ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY (continued)

(Unaudited, in thousands, except per share data)

For the six months ended June 30, 2022:


	Common Stock at Par		Additional Paid-in Capital		Retained Earnings (Dividends in Excess of Net Income)		Accumulated Other Comprehensive Income		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance January 1, 2022	$	114	$	200,906	$	(6,419)	$	1,922	$	196,523	$	31,379	$	227,902
Net Income		—		—		15,088		—		15,088		2,172		17,260
Stock Issuance to Directors		—		158		—		—		158		—		158
Stock Issuance, Net of Equity Issuance Costs		5		7,642		—		—		7,647		—		7,647
Cash Dividends ($0.54 per share)		—		—		(6,368)		—		(6,368)		(920)		(7,288)
Other Comprehensive Income		—		—		—		9,077		9,077		—		9,077
Balance June 30, 2022	$	119	$	208,706	$	2,301	$	10,999	$	222,125	$	32,631	$	254,756

~~(Unaudited)~~For the six months ended June 30, 2021:

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Cash Flow from Operating Activities:

Net Income

$
14,632

$
875,848
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Depreciation and Amortization

2,023,330

1,201,503
Amortization of Intangible Assets and Liabilities to Lease Income

(18,724)

(59,657)
Loan Cost Amortization included in Interest Expense

44,404

—
Amortization of Deferred Expenses to Lease Income

—

75,658
Non-Cash Compensation

36,991

114,907
Decrease (Increase) in Assets:

Straight-Line Rent Adjustment

(322,920)

(108,684)
Deferred Expenses

—

56,988
Other Assets

(310,457)

120,072
Increase (Decrease) in Liabilities:

Accounts Payable, Accrued Expenses, and Other Liabilities

677,123

(164,597)
Prepaid Rent and Deferred Revenue

666,616

(89,727)
Net Cash Provided By Operating Activities

2,810,995

2,022,311
Cash Flow from Investing Activities:

Acquisition of Real Estate

(47,379,161)

—
Net Cash Used In Investing Activities

(47,379,161)

—
Cash Flow from Financing Activities:

Draws on Credit Facility

57,000,000

—
Repurchase of Common Stock

(592,356)

—
Net Transactions with Consolidated-Tomoka Land Co.

—

(1,978,880)
Dividends Paid

(1,822,935)

—
Net Cash Provided By (Used In) Financing Activities

54,584,709

(1,978,880)
Net Increase in Cash

10,016,543

43,431
Cash, Beginning of Year

12,341,978

8,258
Cash, End of Period

$
22,358,521

$
51,689


	Common Stock at Par		Additional Paid-in Capital		Retained Earnings (Dividends in Excess of Net Income)		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity		Noncontrolling Interest		Total Equity
Balance January 1, 2021	$	75	$	132,878	$	(5,713)	$	(481)	$	126,759	$	22,334	$	149,093
Net Income		—		—		744		—		744		113		857
Stock Issuance to Directors		—		139		—		—		139		—		139
Stock Issuance, Net of Equity Issuance Costs		38		64,961		—		—		64,999		—		64,999
Operating Units Issued		—		—		—		—		—		8,010		8,010
Cash Dividends ($0.49 per share)		—		—		(4,720)		—		(4,720)		(599)		(5,319)
Other Comprehensive Income		—		—		—		661		661		—		661
Balance June 30, 2021	$	113	$	197,978	$	(9,689)	$	180	$	188,582	$	29,858	$	218,440

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

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF CASH FLOWS ~~(Continued)~~

~~(Unaudited)~~(Unaudited, in thousands)


	Six Months Ended
	June 30, 2022		June 30, 2021
Cash Flow From Operating Activities:
Net Income	$	17,260	$	857
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		11,366		6,606
Amortization of Intangible Lease Assets and Liabilities to Lease Income		(170)		(91)
Amortization of Deferred Financing Costs to Interest Expense		257		149
Gain on Disposition of Assets		(15,637)		—
Non-Cash Compensation		157		152
Decrease (Increase) in Assets:
Straight-Line Rent Adjustment		(528)		(264)
COVID-19 Rent Repayments		45		385
Other Assets		278		46
Increase (Decrease) in Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities		595		906
Prepaid Rent and Deferred Revenue		(371)		120
Net Cash Provided By Operating Activities		13,252		8,866
Cash Flow From Investing Activities:
Acquisition of Real Estate, Including Capitalized Expenditures		(110,062)		(65,930)
Proceeds from Disposition of Assets		71,446		—
Net Cash Used In Investing Activities		(38,616)		(65,930)
Cash Flow from Financing Activities:
Proceeds from Long-Term Debt		162,500		85,621
Payments on Long-Term Debt		(129,000)		(80,809)
Cash Paid for Loan Fees		(434)		(838)
Proceeds From Stock Issuance, Net		7,647		64,999
Dividends Paid		(7,288)		(5,319)
Net Cash Provided By Financing Activities		33,425		63,654
Net Decrease in Cash and Cash Equivalents		8,061		6,590
Cash and Cash Equivalents, Beginning of Period		9,497		1,894
Cash and Cash Equivalents, End of Period	$	17,558	$	8,484

Reconciliation of Cash to the Consolidated Balance Sheets:
Cash and Cash Equivalents	$	2,427	$	6,294
Restricted Cash		15,131		2,190
Total Cash	$	17,558	$	8,484

~~Supplemental Disclosure of Cash Flows:~~

Interest totaling approximately $164,000 was paid during the three months ended March 31, 2020. No interest was paid during the three months ended March 31, 2019. No interest was capitalized during the three months ended March 31, 2020 or 2019.

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

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ALPINE INCOME PROPERTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited, in thousands)


	Six Months Ended
	June 30, 2022		June 30, 2021
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	$	3,352	$	1,105

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Unrealized Gain on Cash Flow Hedge	$	9,077	$	661
Right-of-Use Assets and Operating Lease Liability	$	1,831	$	—
Operating Units Issued in Exchange for Real Estate	$	—	$	8,010
Underwriting Discounts on Capital Raised Through Issuance of Common Stock	$	—	$	2,866
Assumption of Mortgage Note Payable	$	—	$	30,000

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

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NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BUSINESS AND ORGANIZATION

BUSINESS

Alpine Income Property Trust, Inc. (the “Company” or “PINE”) is a ~~newly organized~~ real estate company that owns and operates a high-quality portfolio of ~~single-tenant~~ 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 ~~29 single-tenant, primarily~~143 net leased ~~retail and office~~ properties located in 1998 markets in 1335 states. ~~Twenty seven of the 29~~The properties in our portfolio ~~representing approximately 85%~~are primarily subject to long-term, triple-net leases, which generally require the tenant to pay all of ~~our portfolio’s annualized base rent (as of March 31, 2020), are leased on a triple-net basis.~~the property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance and certain capital expenditures.

The Company has no0 employees and is externally managed by Alpine Income Property Manager, LLC, a Delaware limited liability company and a wholly owned subsidiary of ~~Consolidated-Tomoka Land Co.~~CTO Realty Growth, Inc. (our “Manager”). ~~Consolidated-Tomoka Land Co. (NYSE American:~~CTO Realty Growth, Inc. (NYSE: CTO) is a ~~Florida~~Maryland corporation that is a publicly traded diversified real estate ~~operating company~~investment trust (“REIT”) and the sole member of our Manager (“CTO”).

~~COVID-19 PANDEMIC~~

In March 2020, the agency of the United Nations, responsible for international public health, declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has caused significant volatility in the U.S. and international markets and, in many industries, business activity has virtually shut down entirely. There is significant uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies. As a result, the Company is not yet able to determine the full impact of the COVID-19 Pandemic on its operations and therefore, the potential as to whether or not such impact will be material.

Our results of operations and cash flows for the three months ended March 31, 2020 were not materially impacted by the COVID-19 Pandemic. An assessment of the current or identifiable potential financial and operational impacts on the Company subsequent to March 31, 2020 as a result of the COVID-19 Pandemic are as follows:

Of the 29 income properties in the Company’s portfolio, 24 properties have remained open since the onset of the COVID-19 Pandemic, with 11 of those properties operating on a limited basis. The 24 properties represent approximately 78% of our annualized base rent.

The Company was contacted by certain of its tenants who are seeking rent relief through possible deferrals or other potential modifications of lease terms, beginning with the April 2020 rent. Tenants seeking rent relief for April 2020 represented approximately 38% of the Company’s annualized base rent as of March 31, 2020. Of the tenants that have not paid rent for April 2020, approximately 34%, representing approximately 13% of the Company’s total April rent, have reached an agreement on either a deferral arrangement or other accommodation. In all instances, the Company is not relinquishing any of its contractual rights under its lease agreements.

The Company believes certain of the programs available under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) may provide tenants with the ability to obtain proceeds from loans provided by the federal government which could provide liquidity that would allow the tenant to pay its near-term rent. However, no assurances can be given that the tenants will seek to access or will receive funds from these programs or will be able to use the proceeds to pay their rent in the near-term or otherwise.

~~Table of Contents~~

When the pandemic was declared, given the uncertainties created by the COVID-19 Pandemic and the impact on the capital markets, the U.S. economy, and PINE’s tenants, the Company temporarily suspended its activities directed at identifying additional acquisition opportunities. In connection with that decision, the Company believed it prudent and necessary to withdraw its previously provided guidance for the full year of 2020, including its targeted level of acquisitions totaling up to $120 million. The Company has not provided any updated guidance. The Company notes, however, that depending upon the duration and severity of the COVID-19 Pandemic, the Company could ultimately reach the targeted level of acquisitions in 2020, although no assurances can be made regarding the likelihood or timing of attaining that level of acquisitions, and should such targets be reached, the timing of such would have an applicable impact on full year results of operations, and the related performance measurements of Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”).

Given uncertainty surrounding the depth, duration, and geographic impact of the COVID-19 Pandemic, as a precautionary measure intended to support the Company’s liquidity, the Company, in March 2020, drew $20 million of available capacity on its $100 million senior unsecured revolving Credit Facility (hereinafter defined in Note 8, “Long-Term Debt”). As a result, the Company, as of March 31, 2020, has approximately $22 million in cash on hand with approximately $57 million outstanding on the Credit Facility. Just prior to the $20 million in draws in March 2020, the Company had approximately $2 million in cash, as approximately $10.3 million of the $12.3 million in cash as of December 31, 2019 had been utilized for both general corporate and working capital purposes, as well as property acquisitions subsequent to December 31, 2019.

The total borrowing capacity on the Credit Facility, based on the assets currently in the borrowing base, is approximately $87 million, and as such the Company has the ability to draw an additional $30 million on the Credit Facility. Subsequent to March 31, 2020, if we were to add the first quarter 2020 acquisitions to the borrowing base, we anticipate that the total borrowing base will increase the borrowing capacity to the $100 million commitment on the Credit Facility. Pursuant to the terms of the Credit Facility, any property in the borrowing base with a tenant that is more than 60 days past due on its contractual rent obligations would be automatically removed from the borrowing base and the Company’s borrowing capacity would be reduced. The Company believes that where the Company and its tenants have agreed to lease modifications pertaining to rent, such as the deferral of current rent to be paid later in 2020, under the terms of the Credit Facility, such tenant would not be past due on its rental obligation if it adheres to such modification, and thus any of the Company’s applicable properties would not be required to be removed from the borrowing base.

As a result of the outbreak of the COVID-19 Pandemic, the federal government and the State of Florida issued orders encouraging everyone to remain at their residence and not go into work. In response to these orders and in the best interest of our Manager’s employees and our directors, our Manager implemented significant preventative measures to ensure the health and safety of its employees and our Board of Directors (the “Board”), including: i) conducting all meetings of our Board and Committees of the Board telephonically or via a visual conferencing service, permitting its employees to work from home at their election, enforcement of appropriate social distancing practices in our Manager’s office, encouraging its employees to wash their hands often and providing hand sanitizer throughout their office, requiring its employees who do not feel well, in any capacity, to stay at home, and requiring all third-party delivery services (e.g. mail, food delivery, etc.) to complete their service outside the front door of its offices.

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”) of shares of its common stock (the “Offering”) as well as a concurrent private placement of shares of common stock to CTO. Net proceeds from the Offering and the concurrent CTO Private Placement (defined below) were used to purchase 15 single-tenant properties from CTO. Additionally, CTO contributed to Alpine Income Property OP, LP, the Company’s operating partnership (the “Operating Partnership”), five additional single-tenant properties in exchange for operating partnership units (“OP Units”).

~~Table of Contents~~

The price per share paid in the Offering and the concurrent private placement was $19.00 (the “IPO Price”). The Offering raised $142.5 million in gross proceeds from the issuance of 7,500,000 shares of our common stock. We also raised $7.5 million from the concurrent private placement to CTO from the issuance of 394,737 shares of our common stock (“CTO Private Placement”). Included in the ~~$142.5 million~~ Offering was CTO’s purchase of 421,053 shares of our common stock for $8.0 million, representing a cash investment by CTO of $15.5 million. ~~Approximately~~A total of $125.9 million of proceeds from the Offering were utilized to acquire 15 properties in our initial ~~portfolio.~~portfolio from CTO. The remaining ~~five~~5 properties in our initial portfolio were contributed by CTO in exchange for 1,223,854 ~~OP Units~~units of the ~~Operating Partnership~~operating partnership (the “OP Units”) for a value of ~~approximately~~ $23.3 million based on the IPO Price. As of June 30, 2022, eight of the properties included within our initial portfolio have been sold. Subsequent to June 30, 2022, one additional property included within our initial portfolio was sold. The Company incurred a total of ~~approximately~~ $12.0 million of transaction costs, which included underwriting fees of ~~approximately~~ $9.4 million. Upon completion of the Offering, the ~~concurrent~~ CTO Private Placement, and the other transactions executed at the time of our listing on the New York Stock Exchange (the “NYSE”) under the symbol “PINE” (collectively defined as the “Formation Transactions”), CTO owned ~~approximately~~ 22.3% of our outstanding common stock (assuming the OP Units issued to CTO in the Formation Transactions are exchanged for shares of our common stock on a ~~one-for-one~~1-for-one basis).

We conduct the substantial majority of our operations through ~~the Operating Partnership.~~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 ~~March 31, 2020,~~June 30, 2022, we have a total ownership interest in the Operating Partnership of ~~approximately 86.6%~~87.4%, with CTO holding, directly and indirectly, a ~~13.4%~~9.1% ownership interest in the Operating Partnership. The remaining 3.5% ownership interest is held by an unrelated third party in connection with the issuance of 479,640 OP Units valued at $9.0 million in the aggregate, or $18.85 per unit. The issuance of 479,640 OP Units includes (i) 424,951 OP Units issued as consideration for the portfolio of 9 net lease properties acquired on June 30, 2021 and (ii) 54,689 OP Units issued as consideration for the acquisition of 1 net lease property on July 12, 2021 (see Note 3, “Property Portfolio”). 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~~Board of ~~directors~~Directors (the “Board”) manages our business and affairs.

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The Company ~~intends to elect~~has elected to be taxed as a ~~real estate investment trust (“REIT”)~~REIT for U.S. federal income tax purposes ~~commencing with its short taxable year beginning on November 26, 2019 and ending on December 31, 2019 upon~~under the ~~filing~~Internal Revenue Code of ~~our tax return for such taxable year, which will be filed on or before its due date.~~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, without regard to the dividends paid deduction or net capital gain, to its stockholders (which ~~is computed and which~~ does not necessarily equal net income as calculated in accordance with generally accepted accounting principles). As a REIT, the Company ~~will~~is generally not be subject to U.S. federal corporate income tax to the extent of its distributions to stockholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income at regular corporate rates and generally will not be permitted to qualify for treatment as a REIT for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the 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. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION~~

~~BASIS OF PRESENTATION~~

For the periods prior to November 26, 2019, the accompanying combined financial statements of Alpine Income Property Trust, Inc. Predecessor (the “Predecessor”) do not represent the financial position and results of operations of one legal entity, but rather a combination of entities under common control that have been “carved out” from CTO’s consolidated financial statements. Historically, financial statements of the Predecessor have not been prepared as it has not operated separately from CTO. These combined financial statements reflect the revenues and expenses of the Predecessor and include certain material assets and liabilities of CTO that are specifically identifiable and generated through, or associated with, an in-place net lease, which have been reflected at CTO’s historical basis.

~~Table of Contents~~

For periods subsequent to November 26, 2019, the accompanying consolidated financial statements represent the consolidated statements of PINE together with our consolidated subsidiaries. As a result of the Company’s acquisitions of the initial portfolio from CTO, the consolidated financial statements subsequent to November 26, 2019 are presented on a new basis of accounting pursuant to Accounting Standards Codification (“ASC”) 805-10, ~~Business Combinations~~.

The accompanying unaudited consolidated and combined financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited consolidated and combined financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties, and other matters. The unaudited consolidated and combined financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company and the results of operations for the interim periods. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020.

The combined financial statements for the periods prior to November 26, 2019 include an allocation of general and administrative expenses to the Predecessor from CTO. In addition, general and administrative expenses include an allocation of the costs of certain CTO corporate functions, including executive oversight, treasury, finance, human resources, tax compliance and planning, internal audit, financial reporting, information technology and investor relations. General and administrative expenses (including stock-based compensation) represent a pro rata allocation of costs from CTO based on the revenues of the Predecessor as a percentage of CTO’s total revenue. The Company believes the allocation methodology for general and administrative expenses is reasonable. However, the allocated general and administrative expense presented in our combined statements of operations for historical periods does not necessarily reflect what our general and administrative expenses will be as a stand-alone public company for future reporting periods. Additionally, most of the Predecessor entities included in CTO’s financial statements did not have separately established bank accounts for the periods presented, and most cash transactions were historically transacted through bank accounts owned by CTO. The combined statements of cash flows for the periods presented were prepared as if operating, investing, and financing transactions had been transacted through separate bank accounts of the Predecessor. The combined financial statements include, on a carve-out basis, the historical balance sheets and statements of operations and cash flows attributed to the Predecessor.

~~PRINCIPLES OF CONSOLIDATION~~

For periods subsequent to November 26, 2019, 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 inter-company balances and transactions have been eliminated in the consolidated financial statements. For periods prior to November 26, 2019, the combined financial statements include, on a carve-out basis, the historical balance sheets and statements of operations and cash flows of the Predecessor.

NOTE 3.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with ~~GAAP~~accounting principles generally accepted in the United States of America (“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.

~~Because of, among~~Among other factors, ~~the~~ fluctuating market conditions that ~~currently~~can exist in the national real estate markets and the volatility and uncertainty in the financial and credit markets make it is possible that the estimates and assumptions, most notably those related to ~~the Predecessor’s~~PINE’s investment in ~~income~~ properties, could change materially due to ~~the~~ continued volatility ofin the real estate and financial markets, or as a result of a significant dislocation in those markets.

~~Table of Contents~~

~~REAL ESTATE~~

Real estate, which is primarily comprised of the income properties in our portfolio, is stated at cost, less accumulated depreciation and amortization. Such income properties are depreciated on a straight-line basis over their estimated useful lives. Renewals and betterments are capitalized to the applicable income property accounts. The cost of maintenance and repairs is expensed as incurred. The cost of property retired or otherwise disposed of, and the related accumulated depreciation or amortization, are removed from the accounts, and any resulting gain or loss is recorded in the statement of operations. The amount of depreciation of real estate, exclusive of amortization related to intangible assets, recognized for the three months ended March 31, 2020 and 2019 was approximately $1.3 million and $773,000, respectively.

LONG-LIVED ASSETS

The Company follows Financial Accounting Standards Board (“FASB”) ~~ASC~~Accounting Standards Codification (“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, 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, ~~an income~~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.

PURCHASE ACCOUNTING FOR ACQUISITIONS OF REAL ESTATE SUBJECT TO A LEASE

~~Upon acquisition of~~Investments in real estate ~~the Company determines~~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 ~~transaction is~~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 ~~combination, which~~when there is ~~accounted for under~~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 ~~method,~~does not include a substantive process in the form of an acquired workforce or an ~~acquisition~~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 ~~assets. For both types~~the cost basis of ~~transactions,~~ the ~~Company recognizes and measures identifiable~~acquired assets, acquired, liabilities assumed and any noncontrolling interests in the acquiror based on their relative fair values. For business combinations, the Company recognizes and measures goodwill or gain from a bargain purchase, if applicable, and acquisition-relatedwhile transaction costs ~~in the periods in which the costs~~for acquisitions that are ~~incurred. For~~deemed to be acquisitions of ~~assets, acquisition-related costs~~a business are expensed as incurred. Improvements and replacements are capitalized onwhen they extend the ~~Company's consolidated balance sheets. If~~useful life or improve the ~~Company acquires real estate and simultaneously enters into a new lease~~productive capacity of the ~~real estate, the acquisition will be accounted for~~asset. Costs of repairs and maintenance are expensed as ~~an asset acquisition.~~incurred.

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In accordance with ~~ASC 805-10,~~ ~~Business Combinations~~,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.

The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and tenant improvements based on the determination of the fair values of these assets.

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 (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease, including the probability of renewal periods.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 the management believes that it is likely that the tenant will renew the lease upon expiration, in which case ~~both~~ the Company ~~and the Predecessor amortize~~amortizes the value attributable to the renewal over the renewal period.

~~Table of Contents~~

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases ~~exclusive of the value of above-market~~ and ~~below-market in-place leases, is~~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. ~~The value~~

SALES OF REAL ESTATE

When properties are disposed of, ~~tenant relationships is reviewed on individual transactions to determine if future value was derived~~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 ~~acquisition.~~dispositions are reflected in net income within gain 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.

~~INCOME~~ PROPERTY LEASE REVENUE

The rental arrangements associated with the Company’s ~~income~~ 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~~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 with the tenant and industry of the tenant, and a review of specifically identified accounts using judgment. As of ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019, no~~2021, the Company’s allowance for doubtful accounts ~~was required.~~totaled $0.3 million.

~~SALES TAX~~OPERATING LAND LEASE EXPENSE

~~Sales tax collected on~~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 ~~payments~~expense is recognized ason a ~~liability~~straight-line basis over the term of the lease and is included in real estate expenses in the accompanying consolidated ~~balance sheets when collected. The liability is reduced at the time payment is remitted to the applicable taxing authority.~~statements of operations.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents ~~includes~~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 ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019~~2021 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.

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RESTRICTED CASH

~~EARNINGS PER COMMON SHARE~~

Restricted cash totaled $15.1 million as of June 30, 2022 of which $0.7 million is being held in a capital replacement and leasing commissions reserve account in connection with our financing of 6 properties and $14.4 million is being held in various escrow accounts to be reinvested through the like-kind exchange structure into other income properties.

~~Basic~~

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY

The Company accounts for its cash flow hedging derivatives in accordance with FASB ASC Topic 815-20, Derivatives and Hedging. Depending upon the hedge’s value at each balance sheet date, the derivatives are included in either other assets or accounts payable, accrued expenses, and other liabilities on the accompanying consolidated balance sheet at its fair value. On the date each interest rate swap was entered into, the Company designated the derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt liabilities.

The Company documented the relationship between the hedging instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transactions. At the hedges’ inception, the Company assessed whether the derivatives that are used in hedging the transactions are highly effective in offsetting changes in cash flows of the hedged items and will continue to do so on a quarterly basis.

Changes in fair value of the hedging instruments that are highly effective and designated and qualified as cash-flow hedges are recorded in other comprehensive income and loss, until earnings ~~per common share is computed by dividing net income for the period~~are affected by the ~~weighted average number~~variability in cash flows of ~~shares~~the designated hedged items (see Note 10, “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 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 mortgage note payable 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 ~~for the period. Diluted earnings per common share~~through maturity. Since such amounts are estimates that are based on ~~the assumption~~limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the ~~OP Units issued to CTO in~~disclosed value of any financial instrument could be realized by immediate settlement of the ~~Formation Transactions are exchanged for shares of our common stock on a one-for-one basis.~~instrument.

~~INCOME TAXES~~FAIR VALUE MEASUREMENTS

The ~~Company intends~~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 ~~elect~~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 ~~be taxed as a REIT for U.S. federal income tax purposes commencing with its short taxable year beginning on November 26, 2019~~measure fair value, two of which are considered observable and ~~ending on December 31, 2019.~~one that is considered unobservable. The ~~Company believes that, commencing with such short taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under~~following describes the U.S. federal income tax laws. The short year tax return will be filed on or before its due date. The Company intends to continue to operate in such a 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. Thesethree 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

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participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

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.

~~STOCK-BASED COMPENSATION~~

The Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans. The purpose of the Equity Incentive Plans is to provide equity incentive opportunities to members of the Manager’s management team and employees who perform services for the Company, the Company’s independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to the Manager. The Equity Incentive Plans provide for grants of stock options, stock appreciation rights (“SARs”), stock awards, restricted stock units, cash awards, dividend equivalent rights, other equity-based awards, including long-term incentive plan (“LTIP”) units, and incentive awards. The Individual Plan is intended to provide a means through which the Company’s directors, officers, employees, consultants and advisors of the Company and its affiliates, as well as employees of the Manager and its affiliates who are providing services to the Company and its affiliates, can acquire and maintain an equity interest in the Company or be paid incentive compensation. The Manager Plan is intended to provide a means through which the Manager and its affiliates can acquire and maintain an equity interest in the Company, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Company’s stockholders.

A total of 684,494 shares of our common stock have been authorized for issuance under the Equity Incentive Plans. If an award granted under the Equity Incentive Plans expires, is forfeited or terminates, the shares of common stock subject to any portion of the award that expires, is forfeited or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. Shares of stock (i) surrendered or withheld in payment of the exercise price or taxes related to an award and (ii) covered by a SAR (without regard to the number of shares actually issued upon the exercise of such SAR) will not again be available for award under the Equity Incentive Plans. Unless previously terminated by the Board, no new award may be granted under the Equity Incentive Plans after November 18, 2029. The maximum aggregate compensation, including cash compensation and the grant date fair value of awards granted under the Individual Plan, to a non-employee director will not exceed $300,000 in any single calendar year.

Compensation cost is recognized on a straight-line basis over the vesting period and is included in general and administrative expenses in the Company’s consolidated and combined statements of operations. Award forfeitures, if any, are accounted for in the period in which they occur.

For the periods prior to November 26, 2019, Predecessor’s stock-based compensation expense, included in general and administrative expenses in the combined statements of operations for the three months ended March 31, 2019, reflected an allocation of a portion of the stock compensation expense of CTO for the applicable period.

CONCENTRATION OF CREDIT RISK

~~Certain of the~~There were no tenants ~~in the portfolio of 29 single-tenant properties~~who accounted for more than 10% of total revenues during the ~~three~~six months ended ~~March 31, 2020 and 2019.~~

~~During the three months ended March 31, 2020, the properties leased to~~June 30, 2022. Wells Fargo Bank, NA ~~and Hilton Grand Vacations represented approximately 22% and 14%~~accounted for 15% of total revenues ~~respectively. During~~during the ~~three~~six months ended ~~March 31, 2019, the properties leased to Wells Fargo Bank, NA and Hilton Grand Vacations represented approximately 28% and 18% of total revenues, respectively.~~June 30, 2021.

As of ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019, approximately 26%~~2021, 21% and ~~29%~~20%, respectively, of the Company’s real estate portfolio, based on square footage, was located in the State of Florida. As of March 31, 2020 and December 31, 2019, approximately 20% and 24%, respectively, of the Company’s real estate portfolio, based on square footage, was located in the State of Oregon. Additionally, as of March 31, 2020, individually more than 10% of the Company’s real

~~Table of Contents~~

~~estate portfolio, based on square footage, was located in the~~ state of North Carolina. As of December 31, 2019, individually more than 10% of the Company’s real estate portfolio, based on square footage, was located in the states of Georgia and North Carolina. Uncertainty of the duration of a prolonged real estate and economic downturn could in any or all of these geographic areas have an adverse impact on the Company’s real estate values.Texas.

~~RECENTLY ISSUED ACCOUNTING STANDARDS~~

~~Lease Modifications.~~ In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 Pandemic. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and, instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to lease concessions related to the COVID-19 Pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We are currently evaluating the impact of this guidance and whether we will make the permitted election for lease concessions such as rent deferrals for the quarter ended June 30, 2020.

~~ASC Topic 842, Leases.~~ In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, which requires entities to recognize assets and liabilities that arise from financing and operating leases and to classify those finance and operating lease payments in the financing or operating sections, respectively, of the statement of cash flows pursuant to FASB ASC Topic 842, ~~Leases. The amendments in this update are effective for annual reporting periods beginning after December 15, 2018.~~

~~During the Company’s and Predecessor’s evaluation of FASB ASC Topic 842,~~ ~~Leases, the following practical expedients and accounting policies with respect to ASC 842 were elected and/or adopted effective January 1, 2019:~~

The Company, as lessor, will not reassess (i) whether any expired or existing contracts are or contain leases (ii) lease classification for any expired or existing leases or (iii) initial direct costs for any expired or existing leases.

The Company, as lessor, will not separate nonlease components from lease components and, instead, will account for each separate lease component and the nonlease components associated with that lease as a single component if the nonlease components otherwise would be accounted for under ASC Topic 606. The primary reason for this election is related to instances where common area maintenance is, or may be, a component of base rent within a lease agreement.

NOTE ~~4. INCOME~~3. PROPERTY PORTFOLIO

As of ~~March 31, 2020,~~June 30, 2022, the Company’s ~~income~~ property portfolio consisted of ~~29 single-tenant~~143 properties with total square footage of ~~approximately 1.1~~3.3 million.

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

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


	Three Months Ended
	March 31, 2020		March 31, 2019
	The Company ($000's)		Predecessor ($000's)
Leasing Revenue

					Three Months Ended				Six Months Ended
					June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Lease Income
Lease Payments	$	3,812	$	2,768	$	10,160	$	5,986	$	19,891	$	11,432
Variable Lease Payments		359		191		1,120		611		2,188		1,055
Total Leasing Revenue	$	4,171	$	2,959
Total Lease Income					$	11,280	$	6,597	$	22,079	$	12,487

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Minimum Future Rental Receipts. Minimum future rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to ~~March 31, 2020,~~June 30, 2022, are summarized as ~~follows:~~ follows (in thousands):



Year Ending December 31,	Amounts ($000's)		Amounts
Remainder of 2020	$	11,942
2021		16,046
2022		16,229
Remainder of 2022			$	19,597
2023		16,382		38,681
2024		15,899		37,621
2025 and thereafter (cumulative)		64,868
2025				36,069
2026				35,202
2027				31,916
2028 and Thereafter (Cumulative)				117,851
Total	$	141,366	$	316,937

See Note 15, “Subsequent Events” for the Company’s disclosure related to the potential cash flow impact as well as Note 3, “Summary of Significant Accounting Policies” for the accounting treatment of potential lease modifications associated with tenant rent relief requests due to the COVID-19 Pandemic.

~~2020~~2022 Activity. During the ~~three~~six months ended ~~March 31, 2020,~~June 30, 2022, the Company acquired ~~nine single-tenant income~~35 properties for a combined purchase price of ~~approximately $46.8~~$109.1 million, or ~~an acquisition~~a total cost of ~~approximately $47.0~~$110.0 million including capitalized acquisition costs. The properties are located in 17 states, leased to 12 different tenants, and had a weighted average remaining lease term of 9.4 years at the time of acquisition. Of the total acquisition cost, ~~approximately $11.9~~$31.1 million was allocated to land, ~~approximately $29.3~~$67.0 million was allocated to buildings and improvements, ~~approximately $6.9~~$13.1 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and ~~approximately $1.1~~$1.2 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was ~~approximately 11.2~~9.7 years at acquisition. ~~No income~~

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During the six months ended June 30, 2022, the Company sold 5 properties for an aggregate sales price of $72.8 million, generating aggregate gains on sale of $15.6 million. NaN property was classified as held for sale as of June 30, 2022.

2021 Activity. During the six months ended June 30, 2021, the Company acquired 23 properties for a combined purchase price of $103.2 million, or a total cost of $103.8 million including capitalized acquisition costs. Of the total acquisition cost, $34.1 million was allocated to land, $57.5 million was allocated to buildings and improvements, $13.9 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $1.5 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 8.3 years at acquisition. NaN properties were ~~disposed of~~sold during the ~~three~~six months ended ~~March 31, 2020.~~June 30, 2021.

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The ~~single-tenant net lease income properties acquired during~~following table presents the ~~three months ended March~~carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at June 30, 2022 and December 31, ~~2020~~2021 (in thousands):


	June 30, 2022				December 31, 2021
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash and Cash Equivalents - Level 1	$	2,427	$	2,427	$	8,851	$	8,851
Restricted Cash - Level 1	$	15,131	$	15,131	$	646	$	646
Long-Term Debt - Level 2	$	300,973	$	296,198	$	267,740	$	272,637

The estimated fair values are ~~described below:~~not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

The following tables present the fair value of assets measured on a recurring basis by level as of June 30, 2022 and December 31, 2021 (in thousands). See Note 10, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.


			Fair Value at Reporting Date Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2022
2026 Term Loan Interest Rate Swap ⁽¹⁾	$	4,640	$	—	$	4,640	$	—
2027 Term Loan Interest Rate Swap ⁽²⁾	$	6,359	$	—	$	6,359	$	—
December 31, 2021
2026 Term Loan Interest Rate Swap ⁽¹⁾	$	945	$	—	$	945	$	—
2027 Term Loan Interest Rate Swap ⁽²⁾	$	977	$	—	$	977	$	—

Tenant Description

Property Location

Date of Acquisition

Property Square-Feet

Purchase Price

Remaining Lease Term at Acquisition Date (in years)
7-Eleven (1)

Austin, TX

1/13/2020

6,400

$
5,762,416

15.0
7-Eleven (1)

Georgetown, TX

1/13/2020

7,726

4,300,474

15.0
Conn's HomePlus

Hurst, TX

1/10/2020

37,957

6,100,000

11.6
Lehigh Gas Wholesale Services, Inc.

Highland Heights, KY

2/03/2020

2,578

4,250,000

10.8
American Multi-Cinema, Inc.

Tyngsborough, MA

2/19/2020

39,474

7,055,000

10.1
Hobby Lobby

Tulsa, OK

2/28/2020

84,180

12,486,334

10.8
Long John Silver's

Tulsa, OK

2/28/2020

3,000

263,666

N/A
Old Time Pottery

Orange Park, FL

2/28/2020

84,180

6,311,702

10.4
Freddy's Frozen Custard

Orange Park, FL

2/28/2020

3,200

303,298

6.8

Total / Weighted Average

268,695

$
46,832,890

11.5

(1)

⁽¹⁾

~~Cash rent has not yet commenced~~Effective May 21, 2021, as amended on April 14, 2022 in connection with the ~~7-Eleven tenant leases, although control~~2026 Term Loan Amendment (hereinafter defined), the Company utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 0.80% plus the applicable spread on $60.0 million of the ~~properties have transferred during tenant improvement periods.~~

$100.0 million 2026 Term Loan (hereinafter defined) balance (prior to the 2026 Term Loan Amendment, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.81%).

(2)

Effective September 30, 2021, as amended on April 14, 2022 in connection with the 2027 Term Loan Amendment (hereinafter defined), the Company utilized interest rate swaps, inclusive of its redesignation of the existing $50.0 million interest rate swap entered into as of April 30, 2020, to fix SOFR and achieve a weighted average fixed interest rate of 0.51% plus the applicable spread on $80.0 million of the $100.0 million 2027 Term Loan (hereinafter defined) balance (prior to the 2027 Term Loan Amendment, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.53%). On September 30, 2021, the Company entered into an additional interest rate swap to extend the fixed interest rate through maturity on January 31, 2027.

~~2019 Predecessor Activity.~~ ~~No income properties were acquired or disposed of during the three months~~ ~~ended March 31, 2019.~~

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NOTE 5. 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 ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019:~~2021 (in thousands):


	As of
	March 31, 2020		December 31, 2019

					As of
					June 30, 2022		December 31, 2021
Intangible Lease Assets:
Value of In-Place Leases	$	18,725,315	$	14,479,323	$	48,035	$	45,301
Value of Above Market In-Place Leases		1,929,258		1,625,325		4,022		3,623
Value of Intangible Leasing Costs		8,862,493		6,544,079		20,450		19,066
Sub-total Intangible Lease Assets		29,517,066		22,648,727		72,507		67,990
Accumulated Amortization		(1,106,956)		(291,094)		(11,136)		(9,169)
Sub-total Intangible Lease Assets—Net		28,410,110		22,357,633		61,371		58,821
Intangible Lease Liabilities:
Value of Below Market In-Place Leases		(3,000,355)		(1,933,416)		(6,063)		(6,397)
Sub-total Intangible Lease Liabilities		(3,000,355)		(1,933,416)		(6,063)		(6,397)
Accumulated Amortization		99,290		25,223		886		921
Sub-total Intangible Lease Liabilities—Net		(2,901,065)		(1,908,193)		(5,177)		(5,476)
Total Intangible Assets and Liabilities—Net	$	25,509,045	$	20,449,440	$	56,194	$	53,345

The following table reflects the net amortization of intangible assets and liabilities during the three and six months ended ~~March 31, 2020~~June 30, 2022 and ~~2019:~~2021 (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Amortization Expense	$	2,165	$	1,303	$	4,291	$	2,498
Accretion to Properties Revenue		(69)		(50)		(170)		(91)
Net Amortization of Intangible Assets and Liabilities	$	2,096	$	1,253	$	4,121	$	2,407

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Depreciation and Amortization Expense

$
760,519

$
400,392
Increase to Income Properties Revenue

(18,724)

(59,657)
Net Amortization of Intangible Assets and Liabilities

$
741,795

$
340,735

The estimated future amortization expense (income) related to net intangible assets and liabilities is as ~~follows:~~follows (in thousands):


Year Ending December 31,	Future Amortization Expense		Future Accretion to Property Revenue		Net Future Amortization of Intangible Assets and Liabilities
Remainder of 2022	$	4,324	$	(143)	$	4,181
2023		8,420		(292)		8,128
2024		8,054		(284)		7,770
2025		7,392		(248)		7,144
2026		6,913		(237)		6,676
2027		5,618		(196)		5,422
2028 and Thereafter		17,134		(261)		16,873
Total	$	57,855	$	(1,661)	$	56,194

Future Accretion

Net Future

Future

to Income

Amortization of

Amortization

Property

Intangible Assets
Year Ending December 31,

Expense

Revenue

and Liabilities
Remainder of 2020

$
2,538,288

$
(90,179)

$
2,448,109
2021

3,384,384

(120,239)

3,264,145
2022

3,384,384

(120,239)

3,264,145
2023

3,384,384

(120,239)

3,264,145
2024

3,153,851

(108,908)

3,044,943
2025 and thereafter

10,711,248

(487,690)

10,223,558
Total

$
26,556,539

$
(1,047,494)

$
25,509,045

As of ~~March 31, 2020,~~June 30, 2022, the weighted average amortization period of both the total intangible assets and liabilities was ~~approximately 9.0~~9.2 years.

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NOTE 6. OTHER ASSETS

Other assets consisted of the ~~following:~~following (in thousands):


	As of
	June 30, 2022		December 31, 2021
Tenant Receivables—Net of Allowance for Doubtful Accounts⁽¹⁾	$	498	$	790
Accrued Unbilled Tenant Receivables		965		553
Prepaid Insurance		248		616
Deposits on Acquisitions		265		350
Prepaid Expenses, Deposits, and Other		1,819		1,496
Deferred Financing Costs—Net		344		469
Interest Rate Swaps		10,999		2,095
Operating Leases - Right-of-Use Asset ⁽²⁾		1,771		—
Total Other Assets	$	16,909	$	6,369

As of

March 31, 2020

December 31, 2019
Tenant Receivables

$
38,761

$
—
Accrued Unbilled Tenant Receivables

235,335

—
Prepaid Insurance (1)

357,157

498,999
Deposits on Acquisitions

100,000

200,000
Prepaid and Deposits - Other

366,521

88,318
Total Other Assets

$
1,097,774

$
787,317

(1)

⁽¹⁾

AsIncludes $0.3 million allowance for doubtful accounts as of ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019, includes prepaid insurance~~2021.

(2)	See Note 7, “Operating Land Leases” for ~~property, general liability, and director and officers.~~ further disclosure related to the Company’s right-of-use asset balance as of June 30, 2022.

NOTE 7. 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 June 30, 2022, the Company’s right-of-use assets and corresponding lease liabilities totaled $1.8 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 less than $0.1 million during the three and six months ended June 30, 2022, with 0 such expense recognized during the three or six months ended June 30, 2021.

The following table reflects a summary of operating land leases, under which the Company is the lessee, for the three and six months ended June 30, 2022 and 2021 (in thousands):


	Three Months Ended					Six Months Ended
	June 30, 2022			June 30, 2021		June 30, 2022			June 30, 2021
Operating Cash Outflows	$	64		$	—	$	69		$	—
Weighted Average Remaining Lease Term		8.2			—		8.2			—
Weighted Average Discount Rate		2.0	%		—		2.0	%		—

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Minimum future lease payments under non-cancelable operating land leases, having remaining terms in excess of one year subsequent to June 30, 2022, are summarized as follows (in thousands):


Year Ending December 31,
Remainder of 2022	$	128
2023		257
2024		251
2025		192
2026		202
2027		202
2028 and Thereafter		701
Total Lease Payments	$	1,933
Imputed Interest		(159)
Operating Leases – Liability	$	1,774

NOTE 7.8. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES

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


	As of
	June 30, 2022		December 31, 2021
Accounts Payable	$	29	$	213
Accrued Expenses		1,885		676
Tenant Security Deposits		164		—
Due to CTO		936		1,301
Interest Rate Swap		—		173
Operating Leases - Liability ⁽¹⁾		1,774		—
Total Accounts Payable, Accrued Expenses, and Other Liabilities	$	4,788	$	2,363

As of

March 31, 2020

December 31, 2019
Accounts Payable

$
585,045

$
462,524
Accrued Expenses

918,393

311,342
Dividend Payable (1)

315,755

70,984
Accrual for Tenant Improvement

329,652

626,872
Total Accounts Payable, Accrued Expenses, and Other Liabilities

$
2,148,845

$
1,471,722

(1)

⁽¹⁾

AsSee Note 7, “Operating Land Leases” for further disclosure related to the Company’s operating lease liability balance as of ~~March 31, 2020 and December 31, 2019, includes the dividends declared and payable of $0.20 and $0.058, respectively, per share on the 1,223,854 OP Units due to Consolidated-Tomoka Land Co.~~

June 30, 2022.

NOTE 8.9. LONG-TERM DEBT

As of ~~March 31, 2020,~~June 30, 2022, the Company’s outstanding indebtedness, at face value, was as ~~follows:~~follows (in thousands):


	Face Value Debt		Stated Interest Rate	Maturity Date
Credit Facility	$	72,500	30-Day LIBOR + [1.35% - 1.95%]	November 2023
2026 Term Loan⁽¹⁾		100,000	30-Day SOFR + 0.10% + [1.35% - 1.95%]	May 2026
2027 Term Loan⁽²⁾		100,000	30-Day SOFR + 0.10% + [1.25% - 1.90%]	January 2027
Mortgage Note Payable – CMBS Portfolio		30,000	4.33%	October 2034
Total Debt/Weighted-Average Rate	$	302,500	3.04%

Face Value Debt

Stated Interest Rate

Maturity Date
Credit Facility

$
57,000,000

30-Day LIBOR +
1.35% - 1.95% (1)

November 2023
Total Debt/Weighted-Average Rate

$
57,000,000

2.27%

(1)

⁽¹⁾

Effective May 21, 2021, as amended on April 14, 2022 in connection with the 2026 Term Loan Amendment (hereinafter defined), the Company utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 0.80% plus the applicable spread on $60.0 million of the $100.0 million 2026 Term Loan (hereinafter defined) balance. See Note ~~15, “Subsequent Events”~~10, “Interest Rate Swaps” for ~~a description~~further disclosure related to the Company’s interest rate swaps.

(2)

Effective September 30, 2021, as amended on April 14, 2022 in connection with the 2027 Term Loan Amendment (hereinafter defined), the Company utilized interest rate swaps, inclusive of the existing $50.0 million interest rate swap ~~effective~~entered into as of April 30, 2020, ~~whereby LIBOR was~~to fix SOFR and achieve a weighted average fixed ~~at 0.48% for approximately $50~~interest rate of 0.51% plus the applicable spread on $80.0 million of the ~~outstanding balance~~$100.0 million 2027 Term Loan (hereinafter defined) balance. On September 30, 2021, the Company entered into an additional interest rate swap to extend the fixed interest rate through maturity on January 31, 2027. See Note 10, “Interest Rate Swaps” for further disclosure related to the Company’s ~~revolving credit facility.~~

interest rate swaps.

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Credit Facility.On November 26, 2019, the Company and the Operating Partnership entered into a credit agreement (the “Credit Facility Credit Agreement”) with a group of lenders for a senior unsecured revolving credit facility (the “Credit Facility”) in the maximum aggregate initial original principal amount of up to ~~$100~~$100.0 million. The Credit Facility includes an accordion feature that may allow the Operating Partnership to increase the availability under the Credit Facility by an additional $50.0 million, subject to meeting specified requirements and obtaining additional commitments from lenders. BMO Capital Markets Corp. and Raymond James Bank, N.A. are joint lead arrangers and joint bookrunners, with Bank of Montreal (“BMO”) as administrative agent.

The Credit Facility has a base term of four years, with the ability to extend the base term for one year. ~~The~~

On June 30, 2020, the Company and the Operating Partnership executed the first amendment to the Credit Facility Credit Agreement whereby the tangible net worth covenant was adjusted to be more reflective of market terms.

On October 16, 2020, the Company and the Operating Partnership executed the second amendment to the Credit Facility (the “Second Amendment”), with the addition of 2 lenders, Huntington National Bank and Truist Bank. As a result of the Second Amendment, the Credit Facility has a total borrowing capacity of $150.0 million with the ability to increase that capacity up to $200.0 million during the term, utilizing an accordion feature, ~~that may allow~~subject to lender approval.

On May 19, 2021, the Company and the Operating Partnership ~~to increase~~executed the ~~availability under~~third amendment to the Credit Facility ~~by an additional $50 million, subject~~(the “Third Amendment”). Among other things, the Third Amendment revised the Credit Facility Credit Agreement to ~~meeting specified requirements and obtaining additional commitments from lenders.~~provide that as of the last day of each fiscal quarter, the Operating Partnership shall not permit the ratio of Unsecured Indebtedness to Borrowing Base Value (as defined in the Credit Facility Credit Agreement) to be greater than 0.60 to 1:00. Prior to the Third Amendment, the Credit Facility Credit Agreement provided that as of the last day of each fiscal quarter, the Operating Partnership could not permit the ratio of Total Indebtedness to Total Asset Value (as defined in the Credit Facility Credit Agreement) to be greater than 0.60 to 1:00.

Pursuant to the Credit Facility Credit Agreement, the indebtedness outstanding under the Credit Facility accrues at a rate ranging from the 30-day LIBOR plus 135 basis points to the 30-day LIBOR plus 195 basis points, based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Operating Partnership, as defined in the Credit Facility Credit Agreement. The Credit Facility also accrues a fee of 15 to 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.

~~Table of Contents~~

The Operating Partnership is subject to customary restrictive covenants under the Credit Facility Credit Agreement, the 2026 Term Loan Credit Agreement (hereinafter defined), and the 2027 Term Loan Credit Agreement (hereinafter defined), collectively referred to herein as the “Credit Agreements”, including, but not limited to, limitations on the Operating Partnership’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 ~~Facility~~Agreements also ~~contains~~contain financial covenants covering the Operating Partnership, including but not limited to, tangible net worth and fixed charge coverage ~~ratio. In addition,~~ratios.

At June 30, 2022, the ~~Operating Partnership is subject to additional financial maintenance covenants as described in the Credit Agreement.~~

~~At March 31, 2020, the current~~ commitment level under the Credit Facility was ~~$100.0 million. The available borrowing capacity under~~$150.0 million and the ~~Credit Facility was $30.1 million, based on the level of borrowing base assets. As of March 31, 2020, the Credit Facility~~Company had an outstanding balance of ~~$57.0~~$72.5 million.~~See Note 15, “Subsequent Events”~~

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”) for a ~~discussion~~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 ~~potential impact on borrowing base assets due~~underlying variable interest rate from LIBOR to SOFR. Truist Securities, Inc. acted as sole lead arranger and sole book runner, with Truist Bank, N.A. as administrative agent. Truist Bank, N.A., Bank of Montreal, Raymond James Bank, N.A., Stifel Bank, The Huntington National Bank, KeyBank National Association, Regions Bank, U.S. Bank National Association, and Synovus Financial Corporation are lenders under the 2026 Term Loan. In addition, subsequent to the ~~COVID-19 Pandemic~~2026 Term Loan Amendment, the Operating Partnership may request additional lender commitments of up to an additional $60.0 million.

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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”) 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 ~~swap entered into by~~from LIBOR to SOFR. KeyBanc Capital Markets Inc., Regions Capital Markets, and U.S. Bank National Association acted as joint lead arrangers, with KeyBanc Capital Markets Inc. as sole book runner, and KeyBank National Association as administrative agent. KeyBank National Association, Regions Bank, U.S. Bank National Association, Bank of Montreal, Raymond James Bank, and The Huntington National Bank are lenders under the 2027 Term Loan. In addition, subsequent to the 2027 Term Loan Amendment, the Operating Partnership may request additional lender commitments of up to an additional $120.0 million.

Mortgage Notes Payable. On June 30, 2021, in connection with the acquisition of 6 net lease properties from CTO (the “CMBS Portfolio”), the Company ~~that fixes~~assumed an existing $30.0 million secured mortgage, which bears interest at a fixed rate of 4.33%. The mortgage note matures in October 2034 and is prepayable without penalty beginning in October 2024. Additionally, on June 30, 2021, in connection with the ~~rate~~acquisition of 2 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 ~~$50 million of the outstanding balance on the Credit Facility to a range of 1.83% to 2.43%.~~July 1, 2021.

Long-term debt as of ~~March 31, 2020~~June 30, 2022 and December 31, ~~2019~~2021 consisted of the ~~following:~~ following (in thousands):


	March 31, 2020				December 31, 2019
	Total		Due Within One Year		Total		Due Within One Year

									June 30, 2022				December 31, 2021
									Total		Due Within One Year		Total		Due Within One Year
Credit Facility	$	57,000,000	$	—	$	—	$	—	$	72,500	$	—	$	99,000	$	—
Loan Costs, net of accumulated amortization		(532,868)		—		—		—
2026 Term Loan										100,000		—		60,000		—
2027 Term Loan										100,000		—		80,000		—
Mortgage Note Payable – CMBS Portfolio										30,000		—		30,000		—
Financing Costs, net of Accumulated Amortization										(1,527)		—		(1,260)		—
Total Long-Term Debt	$	56,467,132	$	—	$	—	$	—	$	300,973	$	—	$	267,740	$	—

Payments applicable to reduction of principal amounts as of ~~March 31, 2020~~June 30, 2022 will be required as ~~follows:~~follows (in thousands):



Year Ending December 31,	Amount		Amount
Remainder of 2020	$	—
2021		—
2022		—
Remainder of 2022			$	0
2023		57,000,000		72,500
2024		—		0
2025 and thereafter		—
2025				0
2026				100,000
2027				100,000
2028 and Thereafter				30,000
Total Long-Term Debt - Face Value	$	57,000,000	$	302,500

AsThe carrying value of ~~March 31, 2020, the Company’s~~ long-term debt ~~includes initial deferred~~as of June 30, 2022 consisted of the following (in thousands):


	Total
Current Face Amount	$	302,500
Financing Costs, net of Accumulated Amortization		(1,527)
Total Long-Term Debt	$	300,973

In addition to the $1.5 million of financing costs, ~~of approximately $594,000,~~ net of accumulated amortization included in the table above, as of ~~approximately $61,000.~~June 30, 2022, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $0.3 million which is included in other assets on the consolidated balance sheets. These costs are amortized on a ~~straight-line~~straight-

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line basis over the term of the Credit Facility and are included in interest expense in the ~~Company’s accompanying~~ consolidated statements of operations. ~~As of December 31, 2019, these costs were reflected as deferred expenses on the accompanying consolidated balance sheets as there was no outstanding debt as of December 31, 2019.~~

The following table reflects a summary of interest expense incurred and paid during the three and six months ended ~~March 31, 2020~~June 30, 2022 and ~~2019:~~2021 (in thousands):


	Three Months Ended
	March 31, 2020		March 31, 2019
	The Company ($000's)		Predecessor ($000's)

					Three Months Ended				Six Months Ended
					June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Interest Expense	$	205	$	—	$	1,991	$	594	$	3,546	$	1,084
Amortization of Loan Costs		44		—
Amortization of Deferred Financing Costs to Interest Expense						132		84		257		149
Total Interest Expense	$	249	$	—	$	2,123	$	678	$	3,803	$	1,233


Total Interest Paid	$	164	$	—	$	1,840	$	623	$	3,352	$	1,105

The Company was in compliance with all of its debt covenants as of ~~March 31, 2020.~~June 30, 2022.

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NOTE ~~9. EQUITY~~

~~PREDECESSOR EQUITY~~

10. INTEREST RATE SWAPS

The ~~Predecessor Equity represents net contributions~~Company has entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to the below noted borrowings. The interest rate agreements were 100% effective during the three and ~~distributions to CTO. Most~~six months ended June 30, 2022. 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 entities included in the Predecessor’s financial statements did not have bank accounts for the periods presented and most cash transactions for the Predecessor were transacted through bank accounts owned by CTO andinterest rate swap agreements are included in other assets and accrue and other liabilities, respectively, on the ~~Predecessor Equity.~~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 June 30, 2022
2026 Term Loan ⁽¹⁾	5/21/2021	5/21/2026	0.80% + 0.10% + applicable spread	$	60,000	$	4,640
2027 Term Loan⁽²⁾	9/30/2021	11/26/2024	0.51%+ 0.10% + applicable spread	$	80,000	$	4,691
2027 Term Loan ⁽³⁾	11/26/2024	1/31/2027	1.60%+ 0.10% + applicable spread	$	80,000	$	1,668

(1)

Effective May 21, 2021, as amended on April 14, 2022 in connection with the 2026 Term Loan Amendment, the Company utilized interest rate swaps to fix SOFR and achieve a weighted average fixed interest rate of 0.80% plus the applicable spread on $60.0 million of the $100.0 million 2026 Term Loan balance. Prior to April 14, 2022, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.81%)

(2)

Effective September 30, 2021, as amended on April 14, 2022 in connection with the 2027 Term Loan Amendment, the Company utilized interest rate swaps, inclusive of its redesignation of the existing $50.0 million interest rate swap entered into as of April 30, 2020, to fix SOFR and achieve a weighted average fixed interest rate of 0.51% plus the applicable spread on $80.0 million of the $100.0 million 2027 Term Loan balance. Prior to April 14, 2022, the swap was to fix LIBOR at a weighted average fixed interest rate of 0.53%.

(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.

~~DIVIDENDS~~NOTE 11. 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 Securities and Exchange Commission declared the Form S-3 effective on December 11, 2020.

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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 three months ended June 30, 2022, the Company sold 87,112 shares under the 2020 ATM Program for gross proceeds of $1.7 million at a weighted average price of $19.09 per share, generating net proceeds of $1.6 million after deducting transaction fees totaling $0.02 million. During the six months ended June 30, 2022, the Company sold 401,783 shares under the 2020 ATM Program for gross proceeds of $7.8 million at a weighted average price of $19.53 per share, generating net proceeds of $7.7 million after deducting transaction fees totaling $0.1 million. During the three months ended June 30, 2021, the Company sold 176,028 shares under the 2020 ATM Program for gross proceeds of $3.2 million at a weighted average price of $18.06 per share, generating net proceeds of $3.1 million after deducting transaction fees totaling $0.05 million. During the six months ended June 30, 2021, the Company sold 610,229 shares under the 2020 ATM Program for gross proceeds of $11.1 million at a weighted average price of $18.19 per share, generating net proceeds of $10.9 million after deducting transaction fees totaling $0.2 million.

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.

NONCONTROLLING INTEREST

As of June 30, 2022, CTO holds, directly and indirectly, a 9.1% 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 Formation Transactions, as further described in Note 1, “Business and Organization.” An additional 3.5% noncontrolling ownership interest is held by an unrelated third party in connection with the issuance of 479,640 OP Units valued at $9.0 million in the aggregate, or $18.85 per unit. The issuance of 479,640 OP Units includes (i) 424,951 OP Units issued as consideration for the portfolio of 9 net lease properties acquired on June 30, 2021 and (ii) 54,689 OP Units issued as consideration for the acquisition of 1 net lease property on July 12, 2021.

DIVIDENDS

The Company ~~intends to elect~~has elected to be taxed as a REIT for U.S. federal income tax purposes ~~commencing with its short taxable year beginning on November 26, 2019 and ending on December 31, 2019 upon~~under the ~~filing of our tax return for such taxable year, which will be filed on or before its due date.~~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 corporate federal income taxes payable by the ~~REIT.~~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 three months ended ~~March 31, 2020,~~June 30, 2022 and 2021, the Company declared and paid cash dividends on its common stock and OP Units of ~~$0.20~~$0.27 per ~~share.~~share and $0.25 per share, respectively. During the six months ended June 30, 2022 and 2021, the Company declared and paid cash dividends on its common stock and OP Units of $0.54 per share and $0.49 per share, respectively.

NOTE ~~10.~~12. 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 ~~during~~for the ~~year.~~period. Diluted earnings per common share are determined based on the assumption of the conversion of OP Units on a one-for-one basis using the treasury stock method at average market prices for the periods.

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Net Income

$
14,632

$
875,848

Weighted Average Number of Common Shares Outstanding

7,896,757

N/A
Common Shares Applicable to OP Units using Treasury Stock Method

1,223,854

N/A
Total Shares Applicable to Diluted Earnings per Share

9,120,611

N/A

Per Common Share Data:

Net Income

Basic

$
—

N/A
Diluted

$
—

N/A

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


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net Income Attributable to Alpine Income Property Trust, Inc.	$	14,282	$	304	$	15,088	$	744

Weighted Average Number of Common Shares Outstanding		11,844,108		8,853,259		11,753,904		8,212,902
Weighted Average Number of Common Shares Applicable to OP Units using Treasury Stock Method ⁽¹⁾		1,703,494		1,228,524		1,703,494		1,226,202
Total Shares Applicable to Diluted Earnings per Share		13,547,602		10,081,783		13,457,398		9,439,104

Per Common Share Data:
Net Income Attributable to Alpine Income Property Trust, Inc.
Basic	$	1.21	$	0.03	$	1.28	$	0.09
Diluted	$	1.05	$	0.03	$	1.12	$	0.08

(1)

Represents shares underlying OP units including (i) 1,223,854 shares underlying OP Units issued to CTO in connection with our Formation Transactions and (ii) 479,640 shares underlying OP Units issued to an unrelated third party in connection with the acquisition of 10 net lease properties during the year ended December 31, 2021 (see Note 11, “Equity”).

NOTE ~~11.~~13. SHARE REPURCHASES

In March 2020, the ~~Company’s~~ Board ~~of Directors~~ approved a $5$5.0 million stock repurchase program (the “$55.0 Million Repurchase Program”). During the ~~three months ended March 31,~~first half of 2020, the Company repurchased ~~57,852~~456,237 shares of its common stock on the open market for a total cost of ~~approximately $592,000,~~$5.0 million, or an average price per share of ~~$10.43. The $5~~$11.02, which completed the $5.0 Million Repurchase ~~Program does not have an expiration date.~~Program. There were 0 repurchases of the Company’s common stock during the six months ended June 30, 2022, or 2021.

~~See Note 15, “Subsequent Events”, for information related to share repurchases made by the Company subsequent to March 31, 2020.~~

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NOTE ~~12.~~14. STOCK-BASED COMPENSATION

In connection with the closing of the IPO, onthe Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans. The purpose of the Equity Incentive Plans is to provide equity incentive opportunities to members of the Manager’s management team and employees who perform services for the Company, the Company’s independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to the Manager.

On November 26, 2019, the Company granted restricted shares of common stock to each of the inaugural non-employee directors under the Individual Plan. Each of the inaugural non-employee directors received an award of 2,000 restricted shares of common stock on November 26, 2019. The restricted shares will vest in substantially equal installments on each of the first, second and third anniversaries of the grant date. As of December 31, 2021, the first and second increments of this award had vested, leaving 2,668 shares unvested. 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,~~common stock, and the quarterly common stock grants 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 ~~independent members of the~~ compensation committee of the Board. The 2019 non-employee director share awards had an aggregate grant date fair value of ~~approximately $150,000.~~$0.2 million. The Company’s determination of the grant date fair value of the three-year vest restricted stock

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awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is 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. ~~During the three months ended March 31, 2020, the Company recognized stock compensation expense totaling approximately $13,000 which is included in general and administrative expenses~~Award forfeitures are accounted for in the ~~consolidated statement of operations.~~period in which they occur.

A summary of activity for these awards during the ~~three~~six months ended ~~March 31, 2020,~~June 30, 2022 is presented below:


		Wtd. Avg.

Non-Vested Restricted Shares	Shares	Fair Value		Shares	Wtd. Avg. Fair Value
Outstanding at January 1, 2020	8,000	$	18.80
Non-Vested at January 1, 2022				2,668	$	18.80
Granted	—		—	0		0
Vested	—		—	0	$	0
Expired	—		—	0		0
Forfeited	—		—	0		0
Outstanding at March 31, 2020	8,000	$	18.80
Non-Vested at June 30, 2022				2,668	$	18.80

As of ~~March 31, 2020,~~June 30, 2022, there was ~~approximately $133,000~~$0.02 million of unrecognized compensation cost related to the three-year vest restricted shares, which will be recognized over a remaining period of ~~2.7~~0.4 years.

Each member of the ~~Company’s~~ Board ~~of Directors~~ has the option to receive his or her annual retainer in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer payment due to such director by the trailing 20-day average 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 ~~three~~six months ended ~~March 31, 2020,~~June 30, 2022, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled ~~approximately $54,000,~~$0.1 million, or ~~4,098~~7,203 shares, of which 3,514 shares were issued on April 1, ~~2020.~~2022 and 3,689 shares were issued on July 1, 2022. During the six months ended June 30, 2021, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $0.1 million, or 6,978 shares, of which 3,453 were issued on April 1, 2021 and 3,525 shares were issued on July 1, 2021.

Stock compensation expense for the three and six months ended ~~March 31, 2020~~June 30, 2022 and 2021 is summarized as ~~follows:~~follows (in thousands):

Three Months Ended

March 31, 2020
($ 000's)
Stock Compensation Expense – Director Restricted Stock

$
13
Stock Compensation Expense – Director Retainers Paid in Stock

54
Total Stock Compensation Expense (1)

$
67

⁽¹⁾

Director retainers are issued through additional paid in capital in arrears. Therefore, the change in additional paid in capital during the three months ended March 31, 2020 is equal to total stock compensation expense of $67,000, less the $54,000 of first quarter 2020 director retainers, as those shares were issued on April 1, 2020, plus the fourth quarter 2019 director retainers of $24,000, as those shares were issued on January 2, 2020.


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Stock Compensation Expense – Director Restricted Stock	$	12	$	13	$	25	$	25
Stock Compensation Expense – Director Retainers Paid in Stock		66		66		132		127
Total Stock Compensation Expense	$	78	$	79	$	157	$	152

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NOTE ~~13.~~15. RELATED PARTY MANAGEMENT COMPANY

We are externally managed by the Manager, a wholly owned subsidiary of CTO. ~~In addition~~Subsequent to the IPO, CTO purchased an aggregate 107,866 shares of PINE common stock in the open market including (i) 99,778 shares purchased during the six months ended June 30, 2022 for $1.8 million, or an average price per share of $17.99 and (ii) 8,088 shares purchased during the year ended December 31, 2021 for $0.1 million, or an average price per share of $17.65. As of June 30, 2022, CTO owns, in the aggregate, 1,223,854 OP Units and 923,656 shares of PINE common stock, inclusive of (i) 394,737 shares of common stock totaling $7.5 million issued in connection with the CTO Private Placement, ~~CTO purchased from us $8 million in~~(ii) 421,053 shares of ~~our~~ common stock ~~or 421,053~~totaling $8.0 million issued in connection with the IPO, and (iii) 107,866 shares ~~in our IPO. Upon completion~~ of ~~our IPO, CTO Private Placement, and the other transactions in the Formation Transactions, CTO owned approximately 22.3% of our outstanding~~ common stock ~~(assuming~~totaling $1.9 million purchased by CTO subsequent to the IPO. The aggregate 1,223,854 OP Units ~~issued to CTO in the Formation Transactions are exchanged for~~and 923,656 shares of ~~our~~PINE common stock ~~on a one-for-one basis).~~held by CTO represent an investment totaling $38.5 million, or 15.8% of PINE’s outstanding equity, as of June 30, 2022.

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Management Agreement

On November 26, 2019, wethe Operating Partnership and PINE entered into a management agreement with the ~~Management Agreement.~~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 ~~our~~the Board and in accordance with the investment guidelines approved and monitored by ~~our Board. Our Manager is subject to~~ the ~~direction and oversight of our~~ 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 to 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.

NaN incentive fee was due for the year ended December 31, 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 ~~will~~ 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~~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~~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 ~~our~~the Board. During the initial term of the Management Agreement, we may not terminate the Management Agreement except for cause.

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

~~During the three months ended March 31, 2020, the~~The Company incurred management fee expenses ~~which totaled approximately $649,000.~~totaling $0.9 million and $1.9 million during the three and six months ended June 30, 2022, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of ~~its~~the Manager in the amount of ~~approximately $163,000. There were no Manager dividends or management fees applicable to~~$0.6 million and $1.1 million for the three and six months ended ~~March 31, 2019.~~June 30, 2022, respectively. The Company incurred management fee expenses totaling $0.7 million and $1.4 million during the three and six months ended June 30, 2021, respectively. The Company also paid dividends on the common stock and OP Units owned by affiliates of the Manager in the amount of $0.5 million and $1.0 million for the three and six months ended June 30, 2021, respectively.

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


	As of
Description	June 30, 2022		December 31, 2021
Management Fee due to CTO	$	948	$	913
Other		(12)		388
Total ⁽¹⁾	$	936	$	1,301

As of
Description

March 31, 2020
($000's)

December 31, 2019
($000's)
Management Fee due to CTO (1)

$
649

$
254
Dividend Payable on OP Units

316

71
Other

(13)

56
Total

$
952

$
381

(1)

⁽¹⁾

Included in ~~Accrued Expenses,~~accrued expenses, see Note 7,8, “Accounts Payable, Accrued Expenses, and Other Liabilities”.

~~Exclusivity and~~

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ROFO Agreement

On November 26, 2019, wePINE also entered into an ~~exclusivity~~Exclusivity and ~~right~~Right of ~~first offer (“ROFO”) agreement~~First Offer Agreement with ~~CTO.~~CTO (the “ROFO Agreement”). During the term of the ~~exclusivity and~~ ROFO ~~agreement,~~Agreement, CTO will not, and will cause each of its affiliates (which for purposes of the ~~exclusivity and~~ ROFO ~~agreement~~Agreement will not include our company and our subsidiaries) not to, acquire, directly or indirectly, a single-tenant, net leased property, ~~without providing~~unless CTO has notified us ~~with notice~~of the opportunity and we have affirmatively rejected the opportunity to acquire the applicable property or properties.

The terms of the ~~exclusivity and~~ ROFO ~~agreement~~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 ~~exclusivity and~~ ROFO ~~agreement,~~Agreement, neither CTO nor any of its affiliates (which for purposes of the ~~exclusivity and~~ ROFO ~~agreement~~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 ~~our IPO;~~the IPO or that is developed and owned by CTO or any of its affiliates after the closing date of ~~our~~the IPO, without first offering us the right to purchase such property.

The term of the ~~exclusivity and~~ ROFO ~~agreement~~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 1 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 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 1 net lease property for $6.9 million. The acquisition was completed on January 7, 2022.

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

Conflicts of Interest

Conflicts of interest may exist or could arise in the future with CTO and its affiliates, including our Manager, the individuals who serve as our executive officers and executive officers of CTO, any individual who serves as a director of our company and as a director of CTO and any limited partner of the Operating Partnership. Conflicts may include, without limitation: conflicts arising from the enforcement of agreements between us and CTO or our Manager; conflicts in the amount of time that executive officers and employees of CTO, who are provided to us through our Manager, will spend on our affairs versus CTO’s affairs; and conflicts in future transactions that we may pursue with CTO and its affiliates. We do not generally expect to enter into joint ventures with CTO, but if we do so, the terms and conditions of our joint venture investment will be subject to the approval of a majority of disinterested directors of ~~our board of directors.~~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.

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We may acquire or sell ~~single-tenant,~~ net leased properties ~~in which~~that would potentially fit the investment criteria for our Manager or its ~~affiliates have or may have an interest.~~affiliates. Similarly, our Manager or its affiliates may acquire or sell ~~single-tenant,~~ net leased properties ~~in which we have or may have an interest.~~that would potentially fit our investment criteria. Although such acquisitions or dispositions ~~may~~could present conflicts of interest, we nonetheless may

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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.~~of assets. If we acquire a ~~single-tenant,~~ net leased property from CTO or one of its affiliates or sell a ~~single-tenant,~~ 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 ~~arms’~~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 ~~our~~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 ~~exclusivity and~~ ROFO ~~agreement~~Agreement does contain exceptions to CTO’s exclusivity for opportunities that include only an incidental interest in single-tenant, net leased properties. Accordingly, the ~~exclusivity and~~ ROFO ~~agreement~~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.

NOTE ~~14.~~16. 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. ~~While the outcome of the~~The Company is not currently a party to any pending or threatened legal proceedings ~~cannot be predicted with certainty, the Company does not expect~~ that ~~these proceedings will~~we believe could have a material adverse effect ~~upon our~~on the Company’s business or financial ~~condition or results of operations.~~condition.

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~~CONTRACTUAL COMMITMENTS - EXPENDITURES~~

The Company is obligated to fund approximately $708,000 to construct a new roof at the 102,019 square-foot property leased to Hilton Grand Vacations. A credit in the amount of approximately $708,000 was received from CTO at the closing of the acquisition of the property on November 26, 2019 and the Company has made payments to date of approximately $379,000, leaving a remaining commitment of approximately $329,000 as of March 31, 2020.

NOTE ~~15.~~17. SUBSEQUENT EVENTS

~~The Company reviewed all subsequent~~Subsequent events and transactions ~~that have occurred after March 31, 2020,~~were evaluated through July 21, 2022 the date of the consolidated ~~balance sheet.~~

~~COVID-19 PANDEMIC~~

In March 2020, the agency of the United Nations, responsible for international public health, declared the outbreak of the COVID-19 Pandemic, which has spread throughout the United States. The spread of the COVID-19 Pandemic has caused significant volatility in the U.S. and international markets and, in many industries, business activity has virtually shut down entirely. There is significant uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies. As a result, the Company is not yet able to determine the full impact of the COVID-19 Pandemic on its operations and therefore, the potential as to whether or not such impact will be material.

~~Our results of operations and cash flows for the three months ended March 31, 2020~~financial statements were not materially impacted by the COVID-19 Pandemic. An assessment of the current or identifiable potential financial and operational impacts on the Company subsequent to March 31, 2020 as a result of the COVID-19 Pandemic are as follows:

The Company believes certain of the programs available under the CARES Act may provide tenants with the ability to obtain proceeds from loans provided by the federal government which could provide liquidity that would allow the tenant to pay its near-term rent. However, no assurances can be given that the tenants will seek to access or will receive funds from these programs or will be able to use the proceeds to pay their rent in the near-term or otherwise.

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~~reached, the timing of such would have an applicable impact on full year results of operations, and the related performance measurements of FFO and AFFO.~~

Given uncertainty surrounding the depth, duration, and geographic impact of the COVID-19 Pandemic, as a precautionary measure intended to support the Company’s liquidity, the Company, in March 2020, drew $20 million of available capacity on its $100 million senior unsecured revolving Credit Facility. As a result, the Company, as of March 31, 2020, has approximately $22 million in cash on hand with approximately $57 million outstanding on the Credit Facility. Just prior to the $20 million in draws in March 2020, the Company had approximately $2 million in cash, as approximately $10.3 million of the $12.3 million in cash as of December 31, 2019 had been utilized for both general corporate and working capital purposes, as well as property acquisitions subsequent to December 31, 2019.

As a result of the outbreak of the COVID-19 Pandemic, the federal government and the State of Florida issued orders encouraging everyone to remain at their residence and not go into work. In response to these orders and in the best interest of our Manager’s employees and our directors, our Manager implemented significant preventative measures to ensure the health and safety of its employees and our Board, including: i) conducting all meetings of our Board and Committees of the Board telephonically or via a visual conferencing service, permitting its employees to work from home at their election, enforcement of appropriate social distancing practices in our Manager’s office, encouraging its employees to wash their hands often and providing hand sanitizer throughout their office, requiring its employees who do not feel well, in any capacity, to stay at home, and requiring all third-party delivery services (e.g. mail, food delivery, etc.) to complete their service outside the front door of its offices.

~~INTEREST RATE SWAP~~

In April of 2020, the Company executed a five-year interest rate swap agreement whereby, effective as of April 30, 2020, LIBOR was fixed at 0.48% for approximately $50 million of the outstanding balance on the Company’s revolving Credit Facility. As a result of the interest rate swap, $50 million of the Company’s long-term debt has a fixed interest rate ranging from 1.83% up to 2.43%, based on the Company’s leverage as a percent of total asset value, as defined in the Credit Facility agreement.

~~SHARE REPURCHASES~~

For the period subsequent to March 31, 2020, through May 6, 2020, the Company has repurchased approximately 311,000 shares of our common stock for approximately $3.4 million, an average purchase price of $10.96 per share, under the $5 Million Repurchase Program. As a result, approximately $1 million of the $5 Million Repurchase Program remains as of May 6, 2020.

issued. There were no ~~other~~ reportable subsequent events or transactions.

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ITEM 2. 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 Financial Statements” refer to the Notes to the Consolidated Financial Statements of Alpine Income Property Trust, Inc. included in this Quarterly Report on Form 10-Q. ~~Also, when the Company uses any~~Some 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 reflectedcomments we make in ~~such~~this section are forward-looking statements ~~are based upon present expectations and reasonable assumptions,~~within the ~~Company’s actual results could differ materially from those set forth in~~meaning of the federal securities laws. For a complete discussion of forward-looking ~~statements.~~statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain factors that could cause actual results or events to differ materially from those the Company anticipates or projects are described in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2021.

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 ~~this Quarterly~~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; any loss of key management personnel; changes in local, regional, and national economic conditions affecting the real estate development business and properties; the impact of competitive real estate activity; the loss of any major property tenants; the ultimate geographic spread, severity and duration of pandemics such as the outbreak of COVID-19 and its variants, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and our financial condition and results of operations; and the availability of capital. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.

See “Item 1A. Risk Factors” of the Company’s Annual Report on Form ~~10-Q.~~10-K for the year ended December 31, 2021 for further discussion of these risks, as well as additional risks and uncertainties that could cause actual results or events to differ materially from those described in the Company’s forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

~~COVID-19 PANDEMIC~~OVERVIEW

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believed it prudent and necessary to withdraw its previously provided guidance for the full year of 2020, including its targeted level of acquisitions totaling up to $120 million. The Company has not provided any updated guidance. The Company notes, however, that depending upon the duration and severity of the COVID-19 Pandemic, the Company could ultimately reach the targeted level of acquisitions in 2020, although no assurances can be made regarding the likelihood or timing of attaining that level of acquisitions, and should such targets be reached, the timing of such would have an applicable impact on full year results of operations, and the related performance measurements of Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”).

~~OVERVIEW~~

We are a real estate company that owns and operates a high-quality portfolio of ~~single-tenant~~ commercial properties ~~all of which are~~ located in the United States. ~~All of the~~Our properties ~~in our portfolio~~ are generally leased on a long-term basis and located primarily in, or in close proximity to major metropolitan statistical areas, or MSAs, and in growth markets and other markets in the United States with favorable economic and demographic conditions. ~~Twenty seven of the 29 properties in our portfolio, representing approximately 85% of our portfolio’s annualized base rent (as of March 31, 2020), are leased on a triple-net basis.~~ Our properties are primarily leased to industry leading, creditworthy tenants, many of which operate in industries we believe are resistant to the impact of ~~e-commerce. Our portfolio consists of 29 single-tenant, primarily net leased retail and office properties located~~e-commerce or defensive in ~~19 markets in 13 states. Twenty of these properties, representing our initial portfolio, were acquired from Consolidated-Tomoka Land Co. (“CTO”), a public company listed on the New York Stock~~

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Exchange (“NYSE”) American under the symbol “CTO”, in our Formation Transactions (as defined within Note 1. Business and Organization), utilizing approximately $125.9 million of proceeds from our initial public offering of our common stock (our “IPO”) and the issuance of 1,223,854 units of our operating partnership (the “OP Units”) that had an initial value of approximately $23.3 million based on our IPO price of $19.00 per share (the “IPO Price”).nature against economic uncertainty or disruption. The ~~remaining nine properties were acquired during the three months ended March 31, 2020. For four of our~~ properties in our portfolio we are ~~the lessor in a long-term ground lease to the tenant.~~

Our portfolio is comprised of single-tenant retail and office properties primarily located in or in close proximity to major MSAs, growth markets and other markets in the United States with favorable economic and demographic conditions and leased to tenants with favorable credit profiles or performance attributes. All of the properties in our portfolio are subject to long-term, primarily triple-net leases which generally require the tenant to pay all of the property operating expenses such as real estate taxes, insurance, assessments and other governmental fees,

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utilities, repairs and maintenance and certain capital expenditures. ~~We intend to elect to be taxed as a real estate investment trust~~Our portfolio consists of 143 net leased retail and office properties located in 98 markets in 35 states.

Twenty properties, representing our initial portfolio, were acquired from CTO Realty Growth, Inc. (“~~REIT”~~CTO”) ~~for U.S. federal income tax purposes commencing with~~in the formation transactions, utilizing $125.9 million of proceeds from our ~~short taxable year ended December 31, 2019 upon the filing~~initial public offering of our ~~tax return for such taxable year, which will be filed~~common stock (the “IPO”) and the issuance of 1,223,854 units of our operating partnership (the “OP Units”) that had an initial value of $23.3 million based on ~~or before its due date. We believe that, commencing with such taxable year, we~~the IPO price of $19.00 per share (the “IPO Price”). As of June 30, 2022, eight of the properties included within our initial portfolio have been ~~organized and have operated in such a manner as~~sold. Subsequent to ~~qualify for taxation as a REIT under the U.S. federal income tax laws, and we intend to continue to be organized and to operate in such a manner.~~

~~Our objective is to maximize cash flow and value per share by generating stable and growing cash flows and attractive risk-adjusted returns through owning, operating and growing a diversified~~June 30, 2022, one additional property included within our initial portfolio of high-quality single-tenant, net leased commercial properties with strong long-term real estate fundamentals. The 29 properties in our portfolio are 100% occupied and represent approximately 1.1 million of gross rentable square feet with leases that have a weighted average lease term of approximately 8.5 years as of March 31, 2020, based on annualized base rent. None of our leases expire prior to January 31, 2024. was sold.

We seek to acquire, own and operate primarily freestanding, ~~single-tenant~~ commercial real estate properties ~~primarily~~ located in ~~our target markets~~the United States leased primarily pursuant to triple-net, long-term leases. ~~Within our target markets, we~~We focus on investments primarily in ~~single-tenant~~ retail ~~and office~~ 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.~~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 ~~market~~respective markets and have ~~rent levels at or below~~rents at-or-below market rent levels. Furthermore, we believe that the size of our company ~~will,~~allows us, for at least the near term, ~~allow us~~ 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 objective is to maximize cash flow and value per share by generating stable and growing cash flows and attractive risk-adjusted returns through owning, operating and growing a diversified portfolio of high-quality net leased commercial properties with strong long-term real estate fundamentals. The 143 properties in our portfolio are 100% occupied and represent 3.3 million of gross rentable square feet. As of June 30, 2022, our leases have a weighted-average remaining lease term of 8.0 years based on annualized base rent.

Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals, ~~and target markets,~~ including ~~major markets or~~ those markets experiencing significant economic growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g., location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing tenant(s) (e.g., credit-worthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other market-specific conditions (e.g., tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g., strategic fit of the asset type, property management needs, alignment with the Company’s structure, etc.).

The Company has no employees and is externally managed by Alpine Income Property Manager, LLC, a Delaware limited liability company and a wholly owned subsidiary of CTO (our “Manager”). CTO is a Maryland corporation that is a publicly traded diversified REIT and the sole member of our Manager.

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COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

~~As of March 31, 2020, the Company owned 29 single-tenant income properties in 13 states.~~

The following ~~is a summary of these properties:~~

Type

Tenant

S&P Credit Rating (1)

Location

Rentable Square Feet

Remaining Term (Years)

Tenant Extension Options (Number x Years)

Contractual Rent Escalations

Annualized Base Rent (2)
Office

Wells Fargo

A+

Portland, OR

211,863

5.8

3x5

No

$
3,137,166
Office

Hilton Grand Vacations

BB+

Orlando, FL

102,019

6.7

2x5

Yes

1,825,444
Retail

LA Fitness

CCC+

Brandon, FL

45,000

12.1

3x5

Yes

957,887
Retail

At Home

CCC+

Raleigh, NC

116,334

9.5

4x5

Yes

722,117
Retail

Century Theatre

BB-

Reno, NV

52,474

4.7

3x5

No

693,501
Retail

Container Store

B-

Phoenix, AZ

23,329

9.9

2x5

Yes

725,502
Office

Hilton Grand Vacations

BB+

Orlando, FL

31,895

6.7

2x5

Yes

684,319
Retail

Live Nation Entertainment, Inc.

BB-

East Troy, WI

N/A
(3)
10.0

N/A

Yes

624,899
Retail

Hobby Lobby

N/A

Winston-Salem, NC

55,000

10.0

3x5

Yes

562,366
Retail

Dick's Sporting Goods

N/A

McDonough, GA

46,315

3.8

4x5

No

472,500
Retail

Jo-Ann Fabric

CCC

Saugus, MA

22,500

8.8

4x5

Yes

468,014
Retail

Walgreens

BBB

Birmingham, AL

14,516

9.0

N/A

No

364,300
Retail

Walgreens

BBB

Alpharetta,  GA

15,120

5.6

N/A

No

362,880
Retail

Best Buy

BBB

McDonough, GA

30,038

6.0

4x5

No

337,500
Retail

Outback

BB-

Charlottesville, VA

7,216

11.5

4x5

Yes

307,555
Retail

Walgreens

BBB

Albany, GA

14,770

12.8

N/A

No

258,000
Retail

Outback

BB-

Charlotte, NC

6,297

11.5

4x5

Yes

220,074
Retail

Cheddar's (4)

BBB-

Jacksonville, FL

8,146

7.5

4x5

Yes

186,150
Retail

Scrubbles Car Wash (4)

N/A

Jacksonville, FL

4,512

17.6

4x5

Yes

188,602
Retail

Family Dollar

BBB-

Lynn, MA

9,228

4.0

7x5

No

160,000
Retail

7-Eleven

AA-

Austin, TX

6,400

15.1

3x5

Yes

374,769
Retail

7-Eleven

AA-

Georgetown, TX

7,726

15.1

4x5

Yes

287,758
Retail

Conn's HomePlus

B

Hurst, TX

37,957

11.4

4x5

No

451,688
Retail

Lehigh Gas Wholesale Services, Inc.

N/A

Highland Heights, KY

2,578

10.7

4x5

Yes

329,447
Retail

American Multi-Cinema, Inc.

CCC-

Tyngsborough, MA

39,474

10.0

2x5

No

522,113
Retail

Hobby Lobby

N/A

Tulsa, OK

84,180

10.8

4x5

No

841,800
Retail

Long John Silver's (4)

N/A

Tulsa, OK

3,000

N/A

N/A

No

24,000
Retail

Old Time Pottery

N/A

Orange Park, FL

84,180

10.3

2x5

Yes

439,403
Retail

Freddy's Frozen Custard (4)

N/A

Orange Park, FL

3,200

6.7

4x5

Yes

98,812

Total / Weighted Average

1,085,267

8.5

$
16,628,566

⁽¹⁾

~~Tenant, or tenant parent, credit rating.~~

⁽²⁾

~~Annualized straight-line base rental income in place as of March 31, 2020.~~

⁽³⁾

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.

⁽⁴⁾

~~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.~~

~~Table of Contents~~

~~SUMMARY OF OPERATING RESULTS FOR THE QUARTER ENDED MARCH 31, 2020 COMPARED TO MARCH 31, 2019~~ ~~(1)~~

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Revenues:

Lease Income

$
4,171,311

$
2,959,290
Total Revenues

4,171,311

2,959,290
Operating Expenses:

Real Estate Expenses

600,388

373,252
General and Administrative Expenses

1,283,790

508,687
Depreciation and Amortization

2,023,330

1,201,503
Total Operating Expenses

3,907,508

2,083,442
Net Income from Operations

263,803

875,848
Interest Expense

249,171

—
Net Income

14,632

875,848
Less: Net Income Attributable to Noncontrolling Interest

(1,963)

—
Net Income Attributable to Alpine Income Property Trust, Inc.

$
12,669

$
875,848

⁽¹⁾

Results of operations prior to November 25, 2019 represent the Predecessor activity of Consolidated-Tomoka Land Co. Subsequent to November 26, 2019, upon the acquisition of the Initial Portfolio from Consolidated-Tomoka Land Co.,presents the Company’s results of operations ~~are presented on a new basis of accounting pursuant to ASC 805.~~

~~General and Administrative Expenses~~ for the ~~Three Months Ended March 31, 2020 and 2019:~~three months ended June 30, 2022, as compared to the three months ended June 30, 2021 (in thousands):

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Management Fee to Manager

$
648,509

$
—
Director Stock Compensation Expense (1)

66,823

114,907
Director & Officer Insurance Expense

117,431

—
Additional General and Administrative Expense

451,027

—
Allocation of Predecessor General and Administrative Expense

—

393,780
Total General and Administrative Expenses

$
1,283,790

$
508,687

⁽¹⁾

~~For the Predecessor periods presented, stock compensation expense represents an allocation from Consolidated-Tomoka Land Co.~~


	Three Months Ended
	June 30, 2022		June 30, 2021		$ Variance		% Variance
Revenues:
Lease Income	$	11,280	$	6,597	$	4,683	71.0%
Total Revenues		11,280		6,597		4,683	71.0%
Operating Expenses:
Real Estate Expenses		1,285		824		461	55.9%
General and Administrative Expenses		1,479		1,286		193	15.0%
Depreciation and Amortization		5,694		3,463		2,231	64.4%
Total Operating Expenses		8,458		5,573		2,885	51.8%
Gain on Disposition of Assets		15,637		—		15,637	100.0%
Net Income from Operations		18,459		1,024		17,435	1702.6%
Interest Expense		2,123		678		1,445	213.1%
Net Income		16,336		346		15,990	4621.4%
Less: Net Income Attributable to Noncontrolling Interest		(2,054)		(42)		(2,012)	(4790.5)%
Net Income Attributable to Alpine Income Property Trust, Inc.	$	14,282	$	304	$	13,978	4598.0%

Revenue and Direct Cost of Revenues

Revenue from our ~~income~~ property operations during the quarter ended March 31, 2020 (the Company) and March 31, 2019 (Predecessor), totaled approximately $4.2 million and $3.0 million, respectively. The increase in the respective revenues during the periods presented is reflective of both the time periods presented as well as an increase in revenue from properties which were acquired by the Predecessor during the second and third quarters of 2019, included in the Initial Portfolio, in addition to the nine properties which were acquired by the Company during the three months ended ~~March 31, 2020.~~June 30, 2022 and 2021, totaled $11.3 million and $6.6 million, respectively. The $4.7 million increase in revenues is reflective of the Company’s volume of property acquisitions, partially offset by property sales. The direct costs of revenues for our ~~income~~ property operations totaled ~~approximately $600,000~~$1.3 million and ~~$373,000~~$0.8 million for the three months ended ~~March 31, 2020 (the Company)~~June 30, 2022 and ~~March 31, 2019 (Predecessor),~~2021, respectively. The $0.5 million increase in the direct cost of revenues ~~during the periods presented~~ is ~~reflective of both the time periods presented as well as an increase related~~also attributable to the ~~properties which were acquired by~~Company’s expanded property portfolio.

General and Administrative Expenses

The following table represents the ~~Predecessor during~~Company’s general and administrative expenses for the ~~second and third quarters of 2019, included in the Initial Portfolio, in addition~~three months ended June 30, 2022, as compared to the ~~nine properties which were acquired by the Company~~three months ended June 30, 2021 (in thousands):


	Three Months Ended
	June 30, 2022		June 30, 2021		$ Variance		% Variance
Management Fee to Manager	$	948	$	721	$	227	31.5%
Director Stock Compensation Expense		78		79		(1)	(1.3)%
Director & Officer Insurance Expense		96		129		(33)	(25.6)%
Additional General and Administrative Expense		357		357		—	0.0%
Total General and Administrative Expenses	$	1,479	$	1,286	$	193	15.0%

General and administrative expenses totaled $1.5 million and $1.3 million during the three months ended ~~March 31, 2020. Additionally,~~June 30, 2022 and 2021, respectively. The $0.2 million increase is primarily attributable to growth in the ~~three months ended March 31, 2020 included higher than expected direct cost of revenues of approximately $83,000~~Company’s equity base, which were the result of expensing costs associated with our due diligence on approximately $75 million of potential income property acquisitions which were terminated at the outset of the COVID-19 Pandemic.led to increased management fee expenses totaling $0.2 million.

~~Table of Contents~~

D~~epreciation~~Depreciation and Amortization

Depreciation and amortization expense totaled ~~approximately $2.0~~$5.7 million and ~~$1.2~~$3.5 million ~~for~~during the three months ended ~~March 31, 2020 (the Company)~~June 30, 2022 and ~~March 31, 2019 (Predecessor),~~2021, respectively. The $2.2 million increase in the depreciation and amortization expense ~~during the periods presented~~ is reflective of ~~both~~ the ~~time periods presented as well as an increase related to~~Company’s expanded property portfolio.

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Gain on Disposition of Assets

During the ~~properties which were acquired by the Predecessor during the second and third quarters of 2019, included in the Initial Portfolio, in addition to the nine properties which were acquired by~~three months ended June 30, 2022, the Company sold five properties for an aggregate sales price of $72.8 million, generating aggregate gains on sale of $15.6 million. No properties were sold during the three months ended ~~March 31, 2020.~~June 30, 2021.

Interest Expense

Interest expense totaled $2.1 million and $0.7 million during the three months ended June 30, 2022 and 2021, respectively. The $1.4 million increase in interest expense is attributable to the higher average outstanding debt balance during the three months ended June 30, 2022 as compared to the same period in 2021. The overall increase in the Company’s long-term debt was primarily utilized to fund the acquisitions of properties during the latter half of 2021 and year to date in 2022.

Net Income

Net income totaled $16.3 million and $0.3 million during the three months ended June 30, 2022 and 2021, respectively. The increase in net income is attributable to the factors described above.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

The following presents the Company’s results of operations for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021 (in thousands):


	Six Months Ended
	June 30, 2022		June 30, 2021		$ Variance		% Variance
Revenues:
Lease Income	$	22,079	$	12,487	$	9,592	76.8%
Total Revenues		22,079		12,487		9,592	76.8%
Operating Expenses:
Real Estate Expenses		2,377		1,475		902	61.2%
General and Administrative Expenses		2,910		2,316		594	25.6%
Depreciation and Amortization		11,366		6,606		4,760	72.1%
Total Operating Expenses		16,653		10,397		6,256	60.2%
Gain on Disposition of Assets		15,637		—		15,637	100.0%
Net Income from Operations		21,063		2,090		18,973	907.8%
Interest Expense		3,803		1,233		2,570	208.4%
Net Income		17,260		857		16,403	1914.0%
Less: Net Income Attributable to Noncontrolling Interest		(2,172)		(113)		(2,059)	(1822.1)%
Net Income Attributable to Alpine Income Property Trust, Inc.	$	15,088	$	744	$	14,344	1928.0%

Revenue and Direct Cost of Revenues

Revenue from our property operations during the six months ended June 30, 2022 and 2021, totaled $22.1 million and $12.5 million, respectively. The $9.6 million increase in revenues is reflective of the Company’s volume of property acquisitions, partially offset by property sales. The direct costs of revenues for our property operations totaled $2.4 million and $1.5 million for the six months ended June 30, 2022 and 2021, respectively. The $0.9 million increase in the direct cost of revenues is also attributable to the Company’s expanded property portfolio.

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General and Administrative Expenses

The following table represents the Company’s general and administrative expenses for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021 (in thousands):


	Six Months Ended
	June 30, 2022		June 30, 2021		$ Variance		% Variance
Management Fee to Manager	$	1,884	$	1,359	$	525	38.6%
Director Stock Compensation Expense		157		152		5	3.3%
Director & Officer Insurance Expense		192		257		(65)	(25.3)%
Additional General and Administrative Expense		677		548		129	23.5%
Total General and Administrative Expenses	$	2,910	$	2,316	$	594	25.6%

General and administrative expenses ~~reflected~~totaled $2.9 million and $2.3 million during the six months ended June 30, 2022 and 2021, respectively. The $0.6 million increase is primarily attributable to growth in the ~~statement of operations~~Company’s equity base, which led to increased management fee expenses totaling $0.5 million.

Depreciation and Amortization

Depreciation and amortization expense totaled ~~approximately $1.3~~$11.4 million and ~~$509,000 for~~$6.6 million during the ~~three~~six months ended ~~March 31, 2020 (the Company)~~June 30, 2022 and ~~March 31, 2019 (Predecessor),~~2021, respectively. ~~Changes~~The $4.8 million increase in ~~general~~the depreciation and ~~administrative expenses during the periods presented~~amortization expense is reflective of ~~both~~ the ~~time periods presented,~~Company’s expanded property portfolio.

Gain on Disposition of Assets

During the six months ended June 30, 2022, the Company sold five properties for an aggregate sales price of $72.8 million, generating aggregate gains on sale of $15.6 million. No properties were sold during the six months ended June 30, 2021.

Interest Expense

Interest expense totaled $3.8 million and $1.2 million during the six months ended June 30, 2022 and 2021, respectively. The $2.6 million increase in ~~addition~~interest expense is attributable to ~~changes~~the higher average outstanding debt balance during the six months ended June 30, 2022 as compared to the same period in 2021. The overall increase in the ~~nature~~Company’s long-term debt was primarily utilized to fund the acquisitions of ~~general~~properties during the latter half of 2021 and administrative expenses, as the three months ended March 31, 2019 (Predecessor) period represents an allocation of the parent company expenses versus actual general and administrative expenses incurred by the Company. The Predecessor general and administrative expenses are not indicative of the amount of general and administrative expenses we expectyear to incur on an annual basis subsequent to 2019. During the three months ended March 31, 2020, general and administrative expenses were impacted by the recognition of approximately $288,000 of costs associated with audit services related to the 2019 annual audit. The fees associated with our annual audit are recognized as the services are incurred, which typically occurs ratably throughout the year. Excluding this item, we believe our full year 2020 general and administrative expenses will bedate in ~~line with consensus expectations.~~2022.

Net Income

Net income ~~reflected in~~totaled $17.3 million and $0.9 million during the ~~statement of operations totaled approximately $15,000 and $876,000 for the three~~six months ended ~~March 31, 2020 (the Company)~~June 30, 2022 and ~~March 31, 2019 (Predecessor),~~2021, respectively. The ~~decrease~~increase in net income ~~for the three months ended March 31, 2020 (the Company) as compared to the three months ended March 31, 2019 (Predecessor) does not reflect a decrease of income directly~~is attributable to the Predecessor portfolio, rather the actual general and administrative expenses incurred during the three months ended March 31, 2020 were approximately $775,00 higher than the allocation of the Parent Company’s general and administrative expense to the Predecessor during the three months ended March 31, 2019.factors described above.

LIQUIDITY AND CAPITAL RESOURCES

Cash totaled ~~approximately $22.4~~$17.6 million ~~at March 31, 2020, and we~~as of June 30, 2022, including restricted cash of $15.1 million, see Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance as of June 30, 2022.

Long-Term Debt. As of June 30, 2022, the Company had ~~no restricted cash.~~

~~Long-term debt, at face value, totaled $57.0 million at March 31, 2020, representing~~ an ~~increase of $57.0 million from the~~outstanding balance of ~~$-0- at December 31, 2019.~~$72.5 million on the $150 million revolving Credit Facility. The ~~increase~~Company also had $200.0 million in term loans and $30.0 million in mortgage notes payable outstanding as of June 30, 2022. See Note 9, “Long-Term Debt” for the Company’s disclosure related to its long-term debt ~~was due to the draws on our Credit Facility including approximately $37 million for acquisitions and $20 million as part of the Company’s actions to respond to the COVID-19 Pandemic.~~ balance at June 30, 2022.

~~As of March 31, 2020, the Company’s outstanding indebtedness, at face value, was as follows:~~

Face Value Debt

Stated Interest Rate

Maturity Date
Credit Facility

$
57,000,000

30-Day LIBOR +
1.35% - 1.95% (1)

November 2023
Total Debt/Weighted-Average Rate

$
57,000,000

2.27%

⁽¹⁾

See Note 15, “Subsequent Events” for a description of the interest rate swap, effective as of April 30, 2020, whereby LIBOR was fixed at 0.48% for approximately $50 million of the outstanding balance on the Company’s revolving credit facility.

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~~Credit Facility.~~ The Company’s revolving $100 million credit facility (the “Credit Facility”), with Bank of Montreal (“BMO”) serving as the administrative agent for the lenders thereunder, is unsecured with regard to our income property portfolio but is guaranteed by certain wholly owned subsidiaries of the Company. The Credit Facility bank group is led by BMOAcquisitions and also includes Raymond James. The Credit Facility has a total borrowing capacity of $100.0 million with the ability to increase that capacity up to $150.0 million during the term, subject to lender approval. The Credit Facility provides the lenders with a secured interestDispositions. As further described in ~~the equity of~~Note 3, “Property Portfolio,” the Company subsidiaries that own the properties included in the borrowing base. The indebtedness outstanding under the Credit Facility accrues interest at a rate ranging from the 30-day LIBOR plus 135 basis points to the 30-day LIBOR plus 195 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 Credit Facility. The Credit Facility also accrues a fee of 15 to 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. See Note 15, “Subsequent Events” for a discussion of the potential impact on borrowing base assets due to the COVID-19 Pandemic and the interest rate swap entered into by the Company that fixes the rate on $50 million of the outstanding balance on the Credit Facility to a range of 1.83% to 2.43%.

At March 31, 2020, the current commitment level under the Credit Facility was $100.0 million. The available borrowing capacity under the Credit Facility was $30.1 million, based on the level of borrowing base assets. As of March 31, 2020, the Credit Facility had a $57.0 million balance. Subsequent to March 31, 2020, if we were to add the first quarter 2020 acquisitions to the borrowing base, we anticipate that the total borrowing base will increase the borrowing capacity to the $100 million commitment on the facility.

The Operating Partnership is subject to customary restrictive covenants under the Credit Facility, including, but not limited to, limitations on the Operating Partnership’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 Facility also contains financial covenants covering the Operating Partnership, including but not limited to, tangible net worth and fixed charge coverage ratio. In addition, the Operating Partnership is subject to additional financial maintenance covenants as described in the Credit Agreement.

~~Acquisitions and Investments.~~ ~~As noted previously, the Company’s operations commenced on November 26, 2019 and we did not acquire any single-tenant income~~(i) acquired 35 properties during the ~~period beginning with the commencement~~six months ended June 30, 2022 for an aggregate purchase price of ~~our operations~~$109.1 million and ~~December 31, 2019.~~ (ii) sold five properties for an aggregate sales price of $72.8 million, generating aggregate gains on sale of $15.6 million. One property was classified as held for sale as of June 30, 2022.

ATM Program. During the ~~three~~six months ended ~~March 31, 2020, we acquired nine single-tenant, net leased properties for a total investment of approximately $47 million.~~

~~As previously highlighted,~~June 30, 2022, the Company ~~suspended its acquisition activities~~sold 401,783 shares under the 2020 ATM Program for gross proceeds of $7.8 million at a weighted average price of $19.53 per share, generating net proceeds of $7.7 million.

Capital Expenditures. As of June 30, 2022, the ~~onset of the COVID-19 Pandemic and withdrew its previously provided guidance~~Company had no commitments related to capital expenditures for the ~~full year~~maintenance of ~~2020, including the target for acquisitions of income properties. Depending upon the duration~~fixed assets, such as land, buildings, and severity of the COVID-19 Pandemic, the Company could ultimately reach the targeted level of acquisitions for 2020 of up to $120 million, although no assurances can be made regarding the likelihood or timing of attaining that level of acquisitions. We expect to fund our acquisitions utilizing available capacity under the Credit Facility, cash from operations, and potentially the proceeds generated from future equity offerings or debt issuances.equipment.

~~Capital Expenditures.~~ The Company is obligated to fund approximately $708,000 to construct a new roof at the 102,019 square-foot property leased to Hilton Grand Vacations. A credit in the amount of approximately $708,000 was received from CTO at the closing of the acquisition of the property on November 26, 2019 and the Company has made payments through March 31, 2020 of approximately $379,000, leaving a remaining commitment of approximately $329,000 as of March 31, 2020.

We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, proceeds from the completion of the sale of assets utilizing the reverse like-kind 1031 exchange structure, $78.2 million of availability remaining under the 2020 ATM Program, and ~~approximately $30.1~~$77.5 million of available capacity on the existing ~~$100.0~~$150.0 million Credit ~~Facility, based on our current borrowing base of income properties, as of March 31, 2020.~~Facility.

~~Our~~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 ~~single-tenant~~ net leased ~~income~~ properties by utilizing ~~the~~ capital that we ~~raised in our IPO~~raise and available borrowing capacity from the Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.

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Non-GAAP Financial Measures

Our reported results are presented in accordance with GAAP. We also disclose FFO and AFFO, both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial ~~measures~~. 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 extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, amortization of ~~capitalized lease incentives and~~ above- and below-market lease related intangibles, non-cash compensation, and other non-cash ~~compensation.~~income or expense. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

Reconciliation of Non-GAAP ~~Measures:~~

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
Net Income

$
14,632

$
875,848
Depreciation and Amortization

2,023,330

1,201,503
Funds from Operations

2,037,962

2,077,351
Adjustments:

Straight-Line Rent Adjustment

(322,920)

(108,684)
Non-Cash Compensation

66,823

114,907
Amortization of Deferred Loan Costs to Interest Expense

44,404

—
Amortization of Intangible Assets and
Liabilities to Lease Income

(18,724)

(59,657)
Amortization of Deferred Expenses to Lease Income

—

75,658
Adjusted Funds from Operations

$
1,807,545

$
2,099,575

Weighted Average Number of Common Shares:

Basic

7,896,757

N/A
Diluted

9,120,611

N/A

Measures (in thousands, except share data):

~~Other Data:~~

Three Months Ended

March 31, 2020

March 31, 2019

The Company

Predecessor
FFO

$
2,037,962

$
2,077,351
FFO per diluted share

$
0.22

$
—
AFFO

$
1,807,545

$
2,099,575
AFFO per diluted share

$
0.20

$
—


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net Income	$	16,336	$	346	$	17,260	$	857
Depreciation and Amortization		5,694		3,463		11,366		6,606
Gain on Disposition of Assets		(15,637)		—		(15,637)		—
Funds From Operations	$	6,393	$	3,809	$	12,989	$	7,463
Adjustments:
Straight-Line Rent Adjustment		(234)		(117)		(528)		(264)
COVID-19 Rent Repayments		22		114		45		385
Non-Cash Compensation		78		79		157		152
Amortization of Deferred Financing Costs to Interest Expense		132		84		257		149
Amortization of Intangible Assets and Liabilities to Lease Income		(69)		(50)		(170)		(91)
Other Non-Cash Expense (Income)		23		(5)		47		(11)
Recurring Capital Expenditures		—		(22)		—		(41)
Adjusted Funds From Operations	$	6,345	$	3,892	$	12,797	$	7,742

Weighted Average Number of Common Shares:
Basic		11,844,108		8,853,259		11,753,904		8,212,902
Diluted		13,547,602		10,081,783		13,457,398		9,439,104

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

~~CONTRACTUAL OBLIGATIONS AND COMMITMENTS~~


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
FFO	$	6,393	$	3,809	$	12,989	$	7,463
FFO per Diluted Share	$	0.47	$	0.38	$	0.97	$	0.79

AFFO	$	6,345	$	3,892	$	12,797	$	7,742
AFFO per Diluted Share	$	0.47	$	0.39	$	0.95	$	0.82

As of March 31, 2020, approximately $329,000 in contractual obligations related to the Hilton Grand Vacations property are recorded as liabilities in our consolidated financial statements. There are no development obligations, which are not recognized as liabilities in our consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

None.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

~~The consolidated and combined financial statements included~~Critical accounting estimates include those estimates made in ~~this Quarterly Report are prepared in conformity with U.S. GAAP. The preparation of financial statements in conformity~~accordance with GAAP ~~requires management~~that involve a significant level of estimation uncertainty and have had or are reasonably likely to ~~make estimates and assumptions that affect~~have a material impact on the ~~reported amounts~~Company’s financial condition or results of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. The development and selection of these critical accounting policies have been determined by management and the related disclosures have been reviewed with the Audit Committee of the Board of Directors of the Company. Actual results could differ from those estimates.

operations. Our most significant accounting policies are more fully described in Note 3, “Summary of Significant Accounting Policies” to the consolidated and combined financial statements included in this Quarterly Report on Form 10-Q; however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, areestimate is as follows:

~~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.

Because of, among other factors, the fluctuating market conditions that currently exist in the national real estate markets, and the volatility and uncertainty in the financial and credit markets, it is possible that the estimates and assumptions, most notably those related to the Predecessor’s investment in income properties, could change materially due to the continued volatility of the real estate and financial markets or as a result of a significant dislocation in those markets.

~~Long-Lived Assets.~~ ~~The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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, 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, an income 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.

Purchase Accounting for Acquisitions of Real Estate Subject to a ~~Lease.~~ Upon acquisition of real estate, the Company determines whether the transaction is a business combination, which is accounted for under the acquisition method, or an acquisition of assets. For both types of transactions, the Company recognizes and measures identifiable assets acquired, liabilities assumed and any noncontrolling interests in the acquire based on their relative fair values. For business combinations, the Company recognizes and measures goodwill or gain from a bargain purchase, if applicable, and expenses acquisition-related costs in the periods in which the costs are incurred. For acquisitions of assets, acquisition-related costs are capitalized on the Company's consolidated balance sheets. If the Company acquires real estate and simultaneously enters into a new lease of the real estate the acquisition will be accounted for as an asset acquisition.

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~~In accordance with the FASB guidance on business combinations,~~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 ~~(using an interest rate which reflects the risks associated with the leases acquired)~~to each of the ~~difference between (i)~~various line items within the contractual amounts to be received pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease, including the probability of renewal periods. 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 the management believes that it is likely that the tenant will renew the option whereby the Predecessor amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is 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. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition.

~~Income Property Lease Revenue. The rental arrangements associated with the~~ Company’s income 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 accompany consolidated balance sheets could have an impact on the Company’s financial condition as well as results of ~~March 31, 2020~~operations due to resulting changes in depreciation and ~~December 31, 2019.~~amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled 35 properties for a combined purchase price of $109.1 million for the six months ended June 30, 2022 and 23 properties for a combined purchase price of $103.2 million for the six months ended June 30, 2021.

~~Stock-Based Compensation.~~ The Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans, to provide equity incentive opportunities to members of our Manager’s management team and employees who perform services for us, our independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to our Manager. The Company’s Equity Incentive Plans provide for grants of stock options, stock appreciation rights, stock awards, restricted stock units, cash awards, dividend equivalent rights, other equity-based awards, including long-term incentive plan units, and incentive awards. A total of 684,494 shares of Common Stock have been authorized for issuance under the Equity Incentive Plans.

~~New Accounting Pronouncements.~~ ~~Refer to~~See Note 3,2, “Summary of Significant Accounting Policies” to, for further discussion of the ~~consolidated~~Company’s accounting estimates and ~~combined financial statements included in this Quarterly Report on Form 10-Q.~~policies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined in ~~Rule 12b-2 under the Securities Exchange Act~~Item 10(f)(1) of ~~1934.~~Regulation S-K. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.

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ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation, as required by Rules ~~13a-15~~13(a)-15 and ~~15d-15 under~~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 ~~our~~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) ~~under~~of the Exchange Act). Based on that evaluation, ~~our~~the CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures ~~were~~are effective ~~as of March 31, 2020,~~ 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 ~~the Securities and Exchange Commission’s~~SEC rules and forms, and to provide reasonable assurance that information required

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to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including ~~our~~its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the ~~three~~six months ended ~~March 31, 2020,~~June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

As of ~~March 31, 2020,~~June 30, 2022, there have been no material changes in our risk factors from those set forth ~~in our Annual Report on Form 10-K for~~under the year ended December 31, 2019 (the “Form 10-K”). However, in light of the onset of the COVID-19 Pandemic, we have expanded the following risk factors disclosed in the Form 10-K to provide additional specificity to the matters covered by such risk factors:

~~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 single-tenant 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;~~

~~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;~~

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~~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 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.~~

~~Our business is dependent upon our tenants successfully operating their businesses, and their failure to do so could materially and adversely affect us.~~

Each of our properties is occupied by a single tenant. Therefore, the success of our investments in these properties is materially dependent upon the performance of our 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 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.

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. Restaurants (including quick service and casual and family dining), home furnishings, entertainment (including movie theaters), sporting goods and health and fitness represent a significant portion of the industries in our portfolio. The

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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.

~~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.

There had been no public market for our common stock prior to our IPO and an active trading market may not be sustained or be liquid in the future, which may cause the market price of our common stock to decline significantly and make it difficult for investors to sell their shares.

Prior to our IPO, there had been no public market for our common stock, and there can be no assurance that an active trading market in our common stock will be sustained or be liquid. There can be no assurance that our common stock will not trade below the IPO Price. The market price of our common stock could be substantially affected by general market conditions, including the extent to which a secondary market develops and is sustained for our common stock following the completion of our IPO, the extent of institutional investor interest in us, the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities of other entities (including securities issued by other real estate-based companies), our financial performance and prospects and general stock and bond market conditions.

The stock markets, including the NYSE on which our shares are listed, have from time to time experienced significant price and volume fluctuations. As a result, the market price of our common stock may be similarly volatile, and investors in shares of our common stock may from time to time experience a decrease in the market price of their shares, including decreases unrelated to our financial performance or prospects. The market price of shares of our common stock could be subject to wide fluctuations in response to a number of factors, including those discussed in this “Risk Factors” section, and others, such as:

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~~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, FFO, 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~~;

~~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;~~

~~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 qualify and 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.

The current COVID-19 Pandemic, and the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our tenant’s business operations and as a result adversely impact our financial condition, results of operations, cash flows and performance.

Since late December 2019, the COVID-19 Pandemic has spread globally, including every state in the United States. The COVID-19 Pandemic has had, and other future pandemics could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 Pandemic has significantly adversely impacted global economic activity and produced significant volatility in the global financial markets. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel.

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Certain states and cities, including where we own properties, have also reacted by instituting quarantines, restrictions on travel, “shelter at home” rules, and importantly restrictions on the types of business that may continue to operate or requiring others to shut down completely. Additional states and cities may implement similar restrictions. As a result, the COVID-19 Pandemic is negatively impacting most every industry directly or indirectly. A number of our tenants have announced temporary closures of their stores and requested deferral, or in some instances, rent abatement while the pandemic remains. Many experts predict that the COVID-19 Pandemic will trigger, or even has already triggered, a period of global economic slowdown or possibly a global recession. The COVID-19 Pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate our business and as a result our financial condition, results of operations and cash flows due to, among other factors:

~~a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action;~~

the reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations;

~~the reduced economic activity could result in a recession, which could negatively impact consumer discretionary spending;~~

difficulty accessing debt and equity capital on attractive terms, or at all, and 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 on a timely basis;

~~a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties;~~

a deterioration in our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' efficient operations could adversely affect our operations and those of our tenants; and

the potential negative impact on the health of our Manager’s personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption.

The extent to which the COVID-19 Pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with any degree of certainty, including the scope, severity and duration of the COVID-19 Pandemic, and the impact of actions taken by governmental and health organizations to contain the COVID-19 Pandemic or mitigate its impact, and the direct and indirect economic effects of the COVID-19 Pandemic and containment measures, among others. Additional closures by our tenants of their businesses and early terminations by our tenants of their leases could reduce our cash flows, which could impact our ability to continue paying dividends to our stockholders at expected levels or at all. The rapid onset of the COVID-19 Pandemic and the continued uncertainty of its duration and long-term impact precludes any prediction of the magnitude of the adverse impact on the U.S. economy, our tenant’s businesses and ours. Consequently, the COVID-19 Pandemic presents material uncertainty and risk with respect to our business operations, our Manager’s business, and therefore our financial condition, results of operations, and cash flows. Further, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, including those disclosed in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, should be interpreted as heightened risks as a result of the impact of the COVID-19 Pandemic.

Certain statements contained in this report (other than statements of historical fact) are forward-looking statements. 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.

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We wish to caution readers that the assumptions, which form the basis for forward-looking statements with respect to or that may impact earnings for the year-ended December 31, 2020, and thereafter, include many factors that are beyond the Company’s ability to control or estimate precisely. 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; any loss of key management personnel; changes in local, regional, and national economic conditions affecting the real estate development business and income properties; the impact of competitive real estate activity; the loss of any major income property tenants; 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.

~~In addition to the other information set forth in this report, you should carefully consider the factors discussed in~~heading Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form ~~10‑K~~10-K for the year ended December 31, ~~2019. There have been no material changes to those risk factors.~~2021 (the “Form 10-K”). The risks described in the ~~Annual Report on~~ Form ~~10‑K~~10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company.

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

~~There were no unregistered sales of equity securities during the three months ended March 31, 2020 which were not previously reported.~~Not applicable

~~Issuer Purchases of Equity Securities~~

~~The following share repurchases were made during the three months ended March 31, 2020:~~

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

1/1/2020 - 1/31/2020

—

$
—

—

$
—

2/1/2020 - 2/29/2020

—

—

—

—

3/1/2020 - 3/31/2020

57,852

10.43

57,852

4,407,644
(1)
Total

57,852

$
10.43

57,852

⁽¹⁾

In March 2020, the Company’s Board of Directors approved a $5 million stock repurchase program under which approximately $592,000 of the Company’s stock had been repurchased as of March 31, 2020. The repurchase program does not have an expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not applicable

4236

Table of Contents

ITEM 6. EXHIBITS

(a)

Exhibits:


	~~(a)~~		~~Exhibits:~~



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

Exhibit 3.2		Second Amended and Restated Bylaws of Alpine Income Property Trust, Inc. (incorporated by reference to Exhibit ~~3.2~~3.1 to the Company’s Current Report on Form 8-K filed on ~~December 3, 2019)~~July 22, 2021)..

Exhibit 4.1		Specimen Common Stock Certificate of Alpine Income Property Trust, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-11/A (File No. 333-234304) filed with the Commission on October 29, 2019)..

Exhibit ~~31.1~~10.1		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).

Exhibit 10.2		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, the Lenders from time to time parties thereto, and KeyBank National Association (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 18, 2022).

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

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

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

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

Exhibit 101.INS		Inline XBRL Instance Document

Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF		Inline XBRL Taxonomy Definition Linkbase Document

Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

4337

Table of Contents

~~Signatures~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ALPINE INCOME PROPERTY TRUST, INC.
	(Registrant)

~~May 7, 2020~~July 21, 2022	By:	/s/ John P. Albright
		John P. Albright President and Chief Executive Officer (Principal Executive Officer)

~~May 7, 2020~~July 21, 2022	By:	/s/ ~~Mark E. Patten~~Matthew M. Partridge
		Matthew M. Partridge, Senior Vice President and Chief Financial Officer and Treasurer (Principal Financial Officer)
July 21, 2022	~~Mark E. Patten, Senior~~By:	/s/ Lisa M. Vorakoun
		Lisa M. Vorakoun, Vice President and Chief ~~Financial~~Accounting Officer ~~and Treasurer~~ (Principal ~~Financial and~~ Accounting Officer)

4438


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

1140 N. Williamson Blvd., Suite 140
Daytona Beach, Florida		32114
(Address of principal executive offices)		(Zip Code)




Title of each class:	Trading Symbol	Name of each exchange on which registered:
COMMON STOCK, $0.01 PAR VALUE	PINE	NYSE



Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☒	Smaller Reporting Company	☒

		Emerging Growth Company	☒


		Page

		~~Page~~
		No.
~~PART I—FINANCIAL INFORMATION~~

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements		3

Consolidated Balance Sheets – ~~March 31, 2020~~June 30, 2022 (Unaudited) and December 31, ~~201~~20219		3

Consolidated ~~and Combined~~ Statements of Operations – Three and six months ended ~~March 31, 2020~~June 30, 2022 and ~~2019~~2021 (Unaudited)		4

Consolidated Statements of Comprehensive Income – Three and ~~Combined~~six months ended June 30, 2022 and 2021 (Unaudited)		5

Consolidated Statements of Stockholders’ Equity – Three and six months ended ~~March 31, 2020~~June 30, 2022 and ~~2019~~2021 (Unaudited)		5 6

Consolidated ~~and Combined~~ Statements of Cash Flows – ~~Three~~Six months ended ~~March 31, 2020~~June 30, 2022 and ~~2019~~2021 (Unaudited)		6 8

Notes to Consolidated ~~and Combined~~ Financial Statements (Unaudited)		8 10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27 28

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risks~~Risk		3635

Item 4. Controls and Procedures		37 35

PART II—OTHER INFORMATION		37 36

Item 1. Legal Proceedings		37 36

Item 1A. Risk Factors		37 36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42 36

Item 3. Defaults Upon Senior Securities		42 36

Item 4. Mine Safety Disclosures		42 36

Item 5. Other Information		42 36

Item 6. Exhibits		43 37

SIGNATURES		44 38


	As of
	(Unaudited) March 31, 2020		December 31, 2019
ASSETS
Real Estate:
Land, at cost	$	66,325,972	$	54,386,511
Building and Improvements, at cost		103,708,481		74,070,181
Total Real Estate, at cost		170,034,453		128,456,692
Less, Accumulated Depreciation		(1,679,046)		(416,235)
Real Estate—Net		168,355,407		128,040,457
Cash and Cash Equivalents		22,358,521		12,341,978
Intangible Lease Assets—Net		28,410,110		22,357,633
Straight-Line Rent Adjustment		390,936		68,016
Deferred Expenses		—		577,272
Other Assets		1,097,774		787,317
Total Assets	$	220,612,748	$	164,172,673
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities	$	2,148,845	$	1,471,722
Prepaid Rent and Deferred Revenue		754,097		87,481
Intangible Lease Liabilities—Net		2,901,065		1,908,193
Long-Term Debt		56,467,132		—
Total Liabilities		62,271,139		3,467,396
Commitments and Contingencies
Equity:
Alpine Income Property Trust, Inc. Stockholders' Equity:
Preferred Stock, $0.01 par value per share, 100 million shares authorized, no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		—		—
Common Stock, $0.01 par value per share, 500 million shares authorized, 7,904,006 shares issued and outstanding as of March 31, 2020 and 7,902,737 shares issued and outstanding December 31, 2019		79,040		79,027
Additional Paid-in Capital		137,392,197		137,947,575
Accumulated Deficit		(2,307,774)		(497,508)
Stockholders' Equity		135,163,463		137,529,094
Noncontrolling Interest		23,178,146		23,176,183
Total Equity		158,341,609		160,705,277
Total Liabilities and Equity	$	220,612,748	$	164,172,673


	As of
	(Unaudited) June 30, 2022		December 31, 2021
ASSETS
Real Estate:
Land, at Cost	$	180,569	$	178,172
Building and Improvements, at Cost		304,129		266,236
Total Real Estate, at Cost		484,698		444,408
Less, Accumulated Depreciation		(17,527)		(15,419)
Real Estate—Net		467,171		428,989
Assets Held for Sale		2,435		—
Cash and Cash Equivalents		2,427		8,851
Restricted Cash		15,131		646
Intangible Lease Assets—Net		61,371		58,821
Straight-Line Rent Adjustment		1,912		1,838
Other Assets		16,909		6,369
Total Assets	$	567,356	$	505,514
LIABILITIES AND EQUITY
Liabilities:
Accounts Payable, Accrued Expenses, and Other Liabilities	$	4,788	$	2,363
Prepaid Rent and Deferred Revenue		1,662		2,033
Intangible Lease Liabilities—Net		5,177		5,476
Long-Term Debt		300,973		267,740
Total Liabilities		312,600		277,612
Commitments and Contingencies—See Note 16
Equity:
Preferred Stock, $0.01 par value per share, 100 million shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021		—		—
Common Stock, $0.01 par value per share, 500 million shares authorized, 11,863,589 shares issued and outstanding as of June 30, 2022 and 11,454,815 shares issued and outstanding as of December 31, 2021		119		114
Additional Paid-in Capital		208,706		200,906
Retained Earnings (Dividends in Excess of Net Income)		2,301		(6,419)
Accumulated Other Comprehensive Income		10,999		1,922
Stockholders' Equity		222,125		196,523
Noncontrolling Interest		32,631		31,379
Total Equity		254,756		227,902
Total Liabilities and Equity	$	567,356	$	505,514


	Predecessor Equity		Common Stock at Par		Additional Paid-in Capital		Retained Earnings (Deficit)		Stockholders' Equity		Noncontrolling Interest		Total Equity
The Company
Balance January 1, 2020	$	—	$	79,027	$	137,947,575	$	(497,508)	$	137,529,094	$	23,176,183	$	160,705,277
Net Income		—		—		—		12,669		12,669		1,963		14,632
Stock Repurchase		—		—		(592,356)		—		(592,356)		—		(592,356)
Stock Issuance to Directors		—		13		36,978		—		36,991		—		36,991
Cash Dividend ($0.20 per share)		—		—		—		(1,822,935)		(1,822,935)		—		(1,822,935)
Balance March 31, 2020	$	—	$	79,040	$	137,392,197	$	(2,307,774)	$	135,163,463	$	23,178,146	$	158,341,609


Tenant Description	Property Location	Date of Acquisition	Property Square-Feet	Purchase Price		Remaining Lease Term at Acquisition Date (in years)
7-Eleven (1)	Austin, TX	1/13/2020	6,400	$	5,762,416	15.0
7-Eleven (1)	Georgetown, TX	1/13/2020	7,726		4,300,474	15.0
Conn's HomePlus	Hurst, TX	1/10/2020	37,957		6,100,000	11.6
Lehigh Gas Wholesale Services, Inc.	Highland Heights, KY	2/03/2020	2,578		4,250,000	10.8
American Multi-Cinema, Inc.	Tyngsborough, MA	2/19/2020	39,474		7,055,000	10.1
Hobby Lobby	Tulsa, OK	2/28/2020	84,180		12,486,334	10.8
Long John Silver's	Tulsa, OK	2/28/2020	3,000		263,666	N/A
Old Time Pottery	Orange Park, FL	2/28/2020	84,180		6,311,702	10.4
Freddy's Frozen Custard	Orange Park, FL	2/28/2020	3,200		303,298	6.8
	Total / Weighted Average		268,695	$	46,832,890	11.5


			Future Accretion		Net Future
	Future		to Income		Amortization of
	Amortization		Property		Intangible Assets
Year Ending December 31,	Expense		Revenue		and Liabilities
Remainder of 2020	$	2,538,288	$	(90,179)	$	2,448,109
2021		3,384,384		(120,239)		3,264,145
2022		3,384,384		(120,239)		3,264,145
2023		3,384,384		(120,239)		3,264,145
2024		3,153,851		(108,908)		3,044,943
2025 and thereafter		10,711,248		(487,690)		10,223,558
Total	$	26,556,539	$	(1,047,494)	$	25,509,045


	Face Value Debt		Stated Interest Rate	Maturity Date
Credit Facility	$	57,000,000	30-Day LIBOR + 1.35% - 1.95% (1)	November 2023
Total Debt/Weighted-Average Rate	$	57,000,000	2.27%


	Three Months Ended
	March 31, 2020 ($ 000's)
Stock Compensation Expense – Director Restricted Stock	$	13
Stock Compensation Expense – Director Retainers Paid in Stock		54
Total Stock Compensation Expense (1)	$	67


	As of
Description	March 31, 2020 ($000's)		December 31, 2019 ($000's)
Management Fee due to CTO (1)	$	649	$	254
Dividend Payable on OP Units		316		71
Other		(13)		56
Total	$	952	$	381


	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
1/1/2020 - 1/31/2020	—	$	—	—	$	—
2/1/2020 - 2/29/2020	—		—	—		—
3/1/2020 - 3/31/2020	57,852		10.43	57,852		4,407,644	(1)
Total	57,852	$	10.43	57,852