8-K: CTO Subsidiary Waives Management Fee for PINE Offering

CTO Realty Growth's subsidiary, Alpine Income Property Manager, LLC, has agreed to waive a portion of its management fee for Alpine Income Property Trust (PINE) related to PINE's recent preferred stock offering.

Summary

• CTO Realty Growth, Inc. (CTO) announced that its wholly-owned subsidiary, Alpine Income Property Manager, LLC (the Manager), has executed a waiver regarding its management fee for Alpine Income Property Trust, Inc. (PINE).
• The waiver applies to a portion of the Base Management Fee attributable to the net cash proceeds from PINE's public offering of 8.00% Series A Cumulative Redeemable Preferred Stock.
• The Base Management Fee rate on this 'Incremental Equity Base' will be reduced from 1.50% per annum (0.375% per fiscal quarter) to 0.75% per annum (0.1875% per fiscal quarter).
• This waiver is conditional upon the completion of PINE's preferred stock offering.
• If the offering is not completed by November 30, 2025, the waiver will become null and void.

Sentiment

Score: 6

Explanation: The fee waiver is positive for Alpine Income Property Trust (PINE) as it reduces management costs on new capital, potentially making its preferred stock offering more attractive. For CTO Realty Growth, it represents a minor reduction in potential management fee revenue but supports a managed entity's growth, which can be strategically beneficial.

Positives

• Alpine Income Property Trust (PINE) will benefit from a reduced management fee rate of 0.75% per annum on the net cash proceeds from its preferred stock offering, compared to the standard 1.50% rate.
• The fee waiver likely enhances the attractiveness of PINE's preferred stock offering by reducing its ongoing operational costs related to new capital.

Negatives

• Alpine Income Property Manager, LLC, a subsidiary of CTO Realty Growth, Inc., will experience a reduction in potential management fee revenue from PINE on the new capital raised.

Risks

• The fee waiver is contingent on the completion of PINE's 8.00% Series A Cumulative Redeemable Preferred Stock offering.
• If PINE's offering is not completed by November 30, 2025, the waiver will become null and void, meaning the standard 1.50% management fee rate would apply to the new capital.

Future Outlook

The fee waiver is a forward-looking agreement contingent on the successful completion of Alpine Income Property Trust's 8.00% Series A Cumulative Redeemable Preferred Stock offering by November 30, 2025. If the offering is completed, PINE will benefit from reduced management costs on the new capital.

Management Comments

• Daniel E. Smith, Senior Vice President, General Counsel and Corporate Secretary of CTO Realty Growth, Inc., signed the Waiver Letter on behalf of Alpine Income Property Manager, LLC.

Industry Context

This announcement reflects a common practice in the real estate investment trust (REIT) sector where external managers, often subsidiaries of larger entities, manage smaller REITs. Adjustments to management fees, particularly in conjunction with capital raises, can be strategic moves to optimize the cost of capital for the managed entity and ensure alignment of interests, while potentially impacting the manager's revenue stream.

Comparison to Industry Standards

• This specific fee waiver is an internal agreement between a manager (CTO's subsidiary) and a managed entity (PINE). Direct comparison to global benchmarks or specific comparable companies/projects is not applicable based solely on the details provided in this filing, as it pertains to a unique contractual relationship.

Corporate Governance

Related Party Transactions

• The fee waiver is a transaction between Alpine Income Property Manager, LLC (a wholly-owned subsidiary of CTO Realty Growth, Inc.) and Alpine Income Property Trust, Inc. (PINE), which is managed by CTO's subsidiary under a pre-existing management agreement.

Stakeholder Impact

• Shareholders of Alpine Income Property Trust (PINE) may benefit from lower management expenses on new capital, potentially leading to improved financial performance or higher distributions.
• Shareholders of CTO Realty Growth, Inc. may see a minor, proportional reduction in the management fee revenue generated by its subsidiary from PINE, offset by the strategic benefit of supporting PINE's capital raise.

Next Steps

• Completion of Alpine Income Property Trust's 8.00% Series A Cumulative Redeemable Preferred Stock offering by November 30, 2025, for the fee waiver to remain valid.

Key Dates

Keywords

Management Agreement, Fee Waiver, Preferred Stock Offering, REIT, CTO Realty Growth, Alpine Income Property Trust, Capital Raise, Corporate Governance