Alpine Income Property Trust (PINE) risk factors, FY2024 10-K

Risks Related to Our Income Properties Segment

1. 01We are subject to risks related to the ownership of commercial real estate that could affect the performance and value of our properties
2. 02Adverse changes in U.S., global and local regions or markets that impact our tenants’ businesses may materially and adversely affect us generally and the ability of our tenants to make rental payments to us pursuant to our leases
3. 03Our business is dependent upon our tenants successfully operating their businesses, and their failure to do so could materially and adversely affect us
4. 04Our assessment that certain of our tenants’ businesses are insulated from e-commerce pressure may prove to be incorrect, and changes in macroeconomic trends may adversely affect our tenants, either of which could impair our tenants’ ability to make rental payments to us and thereby materially and adversely affect us
5. 05Properties occupied by a single tenant pursuant to a single lease subject us to significant risk of tenant default
6. 06We may experience a decline in the fair value of our real estate assets which could result in impairments and would impact our financial condition and results of operations
7. 07Our portfolio has geographic market concentrations that make us susceptible to adverse developments in those geographic markets
8. 08We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us
9. 09Certain of our tenants are not rated by a recognized credit rating agency or do not have an investment grade rating from such an agency. Leases with unrated or non-investment grade rated tenants may be subject to a greater risk of default
10. 10The decrease in demand for retail space may materially and adversely affect us
11. 11We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all
12. 12Certain provisions of our leases may be unenforceable
13. 13The bankruptcy or insolvency of any of our tenants could result in the termination of such tenant’s lease and material losses to us
14. 14We may not acquire the properties that we evaluate in our pipeline
15. 15As we continue to acquire properties, we may decrease or fail to increase the diversity of our portfolio
16. 16The vacancy of one or more of our properties could result in us having to incur significant capital expenditures to re-tenant the space
17. 17We may be unable to identify and complete suitable property acquisitions or developments, which may impede our growth, and our future acquisitions and developments may not yield the returns we expect
18. 18We may be unable to complete acquisitions of properties owned by CTO that are covered by the ROFO Agreement, and any completed acquisitions of such properties may not yield the returns we expect
19. 19We face significant competition for tenants, which may adversely impact the occupancy levels of our portfolio or prevent increases of the rental rates of our properties
20. 20Inflation may materially and adversely affect us and our tenants
21. 21The redevelopment or renovation of our properties may cause us to experience unexpected costs and have other risks that could materially and adversely affect us
22. 22Our real estate investments are generally illiquid, which could significantly affect our ability to respond to market changes or adverse changes relating to our tenants or in the performance of our properties
23. 23We may not be able to dispose of properties we target for sale to recycle our capital
24. 24The development of new projects and/or properties may cause us to experience unexpected costs and have other risks that could materially and adversely affect us
25. 25The success of our activities related to new project development in which we will retain an ownership interest is partly dependent on the availability of suitable undeveloped land at acceptable prices

Risks Related to Our Commercial Loans and Investments Segment

1. 26A part of our investment strategy is focused on investing in commercial loans and investments which may involve credit risk
2. 27Our commercial loans and investments segment is also generally exposed to risks associated with real estate investments
3. 28Our origination or acquisition of construction loans exposes us to an increased risk of loss
4. 29Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the Internal Revenue Service (“IRS”)
5. 30We may invest in fixed-rate loan investments, and an increase in interest rates may adversely affect the value of these investments, which could adversely impact our financial condition, results of operations and cash flows
6. 31The commercial loans or similar financings we have acquired and may acquire in the future that are secured by commercial real estate typically depend on the ability of the property owner to generate income from operating the property. Failure to do so may result in delinquency and/or foreclosure
7. 32We may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is less than the amount due
8. 33We could fail to continue to qualify as a REIT if the IRS successfully challenges our treatment of any mezzanine loans in which we invest
9. 34We may be subject to risks associated with commercial real estate loan participations

Risks Related to Certain Events, Environmental Matters and Climate Change

1. 35Natural disasters, terrorist attacks, other acts of violence or war or other unexpected events could materially and adversely affect us
2. 36Insurance on our properties may not adequately cover all losses and uninsured losses could materially and adversely affect us
3. 37The costs of compliance with or liabilities related to environmental laws may materially and adversely affect us
4. 38Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediation
5. 39Our operations and financial condition may be adversely affected by climate change, including possible changes in weather patterns, weather-related events, government policy, laws, regulations and economic conditions

Risks Related to Other Aspects of our Operation and as a Public Company

1. 40Our senior management team is required to operate two publicly traded companies, CTO and our company, which could place a significant strain on our senior management team and the management systems, infrastructure and other resources of CTO on which we rely
2. 41If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we may be unable to accurately present our financial statements, which could materially and adversely affect us
3. 42Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that materially and adversely affect us
4. 43We have in the past and may in the future choose to acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets

Risks Related to Our Relationship with CTO and Our Manager and the Management Agreement

1. 44We have no employees and are entirely dependent upon our Manager for all the services we require, and we cannot assure you that our Manager will allocate the resources necessary to meet our business objectives
2. 45CTO may be unable to obtain or retain the executive officers and other personnel that it provides to us through our Manager
3. 46We pay substantial fees and expenses to our Manager. These payments increase the risk that you will not earn a profit on your investment
4. 47The base management fee payable to our Manager pursuant to the Management Agreement is payable regardless of the performance of our portfolio, which may reduce our Manager’s incentive to devote the time and effort to seeking profitable investment opportunities for us
5. 48The incentive fee payable to our Manager pursuant to the Management Agreement may cause our Manager to select investments in more risky assets to increase its incentive compensation
6. 49There are conflicts of interest in our relationships with our Manager, which could result in outcomes that are not in our best interests
7. 50Our Manager’s failure to identify and acquire properties that meet our investment criteria or perform its responsibilities under the Management Agreement could materially and adversely affect our business and our ability to make distributions to our stockholders
8. 51Our Manager’s liability is limited under the Management Agreement, and we have agreed to indemnify our Manager against certain liabilities. As a result, we could experience unfavorable operating results or incur losses for which our Manager would not be liable
9. 52with and pursuant to the Management Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of our Manager’s duties under the Management Agreement
10. 53Termination of the Management Agreement could be difficult and costly, including as a result of payment of termination fees to our Manager, and may cause us to be unable to execute our business plan, which could materially and adversely affect us
11. 54If our Manager ceases to be our manager pursuant to the Management Agreement, counterparties to our agreements may cease doing business with us
12. 55The Management Agreement with our Manager and the ROFO Agreement with CTO were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with unaffiliated third parties

Risks Related to Our Financing Activities

1. 56Our growth depends on external sources of capital, including debt financings, that are outside of our control and may not be available to us on commercially reasonable terms or at all
2. 57Our organizational documents have no limitation on the amount of additional indebtedness that we may incur in the future. As a result, we may become highly leveraged in the future, which could materially and adversely affect us
3. 58The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing our operational flexibility and creating risks associated with default and noncompliance
4. 59Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in any property subject to mortgage debt
5. 60Increases in interest rates have and will likely continue to increase our interest costs on our variable rate debt and could adversely impact our ability to refinance existing debt or sell assets

Risks Related to Our Organization and Structure

1. 61We are a holding company with no direct operations, and we rely on funds received from the Operating Partnership to pay our obligations and make distributions to our stockholders
2. 62Certain provisions of Maryland law could inhibit changes in control of our company
3. 63Certain provisions in the partnership agreement of the Operating Partnership may delay, defer or prevent unsolicited acquisitions of us
4. 64Our charter contains stock ownership limits, which may delay, defer or prevent a change of control
5. 65The Board may change our strategies, policies or procedures without stockholder consent, which may subject us to different and more significant risks in the future
6. 66We may have assumed unknown liabilities in connection with the Formation Transactions, which, if significant, could materially and adversely affect us
7. 67Our rights and the rights of our stockholders to take action against our directors and executive officers are limited, which could limit your recourse in the event of actions not in your best interest
8. 68Conflicts of interest exist or could arise in the future between the interests of our stockholders and the interests of holders of Operating Partnership units, which may impede business decisions that could benefit our stockholders
9. 69We could increase or decrease the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval, which could prevent a change in our control and negatively affect the market price of our common stock
10. 70The Operating Partnership has in the past and may in the future issue additional OP Units without the consent of our stockholders, which could have a dilutive effect on our stockholders
11. 71We are a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make shares of our common stock less attractive to investors

Risks Related to Our Qualification and Operation as a REIT

1. 72Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders
2. 73Even if we remain qualified as a REIT, we may face other tax liabilities that could reduce our cash flows and negatively impact our results of operations and financial condition
3. 74Failure to make required distributions would subject us to U.S. federal corporate income tax
4. 75Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments
5. 76The relative lack of experience of our Manager in operating under the constraints imposed on us as a REIT may hinder the achievement of our investment objectives
6. 77Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities
7. 78Our ability to provide certain services to our tenants may be limited by the REIT rules or may have to be provided through a TRS
8. 79The prohibited transactions tax may limit our ability to dispose of our properties
9. 80We may pay taxable dividends in our common stock and cash, in which case stockholders may sell shares of our common stock to pay tax on such dividends, placing downward pressure on the market price of our common stock
10. 81The ability of the Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders
11. 82Any ownership of a TRS we may form in the future will be subject to limitations and our transactions with a TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms
12. 83The stock ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities
13. 84Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
14. 85We may be subject to adverse legislative or regulatory tax changes, in each instance with potentially retroactive effect, that could reduce the market price of our common stock
15. 86If the Operating Partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences

Risks Related to Our Common Stock

1. 87The market value of our common stock is subject to various factors that may cause significant fluctuations or volatility
2. 88There can be no assurance that we will be able to make or maintain cash distributions, and certain agreements relating to our indebtedness may, under certain circumstances, limit or eliminate our ability to make distributions to our common stockholders
3. 89The market price of our common stock could be adversely affected by our level of cash distributions
4. 90Increases in market interest rates may result in a decline in the market price of our common stock
5. 91Sales of substantial amounts of our common stock in the public markets or the perception that they might occur, could reduce the price of our common stock and may dilute the voting power of our then-existing common stockholders and such common stockholders’ ownership interest in us
6. 92Cybersecurity risks and cyber incidents could adversely affect our business and disrupt operations
7. 93We may become subject to litigation, which could materially and adversely affect us
8. 94If we fail to maintain effective disclosure controls and procedures, we may not be able to meet applicable reporting requirements, which could materially and adversely affect us
9. 95including stay-at-home orders, restricting access to CTO’s headquarters, could result in a deterioration in our ability to ensure business continuity during a disruption
10. 96Changes in accounting standards may materially and adversely affect us
11. 97We are subject to risks related to corporate social responsibility