Alpine Income Q2 Revenue Jumps 19%

Alpine Income Property Trust (PINE -1.25%), a real estate investment trust focused on owning and managing a diversified portfolio of net leased retail and commercial properties, reported its second quarter results on July 24, 2025. The most notable news was a beat on GAAP revenue, which reached $14.86 million, surpassing analyst expectations of $14.42 million. However, earnings per share (EPS), as reported under Generally Accepted Accounting Principles (GAAP), disappointed at -$0.12 per share compared to consensus estimates of -$0.03. This miss in GAAP net income was primarily due to higher impairment charges and increased interest expense. While the company delivered growth in core operational metrics such as Funds From Operations (FFO) and Adjusted FFO (AFFO) compared to the prior year period, the quarter was mixed overall, with operational strengths somewhat offset by financial headwinds and a GAAP net loss.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Focus

Alpine Income Property Trust is structured as a real estate investment trust, or REIT. It acquires and manages single-tenant commercial properties, primarily leasing to retail and service businesses on a net lease basis. Net leases pass many property expenses to tenants, providing more predictable cash flows for the landlord.

Its strategy centers on investing in properties leased to tenants with strong credit profiles and long-term agreements. As of June 30, 2025, 51% of annualized base rent comes from investment-grade tenants, and the portfolio remains highly occupied at 98.2%. Extended lease terms, tenant credit quality, and location diversification are major factors supporting its steady rental income. The company is also actively rebalancing its property mix, selling lower-yield or higher-risk assets and directing proceeds into accretive acquisitions and commercial loans.

Quarter in Detail: Achievements, Performance, and Portfolio Adjustments

Revenue climbed by 18.99% compared to the same quarter last year. Rental income and interest income from commercial loans both increased (GAAP). Interest income on loans rose sharply (GAAP). Occupancy levels stayed robust at 98.2%, and the company extended its weighted average remaining lease term to 8.9 years. This longer-term lease structure provides greater certainty and predictability for future cash flows and is considered a strength in the REIT business model.

Despite the higher revenue, GAAP net income moved into negative territory. The main reasons were a $2.8 million impairment charge—reflecting anticipated losses on certain assets marked for sale—and significantly higher interest costs, now at $4.32 million due to larger debt balances and higher rates (GAAP). Higher impairment charges can occur when properties are sold below their recorded accounting value or when asset values decline in a challenging market.

The company’s core operating metrics for real estate investment trusts, Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO), both non-GAAP measures, rose modestly year-over-year. These measures strip out non-cash accounting items such as property depreciation and certain one-time charges, offering a clearer picture of the cash-generating ability of the business. FFO per diluted share and AFFO per diluted share were both $0.44, up from $0.43 in the prior year period; both are non-GAAP measures. Management describes this growth as the result of “effectively execute our strategy focused on accretive capital recycling”

During the quarter, Alpine continued its portfolio pruning and capital recycling activities. It completed $6.6 million in new loan investments and made property sales totaling $16.5 million. The company has prioritized selling properties with shorter leases or less stable tenants. As a result, tenant concentration is less risky: the largest tenants (Dick’s Sporting Goods and Lowe’s) now each account for 10% of annualized base rent (GAAP annualized in-place straight-line base rent), while Walgreens dropped to the fifth largest tenant, further diluting exposure to at-risk retailers.

Interest income from these loans increased from $986,000 in Q2 2024 to $2,737,000. While these loans offer attractive yields, they can carry different risks compared to the company’s net-lease property investments.

Net debt to pro forma adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) is at 8.1x, a metric that underscores how much debt the company uses compared to its recurring earnings. This figure ticked upwards, in part due to investment activity and share repurchases, with $8.8 million spent in the first half of 2025. Management has indicated it expects deleveraging through future asset sales and loan repayments. Total liquidity at the end of the quarter stood at $57.3 million, with substantial credit line availability and no major debt maturing until May 2026.

Dividends declared and paid per share increased for the three- and six-month periods ended June 30, 2025, compared to the same periods in 2024, with the payout at $0.285 per share. This continues the company’s practice of annual dividend increases since its public listing. The current dividend represents approximately 65% of FFO and AFFO, suggesting good cash coverage of distributions. No extraordinary or special dividend payments occurred during the quarter.

Looking Ahead: Guidance and Investor Focus

Management reaffirmed its full-year guidance, projecting FFO and AFFO per diluted share (non-GAAP) in the range of $1.74 to $1.77. Planned investment activity is set at $100 million to $130 million, with $50 million to $70 million of asset dispositions also in the forecast. Guidance assumes stability in portfolio cash flows, with potential upside if the company is able to sell two currently vacant properties (not yet reflected in guidance).

Investors should closely watch several key areas in coming quarters. These include the ongoing reduction in tenant concentration risks, progress in shifting the portfolio toward stronger lease terms and tenant quality, and the execution of planned property dispositions and new loan activity. Elevated leverage and interest costs bear monitoring until asset sales and loan repayments potentially lower debt levels. The company’s policy of regular dividend increases appears intact.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.