Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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When we refer to "we," "us," "our," 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. Some of the comments we make in this section are forward-looking statements within the meaning of the federal securities laws. For a discussion of forward-looking 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 "Part I, Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and in "Part II, Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q.

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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 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.

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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 recession or downturn in economic conditions; our ability to successfully execute acquisition or development strategies; credit risk associated with us investing in commercial loans and investments; any loss of key management personnel; changes in local, regional, national and global economic conditions affecting the real estate development business and properties, including unstable macroeconomic conditions due to, among other things, geopolitical conflicts, inflation, higher interest rates, and tariffs and international trade policies; the impact of competitive real estate activity; the loss of any major property tenants; the ultimate geographic spread, severity and duration of pandemics, 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.

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See "Part I, Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and "Part II, Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q 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.

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OVERVIEW

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Alpine Income Property Trust, Inc. is a Maryland corporation that conducts its operations so as to qualify as a REIT for U.S. federal income tax purposes. Substantially all of our operations are conducted through our Operating Partnership.

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We seek to acquire, own and operate primarily freestanding, commercial retail real estate properties located in the United States primarily leased pursuant to long-term net leases. We target tenants in industries that we believe are favorably impacted by macroeconomic trends that support consumer spending, stable and growing employment, and positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact of the e-commerce retail 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 believe have attractive credit characteristics, stable operating histories, healthy rent coverage levels, are well-located within their respective markets and/or have rents at-or-below market rent levels. Furthermore, we believe that the size of our company allows us, for at least the near term, 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.

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Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals, including 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.).

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During the nine months ended September 30, 2025, the Company acquired five properties for an aggregate purchase price of $60.8 million, or a cost of $61.1 million including capitalized acquisition costs. During the nine months ended September 30, 2025, the Company sold 11 properties for an aggregate sales price of $34.3 million, generating aggregate gains on sale of $2.0 million.

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As of September 30, 2025, we owned 128 properties, including the three properties classified as commercial loans and investments, with an aggregate gross leasable area of 4.1 million square feet, located in 34 states, with a weighted average remaining lease term of 8.7 years. Our portfolio was 99% occupied as of September 30, 2025.

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We also acquire or originate commercial loans and investments associated with commercial real estate located in the United States. Our investments in commercial loans are generally secured by real estate or the borrower's pledge of its ownership interest in an entity that owns real estate. As of September 30, 2025, the Company's commercial loan investments portfolio had a total carrying value of $102.8 million and was comprised of five construction loans, six mortgage notes, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right.

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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 SEPTEMBER 30, 2025 AND 2024

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The following presents the Company's results of operations for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024 (in thousands):

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Lease Income and Real Estate Expenses

Revenue from our property operations totaled $12.1 million and $11.7 million during the three months ended September 30, 2025 and 2024, respectively. The $0.4 million increase in lease income is primarily attributable to an increase in rents due to the volume of property acquisitions versus dispositions. The direct costs of revenues for our income properties totaled $1.9 million and $1.8 million during the three months ended September 30, 2025 and 2024, respectively.

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Commercial Loans and Investments

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Interest income from commercial loans and investments totaled $2.3 million and $1.7 million for the three months ended September 30, 2025 and 2024, respectively. The $0.6 million increase in income is attributable to the expanded portfolio of commercial loans and investments which, as of September 30, 2025, was comprised of five construction loans, six mortgage notes, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right. As of September 30, 2024, the Company's portfolio of commercial loans and investments was comprised of five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right.

Other Revenue

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Other revenue totaled $0.1 million for the three months ended September 30, 2025 and 2024. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, "Related Party Management Company" in the Notes to the Financial Statements.

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General and Administrative Expenses

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The following table represents the Company's general and administrative expenses for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024 (in thousands):

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General and administrative expenses totaled $1.7 million and $1.8 million during the three months ended September 30, 2025 and 2024, respectively. The $0.1 million decrease is primarily the result of decreases in corporate legal and consulting fees.

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Provision for Impairment

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As further described in Note 7, "Provision for Impairment," during the three months ended September 30, 2025, the Company recorded a $1.9 million impairment charge representing the provision for losses related to a certain income property, for which the Company's current intent is to dispose of such property in order to facilitate the re-investment of the proceeds therefrom into new investment opportunities,and a $0.1 million adjustment to the provision for impairment representing the reduction in current expected credit losses ("CECL") reserve related to our commercial loans and investments due to the decrease in principal outstanding as compared to June 30, 2025. During the three months ended September 30, 2024, the Company recorded a $0.4 million impairment charge which represents the increase in the CECL reserve related to our commercial loans and investments.

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Depreciation and Amortization

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Depreciation and amortization expense totaled $6.6 million and $6.3 million during the three months ended September 30, 2025 and 2024, respectively. The $0.3 million increase in depreciation and amortization expense is reflective of the increase in asset cost basis of the Company's income property portfolio.

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Gain (Loss) on Disposition of Assets

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During the three months ended September 30, 2025, the Company sold three properties for an aggregate sales price of $6.2 million, generating an aggregate loss on sale of less than $0.1 million. During the three months ended September 30, 2024, the Company sold eight properties for an aggregate sales price of $48.6 million, generating aggregate gains on sale of $3.4 million.

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Investment and Other Income

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Investment and other income was relatively flat and totaled $0.1 million during each of the three month periods ended September 30, 2025 and 2024.

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Interest Expense

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Interest expense totaled $3.9 million and $3.2 million during the three months ended September 30, 2025 and 2024, respectively. The $0.7 million increase in interest expense is attributable to the higher average outstanding balance on the Company's Credit Facility as well as an increase in the fixed interest for the 2027 Term Loan effective in November of 2024. The overall increase in the Company's long-term debt was primarily utilized to fund the acquisition of properties and commercial loans and investments during the nine months ended September 30, 2025.

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Net Income (Loss)

Net loss totaled $1.4 million and net income totaled $3.4 million during the three months ended September 30, 2025 and 2024, respectively. The $4.8 million decrease in net income is attributable to the factors described above, most notably the $3.5 million decrease of gains on sales of properties, the $1.5 million increase in provision for impairment, as well as the $0.7 million increase in interest expense, which is partially offset by the $1.1 million increase in total revenues.

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COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

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The following presents the Company's results of operations for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024 (in thousands):

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Lease Income and Real Estate Expenses

Revenue from our property operations totaled $36.0 million and $34.5 million during the nine months ended September 30, 2025 and 2024, respectively. The $1.5 million increase in lease income is primarily attributable to an increase in rents due to the volume of property acquisitions versus dispositions. The direct costs of revenues for our income properties totaled $6.0 million and $5.6 million during the nine months ended September 30, 2025 and 2024, respectively. The $0.4 million increase in the direct cost of revenues is reflective of increased reimbursable expenses.

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Commercial Loans and Investments

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Interest income from commercial loans and investments totaled $7.4 million and $3.6 million for the nine months ended September 30, 2025 and 2024, respectively. The $3.8 million increase in income is attributable to the expanded portfolio of commercial loans and investments which, as of September 30, 2025, was comprised of five construction loans, six mortgage notes, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right. As of September 30, 2024, the Company's portfolio of commercial loans and investments was comprised of five construction loans, one mortgage note, and three properties acquired pursuant to a sale-leaseback transaction whereby the tenant has a future repurchase right.

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Other Revenue

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Other revenue totaled $0.3 million and $0.4 million for the nine months ended September 30, 2025 and 2024, respectively. The revenue is attributable to fees earned from a revenue sharing agreement the Company entered into with CTO as further described in Note 19, "Related Party Management Company" in the Notes to the Financial Statements. The $0.1 million decrease is attributable to leasing commissions earned during the nine months ended September 30, 2024.

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General and Administrative Expenses

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The following table represents the Company's general and administrative expenses for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024 (in thousands):

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General and administrative expenses totaled $5.1 million and $5.0 million during the nine months ended September 30, 2025 and 2024, respectively. The $0.1 million increase is primarily the result of increases in the management fee and director compensation, partially offset by a decrease in corporate legal and consulting fees.

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Provision for Impairment

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As further described in Note 7, "Provision for Impairment", during the nine months ended September 30, 2025, the Company recorded a $6.6 million impairment charge representing the provision for losses related to certain income properties, for which the Company's current intent is to dispose of such properties in order to facilitate the re-investment of the proceeds therefrom into new investment opportunities,and a $0.1 million impairment charge which represents the change in our CECL reserve related to our commercial loans and investments. During the nine months ended September 30, 2024, the Company recorded a $0.6 million impairment charge representing the provision for losses related to our income properties, and a $0.5 million impairment charge which represents the change in our CECL reserve related to our commercial loans and investments.

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Depreciation and Amortization

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Depreciation and amortization expense totaled $20.6 million and $19.1 million during the nine months ended September 30, 2025 and 2024, respectively. The $1.5 million increase in depreciation and amortization expense is reflective of the increase in asset cost basis of the Company's income property portfolio.

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Gain on Disposition of Assets

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During the nine months ended September 30, 2025, the Company sold 11 properties for an aggregate sales price of $34.3 million, generating aggregate gains on sale of $2.0 million. During the nine months ended September 30, 2024, the Company sold 10 properties for an aggregate sales price of $55.2 million, generating aggregate gains on sale of $4.3 million.

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Investment and Other Income

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Investment and other income was relatively flat and totaled $0.2 million during each of the nine month periods ended September 30, 2025 and 2024.

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Interest Expense

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Interest expense totaled $11.8 million and $8.9 million during the nine months ended September 30, 2025 and 2024, respectively. The $2.9 million increase in interest expense is attributable to the higher average outstanding balance on the Company's Credit Facility as well as increase in the fixed interest for the 2027 Term Loan effective in November of 2024. The overall increase in the Company's long-term debt was primarily utilized to fund the acquisition of properties and commercial loans and investments during the nine months ended September 30, 2025.

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Net Income (Loss)

Net loss totaled $4.5 million and net income totaled $3.3 million during the nine months ended September 30, 2025 and 2024, respectively. The $7.8 million decrease in net income is attributable to the factors described above, most notably the $5.6 million increase in provision for impairment, the $2.3 million decrease in gains on sale of properties, and an additional $2.9 million increase in interest expense, partially offset by the $5.2 million increase in total revenues.

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LIQUIDITY AND CAPITAL RESOURCES

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Cash totaled $6.6 million as of September 30, 2025, including restricted cash of $5.5 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 September 30, 2025.

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Long-Term Debt. As of September 30, 2025, the commitment level under the Credit Facility was $250.0 million, and the Company had an outstanding balance of $158.5 million and $60.2 million of available capacity. The Company also had $200.0 million in term loans outstanding as of September 30, 2025. See Note 13, "Long-Term Debt" for the Company's disclosure related to its long-term debt balance at September 30, 2025.

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Acquisitions and Dispositions. As further described in Note 3, "Property Portfolio," during the nine months ended September 30, 2025, the Company acquired five properties for an aggregate purchase price of $60.8 million, or a cost of $61.1 million including capitalized acquisition costs, and sold 11 properties for an aggregate sales price of $34.3 million, generating aggregate gains on sale of $2.0 million.

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ATM Program. The Company was not active under the 2022 ATM Program during the nine months ended September 30, 2025.

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Capital Expenditures. As of September 30, 2025, the Company has committed to fund certain capital improvements related to several properties, which include tenant improvements, landlord work, leasing commissions, and other capital improvements. As of September 30, 2025, the commitments totaled $2.1 million, of which $1.1 million has been paid, leaving a remaining commitment of $1.0 million. The improvements are generally expected to be completed within 12 months of September 30, 2025. Additionally, as of September 30, 2025, the Company has unfunded loan commitments under four of the Company's five construction loans as described in Note 4, "Commercial Loans and Investments". The unfunded portion of the construction loans totaled $17.2 million as of September 30, 2025.

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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, $90.4 million of availability remaining under the 2022 ATM Program, and $60.2 million of available capacity on the existing $250.0 million Credit Facility.

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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 net leased properties by utilizing the capital we 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.

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.

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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 or loss or 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.

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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 real estate related depreciation and amortization, as well as extraordinary items (as defined by GAAP) such as net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and impairments associated with the implementation of current expected credit losses on commercial loans and investments at the time of origination, including the pro rata share of such adjustments of unconsolidated subsidiaries. To derive AFFO, we further modify the NAREIT computation of FFO to include other adjustments to GAAP net income or loss related to non-cash revenues and expenses such as loss on extinguishment of debt, amortization of above- and below-market lease related intangibles, straight-line rental revenue, amortization of deferred financing costs, non-cash compensation, and other non-cash adjustments to income or expense. Such items may cause short-term fluctuations in net income or loss 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.

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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.

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Reconciliation of Non-GAAP Measures (in thousands, except share data):

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

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OFF-BALANCE SHEET ARRANGEMENTS

None.

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CRITICAL ACCOUNTING ESTIMATES

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Critical accounting estimates include those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company's financial condition or results of operations. Our most significant estimate is as follows:

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Purchase Accounting for Acquisitions of Real Estate Subject to a 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 to each of the various line items within the Company's consolidated balance sheets could have an impact on the Company's financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled five properties for an aggregate purchase price of $60.8 million for the nine months ended September 30, 2025.

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See Note 2, "Summary of Significant Accounting Policies", for further discussion of the Company's accounting estimates and policies.

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