Alpine Income Property Trust (PINE) owns and manages a portfolio of quality commercial properties. The Trust’s portfolio includes 129 net leased retail and office properties in 84 markets in 35 states.
What is unique about Alpine is that it was established in August 2019, has no employees and is externally governed by Alpine Income Property Manager.
Interestingly, CTO Realty Growth (CTO), the publicly traded REIT, owns both the manager and 22.3% of Alpine’s common stock. As a result, Alpine’s operations are smooth while simultaneously being supported by a high quality sponsor whose interests are fully aligned with common shareholders.
During the continued market volatility, stocks came under significant pressure. In the meantime, Alpine’s share price has held up amid the company’s many good qualities.
Alpine’s last quarter demonstrated the resilience of its property portfolio with strong results, supported by multi-year leases and a diverse, high-quality tenant base. I am bullish on the stock.
Last quarter: unflappable performance
Alpine’s first quarter results remained unflappable despite overall market volatility. Revenue reached $10.8 million, an 83.3% increase over last year, thanks to Alpine’s wave of serial acquisitions. During the first quarter, the trust purchased 16 net leasehold commercial properties for $65.5 million, with a lucrative weighted average cap rate of 6.9%.
Representing $294 million in linear rent adjustment, adjusted funds from operations increased 67.6%, but still remarkably, to $6.4 million. Additionally, following the issuance of common stock to raise additional cash to contribute in part to its acquisitions, AFFO per share rose a robust 9.1% to $0.48.
After another quarter of better-than-expected results, Alpine management raised its outlook for fiscal 2022, anticipating that AFFO/share will land between $1.53 and $1.58, from $1.51 and $1.56 previously. Thus, Alpine is on track to deliver another very profitable year, with the annualized dividend rate of $1.08 remaining quite secure.
The unique qualities of Alpine
Alpine’s performance should stay strong for years to come, backed by a special set of unique qualities.
The company benefits from excellent cash flow visibility, supported by multi-year leases, contractually guaranteed built-in rent increases capable of offsetting inflation, and low-cost financing within its renowned director.
At the end of Q1, Alpine’s weighted average remaining lease term was extended to nine years, when the portfolio was 100% occupied, reflecting these qualities. Alpine was able to borrow $60 million over five years at just 2.16% last year.
In terms of its robust and diverse tenant base, no state or tenant represents more than 17% and 12% of Alpine’s total revenue. If that weren’t enough, a considerable portion of Alpine’s tenants contain premium businesses.
Therefore, I believe Alpine is well positioned to continue to perform resiliently in a possible downturn.
Dividend & Valuation
Alpine has managed to achieve accretive portfolio growth of over 275% since its genesis, which is quite remarkable considering that it also pays a substantial dividend.
Last November, the trust increased its dividend per share by 5.9% to an annualized rate of $1.08. The yield currently stands at 5.65%, making Alpine one of the best performing REITs.
Considering the payout ratio stands at just under 70% at the midpoint of the manager’s forecast, combined with the trust’s resiliency qualities, income-oriented investors will likely appreciate Alpine’s payouts strongly.
Additionally, according to its latest report, nearly half of Alpine’s annualized base rent is subject to rent increases. All in all, Alpine should be able to continue to grow the dividend.
As for the stock’s valuation, Alpine’s current price levels imply a P/AFFO of 12.3. In my view, this is a fair multiple given the strong yield and robust growth prospects supported by Alpine’s property acquisition pipeline.
The Taking of Wall Street
As far as Wall Street is concerned, Alpine Income Property Trust has a Moderate Buy consensus rating based on four unanimous buys awarded over the past three months.
At $22.75, Alpine Income Property Trust’s average price target implies 19.6% upside potential.
Take away
Alpine Income Property Trust offers investors significant assurance during the current days of heightened uncertainty. The company has a truly distinctive set of favorable characteristics that make up a high quality REIT.
Along with its multi-year leases and 100% occupancy rate, Alpine should continue to generate cash flow even in a difficult economic environment.
Additionally, the 5.65% yield is one of the largest in the industry and provides investors with a predictable stream of payouts. Overall, few companies combine the qualities of Alpine.
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