Alpine Income Property Trust, Inc. - 10-Q filing on 2021-10-21

INCOME PROPERTY PORTFOLIO

9 Months Ended

Sep. 30, 2021

NOTE 3. INCOME PROPERTY PORTFOLIO

As of September 30, 2021, the Company’s income property portfolio consisted of 89 properties with total square footage of 2.7 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.

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


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Lease Income
Lease Payments	$	7,418	$	4,721	$	18,850	$	12,762
Variable Lease Payments		753		380		1,808		1,101
Total Lease Income	$	8,171	$	5,101	$	20,658	$	13,863

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 September 30, 2021, are summarized as follows (in thousands):


Year Ending December 31,	Amounts
Remainder of 2021	$	8,167
2022		32,264
2023		32,181
2024		31,465
2025		30,467
2026 and thereafter (cumulative)		118,512
Total	$	253,056

2021 Activity. During the nine months ended September 30, 2021, the Company acquired 42 income properties for a combined purchase price of $158.7 million, or an acquisition cost of $160.0 million including capitalized acquisition costs. Of the total acquisition cost, $52.1 million was allocated to land, $89.6 million was allocated to buildings and improvements, $20.5 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $2.2 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 8.4 years at acquisition.

The leases attributable to the income properties acquired during the nine months ended September 30, 2021 are described below:


Description	Location	Date of Acquisition	Square-Feet	Purchase Price ($000's)			Remaining Lease Term at Acquisition Date (in years)
Dollar General	Cut and Shoot, TX	1/25/2021	9,096	$	1,727		14.8
Dollar General	Del Rio, TX	1/25/2021	9,219		1,403		14.0
Dollar General	Seguin, TX	1/25/2021	9,155		1,290		14.1
At Home	Canton, OH	3/09/2021	89,902		8,571		8.4
Pet Supplies Plus	Canton, OH	3/09/2021	8,400		1,135		6.6
Salon Lofts	Canton, OH	3/09/2021	4,000		694		7.0
Sportsman Warehouse	Albuquerque, NM	3/29/2021	48,974		7,100		8.4
Burlington Stores, Inc.	North Richland Hills, TX	4/23/2021	70,891		11,528		7.8
Academy Sports	Florence, SC	6/22/2021	58,410		7,650		7.7
Big Lots	Durant, OK	6/25/2021	36,794		1,836		5.5
Orscheln	Durant, OK	6/25/2021	37,965		2,017		1.7
Lowe's	Katy, TX	6/30/2021	131,644		14,672		11.1
Harris Teeter	Charlotte, NC	6/30/2021	45,089		8,273		6.8
Rite Aid	Renton, WA	6/30/2021	16,280		7,200		5.1
Walgreens	Clermont, FL	6/30/2021	13,650		5,085		7.2
Big Lots	Germantown, MD	6/30/2021	25,589		4,670		9.6
Big Lots	Phoenix, AZ	6/30/2021	34,512		4,599		9.6
Circle K	Indianapolis, IN	6/30/2021	4,283		2,800	⁽¹⁾	3.4
Burger King	Plymouth, NC	6/30/2021	3,142		1,736	⁽¹⁾	6.8
Dollar Tree	Demopolis, AL	6/30/2021	10,159		1,615	⁽¹⁾	8.7
Firestone	Pittsburgh, PA	6/30/2021	10,629		1,468	⁽¹⁾	7.8
Advance Auto Parts	Ware, MA	6/30/2021	6,889		1,396	⁽¹⁾	3.6
Grease Monkey	Stockbridge, GA	6/30/2021	1,846		1,318	⁽¹⁾	12.3
Hardee's	Boaz, AL	6/30/2021	3,542		1,185	⁽¹⁾	9.4
Schlotzsky's	Sweetwater, TX	6/30/2021	2,431		1,147	⁽¹⁾	14.0
Advance Auto Parts	Athens, GA	6/30/2021	6,871		1,127	⁽¹⁾	3.6
Family Dollar	Burlington, NC	7/01/2021	11,394		1,618		9.8
O'Reilly Auto Parts	Duluth, MN	7/12/2021	11,182		1,030	⁽¹⁾	6.4
Tractor Supply	Washington Court House, OH	8/27/2021	39,984		2,370		10.8
Harbor Freight	Midland, MI	8/31/2021	14,624		1,750		4.8
Camping World	Duluth, MN	9/14/2021	66,033		10,451		12.3
Advance Auto Parts	Ludington, MI	9/14/2021	6,604		1,050		10.3
Advance Auto Parts	New Baltimore, MI	9/14/2021	6,784		1,050		10.3
Dollar Tree	Stillwell, OK	9/17/2021	9,828		1,576		10.5
O'Reilly Auto Parts	Angels Camp, CA	9/22/2021	7,066		2,125		4.5
Walmart	Hempstead, TX	9/28/2021	52,190		4,450		5.3
7-Eleven	Olathe, KS	9/30/2021	4,146		3,782		5.7
At Home	Turnersville, NJ	9/30/2021	89,460		7,181		8.1
Boston Market	Turnersville, NJ	9/30/2021	2,627		1,027		8.3
Verizon	Turnersville, NJ	9/30/2021	6,027		3,568		5.8
Advance Auto Parts	St. Paul, MN	9/30/2021	7,201		2,305		7.1
Hobby Lobby	Aberdeen, SD	9/30/2021	49,034		3,150		3.4
Dollar Tree	Albuquerque, NM	9/30/2021	10,023		1,081		9.4
Office Depot	Albuquerque, NM	9/30/2021	30,346		3,814		2.3
Valero ⁽²⁾	Jackson, MS	9/30/2021	1,920		1,067		20.0
Valero ⁽²⁾	Leland, MS	9/30/2021	3,375		977		20.0
	Total / Weighted Average		1,129,210	$	158,664		8.1

(1)	The aggregate purchase price of $14.8 million was partially funded through the issuance of 479,640 OP Units valued at $9.0 million, see Note 10, “Equity.”

(2)	Subject to a master lease agreement.

On July 21, 2021, the Company disposed of one income property, classified as held for sale as of June 30, 2021, leased to Outback Steakhouse located in Huntersville, North Carolina, for a sales price of $3.8 million, generating a gain on sale of $0.5 million.

2020 Activity. During the nine months ended September 30, 2020, the Company acquired 26 income properties for a combined purchase price of $99.3 million, or an acquisition cost of $100.3 million including capitalized acquisition costs. Of the total acquisition cost, $25.8 million was allocated to land, $59.7 million was allocated to buildings and improvements, $16.1 million was allocated to intangible assets pertaining to the in-place lease value, leasing fees, and above market lease value, and $1.3 million was allocated to intangible liabilities for the below market lease value. The weighted average amortization period for the intangible assets and liabilities was 10.2 years at acquisition.

The net lease income properties acquired during the nine months ended September 30, 2020 are described below:


Description	Location	Date of Acquisition	Square-Feet	Purchase Price ($000's)		Remaining Lease Term at Acquisition Date (in years)
Conn's HomePlus	Hurst, TX	1/10/2020	37,957	$	6,100	11.6
7-Eleven	Austin, TX	1/13/2020	6,400		5,762	15.0
7-Eleven	Georgetown, TX	1/13/2020	7,726		4,301	15.0
Lehigh Gas Wholesale Services, Inc.	Highland Heights, KY	2/03/2020	2,578		4,250	10.8
American Multi-Cinema, Inc.	Tyngsborough, MA	2/19/2020	39,474		7,055	10.1
Hobby Lobby	Tulsa, OK	2/28/2020	84,180		12,486	10.8
Long John Silver's	Tulsa, OK	2/28/2020	3,000		264	N/A
Old Time Pottery	Orange Park, FL	2/28/2020	84,180		6,312	10.4
Freddy's Frozen Custard	Orange Park, FL	2/28/2020	3,200		303	6.8
Hobby Lobby	Arden, NC	6/24/2020	55,000		7,987	11.2
Walmart	Howell, MI	6/30/2020	214,172		20,590	6.6
Advanced Auto Parts	Severn, MD	9/14/2020	6,876		2,588	14.5
Dollar General	Heuvelton, NY	9/14/2020	9,342		1,462	12.1
Dollar General	Winthrop, NY	9/14/2020	9,167		1,589	11.0
Dollar General	Salem, NY	9/14/2020	9,199		1,485	13.0
Dollar General	Harrisville, NY	9/14/2020	9,309		1,466	13.3
Dollar General	Newtonsville, OH	9/14/2020	9,290		1,164	9.7
Dollar General	Hammond, NY	9/14/2020	9,219		1,384	12.3
Dollar General	Barker, NY	9/14/2020	9,275		1,439	13.2
Dollar General	Chazy, NY	9/14/2020	9,277		1,673	11.0
Dollar General	Milford, ME	9/21/2020	9,128		1,606	13.1
Dollar General	Limestone, ME	9/21/2020	9,167		1,456	13.1
Dollar General	Bingham, ME	9/21/2020	9,345		1,522	13.1
Dollar General	Willis, TX	9/23/2020	9,138		1,774	14.9
Dollar General	Somerville, TX	9/23/2020	9,252		1,472	14.8
Dollar General	Odessa, TX	9/30/2020	9,127		1,792	14.8
	Total / Weighted Average		673,978	$	99,282	10.8

On September 25, 2020, the Company disposed of one income property, classified as held for sale as of June 30, 2020, leased to Outback Steakhouse located in Charlottesville, Virginia, for a sales price of $5.1 million, generating a gain on sale of $0.3 million.