Alpine Income Property Trust, Inc. (PINE) is a diversified real estate investment trust (REIT) that owns and operates a high-quality portfolio of commercial net lease properties. The company's strategy is focused on acquiring and managing single-tenant, net-leased commercial properties that are leased to high-quality, credit-worthy tenants.

Business Overview

Alpine Income Property Trust's property portfolio consists of 137 net-leased properties located across 34 states, totaling 3.8 million square feet of gross leasable area. The portfolio is 99.1% occupied and has a weighted average remaining lease term of 6.6 years. Approximately 67% of the company's annualized base rent is derived from investment-grade rated tenants, and 90% is from credit-rated tenants.

The company's top tenants include Walgreens, Dick's Sporting Goods, Lowe's, Dollar Tree/Family Dollar, and Best Buy, all of which carry investment-grade credit ratings. This diversified tenant base across various industries, including dollar stores, sporting goods, home improvement, and consumer electronics, provides stability and resilience to Alpine's cash flows.

Financials

In the second quarter of 2024, Alpine Income Property Trust reported total revenues of $12.5 million, a 10.1% increase compared to the same period in the prior year. This growth was driven by a combination of higher lease income and interest income from the company's commercial loan investments. Net income for the quarter was $222,000, compared to $90,000 in the second quarter of 2023.

For the first six months of 2024, the company reported total revenues of $25.0 million, a 10.9% increase from the same period in 2023. Net loss for the first half of 2024 was $61,000, compared to net income of $3.8 million in the first six months of 2023. The decrease in net income was primarily due to higher operating expenses, including a $0.7 million provision for impairment, and a decrease in gains on disposition of assets.

Alpine's funds from operations (FFO) and adjusted funds from operations (AFFO) for the second quarter of 2024 were $6.3 million and $6.4 million, respectively, representing increases of 9.4% and 9.5% compared to the same period in the prior year. On a per-share basis, FFO and AFFO were both $0.43 per diluted share, up 16.2% from the second quarter of 2023.

For the first six months of 2024, Alpine reported FFO of $12.4 million, or $0.84 per diluted share, and AFFO of $12.6 million, or $0.85 per diluted share. These results represent increases of 9.2% and 10.1%, respectively, compared to the first half of 2023.

Outlook

The company's strong operational performance during the first half of 2024 has led management to increase its full-year 2024 guidance. Alpine now expects FFO per diluted share to be in the range of $1.58 to $1.62, up from the previous guidance of $1.51 to $1.55. Similarly, the company's AFFO per diluted share guidance has been increased to a range of $1.60 to $1.64, up from the prior range of $1.53 to $1.57.

Liquidity

Alpine's balance sheet remains healthy, with a net debt to enterprise value ratio of 53.2% as of June 30, 2024. The company's weighted average interest rate on its long-term debt was 3.75%, with no maturities until 2026. Alpine had $185 million in available liquidity as of the end of the second quarter, providing ample flexibility to fund future growth initiatives.

Recent Developments

During the second quarter, Alpine acquired a $14.6 million net lease retail property leased to investment-grade tenants Best Buy and Golf Galaxy. The company also originated a $6.1 million first mortgage construction loan with an initial yield of 11.5%. On the disposition front, Alpine sold two net lease properties for a total of $6.6 million, generating aggregate gains of $0.9 million.

For the first six months of 2024, Alpine's investment activities, including both property and structured investments, totaled $28.9 million at a weighted average initial yield of 9.8%. Disposition activities during the same period amounted to $20.2 million at a weighted average exit yield of 7.7%.

Geographic Diversification

The company's geographic diversification is a key strength, with properties located across 34 states. The top states by percentage of annualized base rent are New Jersey (12%), Texas (9%), and New York (8%). This diversification helps mitigate concentration risks and provides exposure to various regional economic drivers.

Industry Diversification

In terms of industry diversification, Alpine's portfolio is spread across 23 different sectors, with the largest exposures being dollar stores (14%), sporting goods (13%), pharmacy (13%), and home improvement (13%). This diversification helps reduce the company's reliance on any single industry or tenant, further enhancing the stability of its cash flows.

Conclusion

Looking ahead, Alpine's management team remains focused on executing its strategy of acquiring high-quality, net-leased properties and originating accretive commercial loan investments. The company's increased guidance for 2024 reflects its confidence in its ability to continue delivering strong operational and financial performance.

Overall, Alpine Income Property Trust is a well-diversified net lease REIT that has demonstrated its ability to generate consistent returns for shareholders. With a high-quality portfolio, investment-grade tenant base, and a healthy balance sheet, the company appears well-positioned to navigate the current market environment and capitalize on future growth opportunities.