Interest Income from Commercial Loans and Investments		1,663		112		3,552		112
Other Revenue		99		—		372		—
General and Corporate Expenses		(8,183)		(8,180)		(24,061)		(24,109)
Provision for Impairment		(422)		(2,864)		(1,110)		(2,864)
Gain on Disposition of Assets		3,426		2,586		4,344		7,782
Gain on Extinguishment of Debt		—		—		—		23
Net Income from Operations	$	6,460	$	1,379	$	12,040	$	10,164
Depreciation and Amortization:
Income Properties	$	6,340	$	6,528	$	19,074	$	19,286
Total Depreciation and Amortization	$	6,340	$	6,528	$	19,074	$	19,286
Capital Expenditures:
Income Properties	$	6,577	$	19,723	$	22,523	$	81,395
Commercial Loans and Investments		42,678		6,870		52,993		6,870
Total Capital Expenditures	$	49,255	$	26,593	$	75,516	$	88,265

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Identifiable assets of each segment as of September 30, 2024 and December 31, 2023 are as follows (in thousands):


	As of
	September 30, 2024		December 31, 2023
Identifiable Assets:
Income Properties	$	456,650	$	503,151
Commercial Loans and Investments		89,965		37,384
Corporate and Other		32,371		24,025
Total Assets	$	578,986	$	564,560

Operating income represents income from continuing operations before interest expense, and investment and other income. General and corporate expenses are an aggregate of general and administrative expenses and depreciation and amortization expense. Identifiable assets by segment are those assets that are used in the Company’s operations in each segment. Corporate and other assets consist primarily of cash and restricted cash as well as the interest rate swaps.

NOTE 22. SUBSEQUENT EVENTS

Subsequent events and transactions were evaluated through October 17, 2024, the date the consolidated financial statements were issued.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

When we refer to “we,” “us,” “our,” 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, 2023.

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”)). 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; credit risk associated with us investing in commercial loans and investments; any loss of key management personnel; changes in local, regional, national and global economic conditions affecting the real estate development business and properties, including unstable macroeconomic conditions due to, among other things, geopolitical conflicts, inflation, and rising interest rates; the impact of competitive real estate activity; the loss of any major property tenants; the ultimate geographic spread, severity and duration of pandemics, 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, 2023 for further discussion of these risks, as well as additional risks and uncertainties that could cause actual results or events to differ materially from those described in the Company’s forward-looking statements. Given these risks and 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.

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OVERVIEW

Alpine Income Property Trust, Inc. is a Maryland corporation that conducts its operations so as to qualify as a REIT for U.S. federal income tax purposes. Substantially all of our operations are conducted through our Operating Partnership.

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

Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals, including 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.).

During the nine months ended September 30, 2024, the Company acquired six properties for a combined purchase price of $53.1 million, or a cost of $53.2 million including capitalized acquisition costs. Of the six properties acquired, the three Tampa Properties (previously defined in Note 1, “Business and Organization”), which were purchased during the three months ended September 30, 2024 through a sale-leaseback transaction that includes a tenant repurchase option are, for GAAP purposes, accounted for as a financing arrangement. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we include the Tampa Properties in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto. During the nine months ended September 30, 2024, the Company sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million.

As of September 30, 2024, we owned 133 properties, including the three properties classified as commercial loans and investments, with an aggregate gross leasable area of 3.6 million square feet, located in 34 states, with a weighted average remaining lease term of 8.8 years. Our portfolio was 99% occupied as of September 30, 2024.

We may also acquire or originate commercial loans and investments associated with commercial real estate located in the United States. Our investments in commercial loans are generally secured by real estate or the borrower’s pledge of its ownership interest in an entity that owns real estate. As of September 30, 2024, the Company’s commercial loan investments portfolio had a total carrying value of $86.5 million and was comprised of five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right.

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.

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COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

The following presents the Company’s results of operations for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 (in thousands):


	Three Months Ended
	September 30, 2024		September 30, 2023		$ Variance		% Variance
Revenues:
Lease Income	$	11,718	$	11,447	$	271	2.4%
Interest Income from Commercial Loans and Investments		1,663		112		1,551	1384.8%
Other Revenue		99		—		99	100.0%
Total Revenues		13,480		11,559		1,921	16.6%
Operating Expenses:
Real Estate Expenses		1,841		1,722		119	6.9%
General and Administrative Expenses		1,843		1,652		191	11.6%
Provision for Impairment		422		2,864		(2,442)	(85.3%)
Depreciation and Amortization		6,340		6,528		(188)	(2.9%)
Total Operating Expenses		10,446		12,766		(2,320)	(18.2%)
Gain on Disposition of Assets		3,426		2,586		840	32.5%
Net Income from Operations		6,460		1,379		5,081	368.5%
Investment and Other Income		61		125		(64)	(51.2%)
Interest Expense		(3,167)		(2,443)		(724)	(29.6%)
Net Income (Loss)		3,354		(939)		4,293	457.2%
Less: Net Loss (Income) Attributable to Noncontrolling Interest		(274)		102		(376)	(368.6%)
Net Income (Loss) Attributable to Alpine Income Property Trust, Inc.	$	3,080	$	(837)	$	3,917	468.0%

Lease Income and Real Estate Expenses

Revenue from our property operations totaled $11.7 million and $11.4 million during the three months ended September 30, 2024 and 2023, respectively. The $0.3 million increase in lease income is primarily attributable to an increase in reimbursable revenue. The direct costs of revenues for our income properties totaled $1.8 million and $1.7 million during the three months ended September 30, 2024 and 2023, respectively. The $0.1 million increase in the direct cost of revenues is reflective of increased reimbursable expenses.

Commercial Loans and Investments

Interest income from commercial loans and investments totaled $1.7 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in income is attributable to the expanded portfolio of commercial loans and investments which, as of September 30, 2024, was comprised of five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right. As of September 30, 2023, the Company had originated is first construction loan and there was only one loan generating interest income.

Other Revenue

Other revenue totaled $0.1 million for the three months ended September 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related

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Party Management Company” in the Notes to the Financial Statements. There were no revenue sharing agreements generating income during the three months ended September 30, 2023.

General and Administrative Expenses

The following table represents the Company’s general and administrative expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 (in thousands):


	Three Months Ended
	September 30, 2024		September 30, 2023		$ Variance		% Variance
Management Fee to Manager	$	1,052	$	1,095	$	(43)	(3.9%)
Director Stock Compensation Expense		79		79		—	— %
Director & Officer Insurance Expense		53		62		(9)	(14.5%)
Additional General and Administrative Expense		659		416		243	58.4%
Total General and Administrative Expenses	$	1,843	$	1,652	$	191	11.6%

General and administrative expenses totaled $1.8 million and $1.6 million during the three months ended September 30, 2024 and 2023, respectively. The $0.2 million increase is primarily the result of a $0.2 million increase in corporate legal and consulting fees.

Provision for Impairment

During the three months ended September 30, 2024, the Company recorded a $0.4 million impairment charge which represents the current expected credit losses (“CECL”) reserve related to our commercial loans and investments. During the three months ended September 30, 2023, the Company recorded a $2.9 million impairment charge representing the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”.

Depreciation and Amortization

Depreciation and amortization expense totaled $6.3 million and $6.5 million during the three months ended September 30, 2024 and 2023, respectively. The decrease in depreciation and amortization expense is partially due to three properties acquired during the three months ended September 30, 2024, pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right, whereby no depreciation and amortization is recognized on the $31.4 million investment due to their classification as commercial loans and investment.

Gain on Disposition of Assets

During the three months ended September 30, 2024, the Company sold eight properties for an aggregate sales price of $48.6 million, generating aggregate gains on sale of $3.4 million. During the three months ended September 30, 2023, the Company sold eight properties for an aggregate sales price of $20.6 million, generating aggregate gains on sale of $2.6 million.

Investment and Other Income

Investment and other income totaled $0.1 million during the three months ended September 30, 2024 and 2023. Investment and other income is attributable to interest earned on bank deposits.

Interest Expense

Interest expense totaled $3.2 million and $2.4 million during the three months ended September 30, 2024 and 2023, respectively. The $0.8 million increase in interest expense is attributable to the higher average outstanding debt balance for increased interest expense of $0.4 million as well as $0.3 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note during the three months ended September 30, 2024.

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Net Income (Loss)

Net income totaled $3.4 million during the three months ended September 30, 2024 as compared to a net loss of $0.9 million during the three months ended September 30, 2023. The $4.3 million increase in net income is attributable to the factors described above, most notably the decrease in the provision for impairment of $2.4 million and the increase in the gain on disposition of assets of $0.8 million.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

The following presents the Company’s results of operations for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 (in thousands):


	Nine Months Ended
	September 30, 2024		September 30, 2023		$ Variance		% Variance
Revenues:
Lease Income	$	34,512	$	33,951	$	561	1.7%
Interest Income from Commercial Loans and Investments		3,552		112		3,440	3071.4%
Other Revenue		372		—		372	100.0%
Total Revenues		38,436		34,063		4,373	12.8%
Operating Expenses:
Real Estate Expenses		5,569		4,731		838	17.7%
General and Administrative Expenses		4,987		4,823		164	3.4%
Provision for Impairment		1,110		2,864		(1,754)	(61.2%)
Depreciation and Amortization		19,074		19,286		(212)	(1.1%)
Total Operating Expenses		30,740		31,704		(964)	(3.0%)
Gain on Disposition of Assets		4,344		7,782		(3,438)	(44.2%)
Gain on Extinguishment of Debt		—		23		(23)	(100.0%)
Net Income from Operations		12,040		10,164		1,876	18.5%
Investment and Other Income		186		226		(40)	(17.7%)
Interest Expense		(8,933)		(7,494)		(1,439)	(19.2%)
Net Income		3,293		2,896		397	13.7%
Less: Net Income Attributable to Noncontrolling Interest		(269)		(314)		45	14.3%
Net Income Attributable to Alpine Income Property Trust, Inc.	$	3,024	$	2,582	$	442	17.1%

Lease Income and Real Estate Expenses

Revenue from our property operations during the nine months ended September 30, 2024 and 2023, totaled $34.5 million and $33.9 million, respectively. The $0.6 million increase in lease income is reflective of the Company’s volume of property acquisitions during the nine months ended September 30, 2024 and the year ended December 31, 2023, partially offset by property sales during the same period. The direct costs of revenues for our income properties totaled $5.5 million and $4.7 million during the nine months ended September 30, 2024 and 2023, respectively. The $0.8 million increase in the direct cost of revenues is reflective of increased reimbursable expenses as well as a portion of portfolio expenses being non-recoverable pursuant to tenant leases and certain vacancies in our properties currently held for sale.

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Commercial Loans and Investments

Interest income from commercial loans and investments totaled $3.5 million and $0.1 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in income is attributable to the expanded portfolio of commercial loans and investments which, as of September 30, 2024, was comprised of five construction loans, one mortgage note, and the three Tampa Properties which were acquired through a sale-leaseback transaction that includes a tenant repurchase option and are, for GAAP purposes, accounted for as a financing arrangement. As of September 30, 2023, the Company had originated its first construction loan and there was only one loan generating interest income.

Other Revenue

Other revenue totaled $0.4 million for the nine months ended September 30, 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, “Related Party Management Company” in the Notes to the Financial Statements. There were no revenue sharing agreements generating income during the nine months ended September 30, 2023.

General and Administrative Expenses

The following table represents the Company’s general and administrative expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 (in thousands):


	Nine Months Ended
	September 30, 2024		September 30, 2023		$ Variance		% Variance
Management Fee to Manager	$	3,142	$	3,294	$	(152)	(4.6%)
Director Stock Compensation Expense		238		238		—	— %
Director & Officer Insurance Expense		160		187		(27)	(14.4%)
Additional General and Administrative Expense		1,447		1,104		343	31.1%
Total General and Administrative Expenses	$	4,987	$	4,823	$	164	3.4%

General and administrative expenses totaled $5.0 million and $4.8 million during the nine months ended September 30, 2024 and 2023, respectively, for an increase of $0.2 million. The $0.1 million decrease in the management fee is attributable to a decrease in the Company’s equity base as the result of share repurchases, primarily made during the three months ended December 31, 2023, which were partially offset by the ATM sales made during the three months ended September 30, 2024. The $0.3 million increase in additional general and administrative expenses is due to a $0.2 million increase in corporate legal and consulting fees as well as increases in additional state and local tax payments, as the result of the Company owning more properties in states with franchise tax fees.

Provision for Impairment

During the nine months ended September 30, 2024, the Company recorded a $1.0 million impairment charge of which $0.4 million represents the CECL reserve related to our commercial loans and investments and $0.6 million represents the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”. During the nine months ended September 30, 2023, the Company recorded a $2.9 million impairment charge representing the provision for losses related to our income properties as further described in Note 7, “Provision for Impairment”.

Depreciation and Amortization

Depreciation and amortization expense totaled $19.1 million and $19.3 million during the nine months ended September 30, 2024 and 2023, respectively. The $0.2 million decrease in depreciation and amortization expense is partially due to the three Tampa Properties which were acquired through a sale-leaseback transaction, that includes a tenant repurchase option and are, for GAAP purposes, accounted for as a financing arrangement whereby no depreciation and amortization is recorded.

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Gain on Disposition of Assets

During the nine months ended September 30, 2024, the Company sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million. During the nine months ended September 30, 2023, the Company sold 22 properties for an aggregate sales price of $99.6 million, generating aggregate gains on sale of $7.8 million.

Investment and Other Income

Investment and other income totaled $0.2 million during the nine months ended September 30, 2024 and 2023. Investment and other income is attributable to interest earned on bank deposits.

Interest Expense

Interest expense totaled $8.9 million and $7.5 million during the nine months ended September 30, 2024 and 2023, respectively. The $1.4 million increase in interest expense is attributable to the higher average outstanding debt balance for increased interest expense of $1.0 million as well as $0.4 million of interest expense resulting from the sale of participation interest in the Company’s $23.4 million Mortgage Note during the nine months ended September 30, 2024.

Net Income

Net income totaled $3.3 million and $2.9 million during the nine months ended September 30, 2024 and 2023, respectively. The $0.4 million increase in net income is attributable to the factors described above, most notably the increase in interest revenue from commercial loans and investments of $3.4 million and a lower provision for impairment, offset by higher interest expense and lower gains on disposition of assets.

LIQUIDITY AND CAPITAL RESOURCES

Cash totaled $28.1 million as of September 30, 2024, including restricted cash of $25.5 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 as of September 30, 2024.

Long-Term Debt. As of September 30, 2024, the Company had an outstanding balance of $79.5 million on the $250 million revolving Credit Facility. The Company also had $200.0 million in term loans outstanding as of September 30, 2024. See Note 13, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at September 30, 2024.

Acquisitions and Dispositions. As further described in Note 3, “Property Portfolio,” the Company acquired six properties for a combined purchase price of $53.1 million, or a cost of $53.2 million including capitalized acquisition costs, and sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million. Of the six properties acquired, the three Tampa Properties (previously defined in Note 1, “Business and Organization”), which were purchased during the three months ended September 30, 2024 through a sale-leaseback transaction that includes a tenant repurchase option are, for GAAP purposes, accounted for as a financing arrangement. However, as the Tampa Properties constitute real estate assets for both legal and tax purposes, we include the Tampa Properties in the property portfolio when describing our property portfolio and for purposes of providing statistics related thereto.

ATM Program. During the nine months ended September 30, 2024, the Company sold 623,526 shares under the 2022 ATM Program for gross proceeds of $11.3 million at a weighted average price of $18.08 per share, generating net proceeds of $11.1 million.

Capital Expenditures. As of September 30, 2024, the Company had no commitments related to capital expenditures for the maintenance of fixed assets, such as land, buildings, and equipment. Pursuant to a certain lease agreement executed during the three months ended September 30, 2024, the Company is committed to funding $5.0 million in tenant

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improvements at a property which capital expenditure is expected to be funded within one year. Additionally, the Company is committed to fund five construction loans as described in Note 4, “Commercial Loans and Investments”. The unfunded portion of the construction loans totaled $12.3 million as of September 30, 2024.

We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, proceeds from the completion of the sale of assets utilizing the reverse like-kind 1031 exchange structure, $98.3 million of availability remaining under the 2022 ATM Program, and $53.5 million of available capacity on the existing $250.0 million Credit Facility.

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

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Non-GAAP Financial Measures

Our reported results are presented in accordance with GAAP. We also disclose FFO and 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 real estate related depreciation and amortization, as well as extraordinary items (as defined by GAAP) such as 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, including the pro rata share of such adjustments of unconsolidated subsidiaries. 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.

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. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

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Reconciliation of Non-GAAP Measures (in thousands, except share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income (Loss)	$	3,354	$	(939)	$	3,293	$	2,896
Depreciation and Amortization		6,340		6,528		19,074		19,286
Provision for Impairment		422		2,864		1,110		2,864
Gain on Disposition of Assets		(3,426)		(2,586)		(4,344)		(7,782)
Funds From Operations	$	6,690	$	5,867	$	19,133	$	17,264
Adjustments:
Gain on Extinguishment of Debt		—		—		—		(23)
Amortization of Intangible Assets and Liabilities to Lease Income		(136)		(110)		(361)		(299)
Straight-Line Rent Adjustment		(216)		(112)		(370)		(386)
Non-Cash Compensation		79		79		238		238
Amortization of Deferred Financing Costs to Interest Expense		180		179		540		530
Other Non-Cash Adjustments		52		29		111		86
Adjusted Funds From Operations	$	6,649	$	5,932	$	19,291	$	17,410

Weighted Average Number of Common Shares:
Basic		13,744,232		13,946,194		13,663,752		14,001,774
Diluted		14,968,086		15,649,688		14,887,606		15,705,268

Other Data (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
FFO	$	6,690	$	5,867	$	19,133	$	17,264
FFO per Diluted Share	$	0.45	$	0.37	$	1.29	$	1.10

AFFO	$	6,649	$	5,932	$	19,291	$	17,410
AFFO per Diluted Share	$	0.44	$	0.38	$	1.30	$	1.11

OFF-BALANCE SHEET ARRANGEMENTS

None.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates include those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company’s financial condition or results of operations. Our most significant estimate is as follows:

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable

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sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled three properties for a combined purchase price of $21.7 million for the nine months ended September 30, 2024 and 12 properties for a combined purchase price of $79.9 million for the nine months ended September 30, 2023.

See Note 2, “Summary of Significant Accounting Policies”, for further discussion of the Company’s accounting estimates and policies.

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 13(a)-15 and 15(d)-15 of the Exchange Act was carried out under the supervision and with the participation of the Company’s management, including the 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) of the Exchange Act). Based on that evaluation, the CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures are effective 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 SEC 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 its 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 September 30, 2024, 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

ITEM 1A. RISK FACTORS

As of September 30, 2024, there have been no material changes in our risk factors from those set forth 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, 2023 (the “Form 10-K”). The risks described in the 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

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ITEM 6. EXHIBITS

(a)

Exhibits:




Exhibit 3.1			Articles of Amendment and Restatement of Alpine Income Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 3, 2019).

Exhibit 3.2			Third Amended and Restated Bylaws of Alpine Income Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 3, 2023).

Exhibit 4.1			Specimen Common Stock Certificate of Alpine Income Property Trust, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-11/A (File No. 333-234304) filed with the Commission on October 29, 2019).
Exhibit 10.1			Amendment No. 1 to Management Agreement dated July 18, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 19, 2024).

Exhibit 31.1*			Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2*			Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1**			Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2**			Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS			Inline XBRL Instance Document

Exhibit 101.SCH			Inline XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF			Inline XBRL Taxonomy Definition Linkbase Document

Exhibit 101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104			Cover Page Interactive Data File (embedded within the Inline XBRL document)



* Filed herewith

** Furnished herewith

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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)

October 17, 2024	By:	/s/ John P. Albright
		John P. Albright President and Chief Executive Officer (Principal Executive Officer)

October 17, 2024	By:	/s/ Philip R. Mays
		Philip R. Mays, Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
October 17, 2024	By:	/s/ Lisa M. Vorakoun
		Lisa M. Vorakoun, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

Exhibit 31.1

CERTIFICATIONS

I, John P. Albright, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alpine Income Property Trust, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 17, 2024


By:		/s/ John P. Albright
		John P. Albright
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATIONS

I, Philip R. Mays, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alpine Income Property Trust, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 17, 2024


By:		/s/ Philip R. Mays
		Philip R. Mays, Senior Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alpine Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Albright, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 17, 2024


By:		/s/ John P. Albright
		John P. Albright
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alpine Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip R. Mays, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 17, 2024


By:		/s/ Philip R. Mays
		Philip R. Mays, Senior Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)