Executive Summary / Key Takeaways

• Strategic Barbell Approach Delivering Growth: Alpine Income Property Trust (PINE) is executing a "barbell investment strategy," balancing stable cash flows from high-credit net lease properties with higher-yielding commercial loan originations, driving robust AFFO per share growth.
• Strong Q3 2025 Performance and Raised Outlook: The company reported a 4.5% increase in Q3 2025 AFFO per diluted share year-over-year and has raised its full-year 2025 FFO and AFFO guidance to $1.82-$1.85 per diluted share, reflecting significant investment activity.
• Differentiated Portfolio and Loan Program: PINE's portfolio features a growing concentration of investment-grade tenants like Lowe's and DICK'S Sporting Goods , while its high-yield commercial loan program, now a "permanent fixture," capitalizes on constrained bank lending and offers attractive risk-adjusted returns with embedded acquisition opportunities.
• Robust Liquidity and Shareholder Returns: With ample liquidity, a well-covered dividend yielding approximately 8.25%, and opportunistic share repurchases, PINE demonstrates disciplined capital management aimed at enhancing long-term shareholder value.
• Proactive Risk Management: Management is actively pruning non-core assets and addressing challenges from tenant bankruptcies and vacancies through strategic dispositions and re-leasing efforts, aiming to redeploy capital accretively.

Setting the Stage for PINE's Differentiated Growth

Alpine Income Property Trust, Inc. (PINE) operates as a real estate investment trust (REIT) focused on acquiring, owning, and managing a high-quality portfolio of commercial net lease properties across the United States. Established in 2019, PINE has strategically positioned itself within the competitive net lease sector by adopting a "barbell investment strategy." This approach involves a dual focus: securing stable, long-term cash flows from investment-grade tenants in resilient retail sectors, while simultaneously pursuing higher-yielding opportunities through commercial loan and investment originations. The company's external management by Alpine Income Property Manager, LLC, a subsidiary of CTO Realty Growth, Inc. (CTO), provides access to deep industry relationships and operational expertise.

PINE's strategy is particularly adept at navigating the current market landscape, which is characterized by fluctuating interest rates and evolving capital market dynamics. The company targets properties in industries favorably impacted by macroeconomic trends supporting consumer spending and those demonstrating resilience to e-commerce. This selective focus, coupled with its ability to pursue single properties or smaller portfolios often overlooked by larger REITs, forms the bedrock of its competitive positioning.

The Dual Engine: Income Properties and High-Yield Loans

PINE's investment thesis is powered by two distinct yet complementary segments: income properties and commercial loans and investments. The income properties segment remains the larger contributor to both identifiable assets and consolidated revenues, while the commercial loans segment has demonstrated explosive growth.

Income Properties: Enhancing Quality and Diversification

PINE's income property portfolio, comprising 128 net leased properties across 34 states and totaling 4.1 million square feet, boasts a high occupancy rate of 99.4% as of September 30, 2025. A key strategic initiative has been the continuous enhancement of portfolio quality. During the third quarter of 2025, PINE acquired two Lowe's ground leases for $21.1 million, with a weighted average remaining lease term (WALT) of 11.6 years. This acquisition elevated investment-grade rated Lowe's to PINE's largest tenant by Annualized Base Rent (ABR), surpassing DICK'S Sporting Goods , which now ranks second. Year-to-date through Q3 2025, property acquisitions totaled $60.8 million at a weighted average initial cap rate of 7.7% and a WALT of 13.6 years.

The company is also actively pruning its portfolio through strategic dispositions. In Q3 2025, PINE sold three assets for $6.2 million, including an Advance Auto Parts (AAP), a vacant theater, and a vacant convenience store. Year-to-date dispositions through Q3 2025 amounted to $34.3 million, with $29 million (excluding vacant properties) sold at a weighted average exit cap rate of 8.4%. Management aims to reduce Walgreens (WBA) exposure to below 5% of ABR and is actively marketing properties formerly leased by Party City and Cinemark in Reno to redeploy capital into higher-quality, income-producing assets. The successful renovation and re-leasing of a former Camping World (CWH) property to Bass Pro Shops resulted in a rent increase of approximately $40,000-$50,000 per month (nearly $0.5 million annually) and an extended lease term of 20 years.

Commercial Loans and Investments: A High-Yielding Growth Driver

The commercial loans and investments segment has emerged as a significant growth engine for PINE, demonstrating a remarkable 107.2% revenue growth for the nine months ended September 30, 2025, compared to the prior year. This segment's identifiable assets reached $108.7 million as of September 30, 2025, representing 17% of total assets. PINE leverages its deep relationships to originate high-yielding loans with strong sponsors, capitalizing on a market where traditional bank lending remains constrained.

In Q3 2025, PINE originated two new loans and upsized an existing one, totaling $28.6 million at a weighted average initial yield of 10.6%. Year-to-date through Q3 2025, loan commitments reached $74.8 million at a weighted average initial cash yield of 9.9%. A notable post-Q3 development was the origination of a first mortgage loan for a luxury residential development in Austin, Texas. This loan carries a total commitment of up to $29.5 million for Phase 1 (with $14.1 million funded at closing) and up to $31.8 million for Phase 2, bearing an initial interest rate of 17% (including 4% paid-in-kind interest). PINE anticipates funding the balance of Phase 1 by year-end 2025 and Phase 2 in early 2026. The company may also sell a senior tranche of this loan to reduce its net hold and enhance its yield. This loan program, initially opportunistic, has become a "permanent fixture" due to the flexibility and speed PINE offers to developers, often securing a right of first refusal on acquiring these assets, which provides a strategic pipeline for future property acquisitions.

Financial Fortitude and Strategic Capital Allocation

PINE's financial performance in the third quarter of 2025 underscored its strategic effectiveness. AFFO per diluted share grew by 4.5% year-over-year to $0.46. Total revenue for the quarter was $14.6 million, with lease income at $12.1 million and interest income from loan investments at $2.3 million. For the nine months ended September 30, 2025, total revenue increased to $43.6 million, up from $38.4 million in the prior year, driven by a $1.5 million increase in lease income and a $3.8 million surge in interest income from commercial loans.

Despite a net loss of $1.4 million in Q3 2025 and $4.5 million year-to-date, primarily due to increased impairment provisions and lower gains on asset dispositions compared to the prior year, PINE's operational cash flow remains strong.

The company reported $6.6 million in cash and cash equivalents as of September 30, 2025, including $5.5 million in restricted cash. PINE maintains robust liquidity, with $60.2 million available on its $250 million Credit Facility and $90.4 million remaining under its 2022 ATM Program.

Management is committed to disciplined capital allocation, utilizing share repurchases (546,390 shares for $8.8 million year-to-date 2025 at an average price of $16.07) when the stock trades at a discount to NAV, and reinvesting proceeds from loan maturities and asset sales. The company has also proactively managed its debt, fixing interest rates on over 80% of its debt through interest rate swaps, resulting in a weighted average interest rate of 4.1% at year-end 2024.

Competitive Edge in a Shifting Landscape

PINE's competitive positioning is carved out by its strategic focus and operational agility, particularly against larger net lease REITs like Realty Income Corporation , NetSTREIT Corp. (NTST), and Agree Realty Corporation (ADC). While PINE may not match the sheer scale of Realty Income (O), its ability to target single properties or smaller portfolios allows it to pursue transactions that larger peers often overlook. This niche focus, combined with a "barbell approach" to investment, provides a differentiated value proposition.

PINE's tenant mix, with investment-grade rated Lowe's and DICK'S Sporting Goods (DKS) now its two largest tenants, offers investors exposure to high-quality credits that are less common among other net lease REITs. This focus on strong credit profiles enhances the stability of its income stream. Furthermore, PINE's commercial loan program provides a distinct competitive advantage. In a market where traditional banks are "shrinking again" for certain development projects, PINE's flexibility and speed in originating short-duration, high-yielding loans (such as the 17% initial yield on the Austin residential development loan) allow it to capture opportunities that opportunity funds or credit funds might not pursue due to their longer duration requirements. This strategy not only generates superior unlevered yields but also provides PINE with a right of first refusal on acquiring these underlying assets, creating a proprietary pipeline for future property acquisitions.

Operational Differentiators and Strategic Methodologies

While PINE does not detail proprietary "technological differentiators" in the traditional sense of hardware or software, its competitive advantage is rooted in its sophisticated operational and strategic methodologies for investment and capital deployment. The company employs a rigorous methodology for evaluating targeted investments, encompassing detailed assessments of real estate attributes (location, market demographics), tenant creditworthiness and market positioning, and broader market-specific conditions (job/population growth, local economy). This analytical rigor minimizes risk and optimizes asset selection.

A key operational differentiator is PINE's ability to provide flexible and rapid financing solutions through its commercial loan program. This agility allows it to meet the capital needs of high-quality sponsors with strong real estate projects, particularly when traditional banking channels are slow or constrained. The embedded right of first refusal in many of these loan agreements is a strategic mechanism that effectively transforms a lending relationship into a potential future acquisition opportunity, enhancing PINE's long-term growth prospects without immediate capital commitment for property ownership. These strategic and operational approaches, rather than specific technologies, form PINE's competitive moat, enabling it to achieve superior risk-adjusted returns and maintain a differentiated market position.

Outlook, Guidance, and Mitigated Risks

PINE's management has expressed confidence in the company's trajectory, raising its full-year 2025 FFO and AFFO guidance to a new range of $1.82 to $1.85 per diluted share, up from the previous $1.74 to $1.77. This upward revision is primarily driven by the elevated investment activity in both property acquisitions and loan originations. Key assumptions underpinning this guidance include continued strong investment volume, strategic dispositions, and the benefits of opportunistic share repurchases and interest rate swaps.

The company is proactively addressing potential headwinds, such as the Party City (PRTY) bankruptcy and the vacant Cinemark (CNK) theater in Reno, which collectively represented an estimated $0.08 per share impact on 2025 FFO and AFFO. Management is actively pursuing sales of these vacant properties, with the Reno theater already under contract, to eliminate carrying costs and redeploy capital accretively. While At Home (HOME) filed for bankruptcy in June 2025, PINE's two leased properties paid July rent and were not on the initial closure list, with management confident in their strong operational performance and desirable locations. PINE's dividend, yielding approximately 8.25% and well-covered by a Q3 2025 AFFO payout ratio of 62%, remains a core component of its shareholder return strategy.

The company intends to distribute its taxable income to avoid corporate taxes, while also retaining capital for accretive reinvestment opportunities.

Conclusion

Alpine Income Property Trust (PINE) presents a compelling investment narrative, characterized by a disciplined "barbell investment strategy" that effectively balances stable income from high-quality net lease properties with robust, high-yielding opportunities in commercial real estate loans. The company's proactive portfolio management, evidenced by strategic acquisitions of investment-grade tenants like Lowe's (LOW) and targeted dispositions, coupled with the impressive growth and strategic advantages of its loan program, positions it for sustained earnings expansion. PINE's strong financial performance, ample liquidity, and commitment to a well-covered, increasing dividend underscore its dedication to shareholder value.

Despite a dynamic economic environment and specific tenant challenges, PINE's management has demonstrated an ability to adapt and capitalize on market dislocations, leveraging its operational methodologies to secure attractive risk-adjusted returns. The increased 2025 guidance reflects this momentum, suggesting a positive outlook for investors seeking a yield-driven growth story within the net lease REIT sector. PINE's differentiated approach to asset selection and capital deployment, particularly its unique loan origination capabilities, provides a distinct competitive edge that should continue to drive performance.