2023 ANNUAL REPORT
NYSE: PINE
Dear Fellow Shareholders,
In 2023, the Federal Reserve raised interest rates four times. In a rising interest rate environment,
REITs generally have a difficult time outperforming the broader market. Last year, Alpine Income
Property Trust had a negative 5.5% total return after being one of the best performing net lease
REITs in 2022.
We have been working hard to further enhance Alpine’s portfolio to position the company for better
performance once the Fed is finished raising rates (hopefully rate cuts are right around the corner).
In 2023, we acquired $83 million of net lease properties at a weighted average going-in cash cap
rate of 7.4% and a weighted average remaining lease term of 8.7 years. Most of these acquisitions
were leased to tenants with an investment grade rating.
In addition to our modest but high-quality property acquisitions, in an effort to protect our portfolio
from rising rates and receive better risk-adjusted returns, during 2023 we made approximately $39
million of first mortgage loans at a weighted average initial yield of over 9%. We believe that these
short-duration loans will allow us to achieve better yields at a lower basis than core net lease
investments. Hopefully, better acquisition opportunities will present themselves in the next year or
two as these loans are maturing, which will allow us to reinvest into core investments. In the
meantime, we intend to receive higher investment yields while waiting for better, longer-term
investment opportunities. In 2023, our core acquisitions along with the loan investments totaled
$121.5 million of investments at a weighted average initial yield of 7.9%.
To help fund this investment activity, during 2023 we sold $108.3 million of assets at a weighted
average exit cap rate of 6.3% and booked over $9 million in gains related to these sales. To take
advantage of negative sentiment in the market, we repurchased almost 900,000 shares of common
stock at what we think were very accretive prices to both earnings and NAV.
We ended the year with 65% of our portfolio (based on annualized base rent) being investment
grade credit with a weighted average remaining lease term of 7 years .
As we start off 2024, we believe that Alpine Income Property Trust once again offers investors one of
the most attractive valuations in the net lease category, and one of the highest dividend yields, with
a portfolio composed primarily of investment grade rated tenants, comparable to the much larger
higher valued net lease REITs. We think it’s clear that Alpine offers a compelling relative value
opportunity for investors who may want more exposure to net lease REITs as the market anticipates
a more accommodating Fed.
As of this writing, PINE’s stock price is about fifty cents lower than it was at the time of last year’s
annual letter. I guess in a year where the Fed continued to raise interest rates and with several high-
profile bank failures, it could have been worse.
This year we say goodbye to our CFO, Matt Partridge. We wish Matt well in his new opportunity at a
much larger company. We thank Matt for all his contributions. As we are searching for a new CFO,
we are thankful that we have Lisa Vorakoun as our Chief Accounting Officer, who has been with us
for the past eleven years. Lisa and her team are the bedrock of all things finance and accounting.
We thank our Board members and our shareholders for their support as we continue to navigate our
way to a better environment and improved shareholder returns.
Investments:
Investment Yield:
Investment Grade Tenant Exposure:
Largest Tenant:
Average Lease Term:
Stock Price (as of Annual Meeting Record Date):
Annualized Dividend Yield:
AFFO Payout Ratio:
Net Debt-to-Total Enterprise Value:
Net Debt-to-Total Forma EBITDA:
PINE Total Shareholder Return:
RMZ Index Total Return:
2023
$121.5 million
7.9%
2022
$187 million
7.1%
65%
Walgreens
7.0 Years
54%
Walgreens
7.6 Years
$15.56
7.1%
74%
51%
7.7x
(5.5%)
13.7%
$16.13
6.8%
71%
47%
7.1x
0.6%
(24.3%)
John P. Albright
President and
Chief Executive Officer
PINE PROPERTY LOCATIONS
Net Lease Portfolio:
Number of Properties
Number of States with a Property
Square Feet (in millions)
Year-End Portfolio Occupancy
Weighted Average Remaining Lease Term
As of December 31, 2023
2023
138
35
3.8
99.1%
7.0 years
2022
148
34
3.7
99.5%
7.6 years
2021
113
32
3.3
100%
7.9 years
2020
48
18
1.6
100%
8.4 years
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
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
(State or other jurisdiction of
incorporation or organization)
369 N. New York Avenue, Suite 201
Winter Park, Florida
(Address of principal executive offices)
84-2769895
(I.R.S. Employer
Identification No.)
32789
(Zip Code)
Registrant’s telephone number, including area code
(407) 904-3324
Title of each class
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Trading Symbol
Name of each exchange on which registered
COMMON STOCK, $0.01 PAR VALUE
PINE
NYSE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☐
Non-accelerated filer ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
On June 30, 2023, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of
the Registrant’s common stock held by non-affiliates of the Registrant was $208,761,768 based on the closing sales price of the Registrant’s
common stock on such date as reported on the New York Stock Exchange. For purposes of this computation, all officers, directors and 10%
beneficial owners of the Registrant’s common stock of which the Registrant is aware are deemed to be affiliates. Such determination should not
be deemed to be an admission that such officers, directors or 10% beneficial owners are, in fact, affiliates of the Registrant.
The number of shares of the registrant’s common stock outstanding on February 1, 2024 was 13,618,108.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2024 Annual Meeting of Stockholders, which will be filed with the Securities and
Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 31, 2023, are incorporated by reference in
Part III of this report.
TABLE OF CONTENTS
PART I
Page #
Item 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1C. CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
Item 8.
Item 9.
RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . .
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . .
Item 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Item 12.
Item 13.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . .
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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i
PART I
When we refer to “we,” “us,” “our,” “PINE,” or “the Company,” we mean Alpine Income Property Trust,
Inc. and its consolidated subsidiaries. References to “Notes to the Financial Statements” refer to the Notes to
the Consolidated Financial Statements of Alpine Income Property Trust, Inc. included in Item 8 of this Annual
Report on Form 10-K. Also, when the Company uses any of the words “anticipate,” “assume,” “believe,”
“estimate,” “expect,” “intend,” or similar expressions, the Company is making forward-looking statements.
Although management believes that the expectations reflected in such forward-looking statements are based upon
present expectations and reasonable assumptions, the Company’s actual results could differ materially from
those set forth in the 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 this
Annual Report on Form 10-K. Given these uncertainties, readers are cautioned not to place undue reliance on
such statements, which speak only as of the date of this Annual Report on Form 10-K, or any document
incorporated herein by reference. 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
Annual Report on Form 10-K.
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” within this Annual Report on Form 10-K 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
Annual Report on Form 10-K. 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
Annual Report on Form 10-K.
ITEM 1. BUSINESS
OVERVIEW
We are a real estate investment trust (“REIT”) that owns and operates a high-quality portfolio of
commercial net lease properties all located in the United States. Our properties are primarily leased to
1
industry leading, creditworthy tenants, many of which operate in industries we believe are resistant to the
impact of e-commerce. Our portfolio consists of 138 net leased properties located in 104 markets in 35 states.
The properties in our portfolio are primarily subject to long-term 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. We 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.
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
(our “Manager”), a Delaware limited liability company and a wholly owned subsidiary of CTO Realty
Growth, Inc. (NYSE: CTO) (“CTO”). CTO is a Maryland corporation that is a publicly traded diversified
REIT and the sole member of our Manager.
The Company elected to be taxed as a REIT for U.S. federal income tax purposes commencing with its
initial taxable year ended December 31, 2019. We believe we have been organized and have operated in such
a manner as to qualify and maintain our qualification for taxation as a REIT under the U.S. federal
income tax laws. We intend to continue to operate in such a manner, but no assurances can be given that we
will continue to operate in such a manner as to qualify and maintain our qualification for taxation as a
REIT under the U.S. federal income tax laws.
Our primary objective is to maximize cash flow and value per share by generating stable and growing
cash flows and attractive risk-adjusted returns through the ownership, operation and growth through
acquisition of a diversified portfolio of high-quality, net leased commercial properties with attractive
long-term real estate fundamentals and through the investment of commercial loans secured by commercial
real estate. The 138 properties in our portfolio are 99% occupied and represent 3.8 million of gross rentable
square feet with leases that have a weighted average lease term of 7.0 years (weighting based on annualized
base rent as of December 31, 2023). Our portfolio is representative of our investment strategy, which
consists of one or more of the following core investment criteria:
• Attractive Locations. The 138 properties in our portfolio represent 3.8 million gross rentable square
feet, are 99% occupied, and are primarily located in, or in close proximity to major metropolitan
statistical areas, or MSAs, and in markets in the United States with favorable economic and
demographic conditions supporting the underlying businesses of our tenants. As of December 31,
2023, approximately 50% of our portfolio’s annualized base rent was derived from properties located
in MSAs with populations greater than one million people.
• Creditworthy Tenants.
65% of our portfolio’s annualized base rent as of December 31, 2023 was
derived from tenants that have (or whose parent company has) an investment grade credit rating from
a recognized credit rating agency. The Company defines an investment grade credit rating as a
rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Association
of Insurance Commissioners of Baa3, BBB-, or NAIC-2 or higher. If applicable, in the event of a
split rating between S&P Global Ratings and Moody’s Investors Services, the Company utilizes the
higher of the two ratings as its reference point as to whether a tenant has an investment grade credit
rating. Our largest tenant, Walgreens, has a ‘BBB-’ credit rating from S&P Global Ratings and a
‘Ba2’ credit rating from Moody’s Investors Services and contributed 11% of lease income from the
Company’s income properties for the year ended December 31, 2023.
• Geographic Diversity. Our portfolio is spread across 104 markets in 35 states. Our largest property,
as measured by annualized base rent, is located in the Rochester, New York MSA.
• 99% Occupied with Primarily Long Duration Leases. Our portfolio is 99% occupied. The leases in
our portfolio have a weighted average remaining lease term of 7.0 years (weighted based on annualized
base rent as of December 31, 2023).
In addition to our income property portfolio, as of December 31, 2023, our business included a
portfolio of three commercial loan investments secured by real estate.
2
Organization
The Company is a Maryland corporation formed on August 19, 2019. On November 26, 2019, the
Company closed its initial public offering (“IPO”). Our common stock is listed on the New York Stock
Exchange (“NYSE”) under the symbol “PINE.” We sold 7,500,000 shares of our common stock at $19.00
per share in the IPO. CTO purchased 421,053 of the shares of our common stock that we sold in the IPO. We
refer to the IPO, the CTO Private Placement (defined below), and the other transactions executed at the
time of our listing on the NYSE collectively as the “Formation Transactions.”
We conduct the substantial majority of our operations through, and substantially all of our assets are
held by, 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. As of
December 31, 2023, we have a total ownership interest in the Operating Partnership of 91.8%, with CTO
holding, directly and indirectly, an 8.2% 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”) manages our business and affairs.
Each limited partner of the Operating Partnership has the right to require the Operating Partnership
to redeem part or all of its units of the Operating Partnership (“OP Units”) for cash, based upon the value
of an equivalent number of shares of our common stock at the time of the redemption, or, at our election,
shares of our common stock on a one-for-one basis, beginning on and after the date that is 12 months
after issuance of such OP Units, subject to certain adjustments and the restrictions on ownership and transfer
of our stock set forth in our charter. Each redemption of OP Units will increase our percentage ownership
interest in the Operating Partnership and our share of its cash distributions and profits and losses.
We are externally managed by our Manager. Concurrently with the closing of the IPO, CTO invested
$15.5 million in exchange for 815,790 shares of our common stock. See Note 18, “Related Party Management
Company” in the Notes to the Financial Statements for the Company’s disclosure related to CTO’s purchase
of PINE common stock subsequent to the IPO.
Capital Markets
Equity. 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 (the “SEC”) 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 its 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 SEC declared the 2023 Registration Statement effective on September 29, 2023.
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.
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
3
of $13.8 million after deducting transaction fees totaling $0.2 million. The Company was not active under
the 2020 ATM Program during the year ended December 31, 2020. The 2020 ATM Program was terminated
in advance of implementing the 2022 ATM Program, hereinafter defined.
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 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.
Debt. Credit Facility. On September 30, 2022, the Company and the Operating Partnership entered
into a credit agreement (the “2022 Amended and Restated Credit Agreement”) 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 (the
“Credit Facility”) 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 a range of 125 basis points to 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.
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, amends
certain financial covenants and adds 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”)
4
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.
Mortgage Notes Payable. On June 30, 2021, in connection with the acquisition of six net lease
properties from CTO (the “CMBS Portfolio”), the Company assumed an existing $30.0 million secured
mortgage, which bears interest at a fixed rate of 4.33% (the “CMBS Loan”). On December 1, 2022, the
Company completed the defeasance of the CMBS Loan, unencumbering the CMBS Portfolio. The Company
sold four of the six properties subsequent to the defeasance, during the year ended December 31, 2022.
Market Opportunity
We believe the net lease property market has expanded steadily over the last several years, and investor
demand for net leased properties has generally remained steady. Unlike a gross lease, which places the
financial responsibility for most expenses with the property owner, the net lease structure shifts the majority
or entirety of costs for property taxes, insurance, maintenance and often utilities and capital expenditures,
to the lessee, in addition to rent payments. Net leases are generally executed for an initial term of 10 to
15 years, but 20- and 25-year leases are not uncommon. Lease agreements often include multiple options
for the tenant to extend and may include terms for periodic rent increases. Comparatively, multi-tenant
commercial real estate properties under gross leases often have average initial lease terms between five and
ten years with shorter or fewer options to extend. Rent escalation is also commonly embedded in the net lease
terms as a specified percentage increase of existing rent per year or determined by reference to an inflation
measure such as the Consumer Price Index. With cash flows that are intended to be passive, stable and paid at
regular intervals, net leased real estate is similar, in many ways, to interest-bearing corporate bonds, but
with the additional potential for appreciation in the value of the underlying property.
Investment Strategy
We seek to acquire, own and operate primarily freestanding, commercial real estate properties located
in the United States leased primarily pursuant to triple-net, long-term leases. We focus on investments
primarily in retail properties. We target tenants in industries that we believe are favorably impacted by current
macroeconomic trends that support consumer spending, such as strong and growing employment and
positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact
of the growing e-commerce retail sector 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 determine have attractive
credit characteristics, stable operating histories and healthy rent coverage levels, are well-located within their
respective markets and 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
5
(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.).
We believe that the net leased properties we own and intend to acquire will provide our stockholders
with investment diversification and can deliver strong risk-adjusted returns. We expect the majority of our
net leased properties will be retail properties. We believe the risk-adjusted returns for retail properties within
our portfolio are compelling and offer attractive investment yields, rental rates at or below prevailing
market rental rates and an investment basis below replacement cost.
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. The Company seeks to
invest in commercial loans and investments secured by real estate with the same general fundamentals as our
net lease property investments.
Property Portfolio
As of December 31, 2023, the Company owned 138 properties in 35 states. The following is a summary
of the relevant leases attributable to these properties:
Location
Description
Dicks Sporting Goods . . . . . . . . . . . . . . . . . . . . . . . Victor, NY
Walmart
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Howell, MI
LA Fitness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Riverview, FL
Lowe’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Houston, TX
Kohl’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chandler, AZ
Lowe’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Logan, WV
Burlington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . North Richland Hills, TX
Hobby Lobby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tulsa, OK
At Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . North Canton, OH
Camping World . . . . . . . . . . . . . . . . . . . . . . . . . . . Hermantown, MN
Lowe’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adrian, MI
Home Depot(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Woodridge, IL
Century Theater . . . . . . . . . . . . . . . . . . . . . . . . . . . Reno, NV
At Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Turnersville, NJ
Live Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . East Troy, WI
Academy Sports . . . . . . . . . . . . . . . . . . . . . . . . . . . Florence, SC
Lowe’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fremont, OH
Dicks Sporting Goods . . . . . . . . . . . . . . . . . . . . . . . Chesterfield, MI
Lowe’s(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Webster, TX
Crunch Fitness . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buford, GA
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Feasterville-Trevose, PA
Best Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lafayette, LA
AMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tyngsborough, MA
Sportsman’s Warehouse . . . . . . . . . . . . . . . . . . . . . . Morgantown, WV
Dicks Sporting Goods . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Party City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oceanside, NY
Dicks Sporting Goods . . . . . . . . . . . . . . . . . . . . . . . McDonough, GA
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blackwood, NJ
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brick, NJ
6
Rentable
Square
Feet
120,908
214,172
45,000
131,644
86,584
114,731
70,891
84,180
89,902
66,033
101,287
110,626
52,474
89,460
— (2)
58,410
125,357
49,979
163,300
24,800
14,820
45,611
39,474
30,547
50,000
15,500
46,315
14,820
14,550
Annualized
Base Rent
($000’s)(1)
1,870
1,369
958
917
894
870
859
842
801
776
703
693
661
641
634
625
603
603
571
514
509
507
507
498
496
490
473
464
450
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Albuquerque, NM
Description
Location
Old Time Pottery . . . . . . . . . . . . . . . . . . . . . . . . . . Orange Park, FL
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . West Hartford, CT
Best Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dayton, OH
Marshalls
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
CVS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Baton Rouge, LA
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Birmingham, AL
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alpharetta, GA
Verizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decatur, IL
Best Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . McDonough, GA
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edgewater, MD
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Clermont, FL
Verizon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Turnersville, NJ
Home Depot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Michaels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Old Time Pottery . . . . . . . . . . . . . . . . . . . . . . . . . . West Chicago, IL
Office Depot
Best Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Ashley HomeStore . . . . . . . . . . . . . . . . . . . . . . . . . Dayton, OH
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taylorville, IL
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tacoma, WA
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Albany, GA
Walmart
Festival Foods . . . . . . . . . . . . . . . . . . . . . . . . . . . . Portage, WI
TJ Maxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Walmart
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Malden, MO
Walgreens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Glen Burnie, MD
Hobby Lobby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aberdeen, SD
7-Eleven(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Olathe, KS
Office Depot
Circle K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mattress Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richmond, IN
Mattress Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lake City, FL
Family Dollar
Tractor Supply Company . . . . . . . . . . . . . . . . . . . . Washington Court, OH
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . .
Harbor Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . Washington, MO
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . .
Red Robin(3)
O’Reilly Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . . Angels Camp, CA
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kermit, TX
Burger King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plymouth, NC
Harbor Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . Midland, MI
Tractor Supply Company . . . . . . . . . . . . . . . . . . . . California, MO
Severn, MD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hempstead, TX
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gadsden, AL
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Lynn, MA
Indianapolis, IN
St. Paul, MN
7
Rentable
Square
Feet
84,180
12,805
45,535
30,006
13,813
14,516
15,120
6,034
14,820
30,038
14,820
13,650
6,027
125,218
24,000
78,721
30,346
20,460
33,310
14,550
14,125
14,770
52,190
54,720
22,910
48,081
14,490
49,034
4,165
23,638
4,283
5,108
4,577
9,228
39,984
7,201
23,466
6,876
4,575
7,066
10,920
3,142
14,624
23,042
Annualized
Base Rent
($000’s)(1)
439
430
409
375
369
364
363
359
353
338
328
328
326
321
318
313
300
297
285
282
259
258
253
252
245
240
228
221
219
217
210
175
170
160
159
150
150
148
141
128
126
125
124
123
Location
Sulphur, OK
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Tipton, MO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Description
Mattress Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gadsden, AL
Tractor Supply Company . . . . . . . . . . . . . . . . . . . . Owensville, MO
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chazy, NY
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Auburn, NE
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Odessa, TX
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . McKenney, VA
Chick-Fil-A(3)
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Willis, TX
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Medicine Lodge, KS
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Lake City, AR
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Amsterdam, OH
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Winthrop, NY
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Burlington, KS
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Burlington, NC
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Caneyville, KY
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Caney, KS
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cut and Shoot, TX
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . Ware, MA
Family Dollar
Pet Supplies Plus . . . . . . . . . . . . . . . . . . . . . . . . . . North Canton, OH
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Milford, ME
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Demopolis, AL
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Madill, OK
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . .
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . .
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Phillipsburg, KS
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Van Buren, MO
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Plainville, KS
Family Dollar
. . . . . . . . . . . . . . . . . . . . . . . . . . . . McGehee, AR
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gladewater, TX
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Town Creek, AL
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Tecumseh, NE
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Anthony, KS
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bingham, ME
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Harrisville, NY
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Murfreesboro, AR
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heuvelton, NY
Firestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pittsburgh, PA
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Barker, NY
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Limestone, ME
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Anderson, AL
Superior, NE
Sabetha, KS
Stilwell, OK
Salem, NY
8
Rentable
Square
Feet
7,237
38,452
9,277
10,577
9,127
10,531
4,570
9,138
10,566
10,424
10,500
9,167
10,500
11,394
10,604
10,555
9,096
10,000
6,889
10,557
8,400
9,128
10,159
9,682
10,500
10,500
10,500
10,500
9,199
10,500
10,993
10,111
9,828
10,545
10,644
10,500
9,345
9,309
10,500
9,342
10,629
9,275
9,167
10,607
Annualized
Base Rent
($000’s)(1)
122
121
119
118
117
116
115
114
114
114
113
113
113
113
112
112
112
112
112
111
110
110
110
109
109
108
106
106
105
105
105
105
105
104
104
104
104
104
104
104
103
102
100
99
Seguin, TX
Somerville, TX
. . . . . . . . . . . . . . . . . . . . . . . . . . Turnersville, NJ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Dearing, GA
Description
Location
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hammond, NY
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Des Arc, AR
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Family Dollar
Boston Market(3)
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Albuquerque, NM
Dollar Tree/Family Dollar . . . . . . . . . . . . . . . . . . . . Lake Village, AR
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Newtonsville, OH
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Del Rio, TX
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . Athens, GA
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Warsaw, NY
O’Reilly Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . . Duluth, MN
Salon Lofts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . North Canton, OH
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . Ludington, MI
Advance Auto Parts . . . . . . . . . . . . . . . . . . . . . . . . New Baltimore, MI
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Perry, NY
Starbucks
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dansville, NY
Dollar General . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ellicottville, NY
Long John Silvers(3)
Sushi Lovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
AutoZone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Winston-Salem, NC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
Philly Pretzel
T-Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vineland, NJ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vacant
Jackson, MS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leland, MS
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massillon, OH
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Parma, OH
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cadiz, OH
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lorain, OH
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cleveland, OH
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Victor, NY
Vacant
. . . . . . . . . . . . . . . . . . . . . . . . Tulsa, OK
Rentable
Square
Feet
9,219
10,555
9,252
9,288
2,627
9,155
10,023
14,592
9,290
9,219
6,871
14,495
11,182
4,000
6,604
6,784
9,181
1,500
9,174
9,144
2,701
1,999
8,008
1,505
3,002
1,920
3,343
1,363
1,884
1,292
900
2,554
20,055
3,843,264
Annualized
Base Rent
($000’s)(1)
98
98
96
95
94
90
85
84
83
83
78
74
72
72
63
63
59
57
57
56
55
54
42
40
25
—
—
—
—
—
—
—
—
$38,767
(1) Annualized straight-line base rental income in place as of December 31, 2023.
(2) The Alpine Valley Music Theatre, leased to Live Nation Entertainment, Inc., is an entertainment venue
consisting of a two-sided, open-air, 7,500-seat pavilion; an outdoor amphitheater with a capacity for
37,000; and over 150 acres of green space.
(3) We are the lessor in a ground lease with the tenant. Rentable square feet represents improvements on
the property that revert to us at the expiration of the lease.
Certain individual tenants in the Company’s portfolio of income properties accounted for more than
10% of lease income from the Company’s income properties during the years ended December 31, 2023 and
2021. No individual tenant accounted for more than 10% of lease income from the Company’s income
properties during the year ended December 31, 2022. For the year ended December 31, 2023, Walgreens
9
represented 11% of lease income from the Company’s income properties. Wells Fargo represented 12% of
lease income from the Company’s income properties for the year ended December 31, 2021. As of
December 31, 2023, 13%, 11%, and 11% of the Company’s income property portfolio, based on square
footage, was located in the states of Texas, New Jersey, and Michigan, respectively. As of December 31, 2022,
19% of the Company’s income property portfolio, based on square footage, was located in the state of
Texas.
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 the entity that owns the real estate. As of December 31, 2023, our investments in
commercial loans are all associated with commercial real estate located in the United States, are current and
performing, and bear interest at a fixed rate.
2023 Commercial Loans and Investments Portfolio. During the year ended December 31, 2023, the
Company invested in three commercial loans with a total funding commitment of $38.6 million. As of
December 31, 2023, the Company’s commercial loan investments portfolio included two construction loans
and one mortgage note with a total carrying value of $35.1 million. See Note 4, “Commercial Loans and
Investments” in the Notes to the Financial Statements for additional disclosures related to the Company’s
commercial loans and investments as of December 31, 2023.
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 years ended
December 31, 2023, 2022, or 2021.
The initial term of the Management Agreement will expire on November 26, 2024 and 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 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.
10
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.
Conflicts of Interest
Conflicts of interest may exist or could arise in the future with CTO and its affiliates, including our
Manager, the individuals who serve as our executive officers and executive officers of CTO, any individual
who serves as a director of our company and as a director of CTO and any limited partner of the Operating
Partnership. Conflicts may include, without limitation: conflicts arising from the enforcement of agreements
between us and CTO or our Manager; conflicts in the amount of time that executive officers and employees
of CTO, who are provided to us through our Manager, will spend on our affairs versus CTO’s affairs; and
conflicts in future transactions that we may pursue with CTO and its affiliates. We do not generally
expect to enter into joint ventures with CTO, but if we do so, the terms and conditions of our joint venture
investment will be subject to the approval of a majority of disinterested directors of the Board.
In addition, we are subject to conflicts of interest arising out of our relationships with our Manager.
Pursuant to the Management Agreement, our Manager is obligated to supply us with our senior management
team. However, our Manager is not obligated to dedicate any specific CTO personnel exclusively to us, nor
are the CTO personnel provided to us by our Manager obligated to dedicate any specific portion of their time
to the management of our business. Additionally, our Manager is a wholly owned subsidiary of CTO. All
of our executive officers are executive officers and employees of CTO and one of our officers (John P.
Albright) is also a member of CTO’s board of directors. As a result, our Manager and the CTO personnel it
provides to us may have conflicts between their duties to us and their duties to, and interests in, CTO.
We may acquire or sell net leased properties that would potentially fit the investment criteria for our
Manager or its affiliates. Similarly, our Manager or its affiliates may acquire or sell 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 asset. 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.
11
All of our executive officers are executive officers and employees of CTO. These individuals and other
CTO personnel provided to us through our Manager devote as much time to us as our Manager deems
appropriate. However, our executive officers and other CTO personnel provided to us through our Manager
may have conflicts in allocating their time and services between us, on the one hand, and CTO and its
affiliates, on the other. During a period of prolonged economic weakness or another economic downturn
affecting the real estate industry or at other times when we need focused support and assistance from our
Manager and the CTO executive officers and other personnel provided to us through our Manager, we may
not receive the necessary support and assistance we require or that we would otherwise receive if we were self-
managed.
Additionally, the 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.
COMPETITION
The real estate business, generally, is highly competitive. We intend to focus on investing in commercial
real estate that produces income primarily through the leasing of assets to tenants and on acquiring or
originating commercial loans and investments associated with commercial real estate located in the United
States. To identify investment opportunities in income-producing real estate assets and commercial loans and
investments and to achieve our investment objectives, we compete with numerous companies and
organizations, both public as well as private, of varying sizes, ranging from organizations with local
operations to organizations with national scale and reach, and in some cases, we compete with individual
real estate investors. In all the markets in which we compete to acquire net leased properties, price is the
principal method of competition, with transaction structure and certainty of execution also being significant
considerations for potential sellers. We face competition for acquisitions of real property and acquisitions
and originations of commercial loans and investments from investors, including traded and non-traded public
REITs, private equity investors, institutional investment funds, debt funds, specialty finance companies,
savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, investment
banking firms, financial institutions, hedge funds, governmental bodies and other entities, many of which
have greater financial resources than we do, a greater ability to borrow funds to acquire or originate properties
or other investments and the ability to accept more risk. This competition may increase the demand for the
types of properties or commercial loans and investments in which we typically invest and, therefore, reduce the
number of suitable investment opportunities available to us and increase the prices paid for such acquisition
properties or commercial loans and investments. This competition will increase if investments in real
estate become more attractive relative to other forms of investment.
As a landlord, we compete in the multi-billion-dollar commercial real estate market with numerous
developers and owners of properties, many of which own properties similar to ours in the same markets in
12
which our properties are located. Some of our competitors have greater economies of scale, lower costs of
capital, access to more resources and greater name recognition than we do. If our competitors offer space at
rental rates below current market rates or below the rental rates we currently charge our tenants, we may
lose our tenants or prospective tenants and we may be pressured to reduce our rental rates or to offer
substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal
options in order to retain tenants when our leases expire.
EMERGING GROWTH COMPANY STATUS
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012,
or the JOBS Act, and we are eligible to receive certain specified reduced disclosure and other requirements
that are otherwise generally applicable to public companies that are not “emerging growth companies,”
including, but not limited to, exclusion from the requirement to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. We have irrevocably opted-out of the extended
transition period afforded to emerging growth companies in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised financial accounting standards. As a result, we will comply with new or revised
accounting standards on the same time frames as other public companies that are not emerging growth
companies.
We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal
year during which our total annual gross revenue equals or exceeds $1.235 billion (subject to adjustment for
inflation), (ii) December 31, 2024 (the last day of the fiscal year following the fifth anniversary of the
IPO), (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in
non-convertible debt securities, and (iv) the date on which we are deemed to be a “large accelerated filer”
under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and
may take advantage of certain of the scaled disclosures available to smaller reporting companies. We may be
a smaller reporting company even after we are no longer an “emerging growth company.”
REGULATION
General. Our properties are subject to various laws, ordinances and regulations, including those
relating to fire and safety requirements, and affirmative and negative covenants and, in some instances,
common area obligations. Our tenants have primary responsibility for compliance with these requirements
pursuant to our leases. We believe that each of our properties has the necessary permits and approvals.
Americans With Disabilities Act. Under Title III of the Americans with Disabilities Act (“ADA”),
and rules promulgated thereunder, in order to protect individuals with disabilities, public accommodations
must remove architectural and communication barriers that are structural in nature from existing places of
public accommodation to the extent “readily achievable.” In addition, under the ADA, alterations to a
place of public accommodation or a commercial facility are to be made so that, to the maximum extent
feasible, such altered portions are readily accessible to and usable by disabled individuals. The “readily
achievable” standard considers, among other factors, the financial resources of the affected site and the owner,
lessor or other applicable person.
Compliance with the ADA, as well as other federal, state and local laws, may require modifications to
properties we currently own or may purchase or may restrict renovations of those properties. Failure to
comply with these laws or regulations could result in the imposition of fines or an award of damages to private
litigants, as well as the incurrence of the costs of making modifications to attain compliance, and future
legislation could impose additional obligations or restrictions on our properties. Although our tenants are
generally responsible for all maintenance and repairs of the property pursuant to our lease, including
compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the
property for a failure of one of our tenants to comply with these laws or regulations.
ENVIRONMENTAL MATTERS
Federal, state and local environmental laws and regulations regulate, and impose liability for, releases of
hazardous or toxic substances into the environment. Under various of these laws and regulations, a current
13
or previous owner, operator or tenant of real estate may be required to investigate and clean up hazardous
or toxic substances, hazardous wastes or petroleum product releases or threats of releases at the property, and
may be held liable to a government entity or to third parties for property damage and for investigation,
clean-up and monitoring costs incurred by those parties in connection with the actual or threatened
contamination. These laws may impose clean-up responsibility and liability without regard to fault, or
whether the owner, operator or tenant knew of or caused the presence of the contamination. The liability
under these laws may be joint and several for the full amount of the investigation, clean-up and monitoring
costs incurred or to be incurred or actions to be undertaken, although a party held jointly and severally
liable may seek to obtain contributions from other identified, solvent, responsible parties of their fair share
toward these costs. These costs may be substantial and can exceed the value of the property. In addition,
some environmental laws may create a lien on the contaminated site in favor of the government for damages
and costs it incurs in connection with the contamination. As the owner or operator of real estate, we may
also be liable under common law to third parties for damages and injuries resulting from environmental
contamination emanating from the real estate. The presence of contamination, or the failure to properly
remediate contamination, on a property may adversely affect the ability of the owner, operator or tenant
to sell or rent that property or to borrow using the property as collateral and may adversely impact our
investment in that property.
Some of our properties contain, have contained or are adjacent to or near other properties that have
contained or currently contain storage tanks for the storage of petroleum products or other hazardous or
toxic substances. Similarly, some of our properties were used in the past for commercial or industrial purposes,
or are currently used for commercial purposes, that involve or involved the use of petroleum products or
other hazardous or toxic substances or are adjacent to or near properties that have been or are used for similar
commercial or industrial purposes. These operations create a potential for the release of petroleum products
or other hazardous or toxic substances, and we could potentially be required to pay to clean up any
contamination. In addition, environmental laws regulate a variety of activities that can occur on a property,
including the storage of petroleum products or other hazardous or toxic substances, air emissions, water
discharges and exposure to lead-based paint. Such laws may impose fines or penalties for violations and may
require permits or other governmental approvals to be obtained for the operation of a business involving
such activities. As a result of the foregoing, we could be materially and adversely affected.
Environmental laws also govern the presence, maintenance, and removal of asbestos-containing
materials (“ACM”). Federal regulations require building owners and those exercising control over a
building’s management to identify and warn, through signs and labels, of potential hazards posed by
workplace exposure to installed ACM in their building. The regulations also have employee training, record
keeping and due diligence requirements pertaining to ACM. Significant fines can be assessed for violation
of these regulations. As a result of these regulations, building owners and those exercising control over a
building’s management may be subject to an increased risk of personal injury lawsuits by workers and
others exposed to ACM. The regulations may affect the value of a building containing ACM in which we
have invested. Federal, state and local laws and regulations also govern the removal, encapsulation,
disturbance, handling and/or disposal of ACM when those materials are in poor condition or in the event
of construction, remodeling, renovation or demolition of a building. These laws may impose liability for
improper handling or a release into the environment of ACM and may provide for fines to, and for third
parties to seek recovery from, owners or operators of real properties for personal injury or improper work
exposure associated with ACM.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur,
particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some
molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate
ventilation, chemical contamination from indoor or outdoor sources and other biological contaminants
such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can
be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
As a result, the presence of significant mold or other airborne contaminants at any of our properties could
require us to undertake a costly remediation program to contain or remove the mold or other airborne
contaminants from the affected property or increase indoor ventilation. In addition, the presence of
significant mold or other airborne contaminants could expose us to liability from our tenants, employees of
our tenants or others if property damage or personal injury occurs.
14
We obtain Phase I environmental assessments for properties acquired. Phase I environmental site
assessments are limited in scope and therefore may not reveal all environmental conditions affecting a
property. However, if recommended in the initial assessments, we may undertake additional assessments
such as soil and/or groundwater samplings or other limited subsurface investigations and ACM or mold
surveys to test for substances of concern. A prior owner or operator of a property or historic operations at
our properties may have created a material environmental condition that is not known to us or the independent
consultants preparing the site assessments. Material environmental conditions may have arisen after the
review was completed or may arise in the future, and future laws, ordinances or regulations may impose
material additional environmental liability. If environmental concerns are not satisfactorily resolved in any
initial or additional assessments, we may obtain environmental insurance policies to insure against potential
environmental risk or loss depending on the type of property, the availability and cost of the insurance
and various other factors we deem relevant. Our ultimate liability for environmental conditions may exceed
the policy limits on any environmental insurance policies we obtain, if any.
Generally, our leases require the lessee to comply with environmental law and provide that the lessee
will indemnify us for any loss or expense we incur as a result of the lessee’s violation of environmental law
or the presence, use or release of hazardous materials on our property attributable to the lessee. If our lessees
do not comply with environmental law, or we are unable to enforce the indemnification obligations of our
lessees, our results of operations would be adversely affected.
We cannot predict what other environmental legislation or regulations will be enacted in the future,
how existing or future laws or regulations will be administered or interpreted or what environmental
conditions may be found to exist on our properties in the future. Compliance with existing and new laws
and regulations may require us or our tenants to spend funds to remedy environmental problems. If we or
our tenants were to become subject to significant environmental liabilities, we could be materially and adversely
affected.
EMPLOYEES
The Company has no employees and is externally managed and advised by our Manager pursuant to
the Management Agreement. Our Manager is a wholly owned subsidiary of 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.
AVAILABLE INFORMATION
The Company maintains a website at www.alpinereit.com. The Company is providing the address to its
website solely for the information of investors. The information on the Company’s website is not a part of,
nor is it incorporated by reference into this Annual Report on Form 10-K. Through its website, the Company
makes available, free of charge, its annual proxy statement, Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after the Company electronically files such material with, or furnishes them to, the SEC. The
public may read and obtain a copy of any materials the Company files electronically with the SEC at
www.sec.gov.
ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider the risks
summarized below in this Item 1A, “Risk Factors” included in this Annual Report on Form 10-K. These
risks include, but are not limited to, the following:
• We are subject to risks related to the ownership of commercial real estate that could affect the
performance and value of our properties.
• Adverse changes in U.S., global and local regions or markets that impact our tenants’ businesses may
materially and adversely affect us generally and the ability of our tenants to make rental payments
to us pursuant to our leases.
15
• Our business is dependent upon our tenants successfully operating their businesses, and their failure
to do so could materially and adversely affect us.
• Our assessment that certain of our tenants’ businesses are insulated from e-commerce pressure may
prove to be incorrect, and changes in macroeconomic trends may adversely affect our tenants, either of
which could impair our tenants’ ability to make rental payments to us and thereby materially and
adversely affect us.
• Properties occupied by a single tenant pursuant to a single lease subject us to significant risk of
tenant default.
• Our portfolio has geographic market concentrations that make us susceptible to adverse developments
in those geographic markets.
• We are subject to risks related to tenant concentration, and an adverse development with respect to a
large tenant could materially and adversely affect us.
• Certain of our tenants are not rated by a recognized credit rating agency or do not have an investment
grade rating from such an agency. Leases with unrated or non-investment grade rated tenants may
be subject to a greater risk of default.
• The decrease in demand for retail space may materially and adversely affect us.
• We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable
terms or at all.
• The tenants that occupy our properties compete in industries that depend upon discretionary
spending by consumers. A reduction in the willingness or ability of consumers to use their discretionary
income in the businesses of our tenants and potential tenants could adversely impact our tenants’
business and thereby adversely impact our ability to collect rents and reduce the demand for leasing
our properties.
• The vacancy of one or more of our properties could result in us having to incur significant capital
expenditures to re-tenant the space.
• We may be unable to identify suitable property acquisitions or developments, which may impede our
growth, and our future acquisitions and developments may not yield the returns we expect.
• We face significant competition for tenants, which may adversely impact the occupancy levels of our
portfolio or prevent increases of the rental rates of our properties.
• A part of our investment strategy is focused on investing in commercial loans and investments which
may involve credit risk or repayment risk.
• We may invest in fixed-rate loan investments, and an increase in market interest rates may adversely
affect the value of these investments, which could adversely impact our financial condition, results of
operations and cash flows.
• The commercial loans or similar financings we may acquire that are secured by commercial real
estate typically depend on the ability of the property owner to generate income from operating the
property. Failure to do so may result in delinquency and/or foreclosure.
• We may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is
less than the amount due.
• We may experience a decline in the fair value of our real estate assets or investments which could
result in impairments and would impact our financial condition and results of operations.
• The costs of compliance with or liabilities related to environmental laws may materially and adversely
affect us.
• Our properties may contain or develop harmful mold, which could lead to liability for adverse health
effects and costs of remediation.
• Our senior management team is required to operate two publicly traded companies, CTO and our
company, which could place a significant strain on our senior management team and the management
systems, infrastructure and other resources of CTO on which we rely.
16
• We have no employees and are entirely dependent upon our Manager for all the services we require,
and we cannot assure you that our Manager will allocate the resources necessary to meet our business
objectives.
• CTO may be unable to obtain or retain the executive officers and other personnel that it provides to
us through our Manager.
• The base management fee payable to our Manager pursuant to the Management Agreement is
payable regardless of the performance of our portfolio, which may reduce our Manager’s incentive
to devote the time and effort to seeking profitable investment opportunities for us.
• The incentive fee payable to our Manager pursuant to the Management Agreement may cause our
Manager to select investments in more risky assets to increase its incentive compensation.
• There are conflicts of interest in our relationships with our Manager, which could result in outcomes
that are not in our best interests.
• Termination of the Management Agreement could be difficult and costly, including as a result of
payment of termination fees to our Manager, and may cause us to be unable to execute our business
plan, which could materially and adversely affect us.
• The Management Agreement with our Manager and the ROFO Agreement with CTO were not
negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated
with unaffiliated third parties.
• Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which
would substantially reduce funds available for distributions to our stockholders.
• Even if we remain qualified as a REIT, we may face other tax liabilities that could reduce our cash
flows and negatively impact our results of operations and financial condition.
• Failure to make required distributions would subject us to U.S. federal corporate income tax.
• Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may
cause us to incur tax liabilities.
• The prohibited transactions tax may limit our ability to dispose of our properties.
• The ability of the Board to revoke our REIT qualification without stockholder approval may cause
adverse consequences to our stockholders.
• Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Risks Related to Our Income Properties Segment
We are subject to risks related to the ownership of commercial real estate that could affect the performance
and value of our properties.
Factors beyond our control can affect the performance and value of our properties. Our core business
is the ownership of commercial net leased properties. Accordingly, our performance is subject to risks incident
to the ownership of commercial real estate, including:
• inability to collect rents from tenants due to financial hardship, including bankruptcy;
• changes in local real estate conditions in the markets where our properties are located, including the
availability and demand for the properties we own;
• changes in consumer trends and preferences that affect the demand for products and services offered
by our tenants;
• adverse changes in national, regional and local economic conditions;
• inability to lease or sell properties upon expiration or termination of existing leases;
• environmental risks, including the presence of hazardous or toxic substances on our properties;
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• the subjectivity of real estate valuations and changes in such valuations over time;
• illiquidity of real estate investments, which may limit our ability to modify our portfolio promptly in
response to changes in economic or other conditions;
• zoning or other local regulatory restrictions, or other factors pertaining to the local government
institutions which inhibit interest in the markets in which our properties are located;
• changes in interest rates and the availability of financing;
• competition from other real estate companies similar to ours and competition for tenants, including
competition based on rental rates, age and location of properties and the quality of maintenance,
insurance and management services;
• acts of God, including natural disasters and global pandemics, such as the COVID-19 Pandemic,
which impact the United States, which may result in uninsured losses;
• acts of war or terrorism, including consequences of terrorist attacks;
• changes in tenant preferences that reduce the attractiveness and marketability of our properties to
tenants or cause decreases in market rental rates;
• costs associated with the need to periodically repair, renovate or re-lease our properties;
• increases in the cost of our operations, particularly maintenance, insurance or real estate taxes which
may occur even when circumstances such as market factors and competition cause a reduction in
our revenues;
• changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related
costs of compliance with laws and regulations, fiscal policies and ordinances including in response to
global pandemics whereby our tenants’ businesses are forced to close or remain open on a limited
basis only; and
• commodities prices.
The occurrence of any of the risks described above may cause the performance and value of our
properties to decline, which could materially and adversely affect us.
Adverse changes in U.S., global and local regions or markets that impact our tenants’ businesses may materially
and adversely affect us generally and the ability of our tenants to make rental payments to us pursuant to our
leases.
Our results of operations, as well as the results of operations of our tenants, are sensitive to changes in
U.S., global and local regions or markets that impact our tenants’ businesses. Adverse changes or developments
in U.S., global or regional economic conditions may impact our tenants’ financial condition, which may
adversely impact their ability to make rental payments to us pursuant to the leases they have with us and may
also impact their current or future leasing practices. Adverse economic conditions such as high unemployment
levels, rising interest rates, increased tax rates and increasing fuel and energy costs may have an impact on
the results of operations and financial conditions of our tenants, which would likely adversely impact us.
During periods of economic slowdown and declining demand for real estate, we may experience a general
decline in rents or increased rates of default under our leases. A lack of demand for rental space could
adversely affect our ability to maintain our current tenants and gain new tenants, which may affect our
growth, profitability and ability to pay dividends.
Our business is dependent upon our tenants successfully operating their businesses, and their failure to do so
could materially and adversely affect us.
Most of our properties are occupied by a single tenant. Therefore, the success of our investments in
these properties is materially dependent upon the performance of each property’s respective tenants. The
financial performance of any one of our tenants is dependent on the tenant’s individual business, its industry
and, in many instances, the performance of a larger business network that the tenant may be affiliated with
or operate under. The financial performance of any one of our tenants could be adversely affected by poor
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management, unfavorable economic conditions in general, changes in consumer trends and preferences that
decrease demand for a tenant’s products or services or other factors, including the impact of a global
pandemic which affects the United States, over which neither they nor we have control. Our portfolio includes
properties leased to single tenants that operate in multiple locations, which means we own multiple
properties operated by the same tenant. To the extent we own multiple properties operated by one tenant,
the general failure of that single tenant or a loss or significant decline in its business could materially and
adversely affect us.
At any given time, any tenant may experience a decline in its business that may weaken its operating
results or the overall financial condition of individual properties or its business as a whole. Any such decline
may result in our tenant failing to make rental payments when due, declining to extend a lease upon its
expiration, delaying occupancy of our property or the commencement of the lease or becoming insolvent or
declaring bankruptcy. We depend on our tenants to operate their businesses at the properties we own in a
manner which generates revenues sufficient to allow them to meet their obligations to us, including their
obligations to pay rent, maintain certain insurance coverage, pay real estate taxes, make repairs and otherwise
maintain our properties. The ability of our tenants to fulfill their obligations under our leases may depend,
in part, upon the overall profitability of their operations. Cash flow generated by certain tenant businesses
may not be sufficient for a tenant to meet its obligations to us pursuant to the applicable lease. We could
be materially and adversely affected if a tenant representing a significant portion of our operating results or
a number of our tenants were unable to meet their obligations to us.
Our assessment that certain of our tenants’ businesses are insulated from e-commerce pressure may prove to be
incorrect, and changes in macroeconomic trends may adversely affect our tenants, either of which could
impair our tenants’ ability to make rental payments to us and thereby materially and adversely affect us.
We invest in properties leased, in many instances, to tenants engaged in businesses that we believe are
generally insulated from the impact of e-commerce. While we believe our assessment to be accurate, businesses
previously thought to be resistant to the pressure of the increasing level of e-commerce have ultimately
been proven to be susceptible to competition from e-commerce. Overall business conditions and the impact
of technology, particularly in the retail industry, are rapidly changing, and our tenants may be adversely
affected by technological innovation, changing consumer preferences and competition from non-
traditional sources. To the extent our tenants face increased competition from non-traditional competitors,
such as internet vendors, their businesses could suffer. There can be no assurance that our tenants will be
successful in meeting any new competition, and a deterioration in our tenants’ businesses could impair
their ability to meet their lease obligations to us and thereby materially and adversely affect us.
Additionally, we believe that many of the businesses operated by our tenants are benefiting from
macroeconomic trends that support consumer spending, such as low unemployment and positive consumer
sentiment. Economic conditions are generally cyclical, and developments that discourage consumer
spending, such as increasing unemployment, wage stagnation, decreases in the value of real estate, inflation
or increasing interest rates, could adversely affect our tenants, impair their ability to meet their lease
obligations to us and materially and adversely affect us.
Properties occupied by a single tenant pursuant to a single lease subject us to significant risk of tenant default.
Most of our properties are occupied by a single tenant. Therefore, the financial failure of, or default in
payment by, a tenant under its lease is likely to cause a significant or complete reduction in our rental revenue
from that property and possibly a reduction in the value of the property. We may also experience difficulty
or a significant delay in re-leasing or selling such property. This risk is magnified in situations where we lease
multiple properties to a single tenant and the financial failure of the tenant’s business affects more than a
single property. A failure or default by such a tenant could reduce or eliminate rental revenue from multiple
properties and reduce the value of such properties, which could materially and adversely affect us.
We may experience a decline in the fair value of our real estate assets which could result in impairments and
would impact our financial condition and results of operations.
A decline in the fair market value of our long-lived assets may require us to recognize an impairment
against such assets (as defined by Financial Accounting Standards Board, or the FASB, authoritative
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accounting guidance) if certain conditions or circumstances related to an asset were to change and we were
to determine that, with respect to any such asset, that the cash flows no longer support the carrying value
of the asset. The fair value of our long-lived assets depends on market conditions, including estimates of
future demand for these assets, and the revenues that can be generated from such assets. If such a determination
were to be made, we would recognize the estimated unrealized losses through earnings and write down the
depreciated cost of such assets to a new cost basis, based on the fair value of such assets on the date they are
considered to be impaired. Such impairment charges reflect non-cash losses at the time of recognition, and
subsequent dispositions or sales of such assets could further affect our future losses or gains, as they are based
on the difference between the sales price received and the adjusted depreciated cost of such assets at the
time of sale.
Our portfolio has geographic market concentrations that make us susceptible to adverse developments in those
geographic markets.
In addition to general, regional, national, and global economic conditions, our operating performance
is impacted by the economic conditions of the specific geographic markets in which we have concentrations
of properties. Our portfolio includes substantial holdings in Texas, New Jersey, and Michigan as of
December 31, 2023 (based on square footage). Our geographic concentrations could adversely affect our
operating performance if conditions become less favorable in any of the states or markets within such states
in which we have a concentration of properties. Such geographic concentrations could be heightened by
the fact that our investments may be concentrated in certain areas that are affected by epidemics or pandemics
such as COVID-19 more than other areas. We cannot assure you that any of our markets will grow, not
experience adverse developments or that underlying real estate fundamentals will be favorable to owners and
operators of commercial properties. Our operations may also be affected if competing properties are built
in our markets. A downturn in the economy in the states or regions in which we have a concentration of
properties, or markets within such states or regions, could adversely affect our tenants operating businesses in
those states or regions, impair their ability to pay rent to us and thereby, materially and adversely affect us.
We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant
could materially and adversely affect us.
We have in the past and may in the future have significant tenant and property concentrations. In the
event that a tenant that occupies a significant number of our properties or whose lease payments represent
a significant portion of our rental revenue, were to experience financial difficulty or file for bankruptcy, it
could have a material adverse effect on us.
Certain of our tenants are not rated by a recognized credit rating agency or do not have an investment grade
rating from such an agency. Leases with unrated or non-investment grade rated tenants may be subject to a
greater risk of default.
As of December 31, 2023, 35% of our tenants or parent entities thereof (based on annualized straight-
line base rent) were not rated or did not have an investment grade credit rating from a recognized rating
agency. Leases with non-investment grade or unrated tenants may be subject to a greater risk of default.
Unrated tenants or non-investment grade tenants may also be more likely to experience financial weakness
or file for bankruptcy than tenants with investment grade credit ratings. When we consider the acquisition of
a property with an in-place lease with an unrated or non-investment grade rated tenant or leasing a
property to a tenant that does not have a credit rating or does not have an investment grade rating, we
evaluate the strength of the proposed tenant’s business at the property level and at a corporate level, if
applicable, and may consider the risk of tenant/company insolvency using internally developed methodologies
or assessments provided by third parties. If our evaluation of an unrated or non-investment grade tenant’s
creditworthiness is inaccurate, the default or bankruptcy risk related to the tenant may be greater than
anticipated. In the event that any of our unrated tenants were to experience financial weakness or file for
bankruptcy, it could have a material adverse effect on us.
The decrease in demand for retail space may materially and adversely affect us.
As of December 31, 2023, 100% of leases based on annualized straight-line base rent were with tenants
operating retail businesses. In the future, we intend to acquire additional properties leased to a single tenant
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operating a retail business at the property. Accordingly, decreases in the demand for leasing retail space may
have a greater adverse effect on us than if we had fewer investments in retail properties. The market for
leasing of retail space has historically been adversely affected by weakness in the national, regional and local
economies, the adverse financial condition of some large retail companies, consolidation in the retail
industry, the excess amount of retail space in a number of markets and increasing e-commerce pressure. To
the extent that adverse conditions arise or continue, they are likely to negatively affect market rents for
retail space and could materially and adversely affect us.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at
all.
Our results of operations depend on our ability to lease our properties, including renewing expiring
leases, leasing vacant space and re-leasing space in properties where leases are expiring, and leasing space
related to new project development. In leasing or re-leasing our properties, we may be unable to optimize our
tenant mix or execute leases on more economically favorable terms than the prior in-place lease. Our
tenants may decline, or may not have the financial resources available, to renew their leases, and there can
be no assurance that leases that are renewed will have terms that are as economically favorable to us as the
expiring lease terms. If tenants do not renew their leases as they expire, we will have to source new tenants to
lease our properties, and there can be no assurance that we will be able to find new tenants or that our
properties will be re-leased at rental rates equal to or above the previous in-place lease or current average
rental rates or that substantial rent abatements, tenant improvement allowances, early termination rights or
below-market renewal options will not be offered to attract new tenants. We may experience increased costs in
connection with re-leasing our properties, which could materially and adversely affect us.
Certain provisions of our leases may be unenforceable.
Our rights and obligations with respect to our leases are governed by written agreements. A court
could determine that one or more provisions of such an agreement are unenforceable. We could be adversely
impacted if this were to happen with respect to a property or group of properties.
The bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and
material losses to us.
The occurrence of a tenant bankruptcy or insolvency in most cases diminishes the income we receive
from that tenant’s lease or leases, or forces us to re-tenant the affected property as a result of a default of
the in-place tenant or a rejection of a tenant lease by a bankruptcy court. When a tenant files for bankruptcy
or becomes insolvent, federal law may prohibit us from evicting such tenant based solely upon such
bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and
terminate its lease or leases with us. Any claims against such bankrupt tenant for unpaid rent or future rent
would be subject to statutory limitations that would likely result in our receipt of rental revenues that are
substantially less than the contractually specified rent we are owed under the lease or leases. In addition, any
claim we have for unpaid past rent, if any, may not be paid in full. We may also be unable to re-lease a
property in which the in-place lease was not terminated or rejected or to re-lease it on comparable or more
favorable terms. As a result, tenant bankruptcies or insolvencies may materially and adversely affect us.
During the three months ended March 31, 2023, one of our tenants under three separate master
leases filed for bankruptcy protection and ultimately liquidation, resulting in the termination of such
master leases, which covered seven convenience store properties. During the year ended December 31, 2023,
the Company recorded a $2.9 million impairment charge representing the provision for losses related to
these seven convenience store properties within our income properties segment. The seven leases underlying
these seven convenience store properties were rejected as a part of the bankruptcy proceedings during
August of 2023. The impairment charge of $2.9 million is equal to the estimated sales prices for these seven
convenience store properties (as set forth in executed letters of intent at the time the impairment was
estimated), less the book value of the assets as of December 31, 2023, less estimated costs to sell. As of
December 31, 2023, the Company is continuing to evaluate potential sales of all seven of the convenience
store properties, as well as leasing opportunities for the convenience store properties not currently leased.
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We may not acquire the properties that we evaluate in our pipeline.
We generally seek to maintain a robust pipeline of investment opportunities. Transactions may fail to
close for a variety of reasons, including the discovery of previously unknown liabilities or other items
uncovered during our diligence process. Similarly, we may never execute binding purchase agreements with
respect to properties that are currently subject to non-binding letters of intent, and properties with respect to
which we are negotiating may never lead to the execution of any letter of intent. For many other reasons,
we may not ultimately acquire the properties in our pipeline.
As we continue to acquire properties, we may decrease or fail to increase the diversity of our portfolio.
While we generally seek to maintain or increase our portfolio’s tenant, geographic and industry
diversification with future acquisitions, it is possible that we may determine to consummate one or more
acquisitions that actually decrease our portfolio’s diversity. If our portfolio becomes less diverse, our business
will be more sensitive to tenant or market factors, including the bankruptcy or insolvency of tenants, to
changes in consumer trends of a particular industry and to a general economic downturn or downturns in a
market or particular geographic area.
We may obtain only limited warranties when we acquire a property and may only have limited recourse if our
due diligence did not identify any issues that may subject us to unknown liabilities or lower the value of our
property, which could adversely affect our financial condition and ability to make distributions to you.
The seller of a property often sells the property in its “as is” condition on a “where is” basis and “with
all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition,
purchase agreements may contain only limited warranties, representations and indemnifications that will
survive for only a limited period after the closing. The acquisition of, or purchase of, properties with limited
warranties increases the risk that we may lose some or all of our invested capital in the property, lose
rental income from that property or may be subject to unknown liabilities with respect to such properties.
Many of the tenants that occupy our properties compete in industries that depend upon discretionary spending
by consumers. A reduction in the willingness or ability of consumers to use their discretionary income in the
businesses of our tenants and potential tenants could adversely impact our tenants’ business and thereby adversely
impact our ability to collect rents and reduce the demand for leasing our properties.
Certain properties in our portfolio are leased to tenants operating retail, service-oriented or experience-
based businesses. General merchandise, financial services, hospitality, home furnishings and entertainment
represent a significant portion of the industries in our portfolio. The success of most of the tenants operating
businesses in these industries depends on consumer demand and, more specifically, the willingness of
consumers to use their discretionary income to purchase products or services from our tenants. The ability
of consumers to use their discretionary income may be impacted by issues including a global pandemic that
impacts the United States. A prolonged period of economic weakness, another downturn in the U.S.
economy or accelerated dislocation of these industries due to the impact of e-commerce, could cause
consumers to reduce their discretionary spending in general or spending at these locations in particular,
which could have a material and adverse effect on us.
The vacancy of one or more of our properties could result in us having to incur significant capital expenditures
to re-tenant the space.
The loss of a tenant, either through lease expiration or tenant bankruptcy or insolvency, may require
us to spend significant amounts of capital to renovate the property before it is suitable for a new tenant and
cause us to incur significant costs to source new tenants. In many instances, the leases we enter into or
assume through acquisition are for properties that are specifically suited to the particular business of our
tenants. Because these properties have been designed or physically modified for a particular tenant, if the
current lease is terminated or not renewed, we may be required to renovate the property at substantial costs,
decrease the rent we charge or provide other concessions in order to lease the property to another tenant.
In addition, in the event we decide to sell the property, we may have difficulty selling it to a party other than
the tenant due to the special purpose for which the property may have been designed or modified. This
potential limitation on our ability to sell a property may limit our ability to quickly modify our portfolio in
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response to changes in our tenants’ business prospects, economic or other conditions, including tenant
demand. These limitations may materially and adversely affect us.
We may be unable to identify and complete suitable property acquisitions or developments, which may impede
our growth, and our future acquisitions and developments may not yield the returns we expect.
Our ability to expand through acquisitions and developments requires us to identify and complete
acquisitions and new property developments that are consistent with our investment and growth strategy
and our investment criteria and to successfully integrate newly acquired properties into our portfolio. Our
Manager continually evaluates investment opportunities for us, but our ability to acquire or develop new
properties on favorable terms and successfully operate them may be constrained by the following significant
risks:
• we face competition from commercial developers and other real estate investors with significant
capital, including REITs and institutional investment funds, which may be able to accept more risk
than we can prudently manage, including risks associated with paying higher acquisition prices;
• we face competition from other potential acquirers which may significantly increase the purchase
price for a property we acquire, which could reduce our growth prospects;
• we may incur significant costs and divert management attention in connection with evaluating and
negotiating potential acquisitions and developments, including ones that we are unable to complete;
• we may acquire properties that are not accretive to our results of operations upon acquisition, and
we may be unsuccessful in managing and leasing such properties in accordance with our expectations;
• our cash flow from an acquired or developed property may be insufficient to meet our required
principal and interest payments with respect to debt used to finance the acquisition or development
of such property;
• we may discover unexpected issues, such as unknown liabilities, during our due diligence investigation
of a potential acquisition or other customary closing conditions may not be satisfied, causing us to
abandon an investment opportunity after incurring expenses related thereto;
• we may fail to obtain financing for an acquisition or new property development on favorable terms
or at all;
• we may spend more than budgeted amounts to make necessary improvements or renovations to
acquired properties;
• market conditions may result in higher than expected vacancy rates and lower than expected rental
rates; and
• we may acquire properties subject to (i) liabilities without any recourse, or with only limited recourse,
with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental
contamination not revealed in Phase I environmental site assessments or otherwise through due
diligence, (ii) claims by tenants, vendors or other persons dealing with the former owners of the
properties, (iii) liabilities incurred in the ordinary course of business, and (iv) claims for indemnification
by general partners, directors, officers and others indemnified by the former owners of the properties.
If any of these risks are realized, we may be materially and adversely affected.
We may be unable to complete acquisitions of properties owned by CTO that are covered by the ROFO
Agreement, and any completed acquisitions of such properties may not yield the returns we expect.
Although the ROFO Agreement provides us with a right of first offer with respect to certain single-
tenant, net leased properties owned by CTO, there can be no assurance that CTO will elect to sell these
properties in the future. Even if CTO elects to sell these properties in the future, we may be unable to reach
an agreement with CTO on the terms of the purchase of such properties or may not have the funds or ability
to finance the purchase of such properties. Accordingly, there can be no assurance that we will be able to
acquire any properties covered by the ROFO Agreement in the future. Further, even if we are able to acquire
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properties covered by the ROFO Agreement, there is no guarantee that such properties will be able to
maintain their historical performance, or that we will be able to realize the same returns from those properties
as CTO.
We face significant competition for tenants, which may adversely impact the occupancy levels of our portfolio
or prevent increases of the rental rates of our properties.
We compete with numerous developers, owners and operators of net leased properties, many of which
are much larger and own properties similar to ours in the same markets in which our properties are located.
The size and financial wherewithal of our competitors may allow them to offer space at rental rates below
current market rates or below the rental rates we charge our tenants. As a result, we may lose existing tenants
or fail to obtain future tenants, and the downward pressure caused by these other owners, operators and
developers may cause us to reduce our rental rates or to offer more substantial rent abatements, tenant
improvements, early termination rights or below-market renewal options in order to retain tenants when our
leases expire. Competition for tenants could adversely impact the occupancy levels of our portfolio or
prevent increases of the rental rates of our properties, which could materially and adversely affect us.
Inflation may materially and adversely affect us and our tenants.
Increased inflation has in the past and could again in the future have an adverse impact on interest
rates, which has negatively impacted the cost of our or our tenants’ variable rate debt and would likely
negatively impact the cost of any variable rate debt that we obtain in the future. During times when inflation
is increasing at a greater rate than the increases in rent provided by our leases, our rent levels will not keep
up with the costs associated with rising inflation. Increased costs may have an adverse impact on our tenants
if increases in their operating expenses exceed increases they might achieve in revenues, which may adversely
affect the tenants’ ability to pay rent owed to us.
The redevelopment or renovation of our properties may cause us to experience unexpected costs and have other
risks that could materially and adversely affect us.
We may in the future redevelop, significantly renovate or otherwise invest additional capital in our
properties to improve them and enhance the opportunity for achieving attractive risk-adjusted returns.
These activities are subject to a number of risks, including risks associated with construction work and risks
of cost overruns due to construction delays or other factors that may increase the expected costs of a
project. In addition, we may incur costs in connection with projects that are ultimately not pursued to
completion. Any of our redevelopment or renovation projects may be financed. If such financing is not
available on acceptable terms, our redevelopment and renovation activities may not be pursued or may be
curtailed. In addition, such activities would likely reduce the available borrowing capacity on the Credit
Facility or any other credit facilities that we may have in place in the future, which would limit our ability to
use those sources of capital for the acquisition of properties and other operating needs. The risks associated
with redevelopment and renovation activities, including but not necessarily limited to those noted above,
could materially and adversely affect us.
Our real estate investments are generally illiquid, which could significantly affect our ability to respond to
market changes or adverse changes relating to our tenants or in the performance of our properties.
The real estate investments made, and expected to be made, by us are relatively difficult for us to sell
quickly. As a result, our ability to make rapid adjustments in the size and content of our portfolio in response
to economic or other conditions is limited. Illiquid assets typically experience greater price volatility, as a
ready market does not exist, and can be more difficult to value. In addition, validating third party pricing for
illiquid assets may be more subjective than more liquid assets. As a result, if we are required to quickly
liquidate all or a portion of our portfolio, we may realize significantly less than the value at which we have
previously recorded our assets.
In addition, the Internal Revenue Code of 1986, as amended (the “Code”), imposes restrictions on a
REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In
particular, the tax laws applicable to REITs effectively require that we hold our properties for investment,
rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales
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of properties that otherwise would be in our best interest. Therefore, we may not be able to vary our
portfolio in response to economic or other conditions promptly or on favorable terms, which may materially
and adversely affect us.
We may not be able to dispose of properties we target for sale to recycle our capital.
Although we may seek to selectively sell properties to recycle our capital, we may be unable to sell
properties targeted for disposition due to adverse market or other conditions, or not achieve the pricing or
timing that is consistent with our expectations. This may adversely affect, among other things, our ability to
deploy capital into the acquisition of other properties and the execution of our overall operating strategy,
which could, consequently, materially and adversely affect us.
The development of new projects and/or properties may cause us to experience unexpected costs and have other
risks that could materially and adversely affect us.
We may develop new projects to enhance the opportunity for achieving attractive risk-adjusted returns.
New project development is subject to a number of risks, including risks associated with the availability and
timely receipt of zoning and other regulatory approvals, the timely completion of construction (including
risks from factors beyond our control, such as weather, labor conditions or material shortages) and risks of
cost overruns due to construction delays or other factors that may increase the expected costs of a project.
These risks could result in substantial unanticipated delays and, under certain circumstances, provide a
tenant the opportunity to delay rent commencement, reduce rent or terminate a lease. In addition, we may
incur costs in connection with projects that are ultimately not pursued to completion. Any new development
projects may be financed. If such financing is not available on acceptable terms, our development activities
may not be pursued or may be curtailed. In addition, such activities would likely reduce the available borrowing
capacity on the revolving credit facility or any other credit facilities that we may have in place in the future,
which would limit our ability to use those sources of capital for the acquisition of properties and other
operating needs. The risks associated with new project development activities, including but not necessarily
limited to those noted above, could materially and adversely affect us.
The success of our activities related to new project development in which we will retain an ownership interest is
partly dependent on the availability of suitable undeveloped land at acceptable prices.
Our success in developing projects that we will retain an ownership interest in is partly dependent upon
the availability of undeveloped land suitable for the intended development. The availability of undeveloped
land for purchase at acceptable prices depends on a number of factors outside of our control, including
the risk of competitive over-bidding on land and governmental regulations that restrict the potential uses of
land. If the availability of suitable land opportunities decreases, the number of development projects we
may be able to undertake could be reduced. Thus, the lack of availability of suitable land opportunities could
have a material adverse effect on our results of operations and growth prospects.
Risks Related to Our Commercial Loans and Investments Segment
A part of our investment strategy is focused on investing in commercial loans and investments which may
involve credit risk.
We have invested in commercial loans secured by commercial real estate and may from time to time in
the future opportunistically invest in additional commercial loans secured by commercial real estate or similar
financings secured by real estate. Investments in commercial loans or similar financings of real estate
involve credit risk with regard to the borrower, the borrower’s operations and the real estate that secures the
financing. The credit risks include, but are not limited to, the ability of the borrower to execute their
business plan and strategy, the ability of the borrower to sustain and/or improve the operating results
generated by the collateral property, the ability of the borrower to continue as a going concern, and the risk
associated with the market or industry in which the collateral property is utilized. Our evaluation of the
investment opportunity in a mortgage loan or similar financing includes these elements of credit risk as well
as other underwriting criteria and factors. Further, we may rely on third party resources to assist us in our
investment evaluation process and otherwise in conducting customary due diligence. Our underwriting of the
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investment or our estimates of credit risk may not prove to be accurate, as actual results may vary from our
estimates. In the event we underestimate the performance of the borrower and/or the underlying real
estate which secures our commercial loan or financing, we may experience losses or unanticipated costs
regarding our investment and our financial condition, results of operations, and cash flows may be adversely
impacted.
Our commercial loans and investments segment is also generally exposed to risks associated with real estate
investments.
Any deterioration of real estate fundamentals generally, and in the United States in particular, could
negatively impact the performance of our commercial loans and investments segment by making it more
difficult for borrowers to satisfy their debt payment obligations, increasing the default risk applicable to
borrowers and making it relatively more difficult for us to generate attractive risk-adjusted returns in our
commercial loans and investments segment. Real estate investments are subject to various risks, including the
risks described elsewhere in this Form 10-K with respect to the properties that we own directly. Our
borrowers may be impacted by these same risks, which may make it more difficult for them to satisfy their
debt payment obligations to us.
Our origination or acquisition of construction loans exposes us to an increased risk of loss.
We have originated, and may in the future, originate or acquire additional construction loans. If we fail
to fund our entire commitment on a construction loan or if a borrower otherwise fails to complete the
construction of a project, there could be adverse consequences associated with the loan, including, but not
limited to: a loss of the value of the property securing the loan, especially if the borrower is unable to raise
funds to complete construction from other sources; a borrower claim against us for failure to perform
under the loan documents; increased costs to the borrower that the borrower is unable to pay; a bankruptcy
filing by the borrower; and abandonment by the borrower of the collateral for the loan. A borrower
default on a construction loan where the property has not achieved completion poses a greater risk than a
conventional loan, as completion would be required before the property is able to generate revenue. The
process of foreclosing on a property is time-consuming, and we may incur significant expense if we
foreclose on a property securing a loan under these or other circumstances.
Our investments in construction loans require us to make estimates about the fair value of land improvements
that may be challenged by the Internal Revenue Service (“IRS”).
We have originated and may in the future originate or acquire additional construction loans, the
interest from which will be qualifying income for purposes of the REIT income tests, provided that the loan
value of the real property securing the construction loan is equal to or greater than the highest outstanding
principal amount of the construction loan during any taxable year. For purposes of construction loans, the
loan value of the real property is the fair value of the land plus the reasonably estimated cost of the
improvements or developments (other than personal property) that will secure the loan and that are to be
constructed from the proceeds of the loan. There can be no assurance that the IRS would not challenge our
estimate of the loan value of the real property.
We may invest in fixed-rate loan investments, and an increase in interest rates may adversely affect the value of
these investments, which could adversely impact our financial condition, results of operations and cash flows.
Increases in interest rates may negatively affect the market value of our investments, particularly any
fixed-rate commercial loans or other financings we have invested in. Generally, any fixed-rate commercial
loans or other financings will be more negatively affected by rising interest rates than adjustable-rate assets.
Reductions in the fair value of our investments could decrease the amounts we may borrow to purchase
additional commercial loans or similar financing investments, which could impact our ability to increase our
operating results and cash flows. Furthermore, if our borrowing costs are rising while our interest income
is fixed for the fixed-rate investments, the spread between our borrowing costs and the fixed-rate we earn on
the commercial loans or similar financing investments will contract or could become negative which would
adversely impact our financial condition, results of operations, and cash flows.
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The commercial loans or similar financings we have acquired and may acquire in the future that are secured by
commercial real estate typically depend on the ability of the property owner to generate income from operating
the property. Failure to do so may result in delinquency and/or foreclosure.
Commercial loans are secured by commercial property and are subject to risks of delinquency and
foreclosure and therefore risk of loss. The ability of a borrower to repay a loan secured by an income-
producing property typically is dependent primarily upon the successful operation of such property rather
than upon the existence of independent income or assets of the borrower. If the net operating income of the
property is reduced, the borrower’s ability to repay the loan may be impaired. In the event of any default
under a commercial loan held directly by us, we will bear a risk of loss of principal to the extent of any
deficiency between the value of the collateral and the principal and accrued interest of the commercial loan,
which could have a material adverse effect on our financial condition, operating results and cash flows. In
the event of the bankruptcy of a commercial loan borrower, the mortgage loan to such borrower will be
deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as
determined by the bankruptcy court), and the lien securing the loan will be subject to the avoidance
powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state
law. Foreclosure of a loan can be an expensive and lengthy process, which could have a substantial negative
effect on our anticipated return on the foreclosed commercial loan. If the borrower is unable to repay a
mortgage loan or similar financing, our inability to foreclose on the asset in a timely manner, and/or our
inability to obtain value from reselling or otherwise disposing of the asset for an amount equal to our
investment basis, would adversely impact our financial condition, results of operations, and cash flows.
We may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is less than
the amount due.
If a borrower defaults on a non-recourse loan, we will only have recourse to the real estate-related
assets collateralizing the loan. If the underlying collateral value is less than the loan amount, we will suffer a
loss. Conversely, commercial loans we invest in may be unsecured or be secured only by equity interests in
the borrowing entities. These loans are subject to the risk that other lenders in the capital stack may be directly
secured by the real estate assets of the borrower or may otherwise have a superior right to repayment.
Upon a default, those collateralized lenders would have priority over us with respect to the proceeds of a
sale of the underlying real estate. In such cases, we may lack control over the underlying asset collateralizing
our loan or the underlying assets of the borrower before a default and, as a result, the value of the collateral
may be reduced by acts or omissions by owners or managers of the assets.
Commercial loans we may invest in may be backed by individual or corporate guarantees from
borrowers or their affiliates which guarantees are not secured. If the guarantees are not fully or partially
secured, we typically rely on financial covenants from borrowers and guarantors which are designed to require
the borrower or guarantor to maintain certain levels of creditworthiness. Should we not have recourse to
specific collateral pledged to satisfy such guarantees or recourse loans, we will have recourse as an unsecured
creditor only to the general assets of the borrower or guarantor, some or all of which may be pledged as
collateral for other lenders. There can be no assurance that a borrower or guarantor will comply with its
financial covenants, or that sufficient assets will be available to pay amounts owed to us under our loans and
guarantees. Because of these factors, we may suffer additional losses which could have a material adverse
effect on our financial condition, operating results and cash flows.
Upon a borrower bankruptcy, we may not have full recourse to the assets of the borrower to satisfy our
loan. Additionally, in some instances, our loans may be subordinate to other debt of certain borrowers. If a
borrower defaults on our loan or on debt senior to our loan, or a borrower files for bankruptcy, our loan
will be satisfied only after the senior debt receives payment. Where debt senior to our loan exists, the presence
of inter-creditor arrangements may limit our ability to amend our loan documents, assign our loans,
accept prepayments, exercise our remedies (through “standstill” periods), and control decisions made in
bankruptcy proceedings. Bankruptcy and borrower litigation can significantly increase collection costs and
the time needed for us to acquire title to the underlying collateral (if applicable), during which time the
collateral and/or a borrower’s financial condition may decline in value, causing us to suffer additional losses.
If the value of collateral underlying a loan declines, or interest rates increase during the term of a loan,
a borrower may not be able to obtain the necessary funds to repay our loan at maturity through refinancing
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because the underlying property revenue cannot satisfy the debt service coverage requirements necessary to
obtain new financing. If a borrower is unable to repay our loan at maturity, we could suffer additional loss
which may adversely impact our financial condition, operating results and cash flows.
As a result of any of the above factors or events, the losses we may suffer could adversely impact our
financial condition, results of operations and cash flows.
We could fail to continue to qualify as a REIT if the IRS successfully challenges our treatment of any
mezzanine loans in which we invest.
We may, in the future, originate or acquire mezzanine loans, which are loans secured by equity interests
in an entity that directly or indirectly owns real property, rather than by a direct mortgage of the real property.
In Revenue Procedure 2003-65, the IRS established a safe harbor under which loans secured by a first
priority security interest in ownership interests in a partnership or limited liability company owning real
property will be treated as real estate assets for purposes of the REIT asset tests, and interest derived from
those loans will be treated as qualifying income for both the 75% and 95% gross income tests, provided several
requirements are satisfied. Although Revenue Procedure 2003-65 provides a safe harbor on which taxpayers
may rely, it does not prescribe rules of substantive tax law. Moreover, our mezzanine loans may not meet
all of the requirements for reliance on the safe harbor. Consequently, there can be no assurance that the IRS
will not challenge our treatment of such loans as qualifying real estate assets, which could adversely affect
our ability to continue to qualify as a REIT.
Risks Related to Certain Events, Environmental Matters and Climate Change
Natural disasters, terrorist attacks, other acts of violence or war or other unexpected events could materially
and adversely affect us.
Natural disasters, terrorist attacks, other acts of violence or war or other unexpected events, including
a global pandemic that impacts the economy in the United States, could materially interrupt our business
operations (or those of our tenants), cause consumer confidence and spending to decrease or result in
increased volatility in the U.S. and worldwide financial markets and economies. They also could result in or
prolong an economic recession. Any of these occurrences could materially and adversely affect us.
In addition, our corporate headquarters and certain of our properties are located in Florida, where
major hurricanes have occurred. Depending on where any hurricane makes landfall, our properties in
Florida could experience significant damage. In addition, the occurrence and frequency of hurricanes in
Florida could also negatively impact demand for our properties located in that state because of consumer
perceptions of hurricane risks. In addition to hurricanes, the occurrence of other natural disasters and climate
conditions in Florida (and in other states where our properties are located), such as tornadoes, floods,
fires, unusually heavy or prolonged rain, droughts and heat waves, could have an adverse effect on our tenants,
which could adversely impact our ability to collect rental revenues. If a hurricane, earthquake, natural
disaster or other similar significant disruption occurs, we may experience disruptions to our operations and
damage to our properties, which could materially and adversely affect us.
Terrorist attacks or other acts of violence may also negatively affect our operations. There can be no
assurance that there will not be terrorist attacks against businesses within the U.S. These attacks may directly
impact our physical assets or business operations or the financial condition of our tenants, lenders or
other institutions with which we have a relationship. The U.S. may be engaged in armed conflict, which
could also have an impact on the tenants, lenders or other institutions with which we have a relationship.
The consequences of armed conflict are unpredictable, and we may not be able to foresee events that could
have an adverse effect on our business. Any of these occurrences could materially and adversely affect us.
Insurance on our properties may not adequately cover all losses and uninsured losses could materially and
adversely affect us.
Our leases typically provide that either the landlord or the tenant will maintain property and liability
insurance for the properties that are leased from us. If our tenants are required to carry liability and/or
property insurance coverage, our tenants are required to name us (and any of our lenders that have a
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mortgage on the property leased by the tenant) as additional insureds on their liability policies and additional
named insured and/or loss payee (or mortgagee, in the case of our lenders) on their property policies.
Depending on the location of the property, losses of a catastrophic nature, such as those caused by hurricanes,
earthquakes and floods, may be covered by insurance policies that are held by our tenant with limitations
such as large deductibles or co-payments that a tenant may not be able to meet. In addition, losses of a
catastrophic nature, such as those caused by wind, hail, hurricanes, terrorism or acts of war, may be
uninsurable or not economically insurable. In the event there is damage to our properties that is not covered
by insurance and such properties are subject to recourse indebtedness, we will continue to be liable for the
indebtedness, even if these properties are irreparably damaged.
Inflation, changes in building codes and ordinances, environmental considerations and other factors,
including terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or
replace a property if it is damaged or destroyed. In those circumstances, the insurance proceeds received may
not be adequate to restore our economic position with respect to the affected real property and its generation
of rental revenue. Furthermore, in the event we experience a substantial or comprehensive loss of one of
our properties, we may not be able to rebuild such property to its existing specifications without significant
capital expenditures which may exceed any amounts received pursuant to insurance policies, as reconstruction
or improvement of such a property would likely require significant upgrades to meet zoning and building
code requirements. The loss of our capital investment in or anticipated future returns from our properties due
to material uninsured losses could materially and adversely affect us.
The costs of compliance with or liabilities related to environmental laws may materially and adversely affect
us.
The ownership of our properties may subject us to known and unknown environmental liabilities.
Under various federal, state and local laws and regulations relating to the environment, as a current or
former owner or operator of real property, we may be liable for costs and damages resulting from
environmental matters, including the presence or discharge of hazardous or toxic substances, waste or
petroleum products at, on, in, under or migrating from such property, as well as costs to investigate or clean
up such contamination and liability for personal injury, property damage or harm to natural resources. We
may face liability regardless of:
• our knowledge of the contamination;
• the timing of the contamination;
• the cause of the contamination; or
• the party responsible for the contamination of the property.
There may be environmental liabilities associated with our properties of which we are unaware. We
obtain Phase I environmental assessments for properties acquired. Phase I environmental site assessments
are limited in scope and therefore may not reveal all environmental conditions affecting a property. Therefore,
there could be undiscovered environmental liabilities on the properties we own. Some of our properties
use, or may have used in the past, underground tanks for the storage of petroleum-based products or waste
products that could create a potential for release of hazardous substances or penalties if tanks do not comply
with legal standards. If environmental contamination exists on our properties, we could be subject to strict,
joint and/or several liability for the contamination by virtue of our ownership interest. Some of our properties
may contain asbestos-containing materials, or ACM. Environmental laws govern the presence, maintenance
and removal of ACM and such laws may impose fines, penalties or other obligations for failure to comply
with these requirements or expose us to third-party liability (for example, liability for personal injury associated
with exposure to asbestos). Environmental laws also apply to other activities that can occur on a property,
such as storage of petroleum products or other hazardous toxic substances, air emissions, water discharges
and exposure to lead-based paint. Such laws may impose fines and penalties for violations and may
require permits or other governmental approvals to be obtained for the operation of a business involving
such activities.
The known or potential presence of hazardous substances on a property may adversely affect our
ability to sell, lease or improve the property or to borrow using the property as collateral. In addition,
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environmental laws may create liens on contaminated properties in favor of the government for damages
and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties,
environmental laws may impose restrictions on the manner in which they may be used or businesses may
be operated, and these restrictions may require substantial expenditures.
In addition, although our leases generally require our tenants to operate in compliance with all
applicable laws and to indemnify us against any environmental liabilities arising from a tenant’s activities on
the property, we could be subject to strict liability by virtue of our ownership interest. We cannot be sure
that our tenants will, or will be able to, satisfy their indemnification obligations, if any, under our leases.
Furthermore, the discovery of environmental liabilities on any of our properties could lead to significant
remediation costs or to other liabilities or obligations attributable to the tenant of that property or could
result in material interference with the ability of our tenants to operate their businesses as currently
operated. Noncompliance with environmental laws or discovery of environmental liabilities could each
individually or collectively affect such tenant’s ability to make payments to us, including rental payments
and, where applicable, indemnification payments.
Our environmental liabilities may include property and natural resources damage, personal injury,
investigation and clean-up costs, among other potential environmental liabilities. These costs could be
substantial. Although we may obtain insurance for environmental liability for certain properties that are
deemed to warrant coverage, our insurance may be insufficient to address any particular environmental
situation and we may be unable to continue to obtain insurance for environmental matters, at a reasonable
cost or at all, in the future. If our environmental liability insurance is inadequate, we may become subject to
material losses for environmental liabilities. Our ability to receive the benefits of any environmental
liability insurance policy will depend on the financial stability of our insurance company and the position it
takes with respect to our insurance policies. If we were to become subject to significant environmental
liabilities, we could be materially and adversely affected.
Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects
and costs of remediation.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur,
particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some
molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing,
as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or
other reactions. As a result, should our tenants or their employees or customers be exposed to mold at any
of our properties, we could be required to undertake a costly remediation program to contain or remove the
mold from the affected property. In addition, exposure to mold by our tenants or others could subject us
to liability if property damage or health concerns arise. If we were to become subject to significant mold-
related liabilities, we could be materially and adversely affected.
Our operations and financial condition may be adversely affected by climate change, including possible changes
in weather patterns, weather-related events, government policy, laws, regulations and economic conditions.
In recent years, the assessment of the potential impact of climate change has begun to impact the
activities of government authorities, the pattern of consumer behavior and other areas that impact the
business environment in the U.S., including, but not limited to, energy-efficiency measures, water use
measures and land-use practices. The promulgation of policies, laws or regulations relating to climate change
by governmental authorities in the U.S. and the markets in which we own properties may require us to
invest additional capital in our properties. In addition, the impact of climate change on businesses operated
by our tenants is not reasonably determinable at this time. While not generally known at this time, climate
change may impact weather patterns or the occurrence of significant weather events which could impact
economic activity or the value of our properties in specific markets. The occurrence of any of these events or
conditions may adversely impact our ability to lease our properties, which would materially and adversely
affect us.
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Risks Related to Other Aspects of our Operation and as a Public Company
We are highly dependent on information systems and certain third-party technology service providers, and
systems failures not related to cyber-attacks or similar external attacks could significantly disrupt our business,
which may, in turn, negatively affect the market price of our common stock and adversely impact our results
of operations and cash flows.
Our business is highly dependent on communications and information systems and networks. Any
failure or interruption of these systems or networks could cause delays or other problems in our operations
and communications. Through our relationship with CTO and our Manager, we rely heavily on CTO’s
financial, accounting and other data processing systems. In addition, much of the information technology
(“IT”) infrastructure on which we rely is managed by a third party and, as such, we also face the risk of
operational failure, termination or capacity constraints by this third party. It is difficult to determine
what, if any, negative impact may directly result from any specific interruption or disruption of the networks
or systems on which our business relies or any failure to maintain performance, reliability and security of
our technological infrastructure, but significant events impacting the systems or networks on which our
business relies could materially and adversely affect us.
Our senior management team is required to operate two publicly traded companies, CTO and our company,
which could place a significant strain on our senior management team and the management systems, infrastructure
and other resources of CTO on which we rely.
Our senior management team operates two publicly traded companies, our company and CTO, and is
required to comply with periodic and current reporting requirements under applicable SEC regulations and
comply with applicable listing standards of the NYSE. This could place a significant strain on our senior
management team and the management systems, infrastructure and other resources of CTO made available
to us through our Manager and on which we rely. There can be no assurance that our senior management
team will be able to successfully operate two publicly traded companies. Any failure by our senior management
team to successfully operate our company or CTO could materially and adversely affect us.
If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting,
we may be unable to accurately present our financial statements, which could materially and adversely affect us.
As a publicly traded company, we are required to report our financial statements on a consolidated
basis. Effective internal controls are necessary for us to accurately report our financial results. Section 404 of
the Sarbanes-Oxley Act requires us to evaluate and report on our internal control over financial reporting.
However, for as long as we are an “emerging growth company” under the JOBS Act, our independent
registered public accounting firm will not be required to attest to the effectiveness of our internal control
over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We could be an “emerging
growth company” through December 31, 2024 (the last day of the fiscal year following the fifth anniversary
of the IPO). An independent assessment of the effectiveness of our internal controls could detect problems
that our management’s assessment might not. There can be no guarantee that our internal control over
financial reporting will be effective in accomplishing all control objectives all of the time. Furthermore, as
we grow our business, our internal controls will become more complex, and we may require significantly more
resources to ensure our internal controls remain effective. Future deficiencies, including any material
weakness, in our internal control over financial reporting which may occur could result in misstatements of
our results of operations that could require a restatement, failing to meet our public company reporting
obligations and causing investors to lose confidence in our reported financial information, which could
materially and adversely affect us.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to
make unanticipated expenditures that materially and adversely affect us.
Our properties are and will be subject to the Americans with Disabilities Act, or the ADA. Under the
ADA, all public accommodations must meet federal requirements related to access and use by disabled
persons. Compliance with the ADA requirements could require removal of access barriers and non-compliance
could result in imposition of fines by the U.S. government or an award of damages to private litigants, or
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both. While our tenants are and will be obligated by law to comply with the ADA and typically obligated
under our leases to cover costs associated with compliance, if required changes involve greater expenditures
than anticipated or if the changes must be made on a more accelerated basis than anticipated, the ability
of our tenants to cover costs could be adversely affected. We could be required to expend our own funds to
comply with the provisions of the ADA, which could materially and adversely affect us.
In addition, we are and will be required to operate our properties in compliance with fire and safety
regulations, building codes and other land use regulations, as they may be adopted by governmental agencies
and bodies and become applicable to our properties. We may be required to make substantial capital
expenditures to comply with those requirements and may be required to obtain approvals from various
authorities with respect to our properties, including prior to acquiring a property or when undertaking
renovations of any of our existing properties. There can be no assurance that existing laws and regulatory
policies will not adversely affect us or the timing or cost of any future acquisitions, developments or
renovations, or that additional regulations will not be adopted that increase such delays or result in additional
costs. Additionally, failure to comply with any of these requirements could result in the imposition of fines
by governmental authorities or awards of damages to private litigants. While we intend to only acquire
properties that we believe are currently in substantial compliance with all regulatory requirements, these
requirements may change, and new requirements may be imposed which would require significant
unanticipated expenditures by us and could materially and adversely affect us.
We have in the past and may in the future choose to acquire properties or portfolios of properties through tax
deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such
assets.
We have in the past acquired, and may in the future acquire, properties or portfolios of properties
through tax deferred contribution transactions in exchange for common or preferred units of limited
partnership interest in the Operating Partnership, which may result in stockholder dilution. This acquisition
structure may have the effect of, among other things, reducing the amount of tax depreciation we could
deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’
ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired
properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These
restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such
restrictions.
Risks Related to Our Relationship with CTO and Our Manager and the Management Agreement
We have no employees and are entirely dependent upon our Manager for all the services we require, and we
cannot assure you that our Manager will allocate the resources necessary to meet our business objectives.
Because we are “externally managed,” we do not employ our own personnel, but instead depend upon
CTO, our Manager and their affiliates for virtually all of the services we require. Our Manager selects and
manages the acquisition of properties that meet our investment criteria; administers the collection of rents,
monitors lease compliance by our tenants and deals with vacancies and re-letting of our properties;
coordinates the sale of our properties; provides financial and regulatory reporting services; communicates
with our stockholders, causes us to pay distributions to our stockholders and arranges for transfer agent
services; and provides all of our other administrative services. Accordingly, our success is largely dependent
upon the expertise and services of the executive officers and other personnel of CTO provided to us
through our Manager.
CTO may be unable to obtain or retain the executive officers and other personnel that it provides to us through
our Manager.
Our success depends to a significant degree upon the executive officers and other personnel of CTO
that it provides to us through our Manager. In particular, we rely on the services of John P. Albright, President
and Chief Executive Officer of our company and CTO and a member of the board of directors of our
company and CTO; Matthew M. Partridge, Senior Vice President, Chief Financial Officer and Treasurer of
our company and CTO; Steven R. Greathouse, Senior Vice President and Chief Investment Officer of our
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company and CTO; and Daniel E. Smith, Senior Vice President, General Counsel and Corporate Secretary
of our company and CTO. In addition to these executive officers, we also rely on other personnel of CTO
that are provided to us through our Manager. We cannot guarantee that all, or any particular one of these
executive officers and other personnel of CTO provided to us through our Manager, will remain affiliated
with CTO, our Manager and us. We do not separately maintain key person life insurance on any person.
Failure by CTO to retain any of its executive officers and other personnel provided to us through our
Manager and to hire and retain additional highly skilled managerial, operational and marketing personnel
could have a material adverse effect on our ability to achieve our investment growth objectives and could result
in us incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our
internal control over financial reporting.
We pay substantial fees and expenses to our Manager. These payments increase the risk that you will not earn
a profit on your investment.
Pursuant to the Management Agreement, we pay significant fees to our Manager. Those fees include a
base management fee and an incentive fee, if earned. We will also reimburse our Manager for certain expenses
pursuant to the Management Agreement. These payments increase the risk that you will not earn a profit
on your investment.
The base management fee payable to our Manager pursuant to the Management Agreement is payable
regardless of the performance of our portfolio, which may reduce our Manager’s incentive to devote the time
and effort to seeking profitable investment opportunities for us.
We pay our Manager a base management fee pursuant to the Management Agreement, which may be
substantial, based on our “total equity” (as defined in the Management Agreement) regardless of the
performance of our portfolio of properties. Our Manager’s entitlement to non-performance-based
compensation might reduce its incentive to seek profitable investment opportunities for us, which could
result in a lower performance of our portfolio and materially adversely affect us.
The incentive fee payable to our Manager pursuant to the Management Agreement may cause our Manager to
select investments in more risky assets to increase its incentive compensation.
Our Manager has the ability to earn incentive fees based on our total stockholder return exceeding an
8% cumulative annual hurdle rate, which may create an incentive for our Manager to invest in properties
with a purchase price reflecting a higher potential yield, that may be riskier or more speculative, or sell an
investment prematurely for a gain, in an effort to increase our short-term gains and thereby increase our stock
price and the incentive fees to which it is entitled. If our interests and those of our Manager are not
aligned, the execution of our business plan and our results of operations could be adversely affected, which
could materially and adversely affect the market price of our common stock and our ability to make
distributions to our stockholders.
There are conflicts of interest in our relationships with our Manager, which could result in outcomes that are
not in our best interests.
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 management team. However,
our Manager is not obligated to dedicate any specific 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 executive officers (John P. Albright) is also a
member of the board of directors of our company and the board of directors of CTO. As a result, our
Manager and the CTO personnel it provides to us, including our executive officers, may have conflicts between
their duties to us and their duties to CTO.
In addition to our initial portfolio, we have in the past acquired and may in the future acquire or sell
properties that would potentially fit the investment criteria for CTO or its affiliates. Similarly, CTO or its
affiliates may acquire or sell properties that would potentially fit our investment criteria. Although such
acquisitions or dispositions could present conflicts of interest, we nonetheless may pursue and consummate
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such transactions. Additionally, we may engage in transactions directly with CTO, our Manager or their
affiliates. If we acquire a property from CTO or one of its affiliates or sell a 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. If we issue additional equity securities at dilutive prices, the market price of our
common stock may be adversely affected, and you could lose some or all of your investment in our
common stock.
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.
Our Manager’s failure to identify and acquire properties that meet our investment criteria or perform its
responsibilities under the Management Agreement could materially and adversely affect our business and our
ability to make distributions to our stockholders.
Our ability to achieve our objectives depends on, among other things, our Manager’s ability to identify,
acquire and lease properties that meet our investment criteria. Accomplishing our objectives is largely a
function of our Manager’s structuring of our investment process, our access to financing on acceptable terms
and general market conditions. Our stockholders will not have input into our investment decisions. All of
these factors increase the uncertainty, and thus the risk, of investing in our common stock. The CTO executive
officers and other CTO personnel provided to us through our Manager have substantial responsibilities
under the Management Agreement. In order to implement certain strategies, CTO, our Manager or their
affiliates may need to hire, train, supervise and manage new employees successfully. Any failure by CTO or
our Manager to manage our future growth effectively could have a material adverse effect on us, our ability to
maintain our qualification as a REIT and our ability to make distributions to our stockholders.
Our Manager’s liability is limited under the Management Agreement, and we have agreed to indemnify our
Manager against certain liabilities. As a result, we could experience unfavorable operating results or incur losses
for which our Manager would not be liable.
Pursuant to the Management Agreement, our Manager will not assume any responsibility other than
to render the services called for thereunder and will not be responsible for any action of the Board in following
or declining to follow its directives. Our Manager maintains a contractual, as opposed to a fiduciary
relationship, with us. Under the terms of the Management Agreement, our Manager, its officers, members
and personnel, any person controlling or controlled by our Manager and any person providing sub-advisory
services to our Manager will not be liable to us, any subsidiary of ours, our directors, our stockholders or
any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant
to the Management Agreement, except those resulting from acts constituting gross negligence, willful
misconduct, bad faith or reckless disregard of our Manager’s duties under the Management Agreement.
In addition, we have agreed to indemnify our Manager and each of its officers, directors, members,
managers and employees from and against any claims or liabilities, including reasonable legal fees and other
expenses reasonably incurred, arising out of or in connection with our business and operations or any
action taken or omitted on our behalf pursuant to authority granted by the Management Agreement, except
where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s
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duties under the Management Agreement. As a result, we could experience unfavorable operating results or
incur losses for which our Manager would not be liable.
Termination of the Management Agreement could be difficult and costly, including as a result of payment of
termination fees to our Manager, and may cause us to be unable to execute our business plan, which could
materially and adversely affect us.
If we fail to renew the Management Agreement, or terminate the agreement, other than for a termination
for cause, we are obligated to pay our Manager a termination fee equal to three times the sum of (i) the average
annual base management fee earned by our Manager during the 24-month period immediately preceding
the most recently completed calendar quarter prior to the termination date and (ii) the average annual
incentive fee earned by our Manager during the two most recently completed measurement periods (as defined
in the Management Agreement) prior to the termination date. Such a payment would likely be a substantial
one-time charge that could render unattractive, or not economically feasible, the termination of our
Manager, even if it performed poorly. In addition, any termination of the Management Agreement would
end our Manager’s obligation to provide us with our executive officers and personnel upon whom we rely for
the operation of our business and would also terminate our rights under the ROFO Agreement with CTO,
as discussed further herein. As a result of termination of the ROFO Agreement, we would face increased
competition from CTO and its affiliates, as well as others, for the acquisition of properties that meet our
investment criteria, and our right to acquire certain properties from CTO and its affiliates would be terminated.
As a result, the termination of the Management Agreement could materially and adversely affect us.
If our Manager ceases to be our manager pursuant to the Management Agreement, counterparties to our
agreements may cease doing business with us.
If our Manager ceases to be our manager, it could constitute an event of default or early termination
event under financing and other agreements we may enter into in the future, upon which our counterparties
may have the right to terminate their agreements with us. If our Manager ceases to be our manager for
any reason, including upon the non-renewal of the Management Agreement, our business and our ability to
make distributions to our stockholders may be materially adversely affected.
The Management Agreement with our Manager and the ROFO Agreement with CTO were not negotiated on
an arm’s-length basis and may not be as favorable to us as if they had been negotiated with unaffiliated third
parties.
The Management Agreement with our Manager and the ROFO Agreement with CTO were negotiated
between related parties and before our independent directors were elected, and their terms, including the
fees payable to our Manager, may not be as favorable to us as if they had been negotiated with unaffiliated
third parties. The terms of these agreements may not reflect our long-term best interests and may be overly
favorable to CTO, our Manager and their affiliates (other than us and our subsidiaries). Further, we may
choose not to enforce, or to enforce less vigorously, our rights under the Management Agreement and the
ROFO Agreement because of our desire to maintain our ongoing relationships with our Manager and CTO.
Risks Related to Our Financing Activities
Our growth depends on external sources of capital, including debt financings, that are outside of our control
and may not be available to us on commercially reasonable terms or at all.
In order to maintain our qualification as a REIT under the Code, we are required, among other things,
to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends
paid deduction and excluding any net capital gain. In addition, we are subject to income tax at the U.S.
federal corporate income tax rate to the extent that we distribute less than 100% of our net taxable income.
Because of these distribution requirements, we may not have sufficient liquidity from our operating cash flows
to fund future capital needs, including any acquisition financing. Consequently, we may rely on third-party
sources, including lenders, to fund our capital needs. We may not be able to obtain debt financing on favorable
terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our
access to third-party sources of capital depends, in part, on:
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• general market conditions;
• the market’s perception of our growth potential;
• our current debt levels;
• our current and expected future earnings;
• our cash flow and cash distributions; and
• the market price per share of our common stock.
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop
properties when strategic opportunities exist, meet the capital and operating needs of our existing properties,
satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain
our qualification as a REIT, which would materially and adversely affect us.
Our organizational documents have no limitation on the amount of additional indebtedness that we may incur
in the future. As a result, we may become highly leveraged in the future, which could materially and adversely
affect us.
We have entered into certain debt agreements and, in the future, we may incur additional indebtedness
to finance future acquisitions and development, redevelopment and renovation projects and for general
corporate purposes. There are no restrictions in our charter or bylaws that limit the amount or percentage
of indebtedness that we may incur nor restrict the form in which our indebtedness will be incurred (including
recourse or non-recourse debt or cross-collateralized debt).
A substantial level of indebtedness in the future could have adverse consequences for our business and
otherwise materially and adversely affect us because it could, among other things:
• require us to dedicate a substantial portion of our cash flow from operations to make principal and
interest payments on our indebtedness, thereby reducing our cash flow available to fund working
capital, capital expenditures and other general corporate purposes, including to pay dividends on
our common stock as currently contemplated or necessary to satisfy the requirements for qualification
as a REIT;
• increase our vulnerability to general adverse economic and industry conditions and limit our
flexibility in planning for, or reacting to, changes in our business and our industry;
• limit our ability to borrow additional funds or refinance indebtedness on favorable terms or at all to
expand our business or ease liquidity constraints; and
• place us at a competitive disadvantage relative to competitors that have less indebtedness.
The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing our operational
flexibility and creating risks associated with default and noncompliance.
The agreements governing the Credit Facility, the 2026 Term Loan, the 2027 Term Loan and any other
indebtedness that we may incur in the future contain or may contain covenants that place restrictions on us
and our subsidiaries. These covenants may restrict, among other activities, our and our subsidiaries’
ability to:
• merge, consolidate or transfer all or substantially all of our or our subsidiaries’ assets;
• sell, transfer, pledge or encumber our stock or the ownership interests of our subsidiaries;
• incur additional debt or issue preferred stock;
• make certain investments;
• make certain expenditures, including capital expenditures;
• pay dividends on or repurchase our capital stock; and
• enter into certain transactions with affiliates.
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These covenants could impair our ability to grow our business, take advantage of attractive business
opportunities or successfully compete. Our ability to comply with financial and other covenants may be
affected by events beyond our control, including prevailing economic, financial and industry conditions. A
breach of any of these covenants or covenants under any other agreements governing our indebtedness could
result in an event of default. Any cross-default provisions in our debt agreements could cause an event of
default under one debt agreement to trigger an event of default under our other debt agreements. Upon the
occurrence of an event of default under any of our debt agreements, our lenders could elect to declare all
outstanding debt under such agreements to be immediately due and payable. If we were unable to repay or
refinance the accelerated debt, our lenders could proceed against any assets pledged to secure that debt,
including foreclosing on or requiring the sale of any properties securing that debt, and the proceeds from
the sale of these properties may not be sufficient to repay such debt in full.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our
investment in any property subject to mortgage debt.
Future borrowings may be secured by mortgages on our properties. Incurring mortgage and other
secured debt obligations increases our risk of losses because defaults on secured indebtedness may result in
foreclosure actions initiated by lenders and ultimately our loss of the properties securing any loans for which
we are in default. If we are in default under a cross-defaulted mortgage loan, we could lose multiple
properties to foreclosure. For U.S. federal income tax purposes, a foreclosure of any of our properties
would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt
secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis
in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds,
which could hinder our ability to meet the REIT distribution requirements imposed by the Code. As we
execute our business plan, we may assume or incur new mortgage indebtedness on our properties. Any default
under any mortgage debt obligation we incur may increase the risk of our default on our other indebtedness,
including indebtedness under our Credit Facility, the 2026 Term Loan and the 2027 Term Loan, which
could materially and adversely affect us.
Increases in interest rates have and will likely continue to increase our interest costs on our variable rate debt
and could adversely impact our ability to refinance existing debt or sell assets.
Current and future borrowings under our Credit Facility, the 2026 Term Loan and the 2027 Term
Loan will bear interest at variable rates. Recent increases in interest rates have increased our interest
payments and reduced our cash flow available for other corporate purposes, and we expect this trend to
continue in the near term. In addition, rising interest rates could limit our ability to refinance debt when it
matures and increase interest costs on any debt that is refinanced. Further, an increase in interest rates could
increase the cost of financing, thereby decreasing the amount third parties are willing to pay for our
properties, which would limit our ability to dispose of properties when necessary or desired.
In addition, we may enter into hedging arrangements in the future. Our hedging arrangements may
include interest rate swaps, caps, floors and other interest rate hedging contracts. Our hedging arrangements
could reduce, but may not eliminate, the impact of rising interest rates, and they could expose us to the
risk that other parties to our hedging arrangements will not perform or that the agreements relating to our
hedges may not be enforceable.
Risks Related to Our Organization and Structure
We are a holding company with no direct operations, and we will rely on funds received from the Operating
Partnership to pay our obligations and make distributions to our stockholders.
We are a holding company and will conduct substantially all of our operations through the Operating
Partnership. We will not have, apart from an interest in the Operating Partnership, any independent
operations. As a result, we will rely on distributions from the Operating Partnership to make any distributions
we declare on shares of our common stock. We will also rely on distributions from the Operating Partnership
to meet any of our obligations, including any tax liability on taxable income allocated to us from the
Operating Partnership. In addition, because we are a holding company, your claims as stockholders are
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structurally subordinated to all existing and future creditors and preferred equity holders of the Operating
Partnership and its subsidiaries. Therefore, in the event of a bankruptcy, insolvency, liquidation or
reorganization of the Operating Partnership or its subsidiaries, assets of the Operating Partnership or the
applicable subsidiary will be available to satisfy our claims to us as an equity owner therein only after all of
their liabilities and preferred equity have been paid in full.
As of December 31, 2023, we owned 91.8% of the OP Units issued by the Operating Partnership.
However, in connection with our future acquisition activities or otherwise, we may issue additional OP
Units to third parties. Such issuances would reduce our ownership in the Operating Partnership.
Certain provisions of Maryland law could inhibit changes in control of our company.
Certain “business combination” and “control share acquisition” provisions of the Maryland General
Corporation Law, or the MGCL, may have the effect of deterring a third party from making a proposal to
acquire us or of impeding a change in control under circumstances that otherwise could provide the holders
of our common stock with the opportunity to realize a premium over the then-prevailing market price of
our common stock. Pursuant to the MGCL, the Board has by resolution exempted business combinations
between us and any other person. Our bylaws contain a provision exempting from the control share acquisition
statute any and all acquisitions by any person of shares of our stock. However, there can be no assurance
that these exemptions will not be amended or eliminated at any time in the future. Our charter and bylaws and
Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of
control that might involve a premium price for our common stock or that our stockholders otherwise believe
to be in their best interest.
Certain provisions in the partnership agreement of the Operating Partnership may delay, defer or prevent
unsolicited acquisitions of us.
Provisions in the partnership agreement of the Operating Partnership may delay, defer or prevent
unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties
from making proposals involving an unsolicited acquisition of us or change of our control, although some
stockholders might consider such proposals, if made, desirable. These provisions include, among others:
• redemption rights of qualifying parties;
• transfer restrictions on OP Units;
• our ability, as general partner, in some cases, to amend the partnership agreement and to cause the
Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other
change of control of us or the Operating Partnership without the consent of the limited partners; and
• the right of the limited partners to consent to transfers of the general partnership interest and
mergers or other transactions involving us under specified circumstances.
The partnership agreement of the Operating Partnership and Delaware law also contain other provisions
that may delay, defer or prevent a transaction or a change of control that might involve a premium price for
our common stock or that our stockholders otherwise believe to be in their best interest.
Our charter contains stock ownership limits, which may delay, defer or prevent a change of control.
In order for us to maintain our qualification as a REIT, no more than 50% in value of our outstanding
capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of any
calendar year, and at least 100 persons must beneficially own our stock during at least 335 days of a taxable
year of 12 months or during a proportionate portion of a shorter taxable year. “Individuals” for this
purpose include natural persons, private foundations, some employee benefit plans and trusts and some
charitable trusts. To assist us in complying with these limitations, among other purposes, our charter generally
prohibits any person from directly or indirectly owning more than 9.8% in value or number of shares,
whichever is more restrictive, of the outstanding shares of any class or series of our capital stock. These
ownership limitations could have the effect of discouraging a takeover or other transaction in which holders
of our common stock might receive a premium for their shares over the then prevailing market price or
which holders might believe to be otherwise in their best interests.
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Our charter’s constructive ownership rules are complex and may cause the outstanding shares owned
by a group of related individuals or entities to be deemed to be constructively owned by one individual or
entity. As a result, the acquisition of less than these percentages of the outstanding shares by an individual
or entity could cause that individual or entity to own constructively in excess of these percentages of the
outstanding shares and thus violate the share ownership limits. Our charter also provides that any attempt
to own or transfer shares of our common stock or preferred stock (if and when issued) in excess of the stock
ownership limits without the consent of the Board or in a manner that would cause us to be “closely held”
under Section 856(h) of the Code (without regard to whether the shares are held during the last half of a
taxable year) will result in the shares being automatically transferred to a trustee for a charitable trust or,
if the transfer to the charitable trust is not automatically effective to prevent a violation of the share ownership
limits or the restrictions on ownership and transfer of our shares, any such transfer of our shares will be
null and void.
The Board may change our strategies, policies or procedures without stockholder consent, which may subject us
to different and more significant risks in the future.
Our investment, financing, leverage and distribution policies and our policies with respect to all other
activities, including growth, debt, capitalization and operations, are determined by the Board. These policies
may be amended or revised at any time and from time to time at the discretion of the board of directors
without notice to or a vote of our stockholders. This could result in us conducting operational matters,
making investments or pursuing different business or growth strategies than those contemplated. Under these
circumstances, we may expose ourselves to different and more significant risks in the future, which could
have a material adverse effect on our business and growth. In addition, the Board may change our policies
with respect to conflicts of interest, provided that such changes are consistent with applicable legal
requirements.
We may have assumed unknown liabilities in connection with the Formation Transactions, which, if significant,
could materially and adversely affect us.
As part of the Formation Transactions, we acquired our initial portfolio from CTO, subject to existing
liabilities, some of which may have been unknown at the time of the IPO and may remain unknown.
Unknown liabilities might include claims of tenants, vendors or other persons dealing with such entities prior
to the IPO (that had not been asserted or threatened prior to the IPO), tax liabilities and accrued but
unpaid liabilities incurred in the ordinary course of business. Any unknown or unquantifiable liabilities that
we assumed in connection with the Formation Transactions for which we have no or limited recourse
could materially and adversely affect us.
Our rights and the rights of our stockholders to take action against our directors and executive officers are
limited, which could limit your recourse in the event of actions not in your best interest.
Our charter limits the liability of our present and former directors and executive officers to us and our
stockholders for money damages to the maximum extent permitted under Maryland law. Under current
Maryland law, our present and former directors and executive officers will not have any liability to us or our
stockholders for money damages other than liability resulting from (i) actual receipt of an improper
benefit or profit in money, property or services or (ii) active and deliberate dishonesty by the director or
executive officer that was established by a final judgment and is material to the cause of action. As a result,
we and our stockholders have limited rights against our present and former directors and executive officers,
which could limit your recourse in the event of actions not in your best interest.
Conflicts of interest exist or could arise in the future between the interests of our stockholders and the interests
of holders of Operating Partnership units, which may impede business decisions that could benefit our
stockholders.
Conflicts of interest exist or could arise in the future as a result of the relationships between us and our
affiliates, on the one hand, and the Operating Partnership or any partner thereof, on the other. 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, as the general partner of the Operating Partnership,
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has fiduciary duties and obligations to the Operating Partnership and its limited partners under Delaware
law and the partnership agreement of the Operating Partnership in connection with the management of the
Operating Partnership. The fiduciary duties and obligations of the general partner to the Operating
Partnership and its partners may come into conflict with the duties of our directors and executive officers
to our company. The Operating 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, the general partner 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 the general partner, in its sole and absolute
discretion, determines cannot be resolved in a manner not adverse to either our stockholders or the
limited partners of the Operating Partnership are resolved in favor of our stockholders, and the general
partner will not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived
by the limited partners in connection with such decisions.
In addition, to the extent permitted by applicable law, the partnership agreement will provide for the
indemnification of the general partner and our officers, directors, employees and any other persons the
general partner may designate from and against any and all claims that relate to the operations of the
Operating Partnership as set forth in the partnership agreement in which any indemnitee may be involved,
or is threatened to be involved, as a party or otherwise, unless it is established that:
• the act or omission of the indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate dishonesty;
• the indemnitee actually received an improper personal benefit in money, property or services; or
• in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or
omission was unlawful.
Similarly, the general partner of the Operating Partnership and our officers, directors, agents or
employees, will not be liable for monetary damages to the Operating Partnership or the limited partners for
losses sustained or liabilities incurred as a result of errors in judgment or mistakes of fact or law or of any
act or omission so long as any such party acted in good faith.
We could increase or decrease the number of authorized shares of stock, classify and reclassify unissued stock
and issue stock without stockholder approval, which could prevent a change in our control and negatively affect
the market price of our common stock.
The Board, without stockholder approval, has the power under our charter to amend our charter from
time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock
of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued
shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our
common stock or preferred stock into one or more classes or series of stock and set the terms of such newly
classified or reclassified shares. As a result, we may issue series or classes of common stock or preferred
stock with preferences, distributions, powers and rights, voting or otherwise, that are senior to the rights of
holders of our common stock. Any such issuance could dilute our existing common stockholders’ interests.
Although the Board has no such intention at the present time, it could establish a class or series of preferred
stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of
control that might involve a premium price for our common stock or that our stockholders otherwise
believe to be in their best interest.
The Operating Partnership has in the past and may in the future issue additional OP Units without the consent
of our stockholders, which could have a dilutive effect on our stockholders.
The Operating Partnership has in the past and may in the future issue additional OP Units to third
parties without the consent of our stockholders, which would reduce our ownership percentage in the
Operating Partnership and may have a dilutive effect on the amount of distributions made to us by the
Operating Partnership and, therefore, the amount of distributions we may make to our stockholders. Any
such issuances, or the perception of such issuances, could materially and adversely affect the market price of
our common stock.
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We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the
reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will
make shares of our common stock less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act. We will remain an “emerging
growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total
annual gross revenue equals or exceeds $1.235 billion (subject to adjustment for inflation), (ii) December 31,
2024 (the last day of the fiscal year following the fifth anniversary of the IPO); (iii) the date on which we
have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities and
(iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We intend
to take advantage of exemptions from various reporting requirements that are applicable to most other public
companies, whether or not they are classified as “emerging growth companies,” including, but not limited
to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our
independent registered public accounting firm provide an attestation report on the effectiveness of our
internal control over financial reporting. An attestation report by our auditor would require additional
procedures by them that could detect problems with our internal control over financial reporting that are not
detected by management. If our system of internal control over financial reporting is not determined to be
appropriately designed or operating effectively, it could require us to restate financial statements, cause us to
fail to meet reporting obligations and cause investors to lose confidence in our reported financial
information, all of which could lead to a significant decline in the market price of our common stock. The
JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition
period provided in the Securities Act of 1933, as amended (the “Securities Act”) for complying with new
or revised accounting standards. However, we have chosen to “opt out” of this extended transition period and,
as a result, we will comply with new or revised accounting standards on the relevant dates on which
adoption of such standards is required for all public companies that are not emerging growth companies.
Our decision to opt out of the extended transition period for complying with new or revised accounting
standards is irrevocable.
We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and
may take advantage of certain of the scaled disclosures available to smaller reporting companies. We may be
a smaller reporting company even after we are no longer an “emerging growth company.”
We cannot predict if investors will find our common stock less attractive because we intend to rely on
certain of these exemptions and benefits under the JOBS Act. If some investors find our common stock less
attractive as a result, there may be a less active, liquid and/or orderly trading market for our common
stock and the market price and trading volume of our common stock may be more volatile and decline
significantly.
We have incurred new costs as a result of becoming a public company, and such costs may increase when we
cease to be an “emerging growth company.”
As a public company, we incur significant legal, accounting, insurance and other expenses, including
costs associated with public company reporting requirements. The expenses incurred by public companies
generally for reporting and corporate governance purposes have been increasing. We expect compliance with
these public reporting requirements and associated rules and regulations to increase expenses, particularly
after we are no longer an emerging growth company, although we are currently unable to estimate theses costs
with any degree of certainty. We could be an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier, which could result in our incurring additional costs
applicable to public companies that are not emerging growth companies.
Risks Related to Our Qualification and Operation as a REIT
Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would
substantially reduce funds available for distributions to our stockholders.
We believe that our organization and method of operation have enabled us to meet the requirements
for qualification and taxation as a REIT and we intend to continue to be organized and operate in such a
manner. However, we cannot assure you that we will remain qualified as a REIT. Moreover, our qualification
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and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual
operating results, certain qualification tests set forth in the U.S. federal income tax laws. Accordingly, no
assurance can be given that our actual results of operations for any particular taxable year will satisfy such
requirements.
If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will
substantially reduce the funds available for distributions to our stockholders because:
• we would not be allowed a deduction for dividends paid to stockholders in computing our taxable
income and would be subject to U.S. federal income tax at regular corporate rates (currently 21%);
• we could be subject to increased state and local taxes; and
• unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT
status until the fifth calendar year after the year in which we failed to qualify as a REIT.
In addition, if we fail to remain qualified as a REIT, we will no longer be required to make distributions.
As a result of all these factors, our failure to remain qualified as a REIT could impair our ability to expand
our business and raise capital, and it would adversely affect our business, financial condition, results of
operations or ability to make distributions to our stockholders and the trading price of our common stock.
Even if we remain qualified as a REIT, we may face other tax liabilities that could reduce our cash flows and
negatively impact our results of operations and financial condition.
Even if we remain qualified for taxation as a REIT, we may be subject to certain U.S. federal, state and
local taxes on our income and assets, including taxes on any undistributed income, tax on income from some
activities conducted as a result of a foreclosure and state or local income, property and transfer taxes. In
addition, under partnership audit procedures, the Operating Partnership and any other partnership that we
may form or acquire may be liable at the entity level for tax imposed under those procedures. Further, any
taxable REIT subsidiaries (“TRSs”) that we may form in the future will be subject to regular corporate U.S.
federal, state and local taxes. Moreover, several provisions of the Code regarding the arrangements between
a REIT and its TRS entities function to ensure that such TRS entities are subject to an appropriate level of
U.S. federal income taxation. Any of these taxes would decrease cash available for distributions to
stockholders, which, in turn, could materially adversely affect our business, financial condition, results of
operations or ability to make distributions to our stockholders and the trading price of our common stock.
Failure to make required distributions would subject us to U.S. federal corporate income tax.
We intend to continue to operate in a manner so as to maintain our qualification as a REIT for U.S.
federal income tax purposes. In order to maintain our qualification as a REIT, we generally are required to
distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid
deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy
this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject
to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a
4% nondeductible excise tax on the amount, if any, by which dividends we pay in a calendar year are less
than the sum of 85% of our ordinary income, 95% of our capital gain net income and, 100% of our
undistributed income (as defined under the excise tax rules from prior years).
Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate
otherwise attractive investments.
To maintain our qualification as a REIT for U.S. federal income tax purposes, we must continually
satisfy tests concerning, among other things, the sources of our income, the nature and diversification of
our assets, the amounts we distribute to our stockholders and the ownership of our stock. In order to meet
these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the
REIT requirements may hinder our performance.
In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our
assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of
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our investment in securities (other than government securities, securities of TRSs and qualified real estate
assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more
than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more
than 5% of the value of our assets (other than government securities, securities of TRSs and qualified real
estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total
assets can be represented by the securities of one or more TRSs and no more than 25% of our assets can be
represented by debt of “publicly offered REITs” (i.e., REITs that are required to file annual and periodic
reports with the SEC under the Exchange Act), unless secured by real property or interests in real property.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure
within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to
avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required
to liquidate otherwise attractive investments. These actions could have the effect of reducing our income
and amounts available for distribution to our stockholders.
The relative lack of experience of our Manager in operating under the constraints imposed on us as a REIT
may hinder the achievement of our investment objectives.
The Code imposes numerous constraints on the operations of REITs that do not apply to other
investment vehicles. Our qualification as a REIT depends upon our ability to meet requirements regarding
our organization and ownership, distributions of our income, the nature and diversification of our income
and assets and other tests imposed by the Code. Any failure to comply could cause us to fail to satisfy the
requirements associated with qualifying for and maintaining REIT status. Our Manager has relatively limited
experience operating under these constraints, which may hinder our ability to take advantage of attractive
investment opportunities and to achieve our investment objectives. As a result, we cannot assure you that our
Manager will be able to operate our business under these constraints. If we fail to qualify as a REIT for
any taxable year, we will be subject to U.S. federal income tax on our taxable income at corporate rates. In
addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the
year of losing our REIT status. Losing our REIT status would reduce our net earnings available for
investment or distribution to stockholders because of the additional tax liability. In addition, distributions
to stockholders would no longer qualify for the dividends paid deduction, and we would no longer be required
to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments
in order to pay the applicable tax.
Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us
to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our liabilities. Any income from a
hedging transaction we enter into to manage risk of interest rate changes, price changes or currency
fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, if properly
identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the
75% or 95% gross income tests applicable to REITs. In addition, certain income from hedging transactions
entered into to hedge existing hedging positions after any portion of the hedged indebtedness or property is
extinguished or disposed of will not be included in income for purposes of the 75% and 95% gross income
tests. To the extent that we enter into other types of hedging transactions, the income from those transactions
will likely be treated as non-qualifying income for purposes of both the 75% and 95% gross income tests.
As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement
those hedges through a TRS. This could increase the cost of our hedging activities because our TRSs would
be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we
would otherwise want to bear. In addition, losses in a TRS generally will not provide any tax benefit, except
for being carried forward against future taxable income of such TRS.
Our ability to provide certain services to our tenants may be limited by the REIT rules or may have to be
provided through a TRS.
As a REIT, we generally cannot provide services to our tenants other than those that are customarily
provided by landlords, nor can we derive income from a third party that provides such services. If we forego
providing such services to our tenants, we may be at a disadvantage to competitors that are not subject to
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the same restrictions. However, we can provide such non-customary services to tenants or share in the
revenue from such services if we do so through a TRS, though income earned by such TRS will be subject
to U.S. federal corporate income tax.
The prohibited transactions tax may limit our ability to dispose of our properties.
A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited
transactions are sales or other dispositions of property, other than foreclosure property, held primarily for
sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax equal
to 100% of net gain upon a disposition of real property. Although a safe harbor to the characterization of
the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can
comply with the safe harbor or that we will avoid owning property that may be characterized as held
primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to
engage in certain sales of our properties or may conduct such sales through any TRS that we may form, which
would be subject to U.S. federal corporate income tax.
We may pay taxable dividends in our common stock and cash, in which case stockholders may sell shares of
our common stock to pay tax on such dividends, placing downward pressure on the market price of our common
stock.
We may satisfy the 90% distribution test with taxable distributions of our common stock. The IRS has
issued Revenue Procedure 2017-45 authorizing elective cash/stock dividends to be made by “publicly offered
REITs.” Pursuant to Revenue Procedure 2017-45, the IRS will treat the distribution of stock pursuant to
an elective cash/stock dividend as a distribution of property under Section 301 of the Code (i.e., a dividend),
as long as at least 20% of the total dividend is available in cash and certain other parameters detailed in
the Revenue Procedure are satisfied.
If we made a taxable dividend payable in cash and common stock, taxable stockholders receiving such
dividends will be required to include the full amount of the dividend as ordinary income to the extent of
our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a
result, stockholders may be required to pay income tax with respect to such dividends in excess of the
cash dividends received. If a U.S. stockholder sells the common stock that it receives as a dividend in order
to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend,
depending on the market price of our common stock at the time of the sale. Furthermore, with respect to
certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such
dividends, including in respect of all or a portion of such dividend that is payable in common stock. If we
made a taxable dividend payable in cash and our common stock and a significant number of our stockholders
determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward
pressure on the trading price of our common stock. We do not currently intend to pay taxable dividends
using both our common stock and cash, although we may choose to do so in the future.
The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse
consequences to our stockholders.
Our charter provides that the Board may revoke or otherwise terminate our REIT election, without the
approval of our stockholders, if it determines in good faith that it is no longer in our best interest to continue
to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax
on our taxable income and would no longer be required to distribute most of our taxable income to our
stockholders, which may have adverse consequences on our total return to our stockholders.
Any ownership of a TRS we may form in the future will be subject to limitations and our transactions with a
TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are
not conducted on arm’s-length terms.
Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or
more TRS entities. A TRS will be subject to applicable U.S. federal, state and local corporate income tax on
its taxable income, and its after tax net income will be available for distribution to us but is not required to
be distributed to us. In addition, several provisions of the Code regarding the arrangements between a REIT
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and its TRS entities function to ensure that the TRS is subject to an appropriate level of U.S. federal
income taxation. The Code also imposes a 100% excise tax on certain transactions between a TRS and its
parent REIT that are not conducted on an arm’s-length basis. We will monitor the value of our respective
investments in any TRS that we may form for the purpose of ensuring compliance with TRS ownership
limitations and will structure our transactions with any TRS on terms that we believe are arm’s length to
avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able
to comply with the 20% limitation or to avoid application of the 100% excise tax.
You may be restricted from acquiring or transferring certain amounts of our common stock.
The stock ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our
charter may inhibit market activity in our capital stock and restrict our business combination opportunities.
In order for us to maintain our qualification as a REIT, five or fewer individuals, as defined in the
Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding
capital stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any
individual or entity beneficially or constructively owns our shares of capital stock under this requirement.
Additionally, at least 100 persons must beneficially own our shares of capital stock during at least 335 days
of each taxable year other than our initial REIT taxable year. To help ensure that we meet these tests, our
charter restricts the acquisition and ownership of shares of our capital stock.
Our charter, with certain exceptions, requires our directors to take such actions as are necessary and
desirable to preserve our qualification as a REIT. Unless exempted by the Board, our charter prohibits any
person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is
more restrictive, of the outstanding shares of any class or series of our shares of capital stock. The Board
may not grant an exemption from this restriction to any person if such exemption would result in our failing
to qualify as a REIT. This as well as other restrictions on transferability and ownership will not apply,
however, if the Board determines in good faith that it is no longer in our best interests to continue to qualify
as a REIT.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
The maximum U.S. federal income tax rate applicable to “qualified dividend income” payable to U.S.
stockholders that are taxed at individual rates is 20% (plus the 3.8% surtax on net investment income, if
applicable). Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified
dividend income. However, for taxable years beginning before January 1, 2026, ordinary REIT dividends
constitute “qualified business income” and thus a 20% deduction is available to individual taxpayers with
respect to such dividends, resulting in a 29.6% maximum U.S. federal income tax rate (plus the 3.8% surtax on
net investment income, if applicable) for individual U.S. stockholders. However, to qualify for this deduction,
the stockholder receiving such dividends must hold the dividend-paying REIT stock for at least 46 days
(taking into account certain special holding period rules) of the 91-day period beginning 45 days before the
stock becomes ex-dividend, and cannot be under an obligation to make related payments with respect to
a position in substantially similar or related property. The more favorable rates applicable to regular corporate
qualified dividends could cause investors who are taxed at individual rates to perceive investments in
REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay
dividends, which could adversely affect the value of the shares of REITs, including our common stock.
We may be subject to adverse legislative or regulatory tax changes, in each instance with potentially retroactive
effect, that could reduce the market price of our common stock.
At any time, the U.S. federal income tax laws governing REITs, or the administrative interpretations of
those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation
or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or
administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation
or interpretation may take effect retroactively. We and our stockholders could be adversely affected by
any such change in the U.S. federal income tax laws, regulations or administrative interpretations which, in
turn, could materially adversely affect our ability to make distributions to our stockholders and the trading
price of our common and preferred stock.
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If the Operating Partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would
cease to qualify as a REIT and suffer other adverse consequences.
We believe that the Operating Partnership will be treated as a partnership for U.S. federal income tax
purposes. As a partnership, the Operating Partnership will not be subject to U.S. federal income tax on its
income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with
respect to, its share of the Operating Partnership’s income. We cannot assure you, however, that the IRS will
not challenge the status of the Operating Partnership or any other subsidiary partnership in which we own
an interest as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a
challenge. If the IRS were successful in treating the Operating Partnership or any such other subsidiary
partnership as an entity taxable as a corporation for U.S. federal income tax purposes, we would fail to meet
the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely
cease to qualify as a REIT. Also, the failure of the Operating Partnership or any subsidiary partnership to
qualify as a partnership could cause such partnership to become subject to U.S. federal and state corporate
income tax, which would reduce significantly the amount of cash available for debt service and for
distribution to its partners, including us.
Risks Related to Our Common Stock
The market value of our common stock is subject to various factors that may cause significant fluctuations or
volatility.
As with other publicly traded securities, the market price of our common stock depends on various
factors, which may change from time to time and/or may be unrelated to our financial condition, results of
operations or cash flows. These factors may cause significant fluctuations or volatility in the market price of
our common stock. These factors include, but are likely not limited to, the following:
• our financial condition and operating performance and the financial condition or performance of
other similar companies;
• actual or anticipated differences in our quarterly or annual operating results than expected;
• changes in our revenues, Funds From Operations (“FFO”), Adjusted Funds From Operations
(“AFFO”), or earnings estimates or recommendations by securities analysts;
• publication of research reports about us or the real estate industry generally;
• increases in market interest rates, which may lead investors to demand a higher distribution yield for
shares of our common stock, and could result in increased interest expense on our debt;
• adverse market reaction to any increased indebtedness we incur in the future;
• actual or anticipated changes in our and our tenants’ businesses or prospects, including as a result of
the impact of a global pandemic, such as the COVID-19 Pandemic;
• the current state of the credit and capital markets, and our ability and the ability of our tenants to
obtain financing on favorable terms;
• conflicts of interest with CTO and its affiliates, including our Manager;
• the termination of our Manager or additions and departures of key personnel of our Manager;
• increased competition in our markets;
• strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs, joint
ventures, strategic investments or changes in business or growth strategies;
• the passage of legislation or other regulatory developments that adversely affect us or our industry;
• adverse speculation in the press or investment community;
• actions by institutional stockholders;
• the extent of investor interest in our securities;
46
• the general reputation of REITs and the attractiveness of our equity securities in comparison to
other equity securities, including securities issued by other real estate-based companies;
• investor confidence in the stock and bond markets, generally;
• changes in tax laws;
• equity issuances by us (including the issuances of OP Units), or common stock resales by our
stockholders, or the perception that such issuances or resales may occur;
• volume of average daily trading and the amount of our common stock available to be traded;
• changes in accounting principles;
• failure to maintain our qualification as a REIT;
• failure to comply with the rules of the NYSE or maintain the listing of our common stock on the
NYSE;
• terrorist acts, natural or man-made disasters, including global pandemics impacting the United
States, or threatened or actual armed conflicts; and
• general market and local, regional and national economic conditions, including factors unrelated to
our operating performance and prospects.
No assurance can be given that the market price of our common stock will not fluctuate or decline
significantly in the future or that holders of shares of our common stock will be able to sell their shares
when desired on favorable terms, or at all. From time to time in the past, securities class action litigation has
been instituted against companies following periods of extreme volatility in their stock price. This type of
litigation could result in substantial costs and divert our management’s attention and resources.
There can be no assurance that we will be able to make or maintain cash distributions, and certain agreements
relating to our indebtedness may, under certain circumstances, limit or eliminate our ability to make distributions
to our common stockholders.
We intend to make cash distributions to our stockholders in amounts such that all or substantially all
of our taxable income in each year, subject to adjustments, is distributed. Our ability to continue to make
distributions in the future may be adversely affected by the risk factors described in this Annual Report on
Form 10-K. We can give no assurance that we will be able to make or maintain distributions and certain
agreements relating to our indebtedness may, under certain circumstances, limit or eliminate our ability to
make distributions to our common stockholders. We can give no assurance that rents from our properties will
increase, or that future acquisitions of real properties or other investments will increase our cash available
for distributions to stockholders. In addition, any distributions will be authorized at the sole discretion of the
Board, and their form, timing and amount, if any, will depend upon a number of factors, including our
actual and projected results of operations, FFO, AFFO, liquidity, cash flows and financial condition, the
revenue we actually receive from our properties, our operating expenses, our debt service requirements, our
capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable
income, the annual REIT distribution requirements, applicable law and such other factors as the Board
deems relevant.
If we do not have sufficient cash available for distributions, we may need to fund the shortage out of
working capital or borrow to provide funds for such distributions, which would reduce the amount of
proceeds available for real estate investments and increase our future interest costs. Our inability to make
distributions, or to make distributions at expected levels, could result in a decrease in the per share trading
price of our common stock.
The market price of our common stock could be adversely affected by our level of cash distributions.
We believe the market price of the equity securities of a REIT is based primarily upon the market’s
perception of the REIT’s growth potential, its current and potential future cash distributions, whether from
operations, sales or refinancing, and its management and governance structure and is secondarily based
47
upon the real estate market value of the underlying assets. For that reason, our common stock may trade at
prices that are higher or lower than our net asset value per share. To the extent we retain operating cash
flows for investment purposes, working capital reserves or other purposes, these retained funds, while
increasing the value of our underlying assets, may not correspondingly increase the market price of our
common stock. If we fail to meet the market’s expectations with regard to future operating results and cash
distributions, the market price of our common stock could be adversely affected.
Increases in market interest rates may result in a decline in the market price of our common stock.
One of the factors that we believe influences the market price of our common stock is the distribution
yield on the common stock (as a percentage of the market price of our common stock) relative to market
interest rates. Additional increases in market interest rates, which have increased recently but are still currently
at low levels relative to certain historical rates, may lead prospective purchasers of shares of our common
stock to expect a higher distribution yield. Additionally, higher interest rates have in the past and are expected
to continue to increase our borrowing costs and potentially decrease our cash available for distribution.
Thus, higher market interest rates could cause the market price of our common stock to decline.
Future issuances of debt securities, which would rank senior to shares of our common stock upon our liquidation,
and future issuances of equity securities (including preferred stock and OP Units), which would dilute the
holdings of our then-existing common stockholders and may be senior to shares of our common stock for the
purposes of making distributions, periodically or upon liquidation, may materially and adversely affect the
market price of our common stock.
In the future, we may issue debt or equity securities or incur other borrowings. Upon liquidation,
holders of our debt securities and other loans and shares of our preferred stock will receive a distribution of
our available assets before holders of shares of our common stock. We are not required to offer any debt
or equity securities to existing stockholders on a preemptive basis. Therefore, shares of our common stock
that we issue in the future, directly or through convertible or exchangeable securities (including OP Units),
warrants or options, will dilute the holdings of our then-existing common stockholders and such issuances
or the perception of such issuances may reduce the market price of our common stock. Our preferred stock,
if issued, would likely have a preference on distribution payments, periodically or upon liquidation, which
could limit our ability to make distributions to holders of shares of our common stock. Because our decision
to issue debt or equity securities or otherwise incur debt in the future will depend on market conditions
and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or impact
of our future capital raising efforts. Thus, holders of shares of our common stock bear the risk that our future
issuances of debt or equity securities or our incurrence of other borrowings may materially and adversely
affect the market price of shares of our common stock and dilute their ownership in us.
Sales of substantial amounts of our common stock in the public markets or the perception that they might
occur, could reduce the price of our common stock and may dilute the voting power of our then-existing common
stockholders and such common stockholders’ ownership interest in us.
Sales of substantial amounts of our common stock in the public market, or the perception that such
sales could occur, could adversely affect the market price of our common stock and may make it more
difficult for our then-existing common stockholders to sell their shares of common stock at a time and price
that such common stockholders deem appropriate.
The shares of our common stock that we sold in the IPO may be resold immediately in the public
market unless they are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. The
common stock purchased by CTO in the CTO Private Placement and in the IPO and the shares of common
stock underlying the OP Units issued in the Formation Transactions are “restricted securities” within the
meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including the exemptions contained in
Rule 144. As a result of the registration rights agreement that we entered into with CTO, the shares of our
common stock purchased by CTO in the CTO Private Placement may be eligible for future sale without
restriction. Sales of a substantial number of such shares, or the perception that such sales may occur,
48
could cause the market price of our common stock to fall or make it more difficult for our then-existing
common stockholders to sell their common stock at a time and price that such common stockholders deem
appropriate.
In addition, our charter provides that we may issue up to 500,000,000 shares of common stock and
100,000,000 shares of preferred stock, $0.01 par value per share. Moreover, under Maryland law and as is
provided in our charter, a majority of our entire board of directors will have the power to amend our charter
to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any
class or series that we are authorized to issue without stockholder approval. Future issuances of shares of
our common stock or securities convertible or exchangeable into common stock may dilute the ownership
interest of our common stockholders. Because our decision to issue additional equity or convertible or
exchangeable securities in any future offering will depend on market conditions and other factors beyond
our control, we cannot predict or estimate the amount, timing or nature of our future issuances. In addition,
we are not required to offer any such securities to existing stockholders on a preemptive basis. Therefore, it
may not be possible for existing stockholders to participate in such future issuances, which may dilute the
existing stockholders’ interests in us.
General Risk Factors
Cybersecurity risks and cyber incidents could adversely affect our business and disrupt operations.
Cyber incidents can result from deliberate attacks or unintentional events. These incidents can include,
but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets
or sensitive information, corrupting data or causing operational disruption. The result of these incidents
could include, but are not limited to, disrupted operations, misstated financial data, liability for stolen assets
or information, increased cybersecurity protection costs, litigation and reputational damage. Should any
such cyber incidents or similar events occur, our assets, particularly cash, could be lost and, as a result, our
ability to execute our business and pursue our investment and growth strategy could be impaired, thereby
materially and adversely affecting us.
We may become subject to litigation, which could materially and adversely affect us.
We may become subject to litigation, in connection with our operations, securities offerings and
otherwise in the ordinary course of business. Some of these claims may result in significant defense costs
and potentially significant judgments against us, some of which are not, or cannot be, insured against. We
generally intend to vigorously defend ourselves. However, we cannot be certain of the ultimate outcomes of
any claims that may arise in the future and which are presently not known to us. Resolution of these
types of matters against us may result in our having to pay significant fines, judgments or settlements,
which, if uninsured, or if the fines, judgments and settlements exceed insured levels, could materially and
adversely impact our earnings and cash flows, thereby materially and adversely affecting us. Certain litigation
or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage,
which could materially and adversely impact us, expose us to increased risks that would be uninsured and
materially and adversely impact our ability to attract directors and officers.
If we fail to maintain effective disclosure controls and procedures, we may not be able to meet applicable
reporting requirements, which could materially and adversely affect us.
As a publicly traded company, we are subject to the informational requirements of the Exchange Act
and are required to file reports and other information with the SEC. In addition, we are required to maintain
disclosure controls and procedures that are designed to ensure that information required to be disclosed in
the reports that we file with, or submit to, the SEC is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms. They include controls and procedures designed to
ensure that information required to be disclosed in reports filed with, or submitted to, the SEC is accumulated
and communicated to management, including our principal executive and principal financial officers, to
allow timely decisions regarding required disclosure. Effective disclosure controls and procedures are necessary
for us to provide reliable reports, effectively prevent and detect fraud and to operate successfully as a
public company. Designing and implementing effective disclosure controls and procedures is a continuous
49
effort that requires significant resources and devotion of time. We may discover deficiencies in our disclosure
controls and procedures that may be difficult or time consuming to remediate in a timely manner. Any
failure to maintain effective disclosure controls and procedures or to timely effect any necessary improvements
thereto could cause us to fail to meet our reporting obligations (which could affect the listing of our
common stock on the NYSE). Additionally, ineffective disclosure controls and procedures could also
adversely affect our ability to prevent or detect fraud, harm our reputation and cause investors to lose
confidence in our reports filed with, or submitted to, the SEC, which would likely have a negative effect on
the trading price of our common stock.
An epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that
international, federal, state and local governments, agencies, law enforcement and/or health authorities implement
to address it, may precipitate or materially exacerbate one or more of the other risks, and may significantly
disrupt our tenants’ ability to operate their businesses and/or pay rent to us or prevent us from operating our
business in the ordinary course for an extended period.
An epidemic or pandemic could have a material and adverse effect on or cause disruption to our
business or financial condition, results of operations, cash flows and the market value and trading price of
our securities due to, among other factors:
• A complete or partial closure of, or other operational issues with, our portfolio as a result of
government or tenant action;
• Declines in or instability of the economy or financial markets may result in a recession or negatively
impact consumer discretionary spending, which could adversely affect retailers and consumers;
• A reduction of economic activity may severely impact our tenants’ business operations, financial
condition, liquidity and access to capital resources and may cause one or more of our tenants to be
unable to meet their obligations to us in full, or at all, to default on their lease, or to otherwise seek
modifications of such obligations;
• The inability to access debt and equity capital on favorable terms, if at all, or a severe disruption and
instability in the global financial markets or deteriorations in credit and financing conditions may
affect our access to capital necessary to fund business operations, pursue acquisition and development
opportunities, refinance existing debt, reduce our ability to make cash distributions to our
stockholders and increase our future interest expense;
• A general decline in business activity and demand for real estate transactions would adversely affect
our ability to successfully execute our investment strategies or expand our portfolio;
• A significant reduction in our cash flows could impact our ability to continue paying cash dividends
to our stockholders at expected levels or at all;
• The financial impact could negatively affect our future compliance with financial and other covenants
of our debt instruments, and the failure to comply with such covenants could result in a default
that accelerates the payment of such debt; and
• The potential negative impact on the health of on CTO’s employees or members of the Board or
CTO’s board of directors, particularly if a significant number are impacted, or the impact of
government actions or restrictions, including stay-at-home orders, restricting access to CTO’s
headquarters, could result in a deterioration in our ability to ensure business continuity during a
disruption.
A prolonged continuation of or repeated temporary business closures, reduced capacity at businesses
or other social-distancing practices, and quarantine orders may adversely impact our tenants’ ability to
generate sufficient revenues to meet financial obligations, and could force tenants to default on their leases,
or result in the bankruptcy of tenants, which would diminish the rental revenue we receive under our leases.
Changes in accounting standards may materially and adversely affect us.
From time to time, the FASB and the SEC, who create and interpret appropriate accounting standards,
may change the financial accounting and reporting standards or their interpretation and application of these
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standards that will govern the preparation of our financial statements. These changes could materially and
adversely affect our reported financial condition and results of operations. In some cases, we could be required
to apply a new or revised standard retroactively, resulting in restating prior period financial statements.
Similarly, these changes could materially and adversely affect our tenant’s reported financial condition or
results of operations and affect their preferences regarding leasing real estate.
We are subject to risks related to corporate social responsibility.
Our business faces public scrutiny related to environmental, social and governance (“ESG”) activities.
We risk damage to our reputation if we or affiliates of our Manager fail to act responsibly in a number of
areas, such as diversity and inclusion, environmental stewardship, support for local communities, corporate
governance and transparency and considering ESG factors in our investment processes. Adverse incidents
with respect to ESG activities could impact the cost of our operations and relationships with investors, all of
which could adversely affect our business and results of operations. Additionally, new legislative or
regulatory initiatives related to ESG could adversely affect our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 1C. CYBERSECURITY
The Company has no employees and is externally managed by our Manager, which is a wholly owned
subsidiary of CTO, a publicly traded diversified REIT. 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. The Board recognizes the critical importance of maintaining
the trust and confidence of our tenants and business partners. The Board plays an active role in overseeing
management of our risks, and cybersecurity represents an important component of the Company’s overall
approach to risk management and oversight.
As an externally managed company, the Company relies on CTO’s information systems in connection
with the Company’s day-to-day operations. Consequently, the Company also relies on the processes for
assessing, identifying, and managing material risks from cybersecurity threats undertaken by CTO. All of
the Company’s executive officers are executive officers and employees of CTO, and one of the Company’s
officers (John P. Albright) is also a member of CTO’s board of directors.
CTO’s cybersecurity processes and practices are integrated into CTO’s risk management and oversight
program. In general, CTO seeks to address cybersecurity risks through a comprehensive, cross-functional
approach that is focused on preserving the confidentiality, security and availability of the information that
CTO collects and stores by identifying, preventing and mitigating cybersecurity threats and effectively
responding to cybersecurity incidents when they occur. CTO utilizes a third-party managed IT service
provider (the “MSP”) to provide comprehensive cybersecurity services for the Company, including threat
detection and response, vulnerability assessment and monitoring, security incident response and recovery,
and cybersecurity education and awareness. The Company has adopted a written information security incident
response plan, which, as discussed below, is overseen by the Audit Committee of the Board (the “Audit
Committee”).
Risk Management and Strategy
The Company’s cybersecurity program is focused on the following key areas:
• Governance: As discussed in more detail under “Item 1C. Cybersecurity — Governance,” the
Board’s oversight of cybersecurity risk management will be supported by the Audit Committee, which
regularly interacts with the Company’s management team.
• Collaborative Approach: CTO has implemented a comprehensive, cross-functional approach to
identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing
controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so
51
that decisions regarding the public disclosure and reporting of such incidents can be made by
management, the Audit Committee, and the Board in a timely manner.
• Technical Safeguards: CTO and the MSP deploy technical safeguards that are designed to protect
information systems from cybersecurity threats, including firewalls, intrusion prevention systems,
endpoint detection and response systems, anti-malware functionality and access controls, which are
evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
• Incident Response and Recovery Planning: CTO and the MSP have established a written
information security incident response plan that addresses the response to a cybersecurity incident,
which plan will be tested and evaluated on a regular basis.
• Third-Party Risk Management: CTO and the MSP maintain a comprehensive, risk-based approach
to identifying and overseeing cybersecurity risks presented by third parties, including vendors,
service providers and other external users of CTO’s systems, as well as the systems of third parties
that could adversely impact the Company’s business in the event of a cybersecurity incident affecting
those third-party systems.
• Education and Awareness: CTO, through the MSP, provides regular training for personnel
regarding cybersecurity threats as a means to equip personnel with effective tools to address
cybersecurity threats, and to communicate evolving information security policies, standards, processes
and practices.
CTO and the MSP will engage in the periodic assessment and testing of CTO’s policies, standards,
processes and practices that are designed to address cybersecurity threats and incidents. These efforts will
include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling,
vulnerability testing and other exercises focused on evaluating the effectiveness of CTO’s cybersecurity
measures and planning. The MSP regularly assesses CTO’s cybersecurity measures, including information
security maturity, and regularly reviews CTO’s information security control environment and operating
effectiveness. The results of such assessments, audits and reviews will be reported to the Audit Committee
and the Board, and CTO will adjust its cybersecurity policies, standards, processes and practices as necessary
based on the information provided by these assessments, audits and reviews.
Governance
The Board, in coordination with the Audit Committee, will oversee the Company’s cybersecurity risk
management process. The Audit Committee has adopted a charter that provides that the Audit Committee
must review and discuss with the Company’s management team the Company’s privacy and cybersecurity risk
exposures, including:
• the potential impact of those exposures on the Company’s business, financial results, operations and
reputation;
• the steps management has taken to monitor and mitigate such exposures;
• the Company’s information governance policies and programs; and
• major legislative and regulatory developments that could materially impact the Company’s privacy
and cybersecurity risk exposure.
The charter of the Audit Committee also provides that the Audit Committee may receive additional
training in cybersecurity and data privacy matters to enable its oversight of such risks and that the Audit
Committee will regularly report to the Board the substance of such reviews and discussions and, as necessary,
recommend to the Board such actions as the Audit Committee deems appropriate.
As noted above, the Company relies on CTO’s information systems and the MSP in connection with
the Company’s day-to-day operations. Consequently, the Company also relies on the processes for assessing,
identifying, and managing material risks from cybersecurity threats undertaken by CTO. All of the
Company’s executive officers are executive officers and employees of CTO, and one of the Company’s
officers (John P. Albright) is also a member of CTO’s board of directors.
52
CTO’s President and Chief Executive Officer, Senior Vice President, Chief Financial Officer and
Treasurer, and Senior Vice President, General Counsel and Corporate Secretary work collaboratively with
the MSP to implement a program designed to protect CTO’s information systems from cybersecurity threats
and to promptly respond to any cybersecurity incidents in accordance with written information security
incident response plans adopted by CTO and the Company. These members of CTO’s management team,
together with the MSP, will monitor the prevention, detection, mitigation and remediation of cybersecurity
threats and incidents and will report such threats and incidents to the Audit Committee when appropriate.
CTO’s President and Chief Executive Officer, Senior Vice President, Chief Financial Officer and
Treasurer, and Senior Vice President, General Counsel and Corporate Secretary each hold degrees in their
respective fields, and have an average of over 20 years of experience managing risks at CTO, the Company and
similar companies, including risks arising from cybersecurity threats.
Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially
affected and are not reasonably likely to affect the Company, including its business strategy, results of
operations or financial condition.
ITEM 2. PROPERTIES
Our principal offices are located at 369 N. New York Avenue., Suite 201, Winter Park, Florida 32789.
Our telephone number is (407) 904-3324.
As of December 31, 2023, the Company owns 138 net leased retail buildings located in 35 states (refer
to Item 1. “Business”).
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal
course of our business. We are not currently a party to any pending or threatened legal proceedings that we
believe could have a material adverse effect on our business or financial condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
53
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER REPURCHASES OF EQUITY SECURITIES
The Company’s common stock trades on the NYSE under the symbol “PINE”.
As of January 31, 2024, there were 127 holders of record of our common stock. This figure does not
represent the actual number of beneficial owners of our common stock because shares of our common
stock are frequently held in “street name” through banks, brokers and others for the benefit of beneficial
owners who may vote the shares.
We intend to make quarterly distributions to our common stockholders. In particular, in order to
maintain our qualification for taxation as a REIT, we intend to make annual distributions to our stockholders
of at least 90% of our REIT taxable income, determined without regard to the deduction for dividends
paid and excluding any net capital gain. However, any future distributions will be at the sole discretion of
the Board and will depend upon, among other things, our actual results of operations and liquidity.
Unregistered Sales of Equity Securities
During the years ended December 31, 2022 and 2021, there were no unregistered sales of equity
securities, which were not previously reported. On November 10, 2023, we issued 479,640 shares of our
common stock to holders OP Units upon the redemption of such OP Units pursuant to the partnership
agreement of the Operating Partnership. The issuance of such shares was exempt from registration under the
Securities Act, pursuant to the exemption contemplated by Section 4(a)(2) thereof for transactions not
involving a public offering. The OP Units were redeemed for an equal number of shares of our common
stock. Each limited partner of the Operating Partnership has the right to require the Operating Partnership
to redeem part or all of its OP Units for cash, based upon the value of an equivalent number of shares of
our common stock at the time of the redemption, or, at our election, shares of our common stock on a one-
for-one basis, beginning on and after the date that is 12 months after issuance of such OP Units, subject to
certain adjustments and the restrictions on ownership and transfer of our stock set forth in our charter.
Issuer Purchases of Equity Securities
The following repurchases of shares on the Company’s common stock were made during the
three months ended December 31, 2023:
Total Number
of Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as a
Part of Publicly
Announced Plans
or Programs
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet be Purchased
Under the Plans or
Programs ($000’s)(1)
10/1/2023 – 10/31/2023 . . . . . . . . . . .
11/1/2023 – 11/30/2023 . . . . . . . . . . .
12/1/2023 – 12/31/2023 . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . .
240,907
240,234
113,649
594,790
$15.73
15.89
16.86
$16.01
240,907
240,234
113,649
594,790
$6,507
$2,689
$ 773
(1)
In July 2023, the Company’s Board of Directors approved a $15 million stock repurchase program
under which approximately $14.2 million of the Company’s stock had been repurchased as of
December 31, 2023. The repurchase program does not have an expiration date.
54
ITEM 6.
[Reserved]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
When we refer to “we,” “us,” “our,” “PINE,” or “the Company,” we mean Alpine Income Property Trust,
Inc. and its consolidated subsidiaries. References to “Notes to the Financial Statements” refer to the Notes to
the Consolidated Financial Statements of Alpine Income Property Trust, Inc. included in Item 8 of this Annual
Report on Form 10-K. Also, when the Company uses any of the words “anticipate,” “assume,” “believe,”
“estimate,” “expect,” “intend,” or similar expressions, the Company is making forward-looking statements.
Although management believes that the expectations reflected in such forward-looking statements are based upon
present expectations and reasonable assumptions, the Company’s actual results could differ materially from
those set forth in the 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 this
Annual Report on Form 10-K. Given these uncertainties, readers are cautioned not to place undue reliance on
such statements, which speak only as of the date of this Annual Report on Form 10-K or any document
incorporated herein by reference. 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
Annual Report on Form 10-K.
The following discussion and analysis should be read in conjunction with the consolidated financial
statements and related notes included elsewhere in this report.
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.
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 our Manager, a Delaware limited
liability company and a wholly owned subsidiary of CTO. CTO is a Maryland corporation that is a publicly
traded diversified REIT and the sole member of our Manager. See Note 18, “Related Party Management
Company” in the Notes to the Financial Statements for further discussion of the Company’s related party
transactions with CTO.
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
55
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 year ended December 31, 2023, the Company acquired 14 properties for total acquisition
volume of $82.9 million. During the year ended December 31, 2023, the Company sold 24 properties for an
aggregate sales price of $108.3 million, generating aggregate gains on sale of $9.3 million.
As of December 31, 2023, we owned 138 properties with an aggregate gross leasable area of 3.8 million
square feet, located in 35 states, with a weighted average remaining lease term of 7.0 years. Our portfolio
was 99% occupied as of December 31, 2023.
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. During the year ended
December 31, 2023, the Company originated three commercial loans with a total funding commitment of
$38.6 million. As of December 31, 2023, the Company’s commercial loan investments portfolio included two
construction loans and one mortgage note with a total carrying value of $35.1 million.
Historical Financial Information
The following table summarizes our selected historical financial information for each of the last three
fiscal years (in thousands, except per share and dividend data). The selected financial information has been
derived from our audited consolidated financial statements.
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income From Operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$45,644
$13,142
$ 3,266
$45,191
$43,482
$33,955
$30,126
$15,162
$11,462
Less: Net Income Attributable to Noncontrolling Interest . . . . .
(349)
(4,235)
(1,498)
Net Income Attributable to Alpine Income Property Trust, Inc.
. .
$ 2,917
$29,720
$ 9,964
Net Income Per Share Attributable to Alpine Income Property
Trust, Inc.
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends Declared and Paid . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.21
$ 0.19
$ 1.100
$ 2.48
$ 2.17
$ 1.090
1.02
$
$
0.89
$ 1.015
56
Balance Sheet Data (in thousands):
As of December 31,
2023
2022
Total Real Estate, at Cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$478,307
$499,367
Real Estate – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$443,593
$477,054
Assets Held For Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,410
Commercial Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 35,080
$
$
—
—
Cash and Cash Equivalents and Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,731
$ 13,044
Intangible Lease Assets – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 49,292
$ 60,432
Straight-Line Rent Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,409
$ 1,668
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 17,045
$ 21,233
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$564,560
$573,431
Accounts Payable, Accrued Expenses, and Other Liabilities
. . . . . . . . . . . . . . . . .
$ 5,197
$ 4,411
Prepaid Rent and Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Liabilities – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,166
$ 4,907
$275,677
$288,947
$275,613
$ 1,479
$ 5,050
$267,116
$278,056
$295,375
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
57
distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to
similarly titled measures employed by other companies.
Reconciliation of Non-GAAP Measures (in thousands, except share data):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
3,266
$
33,955
$
Depreciation and Amortization . . . . . . . . . . . . . . . . . . .
Provision for Impairment . . . . . . . . . . . . . . . . . . . . . . .
Gain on Disposition of Assets . . . . . . . . . . . . . . . . . . . .
25,758
3,220
(9,334)
23,564
—
(33,801)
11,462
15,939
—
(9,675)
Funds From Operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
22,910
$
23,718
$
17,726
Adjustments:
Loss (Gain) on Extinguishment of Debt . . . . . . . . . . . . .
Amortization of Intangible Assets and Liabilities to Lease
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Straight-Line Rent Adjustment . . . . . . . . . . . . . . . . . . .
COVID-19 Rent Repayments
. . . . . . . . . . . . . . . . . . . .
Non-Cash Compensation . . . . . . . . . . . . . . . . . . . . . . .
Amortization of Deferred Financing Costs to Interest
Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Non-Cash Expense . . . . . . . . . . . . . . . . . . . . . . .
Recurring Capital Expenditures . . . . . . . . . . . . . . . . . . .
(23)
(417)
(402)
—
318
710
115
—
727
(328)
(935)
45
310
599
100(18)
—
—
(257)
(607)
430
309
362
(41)
Adjusted Funds From Operations
. . . . . . . . . . . . . . . . . . . .
$
23,211
$
24,236
$
17,904
Weighted Average Number of Common Shares:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,925,362
15,560,524
11,976,001
13,679,495
9,781,066
11,246,227
Other Data (in thousands, except per share data):
FFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO per Diluted Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AFFO per Diluted Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$22,910
$ 1.47
$23,211
$ 1.49
$23,718
$ 1.73
$24,236
$ 1.77
$17,726
$ 1.58
$17,904
$ 1.59
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
58
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2023 AND 2022
The following presents the Company’s results of operations for the year ended December 31, 2023, as
compared to the year ended December 31, 2022 (in thousands):
Revenues:
Lease Income . . . . . . . . . . . . . . . . . . . . . . .
$ 44,967
$45,191
$
(224)
(0.5)%
Year Ended
December 31, 2023 December 31, 2022
$ Variance % Variance
Interest Income from Commercial Loans and
Investments . . . . . . . . . . . . . . . . . . . . . .
Other Revenue . . . . . . . . . . . . . . . . . . . . . .
637
40
—
—
Total Revenues . . . . . . . . . . . . . . . . . . . .
45,644
45,191
Operating Expenses:
Real Estate Expenses . . . . . . . . . . . . . . . . . .
General and Administrative Expenses . . . . . .
Provision for Impairment
. . . . . . . . . . . . . .
Depreciation and Amortization . . . . . . . . . .
Total Operating Expenses . . . . . . . . . . . . .
Gain on Disposition of Assets . . . . . . . . . . .
Gain (Loss) on Extinguishment of Debt . . . .
Net Income From Operations . . . . . . . . . . . . .
Investment and Other Income . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net Income Attributable to
6,580
6,301
3,220
25,758
41,859
9,334
23
13,142
289
(10,165)
3,266
5,435
5,784
—
23,564
34,783
33,801
(727)
43,482
12
(9,539)
33,955
637
40
453
1,145
517
3,220
2,194
7,076
(24,467)
750
(30,340)
100.0%
100.0%
1.0%
21.1%
8.9%
100.0%
9.3%
20.3%
(72.4)%
103.2%
(69.8)%
277
(626)
2308.3%
(6.6)%
(30,689)
(90.4)%
Noncontrolling Interest
. . . . . . . . . . . .
(349)
(4,235)
3,886
91.8%
Net Income Attributable to Alpine Income
Property Trust, Inc.
. . . . . . . . . . . . . . . . . .
$ 2,917
$29,720
$(26,803)
(90.2)%
Lease Income and Real Estate Expenses
Revenue from our income properties during the years ended December 31, 2023 and 2022 totaled
$45.0 million and $45.2 million, respectively. The decrease in revenues is reflective of the Company’s volume
of dispositions, offset by acquisitions, as well as certain one-time reduced revenues related to tenant credit
loss and bankruptcy. The direct costs of revenues for our income properties totaled $6.6 million and
$5.4 million during the years ended December 31, 2023 and 2022, respectively. The $1.1 million increase in
the direct cost of revenues is reflective of a portion of portfolio expenses being non-recoverable pursuant to
tenant leases, as well as certain non-recoverable expenses related to transaction costs and legal fees
associated with the seven assets leased to one tenant that filed for bankruptcy during the year ended
December 31, 2023.
Commercial Loans and Investments
Interest income from commercial loans and investments totaled $0.6 million for the year ended
December 31, 2023. The income is attributable to three loans originated by the Company during the year
ended December 31, 2023. There were no commercial loans and investments generating interest income
during the year ended December 31, 2022.
Other Revenue
Other revenue totaled less than $0.1 million for the year ended December 31, 2023. The revenue is
attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as
59
further described in Note 18, “Related Party Management Company” in the Notes to the Financial
Statements. There were no revenue sharing agreements generating income during the year ended December 31,
2022.
General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the year ended
December 31, 2023 as compared to the year ended December 31, 2022 (in thousands):
December 31,
2023
December 31,
2022
$ Variance % Variance
Management Fee to Manager . . . . . . . . . . . . . . . . . . .
$4,356
$3,828
$ 528
Director Stock Compensation Expense . . . . . . . . . . . . .
Director & Officer Insurance Expense . . . . . . . . . . . . .
Additional General and Administrative Expense . . . . . .
Total General and Administrative Expenses . . . . . . . . . .
318
247
1,380
$6,301
310
366
1,280
$5,784
8
(119)
100
$ 517
13.8%
2.6%
(32.5)%
7.8%
8.9%
General and administrative expenses totaled $6.3 million and $5.8 million during the years ended
December 31, 2023 and 2022, respectively. The $0.5 million increase is primarily attributable to growth in
the Company’s equity base, which led to an increase in management fee expense of $0.5 million.
Provision for Impairment
During the year ended December 31, 2023, the Company recorded a $3.2 million impairment charge of
which $0.3 million represents the current expected credit losses (“CECL”) reserve related to our commercial
loans and investments and $2.9 million represents the provision for losses related to our income properties
as further described in Note 7, “Provision for Impairment” in the Notes to the Financial Statements. There
were no impairment charges on the Company’s income property portfolio during the year ended
December 31, 2022.
Depreciation and Amortization
Depreciation and amortization expense totaled $25.8 million and $23.5 million during the years ended
December 31, 2023 and 2022, respectively. The $2.3 million increase in the depreciation and amortization
expense is reflective of the Company’s change in portfolio as well as the timing of acquisitions versus
dispositions. Several ground lease assets were disposed of during the earlier part of 2023 which were
re-invested into more depreciable assets on a relative basis.
Gain on Disposition of Assets
During the year ended December 31, 2023, the Company sold 24 properties for an aggregate sales price
of $108.3 million, generating aggregate gains on sale of $9.3 million. During the year ended December 31,
2022, the Company sold 16 properties for an aggregate sales price of $154.6 million, generating aggregate
gains on sale of $33.8 million.
Gain (Loss) on Extinguishment of Debt
During the year ended December 31, 2022, the Company recorded a $0.7 million loss on the
extinguishment of debt attributable to the write off of unamortized loan costs in connection with the
CMBS Loan defeasance and the termination of the Prior Revolving Credit Facility, as defined in Note 12,
“Long-Term Debt” in the Notes to the Financial Statements.
Investment and Other Income
Investment and other income totaled $0.3 million and less than $0.1 million during the years ended
December 31, 2023 and 2022, respectively. The increase is attributable to higher interest rates on bank
deposits.
60
Interest Expense
Interest expense totaled $10.1 million and $9.5 million during the years ended December 31, 2023 and
2022, respectively. The $0.6 million increase in interest expense is attributable to the higher average interest
rates during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The overall
increase in the Company’s long-term debt was primarily utilized to fund the acquisition of properties and
commercial loans and investments during 2023 and 2022.
Net Income
Net income totaled $3.3 million and $34.0 million during the years ended December 31, 2023 and
2022, respectively. The decrease in net income is attributable to the factors described above, most significantly
to the $24.5 million decrease in gain on disposition of assets during the year ended December 31, 2023.
The decreased gain on disposition of assets is the result of reduced disposition activity during the year ended
December 31, 2023.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2022 AND 2021
The following presents the Company’s results of operations for the year ended December 31, 2022, as
compared to the year ended December 31, 2021 (in thousands):
Year Ended
December 31,
2022
December 31,
2021
$
Variance
%
Variance
Revenues:
Lease Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$45,191
$30,126
$15,065
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,191
30,126
15,065
Operating Expenses:
Real Estate Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
General and Administrative Expenses . . . . . . . . . . . . . .
Depreciation and Amortization . . . . . . . . . . . . . . . . . .
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . .
Gain on Disposition of Assets . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Loss on Extinguishment of Debt
Net Income From Operations . . . . . . . . . . . . . . . . . . . . .
Investment and Other Income . . . . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net Income Attributable to Noncontrolling
5,435
5,784
23,564
34,783
33,801
(727)
43,482
12
(9,539)
33,955
50.0%
50.0%
48.0%
15.1%
47.8%
1,762
757
7,625
10,144
24,126
(727)
41.2%
249.4%
(100.0)%
28,320
186.8%
10
(5,837)
500.0%
(157.7)%
3,673
5,027
15,939
24,639
9,675
—
15,162
2
(3,702)
11,462
22,493
196.2%
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,235)
(1,498)
(2,737)
(182.7)%
Net Income Attributable to Alpine Income Property Trust,
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$29,720
$ 9,964
$19,756
198.3%
Lease Income and Real Estate Expenses
Revenue from our income properties during the years ended December 31, 2022 and 2021 totaled
$45.2 million and $30.1 million, respectively. The increase in revenues is reflective of the Company’s volume
of acquisitions, offset by dispositions. The direct costs of revenues for our income properties totaled
$5.4 million and $3.7 million during the years ended December 31, 2022 and 2021, respectively. The increase
in the direct cost of revenues is also attributable to the Company’s expanded property portfolio.
61
General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the year ended
December 31, 2022 as compared to the year ended December 31, 2021 (in thousands):
December 31,
2022
December 31,
2021
$
Variance
%
Variance
Management Fee to Manager . . . . . . . . . . . . . . . . . . . . . .
$3,828
$3,182
$ 646
Director Stock Compensation Expense . . . . . . . . . . . . . . .
Director & Officer Insurance Expense . . . . . . . . . . . . . . . .
Additional General and Administrative Expense . . . . . . . . .
Total General and Administrative Expenses . . . . . . . . . . . .
310
366
1,280
$5,784
309
499
1,037
$5,027
20.3%
0.3%
1
(133)
(26.7)%
243
$ 757
23.4%
15.1%
General and administrative expenses totaled $5.8 million and $5.0 million during the years ended
December 31, 2022 and 2021, respectively. The $0.8 million increase is primarily attributable to growth in
the Company’s equity base, which led to an increase in management fee expense of $0.6 million.
Depreciation and Amortization
Depreciation and amortization expense totaled $23.5 million and $15.9 million during the years ended
December 31, 2022 and 2021, respectively. The $7.6 million increase in the depreciation and amortization
expense is reflective of the Company’s expanded property portfolio.
Gain on Disposition of Assets
During the year ended December 31, 2022, the Company sold 16 properties for an aggregate sales price
of $154.6 million, generating aggregate gains on sale of $33.8 million. During the year ended December 31,
2021, the Company sold three properties for an aggregate sales price of $28.3 million, generating aggregate
gains on sale of $9.7 million.
Loss on Extinguishment of Debt
Simultaneous with the Company entering into the 2022 Amended and Restated Credit Agreement, the
Company’s then-existing revolving credit facility (the “Prior Revolving Credit Facility”) was terminated,
which resulted in $0.3 million of unamortized deferred financing costs written off during the year ended
December 31, 2022 with no such expense during the year ended December 31, 2021.
Interest Expense
Interest expense totaled $9.5 million and $3.7 million during the years ended December 31, 2022 and
2021, respectively. The $5.8 million increase in interest expense is attributable to the higher average
outstanding debt balance during the year ended December 31, 2022 as compared to the same period in 2021,
as well as increasing rates on the Company’s variable rate Credit Facility indebtedness. The overall increase
in the Company’s long-term debt was primarily utilized to fund the acquisition of properties during 2022 and
2021.
Net Income
Net income totaled $34.0 million and $11.5 million during the years ended December 31, 2022 and
2021, respectively. The increase in net income is attributable to the factors described above in addition to the
$24.1 million increase in gain on disposition of assets during the year ended December 31, 2022. The
increased gain on disposition of assets is the result of more disposition activity during the year ended
December 31, 2022, with proceeds from such dispositions being reinvested into income properties through
the like-kind exchange structure. The increase in gain on disposition of assets was partially offset by the
$0.7 million loss on extinguishment of debt incurred during the year ended December 31, 2022, incurred
as a result of the write off of unamortized loan costs in connection with the CMBS Loan defeasance and the
termination of the Prior Revolving Credit Facility, as hereinafter defined in Note 12, “Long-Term Debt”.
62
LIQUIDITY AND CAPITAL RESOURCES
Cash and Cash Equivalents and Restricted Cash. Cash totaled $13.7 million at December 31, 2023,
including restricted cash of $9.7 million. See Note 2 “Summary of Significant Accounting Policies” under
the heading Restricted Cash in the Notes to the Financial Statements for the Company’s disclosure related to
its restricted cash balance at December 31, 2023.
Our total cash balance at December 31, 2023, reflected net cash provided by our operating activities
totaling $25.6 million during the year ended December 31, 2023, compared to net cash provided by operating
activities totaling $24.6 million for the year ended December 31, 2022, an increase of $1.0 million. The
increase of $1.0 million is primarily related to the cash reserves received from the borrowers associated with
the Company’s commercial loans and investments, as well as increased interest income earned on deposits
at financial institutions.
Our net cash used in investing activities totaled $13.6 million for the year ended December 31, 2023,
compared to net cash used in investing activities of $38.8 million for the year ended December 31, 2022, a
decrease of $25.2 million. The decrease in net cash used in investing activities of $25.2 million is primarily
related to a net decrease in cash outflows of $60.6 million during the year ended December 31, 2023 related to
the timing of income property acquisitions versus dispositions, which decrease in cash outflows was
partially offset by $35.4 million in additional cash outflows related to investments in the Company’s
commercial loans and investment portfolio for which there were no such outflows during the year ended
December 31, 2022.
Our net cash used in financing activities totaled $11.4 million for the year ended December 31, 2023,
compared to net cash provided by financing activities of $17.7 million for the year ended December 31,
2022, for a decrease in cash inflows from financing activities of $29.1 million. The decrease of $29.1 million
is primarily related to a $9.0 million decrease in net proceeds from long-term debt during the year ended
December 31, 2023 as well as $2.0 million less cash paid for loan fees the year ended December 31, 2023. These
amounts were offset by $23.5 million less proceeds received from sales of common stock under the
Company’s “at-the-market” equity offering programs during the year ended December 31, 2023 and
$14.6 million more cash used to repurchase the Company’s common stock during the year ended December 31,
2023.
Long-Term Debt. As of December 31, 2023, the Company had $173.5 million of undrawn
commitments available on its Credit Facility. See Note 12, “Long-Term Debt” in the Notes to the Financial
Statements for the Company’s disclosure related to its long-term debt balance at December 31, 2023.
Acquisitions and Investments. As noted previously, the Company acquired 14 properties during the year
ended December 31, 2023, for an aggregate purchase price of $82.9 million, as further described in Note 3
“Property Portfolio” in the Notes to the Financial Statements. The Company also invested in three commercial
loans with a total funding commitment of $38.6 million. As of December 31, 2023, the Company’s
commercial loan investments portfolio included two construction loans and one mortgage note with a total
carrying value of $35.1 million. See Note 4, “Commercial Loans and Investments” in the Notes to the
Financial Statements for additional disclosures related to the Company’s commercial loans and investments
as of December 31, 2023.
Dispositions. During the year ended December 31, 2023, the Company sold 24 properties for a total
sales price of $108.3 million, generating aggregate gains on sale of $9.3 million, as further described in Note 3
“Property Portfolio” in the Notes to the Financial Statements.
Capital Expenditures. As of December 31, 2023, the Company had no commitments related to capital
expenditures.
The Company is committed to fund two construction loans as described in Note 4, “Commercial
Loans and Investments” in the Notes to the Financial Statements. The unfunded portion of the construction
loans totaled $3.0 million as of December 31, 2023.
The Company is contractually obligated under its various long-term debt agreements. In the aggregate,
the Company is obligated under such agreements to repay $276.5 million on long-term basis, to be repaid in
excess of one year, with no payments due within one year.
63
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 sales of assets utilizing the reverse
like-kind 1031 exchange structure, $109.5 million of availability under the 2022 ATM Program, and
$173.5 million of undrawn commitments available on its existing $250.0 million Credit Facility, as of
December 31, 2023.
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.
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 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 14 properties for a combined purchase
price of $82.9 million for the year ended December 31, 2023 and 51 properties for a combined purchase
price of $187.4 million for the year ended December 31, 2022.
See Note 2, “Summary of Significant Accounting Policies” in the Notes to the Financial Statements
for further discussion of the Company’s accounting estimates and policies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934.
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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s Consolidated Financial Statements appear beginning on page F-1 of this report. See
Item 15 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with our accountants on accounting and financial disclosures.
64
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE 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 Securities Exchange Act of 1934 (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.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP. Our internal
control over financial reporting includes policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could
have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our CEO and our
CFO, we evaluated the effectiveness of our internal control over financial reporting using the criteria set
forth in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, our
management concluded that our internal control over financial reporting was effective as of December 31,
2023.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company’s internal control over financial reporting (as defined in
Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable
65
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information required to be set forth herein will be included in the Company’s definitive proxy
statement for its 2024 annual stockholders’ meeting to be filed with the SEC within 120 days after the end
of the registrant’s fiscal year ended December 31, 2023 (the “Proxy Statement”), which sections are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
We are externally managed by our Manager and as such the Company does not incur compensation
costs affiliated with our executive officers. Any additional information required to be set forth herein will be
included in the Proxy Statement, which sections are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required to be set forth herein will be included in the Proxy Statement, which sections
are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required to be set forth herein will be included in the Proxy Statement, which sections
are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required to be set forth herein will be included in the Proxy Statement, which section
is incorporated herein by reference.
66
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. FINANCIAL STATEMENTS
The following financial statements are filed as part of this report:
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
. . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 . . . . F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023,
2022, and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
2. FINANCIAL STATEMENT SCHEDULES
Schedules are omitted because of the absence of conditions under which they are required, materiality,
or because the required information is given in the financial statements or notes thereof.
67
3. EXHIBITS
Exhibit Number
Description
EXHIBIT INDEX
3.1
3.2
4.1
4.2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
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).
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).
Description of the Registrant’s Securities (incorporated by reference to Exhibit 4.1 to
the Company’s Annual Report on Form 10-K filed on February 9, 2023).
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).
Stock Purchase Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Consolidated-Tomoka Land Co. (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 3,
2019).
Registration Rights Agreement, dated November 26, 2019, between Alpine Income
Property Trust, Inc. and Consolidated-Tomoka Land Co. (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 3,
2019).
Amended and Restated Agreement of Limited Partnership, dated November 26, 2019,
among Alpine Income Property GP, LLC, Alpine Income Property Trust, Inc.,
Consolidated-Tomoka Land Co. and Indigo Group Ltd. (incorporated by reference to
Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 3,
2019).
Tax Protection Agreement, dated November 26, 2019, among Alpine Income Property
Trust, Inc., Alpine Income Property OP, LP, Consolidated-Tomoka Land Co. and
Indigo Group Ltd. (incorporated by reference to Exhibit 10.4 to the Company’s
Current Report on Form 8-K filed on December 3, 2019).
Management Agreement, dated November 26, 2019, among Alpine Income Property
Trust, Inc., Alpine Income Property OP, LP and Alpine Income Property Manager,
LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on
Form 8-K filed on December 3, 2019).*
Exclusivity and Right of First Offer Agreement, dated November 26, 2019, between
Consolidated-Tomoka Land Co. and Alpine Income Property Trust, Inc. (incorporated
by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on
December 3, 2019).
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and John P. Albright (incorporated by reference to Exhibit 10.8 to
the Company’s Current Report on Form 8-K filed on December 3, 2019).*
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Steven R. Greathouse (incorporated by reference to
Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on December 3,
2019).*
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Daniel E. Smith (incorporated by reference to Exhibit 10.11 to
the Company’s Current Report on Form 8-K filed on December 3, 2019).*
68
Exhibit Number
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
Description
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Mark O. Decker, Jr. (incorporated by reference to
Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on December 3,
2019).*
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and M. Carson Good (incorporated by reference to Exhibit 10.13
to the Company’s Current Report on Form 8-K filed on December 3, 2019).*
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Andrew C. Richardson (incorporated by reference to
Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on December 3,
2019).*
Indemnification Agreement, dated November 21, 2019, between Alpine Income
Property Trust, Inc. and Jeffrey S. Yarckin (incorporated by reference to Exhibit 10.15
to the Company’s Current Report on Form 8-K filed on December 3, 2019).*
Indemnification Agreement, dated February 10, 2021, between Alpine Income Property
Trust, Inc. and Rachel E. Wein (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on February 11, 2021).*
Alpine Income Property Trust, Inc. 2019 Individual Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on
Form S-8 (File No. 333-235256) filed on November 25, 2019).*
Alpine Income Property Trust, Inc. 2019 Manager Equity Incentive Plan (incorporated
by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed on
December 3, 2019).*
Form of Non-Employee Director Restricted Stock Award Agreement under the Alpine
Income Property Trust, Inc. 2019 Individual Equity Incentive Plan (incorporated by
reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-11/A
(File No. 333-234304) filed with the Commission on November 7, 2019).*
Credit Agreement, dated as of May 21, 2021, among Alpine Income Property, OP, LP,
Alpine Income Property Trust, Inc., the other Guarantors from time to time parties
thereto, Truist Bank, N.A., Bank of Montreal, Raymond James Bank, N.A. and Stifel
Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K filed on May 25, 2021)
Amendment, Increase and Joinder to Credit Agreement, dated as of April 14, 2022,
among Alpine Income Property, OP, LP, Alpine Income Property Trust, Inc., the other
Guarantors from time to time parties thereto, Truist Bank, N.A., and certain other
lenders named therein (incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K filed on April 18, 2022).
Amended and Restated Credit Agreement, dated as of September 30, 2022, among
Alpine Income Property, OP, LP, Alpine Income Property Trust, Inc., the other
Guarantors from time to time parties thereto, KeyBank National Association, and
certain other lenders named therein (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on October 6, 2022).
Second Amendment to the 2026 Term Loan Agreement, dated as of October 5, 2022,
among Alpine Income Property, OP, LP, Alpine Income Property Trust, Inc., the other
Guarantors from time to time parties thereto, Truist Bank, N.A., and certain other
lenders named therein (incorporated by reference to Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q filed on October 20, 2022).
21.1
23.1
List of Subsidiaries of the Registrant.†
Consent of Grant Thornton LLP.†
69
Exhibit Number
Description
31.1
31.2
32.1
32.2
Certificate of John P. Albright, President and Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.†
Certificate of Matthew M. Partridge, Senior Vice President, Chief Financial Officer
and Treasurer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
Certificate of John P. Albright, President and Chief Executive Officer, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.††
Certificate of Matthew M. Partridge, Senior Vice President, Chief Financial Officer
and Treasurer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.††
97.1
Policy Relating to Recovery of Erroneously Awarded Compensation.†*
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
* Management Contract or Compensatory Plan or Arrangement
** Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The
omitted information is not material and is the type of information that the Company customarily and
actually treats as private and confidential.
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: February 8, 2024
By:
/S/ JOHN P. ALBRIGHT
John P. Albright
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
February 8, 2024 President and Chief Executive Officer
(Principal Executive Officer), and
Director
/S/ JOHN P. ALBRIGHT
John P. Albright
February 8, 2024
Senior Vice President, Chief Financial
Officer, and Treasurer (Principal Financial
Officer)
/S/ MATTHEW M. PARTRIDGE
Matthew M. Partridge
February 8, 2024 Vice President and Chief Accounting
Officer (Principal Accounting Officer)
/S/ LISA M. VORAKOUN
Lisa M. Vorakoun
February 8, 2024 Chairman of the Board, Director
/S/ ANDREW C. RICHARDSON
Andrew C. Richardson
February 8, 2024 Director
February 8, 2024 Director
February 8, 2024 Director
February 8, 2024 Director
/S/ MARK O. DECKER, JR.
Mark O. Decker, Jr.
/S/ M. CARSON GOOD
M. Carson Good
/S/ JEFFREY S. YARCKIN
Jeffrey S. Yarckin
/S/ RACHEL E. WEIN
Rachel E. Wein
71
[This page intentionally left blank.]
ALPINE INCOME PROPERTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 . . . . F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023,
2022, and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
F-1
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Alpine Income Property Trust, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Alpine Income Property Trust, Inc.
(a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related
consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows
for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred
to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity
with accounting principles generally accepted in the United States of America.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on the Company’s financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our
audits we are required to obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/ Grant Thornton LLP
We have served as the Company’s auditor since 2019.
Orlando, Florida
February 8, 2024
F-2
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
As of
December 31,
2023
December 31,
2022
Real Estate:
ASSETS
Land, at Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$149,314
$176,857
Building and Improvements, at Cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Real Estate, at Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
328,993
478,307
322,510
499,367
Less, Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(34,714)
(22,313)
Real Estate – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
443,593
477,054
Assets Held for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Assets – Net
Straight-Line Rent Adjustment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets
4,410
35,080
4,019
9,712
49,292
1,409
17,045
—
—
9,018
4,026
60,432
1,668
21,233
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$564,560
$573,431
Liabilities:
LIABILITIES AND EQUITY
Accounts Payable, Accrued Expenses, and Other Liabilities . . . . . . . . . . . . .
Prepaid Rent and Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Liabilities – Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,197
3,166
4,907
275,677
288,947
$ 4,411
1,479
5,050
267,116
278,056
Commitments and Contingencies – See Note 19
Equity:
Preferred Stock, $0.01 par value per share, 100 million shares authorized, no
shares issued and outstanding as of December 31, 2023 and December 31,
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock, $0.01 par value per share, 500 million shares authorized,
13,659,207 shares issued and outstanding as of December 31, 2023 and
13,394,677 shares issued and outstanding as of December 31, 2022 . . . . . .
—
—
137
134
Additional Paid-in Capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
243,690
236,841
Retained Earnings (Dividends in Excess of Net Income)
. . . . . . . . . . . . . . .
Accumulated Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . .
(2,359)
9,275
Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250,743
Noncontrolling Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,870
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
275,613
10,042
14,601
261,618
33,757
295,375
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$564,560
$573,431
The accompanying notes are an integral part of these consolidated financial statements.
F-3
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Revenues:
Lease Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
44,967 $
45,191 $
30,126
Interest Income from Commercial Loans and Investments
. . . .
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
637
40
—
—
—
—
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,644
45,191
30,126
Operating Expenses:
Real Estate Expenses
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and Administrative Expenses . . . . . . . . . . . . . . . . . . .
Provision for Impairment
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . .
Total Operating Expenses
. . . . . . . . . . . . . . . . . . . . . . . . .
Gain on Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . .
Gain (Loss) on Extinguishment of Debt . . . . . . . . . . . . . . . . .
Net Income From Operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment and Other Income . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net Income Attributable to Noncontrolling Interest . . .
6,580
6,301
3,220
25,758
41,859
9,334
23
13,142
289
(10,165)
3,266
(349)
5,435
5,784
—
23,564
34,783
33,801
(727)
43,482
12
(9,539)
33,955
(4,235)
3,673
5,027
—
15,939
24,639
9,675
—
15,162
2
(3,702)
11,462
(1,498)
Net Income Attributable to Alpine Income Property Trust, Inc.
. . $
2,917 $
29,720 $
9,964
Per Common Share Data:
Net Income Attributable to Alpine Income Property Trust, Inc.
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.21 $
0.19 $
2.48 $
2.17 $
1.02
0.89
Weighted Average Number of Common Shares:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,925,362
15,560,524
11,976,001
13,679,495
9,781,066
11,246,227
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,266
$33,955
$11,462
Other Comprehensive Income (Loss)
Cash Flow Hedging Derivative – Interest Rate Swaps . . . . . . . . . .
Total Other Comprehensive Income (Loss)
. . . . . . . . . . . . . . . . . . .
Total Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . .
Less: Comprehensive Income Attributable to Noncontrolling Interest
(3,778)
(3,778)
(512)
12,679
12,679
46,634
2,403
2,403
13,865
Net Income Attributable to Noncontrolling Interest . . . . . . . . . . .
(349)
(4,235)
(1,498)
Other Comprehensive Income Attributable to Noncontrolling
Interest(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive Income Attributable to Noncontrolling Interest . . . . .
Comprehensive Income (Loss) Attributable to Alpine Income
(1,548)
(1,897)
—
—
(4,235)
(1,498)
Property Trust, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(2,409)
$42,399
$12,367
(1) For the year ended December 31, 2023, the $1.5 million of other comprehensive income attributable to
the noncontrolling interest includes approximately $1.8 million of other comprehensive income
which represents the cumulative amount that should have been attributed to the noncontrolling interest
through December 31, 2022.
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share data)
Retained
Earnings
(Dividends
in Excess
of Net
Income)
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock at
Par
Additional
Paid-in
Capital
Stockholders’
Equity
Noncontrolling
Interest
Total
Equity
Balance January 1, 2021 . . . . . . . .
$ 75
$132,878
$ (5,713)
$ (481)
$126,759
$22,334
$149,093
Net Income . . . . . . . . . . . . . . .
Stock Issuance to Directors
. . . . .
Stock Issuance, Net of Equity
Issuance Costs . . . . . . . . . . . .
Operating Units Issued . . . . . . . .
Cash Dividend ($1.015 per share) . .
Other Comprehensive Income . . . .
—
—
39
—
—
—
—
297
67,731
—
9,964
—
—
—
— (10,670)
—
—
Balance December 31, 2021 . . . . .
114
200,906
(6,419)
Net Income . . . . . . . . . . . . . . .
Stock Issuance to Directors
. . . . .
Stock Issuance, Net of Equity
Issuance Costs . . . . . . . . . . . .
Cash Dividend ($1.090 per share) . .
Other Comprehensive Income . . . .
Balance December 31, 2022 . . . . .
Net Income . . . . . . . . . . . . . . .
Operating Partnership Unit
Redemption . . . . . . . . . . . . .
Stock Repurchase . . . . . . . . . . .
Stock Issuance to Directors
. . . . .
Stock Issuance, Net of Equity
Issuance Costs . . . . . . . . . . . .
Cash Dividend ($1.100 per share) . .
Other Comprehensive Income
(Loss) . . . . . . . . . . . . . . . . .
—
—
20
—
—
134
—
5
(9)
—
7
—
—
—
310
35,625
29,720
—
—
— (13,259)
—
—
236,841
10,042
—
2,917
9,036
(14,607)
303
12,117
—
—
—
—
— (15,318)
—
—
—
—
—
2,403
1,922
—
—
—
—
12,679
14,601
—
—
—
—
—
—
9,964
297
67,770
—
1,498
—
—
9,041
11,462
297
67,770
9,041
(10,670)
(1,494)
(12,164)
2,403
196,523
29,720
310
35,645
(13,259)
12,679
261,618
2,917
9,041
(14,616)
303
12,124
(15,318)
—
31,379
4,235
—
—
2,403
227,902
33,955
310
35,645
(1,857)
(15,116)
—
12,679
33,757
295,375
349
3,266
(9,041)
—
—
—
—
(14,616)
303
12,124
(1,743)
(17,061)
—
—
(5,326)
(5,326)
1,548
(3,778)
Balance December 31, 2023 . . . . .
$137
$243,690
$ (2,359)
$ 9,275
$250,743
$24,870
$275,613
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash Flow From Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to Reconcile Net Income to Net Cash Provided by Operating
Activities:
Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of Intangible Lease Assets and Liabilities to Lease
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of Deferred Financing Costs to Interest Expense . . . . . .
Accretion of Commercial Loans and Investments Origination Fees . . .
Non-Cash Portion of Extinguishment of Debt . . . . . . . . . . . . . . . .
Gain on Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Impairment
Non-Cash Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Assets:
Straight-Line Rent Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . .
COVID-19 Rent Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets
Increase (Decrease) in Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities . . . . . . . .
Prepaid Rent and Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided By Operating Activities . . . . . . . . . . . . . . . . .
Cash Flow From Investing Activities:
Acquisition of Real Estate, Including Capitalized Expenditures
. . . . .
Proceeds from Disposition of Assets . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Commercial Loans and Investments . . . . . . . . . . . . .
Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . .
Cash Flow from Financing Activities:
Proceeds from Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Paid for Loan Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds From Stock Issuance, Net . . . . . . . . . . . . . . . . . . . . . . .
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . .
Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents and Restricted Cash, Beginning of Period . . .
Cash and Cash Equivalents and Restricted Cash, End of Period . . . . . .
Reconciliation of Cash to the Consolidated Balance Sheets:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Unrealized Gain (Loss) on Cash Flow Hedges . . . . . . . . . . . . . . . .
Operating Partnership Unit Redemption . . . . . . . . . . . . . . . . . . . .
Right-of-Use Assets and Operating Lease Liability . . . . . . . . . . . . .
Operating Units Issued in Exchange for Real Estate . . . . . . . . . . . . .
Assumption of Mortgage Note Payable . . . . . . . . . . . . . . . . . . . .
December 31,
2023
Year Ended
December 31,
2022
December 31,
2021
$
3,266
$ 33,955
$ 11,462
25,758
23,564
15,939
(417)
710
(18)
—
(9,334)
3,220
318
(402)
—
186
670
1,687
25,644
(84,465)
106,303
(35,419)
(13,581)
31,750
(23,500)
(73)
(14,616)
12,124
(17,061)
(11,376)
687
13,044
$ 13,731
$
4,019
9,712
$ 13,731
(328)
599
—
727
(33,801)
—
310
(935)
45
552
217
(253)
24,652
(189,148)
150,370
—
(38,778)
277,000
(277,750)
(2,106)
—
35,645
(15,116)
17,673
3,547
9,497
$ 13,044
$
9,018
4,026
$ 13,044
$
9,245
$
7,753
$ (3,778)
9,041
$
—
$
—
$
—
$
$ 12,679
—
$
1,831
$
—
$
—
$
(257)
362
—
—
(9,675)
—
309
(607)
430
(2,413)
673
977
17,200
(223,407)
27,415
(195,992)
294,622
(162,431)
(1,402)
—
67,770
(12,164)
186,395
7,603
1,894
9,497
$
$
$
$
8,851
646
9,497
3,131
2,403
$
—
$
—
$
9,041
$
$ 30,000
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ALPINE INCOME PROPERTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022 and 2021
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 portfolio consists of 138 net leased properties located in 104 markets in 35 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. See
Note 4, “Commercial Loans and Investments” for further disclosure related to the Company’s commercial
loans and investments.
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 December 31, 2023, we have a total ownership interest in the Operating
Partnership of 91.8%, with CTO holding, directly and indirectly, an 8.2% 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
F-8
Service grants the Company relief under certain statutory provisions. Such an event could materially
adversely affect the Company’s net income and net cash available for distribution to stockholders. Even if
the Company qualifies for taxation as a REIT, the Company may be subject to state and local taxes on its
income and property and federal income and excise taxes on its undistributed income.
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 20, “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 primarily 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 years ended
December 31, 2023, 2022, and 2021, was $16.8 million, $14.8 million, and $10.0 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.
F-9
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.
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
F-10
with the tenant and industry of the tenant, and a review of specifically identified accounts using judgment.
As of December 31, 2023 and 2022, the Company’s allowance for doubtful accounts totaled $0.4 million.
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.
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.
SALES TAX
Sales tax collected on lease payments is recognized as a liability in the accompanying consolidated
balance sheets when collected. The liability is reduced at the time payment is remitted to the applicable
taxing authority.
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 December 31, 2023 and
2022 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 $9.7 million at December 31, 2023, of which $7.5 million is being held in an
escrow account to be reinvested through the like-kind exchange structure into other income properties and
$2.2 million is being held in interest, real estate tax, and/ or insurance reserve accounts related to the Company’s
commercial loans and investments.
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.
F-11
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 13, “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 December 31, 2023 and December 31, 2022, 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.
EARNINGS PER COMMON SHARE
Basic earnings per common share is computed by dividing net income attributable to the Company for
the period by the weighted average number of shares outstanding for the period. Diluted earnings per
common share is based on the assumption that the OP Units issued are redeemed for shares of our common
stock on a one-for-one basis.
INCOME TAXES
The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under the Code.
We believe the Company has been organized and has operated in such a manner as to qualify for taxation
as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a
F-12
manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate
rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends
paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at
the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income,
determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as
a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain
other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable
income and distribution requirement. These deductions permit the Company to reduce its dividend
payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise
taxes. The Company may form one or more taxable REIT subsidiaries (“TRSs”), which will be subject to
applicable U.S. federal, state and local corporate income tax on their taxable income. For the periods presented,
the Company did not have any TRSs that would be subject to taxation.
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 years ended December 31, 2023 and 2021.
No individual tenant accounted for more than 10% of lease income from the Company’s income properties
during the year ended December 31, 2022.
For the year ended December 31, 2023, Walgreens represented 11% of lease income from the Company’s
income properties. Wells Fargo represented 12% of lease income from the Company’s income properties for
the year ended December 31, 2021.
As of December 31, 2023, 13%, 11%, and 11% of the Company’s income property portfolio, based on
square footage, was located in the states of Texas, New Jersey, and Michigan, respectively. As of December 31,
2022, 19% of the Company’s income property portfolio, based on square footage, was located in the state
of Texas. Uncertainty of the duration of a prolonged real estate and economic downturn could have an
adverse impact on the Company’s real estate values.
RECLASSIFICATIONS
Certain items in the prior period’s consolidated statement of operations have been reclassified to
conform to the presentation for the year ended December 31, 2023. Specifically, interest income earned on
deposits at financial institutions was previously included within Lease Income and is now included within
Investment and Other Income on the accompanying consolidated statement of operations. There was no
impact to retained earnings as a result of the reclassifications.
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 December 31, 2023, the Company’s property portfolio consisted of 138 properties with total
square footage of 3.8 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.
F-13
The components of leasing revenue are as follows (in thousands):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Lease Income
Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$40,141
$40,190
$27,138
Variable Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,826
5,001
2,988
Total Lease Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$44,967
$45,191
$30,126
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 December 31, 2023, are summarized as follows (in
thousands). Certain of our operating leases have options to extend, which option periods are not included
within minimum future rental receipts.
Year Ending December 31,
Amounts
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 38,586
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 and Thereafter (Cumulative)
37,354
36,510
32,840
29,453
95,794
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$270,537
2023 Activity. During the year ended December 31, 2023, the Company acquired 14 properties for a
combined purchase price of $82.9 million, or a total cost of $84.2 million including capitalized acquisition
costs. Of the total acquisition cost, $21.5 million was allocated to land, $55.2 million was allocated to buildings
and improvements, $8.4 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 year ended December 31, 2023, the Company sold 24 properties for an aggregate sales price
of $108.3 million, generating aggregate gains on sale of $9.3 million.
2022 Activity. During the year ended December 31, 2022, the Company acquired 51 properties for a
combined purchase price of $187.4 million, or a total cost of $189.0 million including capitalized acquisition
costs. The properties are located in 21 states, leased to 18 different tenants, and had a weighted average
remaining lease term of 8.7 years at the time of acquisition. Of the total acquisition cost, $44.5 million was
allocated to land, $123.0 million was allocated to buildings and improvements, $23.7 million was allocated
to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and
$2.2 million was allocated to intangible liabilities for the below market lease value. The weighted average
amortization period for the intangible assets and liabilities was 8.9 years at acquisition.
During the year ended December 31, 2022, the Company sold 16 properties for an aggregate sales price
of $154.6 million, generating aggregate gains on sale of $33.8 million.
2021 Activity. During the year ended December 31, 2021, the Company acquired 68 properties for a
combined purchase price of $260.3 million, or a total cost of $262.4 million including capitalized acquisition
costs. Of the total acquisition cost, $100.8 million was allocated to land, $132.6 million was allocated to
buildings and improvements, $31.8 million was allocated to intangible assets pertaining to the in-place lease
value, leasing fees, and above market lease value, and $2.8 million was allocated to intangible liabilities for
the below market lease value. The weighted average amortization period for the intangible assets and liabilities
was 8.6 years at acquisition.
F-14
During the year ended December 31, 2021, the Company sold three properties for an aggregate sales
price of $28.3 million, generating aggregate gains on sale of $9.7 million.
NOTE 4. COMMERCIAL LOANS AND INVESTMENTS
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 increases 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 December 31,
2023, the Company has disbursed $7.0 million to the borrower.
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 December 31, 2023, the Company has disbursed $4.6 million
to the borrower.
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.
The Company’s commercial loans and investments were comprised of the following at December 31,
2023 (in thousands):
Description
Construction Loan – Wawa Land
Date of
Investment
Maturity
Date
Original
Face
Amount
Current
Face
Amount
Carrying
Value
Coupon
Rate
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%
CECL Reserve . . . . . . . . . . . . . . . . .
Total Commercial Loans and
Investments . . . . . . . . . . . . . . . . .
$38,625 $35,629 $35,437
(357)
$35,080
The carrying value of the commercial loans and investments at December 31, 2023 consisted of the
following (in thousands). There were no commercial loans and investments as of December 31, 2022:
Current Face Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$35,629
$ —
Unaccreted Origination Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CECL Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(192)
(357)
—
—
Total Commercial Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
$35,080
$ —
As of
December 31,
2023
December 31,
2022
F-15
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 as of December 31, 2023 and 2022
(in thousands):
December 31, 2023
December 31, 2022
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Cash and Cash Equivalents – Level 1 . . . . . . . . . . . . . . . .
$ 4,019
$
4,019
$ 9,018
$ 9,018
Restricted Cash – Level 1 . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,712
$ 9,712
$ 4,026
$
4,026
Commercial Loans and Investments – Level 2 . . . . . . . . . .
$ 35,080
$ 36,288
$
— $
—
Long-Term Debt – Level 2 . . . . . . . . . . . . . . . . . . . . . . . .
$275,677
$258,613
$267,116
$250,568
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 (liabilities) measured on a recurring basis by Level
as of December 31, 2023 and 2022 (in thousands). See Note 13, “Interest Rate Swaps” for further disclosure
related to the Company’s interest rate swaps.
Fair Value at Reporting Date Using
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Fair Value
December 31, 2023
2026 Term Loan Interest Rate Swap(1)
. . . . . . .
2027 Term Loan Interest Rate Swap(2)
. . . . . . .
Credit Facility Interest Rate Swap(3) . . . . . . . . .
$4,314
$5,793
$ 716
December 31, 2022
2026 Term Loan Interest Rate Swap(1)
2027 Term Loan Interest Rate Swap(2)
. . . . . . .
. . . . . . .
$6,125
$8,476
$ —
$ —
$ —
$ —
$ —
$4,314
$5,793
$ 716
$6,125
$8,476
$ —
$ —
$ —
$ —
$ —
(1) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further
disclosure related to the Company’s interest rate swaps.
(2) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further
disclosure related to the Company’s interest rate swaps.
(3) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further disclosure
related to the Company’s interest rate swaps.
F-16
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 December 31, 2023 and 2022 (in thousands):
Intangible Lease Assets:
Value of In-Place Leases
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of Above Market In-Place Leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of Intangible Leasing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total Intangible Lease Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total Intangible Lease Assets – Net . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Liabilities:
Value of Below Market In-Place Leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total Intangible Lease Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total Intangible Lease Liabilities – Net . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Total Intangible Assets and Liabilities – Net
As of
December 31,
2023
December 31,
2022
$ 48,267
2,942
18,865
70,074
(20,782)
49,292
(6,770)
(6,770)
1,863
(4,907)
$ 44,385
$ 49,974
3,897
20,579
74,450
(14,018)
60,432
(6,130)
(6,130)
1,080
(5,050)
$ 55,382
The following table reflects the net amortization of intangible assets and liabilities during the years
ended December 31, 2023, 2022, and 2021 (in thousands):
Amortization Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion to Properties Revenue . . . . . . . . . . . . . . . . . . . . . . . .
Net Amortization of Intangible Assets and Liabilities . . . . . . . . .
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
$8,936
(417)
$8,519
$8,801
(328)
$8,473
$5,977
(257)
$5,720
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
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 8,443
$ (446)
$ 7,997
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 and Thereafter . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,840
7,416
5,888
4,796
12,933
$47,316
(417)
(442)
(425)
(376)
(825)
$(2,931)
7,423
6,974
5,463
4,420
12,108
$44,385
As of December 31, 2023, the weighted average amortization period of both the total intangible assets
and liabilities was 8.8 years.
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
F-17
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 year ended December 31, 2023, the Company recorded a $2.9 million impairment charge
representing the provision for losses related to seven convenience store properties within our income
properties segment. These seven convenience store properties were leased to one tenant that filed for
bankruptcy during the three months ended March 31, 2023. The seven leases underlying these seven
convenience store properties were rejected as a part of the bankruptcy proceedings during August of 2023.
The impairment charge of $2.9 million is equal to the estimated sales prices for these seven convenience store
properties (as set forth in executed letters of intent at the time the impairment was estimated), less the
book value of the assets as of December 31, 2023, less estimated costs to sell. As of December 31, 2023, the
Company is continuing to evaluate potential sales of all seven of the convenience store properties, as well
as leasing opportunities for the convenience store properties not currently leased. There were no impairment
charges on the Company’s income property portfolio during the years ended December 31, 2022 and 2021.
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 year ended December 31, 2023, the Company recorded a $0.3 million impairment charge
representing the provision for credit losses related to our commercial loans and investments. The $0.3 million
charge was driven by the initial estimated CECL allowance based on our investment activity during the
year ended December 31, 2023. 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.
NOTE 8. OTHER ASSETS
Other assets consisted of the following (in thousands):
Tenant Receivables – Net of Allowance for Doubtful Accounts(1) . . . . . . . . . . .
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits on Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid Expenses, Deposits, and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Financing Costs – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Rate Swaps
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Leases – Right-of-Use Asset(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of
December 31,
2023
$
809
838
60
1,757
1,190
10,957
1,434
$17,045
December 31,
2022
$ 1,172
740
30
1,494
1,518
14,632
1,647
$21,233
(1)
Includes $0.4 million allowance for doubtful accounts as of December 31, 2023 and 2022.
(2) See Note 9, “Operating Land Leases” for further disclosure related to the Company’s right-of-use asset
balance as of December 31, 2023.
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 December 31, 2023, the Company’s right-of-use
F-18
assets totaled $1.4 million and the corresponding lease liabilities totaled $1.5 million, 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 $0.3 million and $0.1 million during the years ended December 31, 2023 and 2022,
respectively, with no such expense recognized during the year ended December 31, 2021.
The following table reflects a summary of operating land leases, under which the Company is the
lessee, for the years ended December 31, 2023, 2022, and 2021 (in thousands):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Operating Cash Outflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average Remaining Lease Term . . . . . . . . . . . . . . . . .
Weighted Average Discount Rate . . . . . . . . . . . . . . . . . . . . . . . .
$257
7.1
2.0
$197
7.9
2.0
$ —
—
—
Minimum future lease payments under non-cancelable operating land leases, having remaining terms in
excess of one year subsequent to December 31, 2023, are summarized as follows (in thousands):
Year Ending December 31,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 and Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Imputed Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Leases – Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 251
192
202
202
202
490
$1,539
(85)
$1,454
NOTE 10. ASSETS HELD FOR SALE
Assets held for sale as of December 31, 2023 are summarized below (in thousands). There were no
assets or liabilities held for sale as of December 31, 2022.
Real Estate – Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Assets – Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible Lease Liabilities – Net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Straight-Line Rent Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets Prior to Provision for Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less Provision for Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets Held for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31, 2023
$ 6,374
749
(39)
173
17
$ 7,274
(2,864)
$ 4,410
F-19
NOTE 11. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):
As of
December 31,
2023
December 31,
2022
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tenant Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to CTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Rate Swaps
Operating Leases – Liability(1)
Total Accounts Payable, Accrued Expenses, and Other Liabilities . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
30
2,449
78
1,052
134
1,454
$5,197
$
17
1,609
165
932
31
1,657
$4,411
(1) See Note 9, “Operating Land Leases” for further disclosure related to the Company’s operating land
lease liability balance as of December 31, 2023.
NOTE 12. LONG-TERM DEBT
As of December 31, 2023, the Company’s outstanding indebtedness, at face value, was as follows (in
thousands):
Face Value Debt
Stated
Interest Rate
Maturity Date
Credit Facility(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 76,500
SOFR + 0.10% +
[1.25% – 2.20%]
SOFR + 0.10% +
January 2027
2026 Term Loan(2)
. . . . . . . . . . . . . . . . . . . . . . . . .
100,000
[1.35% – 1.95%] May 2026
2027 Term Loan(3)
Total Debt/Weighted-Average Rate . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
100,000
$276,500
SOFR + 0.10% +
[1.25% – 1.90%]
3.84%
January 2027
(1) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further disclosure
related to the Company’s interest rate swaps.
(2) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further
disclosure related to the Company’s interest rate swaps.
(3) As of December 31, 2023, 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 13, “Interest Rate Swaps” for further
disclosure related to the Company’s interest rate swaps.
Credit Facility. On September 30, 2022, the Company and the Operating Partnership entered into a
credit agreement (the “2022 Amended and Restated Credit Agreement”) 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 (the
“Credit Facility”) which matures on January 31, 2027, with the option to extend for one year;
F-20
• 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.
At December 31, 2023, the commitment level under the Credit Facility was $250.0 million and the
Company had an outstanding balance of $76.5 million.
Prior Credit Facility. On September 30, 2022, in connection with the Company’s entry into the 2022
Amended and Restated Credit Agreement, the Company repaid all obligations outstanding under the Credit
Agreement, dated as of November 26, 2019, as amended, among the Company, the Bank of Montreal, as
administrative agent, and certain other lenders party thereto (the “Prior Revolving Credit Facility”), and the
Prior Revolving Credit Facility was terminated and the obligations thereunder discharged. As a result of
the termination of the Prior Revolving Credit Facility, $0.3 million of unamortized deferred financing costs
were written off during the three months ended September 30, 2022 and are included in the consolidated
statements of operations as Loss on Extinguishment of Debt.
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.
F-21
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.
Mortgage Notes Payable. On June 30, 2021, in connection with the acquisition of six net lease
properties from CTO (the “CMBS Portfolio”), the Company assumed an existing $30.0 million secured
mortgage, which bears interest at a fixed rate of 4.33% (the “CMBS Loan”). On December 1, 2022, the
Company completed the defeasance of the CMBS Loan, unencumbering the CMBS Portfolio. The Company
sold four of the six properties subsequent to the defeasance, during the year ended December 31, 2022.
Additionally, on June 30, 2021, in connection with the acquisition of two net lease properties from an
unrelated third party, the Company assumed mortgage notes totaling an aggregate of $1.6 million, which
balance was repaid on July 1, 2021.
Long-term debt as of December 31, 2023 and 2022 consisted of the following (in thousands):
December 31, 2023
December 31, 2022
Total
Due Within
One Year
Total
Due Within
One Year
Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 76,500
$ — $ 68,250
$ —
2026 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing Costs, net of Accumulated Amortization . . . . . .
100,000
100,000
(823)
—
—
—
100,000
100,000
(1,134)
—
—
—
Total Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . .
$275,677
$ — $267,116
$ —
Payments applicable to reduction of principal amounts as of December 31, 2023 will be required as
follows (in thousands):
Year Ending December 31,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 and Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount
—
—
100,000
176,500
—
—
Total Long-Term Debt – Face Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$276,500
The carrying value of long-term debt as of December 31, 2023 consisted of the following (in thousands):
Current Face Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$276,500
Financing Costs, net of Accumulated Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(823)
Total Long-Term Debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$275,677
Total
In addition to the $0.8 million of financing costs, net of accumulated amortization included in the
table above, as of December 31, 2023, the Company also had financing costs, net of accumulated
amortization related to the Credit Facility of $1.2 million which is included in other assets on the consolidated
balance sheets. These costs are amortized on a straight-line basis over the term of the Credit Facility and
are included in interest expense in the Company’s accompanying consolidated statements of operations.
F-22
The following table reflects a summary of interest expense incurred and paid during the years ended
December 31, 2023, 2022, and 2021 (in thousands):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,455
Amortization of Deferred Financing Costs to Interest Expense . . .
710
Total Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$10,165
Total Interest Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 9,245
$8,940
599
$9,539
$7,753
$3,340
362
$3,702
$3,131
The Company was in compliance with all of its debt covenants as of December 31, 2023.
NOTE 13.
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 years ended December 31, 2023, 2022, and 2021. Accordingly,
the changes in fair value on the interest rate swaps have been classified in accumulated other comprehensive
income (loss). The fair value of the interest rate swap agreements are included in other assets and accrued
and other liabilities, respectively, on the consolidated balance sheets. Information related to the Company’s
interest rate swap agreements are noted below (in thousands):
Hedged Item
Effective Date Maturity Date
Rate
Amount
Fair Value as of
December 31, 2023
2026 Term Loan(1) . . . . . .
5/21/2021
5/21/2026
2027 Term Loan(2) . . . . . .
9/30/2021
11/26/2024
2027 Term Loan(3) . . . . . .
11/26/2024
1/31/2027
Credit Facility(4)
. . . . . . .
3/1/2023
3/1/2028
2.05% + 0.10% +
applicable spread
1.18% + 0.10% +
applicable spread
1.60% + 0.10% +
applicable spread
3.21% + 0.10% +
applicable spread
$100,000
$4,314
$100,000
$3,048
$ 80,000
$2,745
$ 50,000
$ 716
(1) As of December 31, 2023, 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 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 December 31, 2023, 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 balance. The weighted average fixed interest rate of 1.18%, is comprised of: (i) 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), and (ii) a rate swap on $20.0 million of the 2027 Term Loan balance
effective September 30, 2022, to fix SOFR.
(3) 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 26, 2024 to extend the fixed interest rate through maturity on January 31, 2027.
(4) As of December 31, 2023, 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 million of the outstanding
balance on the Credit Facility. The swap was effective on March 1, 2023.
F-23
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 December 31, 2023 and 2022, there were no events of default related to the Company’s
interest rate swap agreements.
NOTE 14. 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.
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 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.
F-24
NONCONTROLLING INTEREST
As of December 31, 2023, CTO holds, directly and indirectly, an 8.2% 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. On November 10, 2023, the Company redeemed the 479,640 OP Units held previously held
by an unrelated third party. The 479,640 OP Units were redeemed on a one-for-one basis for shares of
common stock of the Company.
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 years ended December 31,
2023, 2022, and 2021, the Company declared and paid cash dividends on its common stock and OP Units
of $1.100 per share, $1.090 per share, and $1.015 per share, respectively.
NOTE 15. 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.
The following is a reconciliation of basic and diluted earnings per common share (in thousands, except
share and per share data):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Net Income Attributable to Alpine Income Property
Trust, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,917
$
29,720
$
9,964
Weighted Average Number of Common Shares
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,925,362
11,976,001
9,781,066
Weighted Average Number of Common Shares Applicable to
OP Units using Treasury Stock Method(1)
. . . . . . . . . . . . .
1,635,162
1,703,494
1,465,161
Total Shares Applicable to Diluted Earnings per Share . . . . . .
15,560,524
13,679,495
11,246,227
Per Common Share Data:
Net Income Attributable to Alpine Income Property Trust, Inc.
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.21
0.19
$
$
2.48
2.17
$
$
1.02
0.89
(1) Represents shares underlying OP units including (i) 1,223,854 shares underlying OP Units issued to
CTO in connection with our IPO and (ii) 479,640 shares underlying OP Units issued to an unrelated third
party in connection with the acquisition of a portfolio of properties during the year ended
December 31, 2021, which OP Units were redeemed on a one-for-one basis for shares of common
stock of the Company during the year ended December 31, 2023 (see Note 14, “Equity”).
NOTE 16. SHARE REPURCHASES
In March 2020, the Board approved a $5.0 million stock repurchase program (the “2020 $5.0 Million
Repurchase Program”). During the year ended December 31, 2020, the Company repurchased 456,237
F-25
shares of its common stock on the open market for a total cost of $5.0 million, or an average price per
share of $11.02, which completed the 2020 $5.0 Million Repurchase Program.
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 year ended December 31, 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.
In aggregate, the Company repurchased 899,011 shares of its common stock on the open market for a
total cost of $14.6 million, or an average price per share of $16.23, during the year ended December 31,
2023. There were no repurchases of the Company’s common stock during the years ended December 31, 2022
or 2021.
NOTE 17. STOCK-BASED COMPENSATION
In connection with the closing of the IPO, on November 26, 2019, the Company granted restricted
shares of common stock to each of the Company’s initial non-employee directors under the Individual
Plan. Each of the initial non-employee directors received an award of 2,000 restricted shares of common
stock on November 26, 2019. The restricted shares vested in substantially equal installments on each of the
first, second, and third anniversaries of the grant date. As of December 31, 2022, all increments of this award
had vested. In addition, the restricted shares are subject to a holding period beginning on the grant date
and ending on the date that the grantee ceases to serve as a member of the Board (the “Holding Period”).
During the Holding Period, the restricted shares may not be sold, pledged or otherwise transferred by the
grantee. Except for the one-time IPO-related grant of these 8,000 restricted shares of common stock, and the
shares of common stock issued quarterly to the non-employee directors in lieu of cash retainer fees
(pursuant to the directors’ annual election under the Company’s Non-Employee Director Compensation
Policy), the Company has not made any grants under the Equity Incentive Plans. Any future grants under
the Equity Incentive Plans will be approved by the compensation committee of the Board. The 2019 non-
employee director share awards had an aggregate grant date fair value of $0.15 million. The Company’s
determination of the grant date fair value of the three-year vest restricted stock awards was calculated by
multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost
was recognized on a straight-line basis over the vesting period and is included in general and administrative
expenses in the Company’s consolidated statements of operations. The Company recognized stock
compensation expense totaling $0.05 million during each of the years ended December 31, 2022, and 2021.
There was no stock compensation expense during the year ended December 31, 2023.
A summary of activity for these awards during the years ended December 31, 2023, 2022 and 2021 is
presented below:
F-26
Non-Vested Restricted Shares
Shares Wtd. Avg. Fair Value
Non-Vested at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,336
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
$18.80
—
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,668)
$18.80
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Non-Vested at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,668
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
$18.80
—
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,668)
$18.80
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Vested at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Vested at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
$ —
—
—
—
—
$ —
As of December 31, 2023 and 2022, there was no unrecognized compensation cost related to the three-
year vest restricted shares.
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 year ended
December 31, 2023, the expense recognized for the value of the Company’s common stock received by non-
employee directors totaled $0.3 million, or 19,133 shares, of which 4,776 shares were issued on April 1,
2023, 4,940 shares were issued on July 3, 2023, 4,748 shares were issued on October 2, 2023, and 4,669 shares
were issued on January 2, 2024. During the year ended December 31, 2022, the expense recognized for the
value of the Company’s common stock received by non-employee directors totaled $0.3 million, or 14,485
shares, of which 3,514 shares were issued on April 1, 2022, 3,689 shares were issued on July 1, 2022, 3,774
shares were issued on October 1, 2022, and 3,508 shares were issued on January 1, 2023. During the year
ended December 31, 2021, the expense recognized for the value of the Company’s common stock received by
non-employee directors totaled $0.3 million, or 14,049 shares, of which 3,453 shares were issued on
April 1, 2021, 3,525 shares were issued on July 1, 2021, 3,594 shares were issued on October 1, 2021, and
3,477 shares were issued on January 3, 2022.
Stock compensation expense for the years ended December 31, 2023, 2022, and 2021 is summarized as
follows (in thousands):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Stock Compensation Expense – Director Restricted Stock . . . . . .
$ —
Stock Compensation Expense – Director Retainers
Paid in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Stock Compensation Expense . . . . . . . . . . . . . . . . . . . . . .
318
$318
$ 46
264
$310
$ 50
259
$309
(1) Director retainers are issued through additional paid in capital in arrears. Therefore, the change in
additional paid in capital during the years ended December 31, 2023, 2022, and 2021 reported on the
F-27
consolidated statements of stockholders’ equity does not agree to the total non-cash compensation
reported on the consolidated statements of cash flows.
NOTE 18. RELATED PARTY MANAGEMENT COMPANY
We are externally managed by the Manager, a wholly owned subsidiary of CTO. During the year ended
December 31, 2023, CTO purchased 129,271 shares of PINE common stock in the open market for
$2.1 million, or an average price per share of $16.21. During the year ended December 31, 2022, CTO
purchased 155,665 shares of PINE common stock in the open market for $2.7 million, or an average price
per share of $17.57. As of December 31, 2023, CTO owns, in the aggregate, 1,223,854 OP Units and 1,108,814
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) 293,024 shares of common
stock totaling $5.0 million purchased by CTO subsequent to the IPO. The aggregate 1,223,854 OP Units and
1,108,814 shares of PINE common stock held by CTO represent an investment totaling $39.4 million, or
15.7% of PINE’s outstanding equity, as of December 31, 2023.
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, 2022 or 2021.
The initial term of the Management Agreement will expire on November 26, 2024 and 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 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 $4.3 million, $3.8 million, and $3.2 million
during the years ended December 31, 2023, 2022, and 2021, respectively. The Company also paid dividends
F-28
on the common stock and OP Units owned by affiliates of the Manager in the amount of $2.5 million,
$2.3 million, and $2.1 million, for the years ended December 31, 2023, 2022, and 2021, respectively.
The following table represents amounts due from the Company to CTO (in thousands):
Description
As of
December 31,
2023
December 31,
2022
Management Fee due to CTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,062
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10)
$1,052
$993
(61)
$932
(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.
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
F-29
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.
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
F-30
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. During the year ended December 31, 2023, the Company recognized less than $0.1 million
of revenue pursuant to the Revenue Sharing Agreement, which is included in other revenue on the Company’s
consolidated statement of operations.
NOTE 19. 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 two construction loans as described in Note 4, “Commercial
Loans and Investments”. The unfunded portion of the construction loans totaled $3.0 million as of
December 31, 2023.
NOTE 20. 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 89% and 95% of our identifiable assets as of December 31, 2023 and 2022,
respectively, and 98.5%, 100%, and 100% of our consolidated revenues for the years ended December 31,
2023, 2022, and 2021, respectively. As of December 31, 2023, our commercial loans investment portfolio
consisted of three commercial loan investments.
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.
F-31
Information about the Company’s operations in different segments for the years ended December 31,
2023, 2022, and 2021 is as follows (in thousands):
Year Ended
December 31,
2023
December 31,
2022
December 31,
2021
Revenues:
Lease Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 44,967
$ 45,191
$ 30,126
Interest Income from Commercial Loans and Investments . . . . . .
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
637
40
—
—
—
—
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 45,644
$ 45,191
$ 30,126
Operating Income (Loss):
Lease Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 38,387
$ 39,756
$ 26,453
Interest Income from Commercial Loans and Investments . . . . . .
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and Corporate Expenses
. . . . . . . . . . . . . . . . . . . . . . .
Provision for Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on Disposition of Assets
. . . . . . . . . . . . . . . . . . . . . . . . .
Gain (Loss) on Extinguishment of Debt . . . . . . . . . . . . . . . . . . .
637
40
(32,059)
(3,220)
9,334
23
—
—
—
—
(29,348)
(20,966)
—
33,801
(727)
—
9,675
—
Total Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,142
$ 43,482
$ 15,162
Depreciation and Amortization:
Income Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 25,758
$ 23,564
$ 15,939
Total Depreciation and Amortization . . . . . . . . . . . . . . . . . . .
$ 25,758
$ 23,564
$ 15,939
Capital Expenditures:
Income Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Commercial Loans and Investments
$ 84,465
35,419
$189,148
—
$223,407
—
Total Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .
$119,884
$189,148
$223,407
Identifiable assets of each segment as of December 31, 2023 and 2022 are as follows (in thousands):
As of
December 31,
2023
December 31,
2022
Identifiable Assets:
Income Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$503,151
$543,909
Commercial Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,220
26,189
—
29,522
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$564,560
$573,431
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 21. SUBSEQUENT EVENTS
Subsequent events and transactions were evaluated through February 8, 2024, the date the consolidated
financial statements were issued. There were no reportable subsequent events or transactions.
F-32
PERFORMANCE SUMMARY
Diluted Per Share Information:
Net Income Attributable to PINE Shareholders
Funds from Operations
Adjusted Funds from Operations
Dividends Per Share:
Declared and Paid
2023
$0.19
$1.47
$1.49
2022
$2.17
$1.73
$1.77
% Growth
(91%)
(15%)
(16%)
2023
$1.100
2022
$1.090
% Growth
1%
Total Shareholder Return For 2023
As of December 31, 2023
Source: Bloomberg
CORPORATE INFORMATION
BOARD OF DIRECTORS
Andrew C. Richardson
Chairman of the Board of Alpine Income Property Trust, Inc. and Chief
Executive Officer of RCM Living
M. Carson Good
President of Good Capital Group and Chairman of the Board of
the Greater Orlando Airport Authority
John P. Albright
President and Chief Executive Officer of CTO Realty Growth, Inc. and
Alpine Income Property Trust, Inc.
Rachel Elias Wein
Founder and Chief Executive Officer of WeinPlus
Mark O. Decker, Jr.,
Founding Partner and Managing Director, Proterra Real Estate Partners
Jeffrey S. Yarckin
President and Chief Operating Officer and co-founder of
TriGate Capital, LLC
EXECUTIVES
John P. Albright
President and Chief Executive Officer
Matthew M. Partridge
Senior Vice President, Chief Financial Officer and Treasurer
Steven R. Greathouse
Senior Vice President and Chief Investment Officer
Daniel E. Smith
Senior Vice President, General Counsel and Corporate Secretary
Lisa M. Vorakoun
Vice President and Chief Accounting Officer
Counsel
Vinson & Elkins LLP
901 East Byrd Street, Suite 1500
Richmond, VA 23219
Registrar and Stock Transfer Agent
Computershare Trust Company N.A.
150 Royall Street, Suite 100
Canton, MA 02021
INFORMATION
Auditors
Grant Thornton LLP
5955 T.G. Lee Boulevard, Suite 200
Orlando, FL 32822
Mailing Address
Alpine Income Property Trust, Inc.
369 N. New York Avenue, Suite 201
Winter Park, FL 32789
NYSE: PINE
alpinereit.com
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