Q1 2021 Alpine Income Property Trust Inc Earnings Call

April 23, 2021

Good day and welcome to Alpine income property Trust first quarter 2021 earnings conference call. All participants will be in a listen only mode should you need assistance. Please take note of the conference specialist by pressing the star key followed by zero.

Operator 2: Good day, and welcome to Alpine Income Property Trust Q1 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the conference over to John Albright, President and CEO. Please go ahead.

Operator: Good day, and welcome to Alpine Income Property Trust Q1 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the conference over to John Albright, President and CEO. Please go ahead.

After todays presentation, there will be an opportunity to ask questions to ask the question. You May Press Star then one on a touch 10 of fat to withdraw. Your question. Please press Star then two please note. This event is being recorded I would like to turn the conference over to John Albright President and CEO. Please go ahead.

Good morning, everyone and thank you for joining us today for the Alpine income property Trust first quarter 2021 operating results Conference call with me is Matt Partridge, Our Chief Financial Officer before we begin I will turn it over to match the provide the customary disclosures regarding today's call Matt.

John Albright: Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust Q1 2021 operating results conference call. With me is Matt Partridge, our Chief Financial Officer. Before we begin, I'll turn it over to Matt to provide the customary disclosures regarding today's call. Matt?

Thanks, John I'd like to remind everyone that many of our comments today are considered forward looking statements under federal Securities law. The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we undertake no duty to update these statements factors and risks that could cause actual results to differ materially from XP.

Matthew Partridge: Thanks, John. I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports and our earnings release, which contains reconciliations of non-GAAP financial measures we use on our website at alpinereit.com. With that, I'll turn this call back over to John.

Matt Partridge: Thanks, John. I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports and our earnings release, which contains reconciliations of non-GAAP financial measures we use on our website at alpinereit.com. With that, I'll turn this call back over to John.

Patients are disclosed from time to time in greater detail in the company's form 10-K form 10-Q, and other SEC filings you can find the SEC reports in our earnings release, which contains reconciliations of non-GAAP financial measures. We use on our website at alpine <unk> Dot com.

With that I'll turn the call back over to Jonathan Thanks, Matt I'm pleased to report we had a solid start to the year with strong investment activity in the first quarter acquired five properties for nearly $22 million and entering into our first transaction agreements with CTO since our IPO to acquire seven single tenant net lease.

John Albright: Thanks, Matt. I'm pleased to report we had a solid start to the year with strong investment activity in Q1, acquiring five properties for nearly $22 million and entering into our first transaction agreements with CTO since our IPO to acquire seven single-tenant net lease properties for $56 million. Our strong start also saw us continue our trend of collecting 100% of our contractual base rents and the continued growth of our quarterly dividend, which we increased for Q3 in a row with our Q2 dividend announcement earlier this week.

<unk> for $56 million.

Our strong start also saw US continue our trend of collecting the 100% of our contractual base rents and the continued growth of our quarterly dividend, which we increased for the third quarter in a row with our Q2 dividend announcement earlier this week.

Specifically as it relates to our acquisitions activity, we invested in five properties in Texas, Ohio in Mexico for $21 9 million at a weighted average cap rate of eight 2% and with a weighted average remaining lease term of nine two years at the time of acquisition.

John Albright: More specifically, as it relates to our acquisitions activity, we invested in 5 properties in Texas, Ohio, and New Mexico for $21.9 million at a weighted average cap rate of 8.2% and with a weighted average remaining lease term of 9.2 years at the time of acquisition. Our acquisitions were a combination of increasing exposure to existing well-performing credits such as At Home and Dollar General, as well as adding a few new names to our tenant roster, such as Sportsman's Warehouse. As we went through our underwriting process for each property, our due diligence suggests very strong tenant operations when compared within the broader market and throughout the existing chains nationally at the Ohio and New Mexico properties.

Our acquisitions were a combination of increasing exposure to the existing well performing credits such as at home and dollar general as well as adding a few new names to our tenant roster of such as sports and warehouse.

As we went through our underwriting process for each property, our due diligence suggest very strong tenant operations when compared within the broader market and throughout the existing change nationally at the Ohio, New Mexico properties and we believe this implied tenant strength combined with their locations along highly trafficked retail thoroughfares.

John Albright: We believe this implied tenant strength, combined with their locations along highly trafficked retail thoroughfares, solid demographics, and our ability to acquire at a reasonable cost basis and rent basis present very attractive risk-adjusted opportunities for us to strategically grow our portfolio. As of the end of the quarter, our growing portfolio was 100% occupied, consisted of 53 properties in 19 states, totaling 1.8 million sq ft, with top tenants that included Wells Fargo, Hilton Grand Vacations, Hobby Lobby, Dollar General, At Home, Walmart, and Walgreens. We are very confident in the quality of our assets. Our two top tenants, Wells Fargo and Hilton Grand Vacations, occupy. As we announced in yesterday's press release, we are going to explore the sale of these office properties as we migrate towards a 100% retail-focused portfolio.

Solid demographics, and our ability to acquire at a reasonable cost basis and rent basis present, very attractive risk adjusted opportunities for us at your stage of your fleet grow our portfolio.

As of the end of the quarter, our growing portfolio was 100% occupied consisted of 53 properties in 19 states totaling one 8 million square feet with top tenants that included Wells Fargo Hilton Grand Vacations hobby lobby dollar general at home Wal Mart and Walgreens.

We are very confident in the quality of our assets of.

Of our two top tenants Wells Fargo of Hilton Grand vacations occupy but as we announced in yesterday's press release.

We're going to explore the sale of these office properties as we migrate towards the 100% retail focused portfolio we.

We have a robust pipeline and the proceeds from these potential sales would be redeployed into retail acquisitions further growing our high quality retail portfolio and simplifying the overall investment strategy.

John Albright: We have a robust pipeline, and the proceeds from these potential sales would be redeployed into retail acquisitions, further growing our high-quality retail portfolio and simplifying the overall investment strategy. We look forward to providing updates on this process as we head into the summer and start receiving market feedback. Lastly, as we announced earlier in the month, and as I alluded to at the beginning of our prepared remarks, we have entered into agreements to acquire seven high-quality single-tenant net lease properties from CTO for $56 million at a weighted average cap rate of just under 7.2%. These are two transactions, one of which is Burlington in a growing and fairly dense area of Dallas-Fort Worth metro area, and the second is a six-property portfolio with assets in major metro markets that include Charlotte, Houston, Phoenix, Washington, DC, Seattle, and Orlando.

I look forward to providing updates on this process as we head into the summer and you start receiving market feedback and lastly, as we announced earlier in the month and as I alluded to at the beginning of our prepared remarks, we have entered into agreements to acquire seven high quality single tenant net lease properties from CTO for $56 million.

Weighted average cap rate of just under seven 2%.

These are two transactions, one of which is Burlington and of growing and fairly dense area of Dallas Fort worth Metro area and the second is the six property portfolio with assets in major Metro markets that include Charlotte, Houston, Phoenix, Washington, D C, Seattle and Orlando the properties of our net lease to tenants that include Lowe's Walgreens.

John Albright: The properties are net leased to tenants that include Lowe's, Walgreens, Big Lots, Rite Aid, and Harris Teeter, with Lowe's representing the largest asset of the group. The six-property portfolio has more than 60% of its rent coming from investment-grade tenants, and the collective transactions represent an excellent opportunity for us to further diversify our growing portfolio with a number of high-quality properties that we know very well. With that, I'll now turn the call over to Matt.

Big lots Rite aid and Harris Teeter with Lowe's, representing the largest asset of the group.

The six property portfolio of has more than 60% of its rents coming from investment grade tenants and the collective transactions represent an excellent opportunity for us to further diversify our growing portfolio with a number of high quality properties that we know very well with that I'll now turn the call over to Matt.

Thanks, John I'll start by highlighting our strong portfolio performance in the first quarter and then for the second quarter, where we collected 100% of contractual base rent for each of the first four months of the year.

Matthew Partridge: Thanks, John. I'll start by highlighting our strong portfolio performance in Q1 and into Q2, where we collected 100% of contractual base rents for each of the first 4 months of the year. We're no longer experiencing any of the effects of deferred rent, as the rent deferrals we previously agreed to have all run their course. Our contractual base rents and the associated collection statistics do include repayments of previously deferred rent. While we reported 100% collected for each of the 4 months, I'm pleased to say we have had certain circumstances where we've had tenants pay for their deferred rent earlier than anticipated or required.

Matt Partridge: Thanks, John. I'll start by highlighting our strong portfolio performance in Q1 and into Q2, where we collected 100% of contractual base rents for each of the first 4 months of the year. We're no longer experiencing any of the effects of deferred rent, as the rent deferrals we previously agreed to have all run their course. Our contractual base rents and the associated collection statistics do include repayments of previously deferred rent. While we reported 100% collected for each of the 4 months, I'm pleased to say we have had certain circumstances where we've had tenants pay for their deferred rent earlier than anticipated or required.

There are no longer experiencing any of the effects of the deferred rent the rent deferrals. We previously agreed to of all run their course or contractual base rents and the associated collection statistics do include repayments of previously deferred rent and while we reported 100% collected for each of the for months I'm pleased to say we've had certain circumstances.

Where we had tenants pay for their deferred rents earlier than anticipated are required.

Total revenues for the first quarter of 2021 of $5 9 million of 41% increase over the first quarter of 2020, and our general and administrative expenses, which include our management fee of the CTO decreased by 300 basis points from the fourth quarter of 2020 and more than 3500 basis points when compared year over year for the first quarter of 2020.

Matthew Partridge: Total revenues for Q1 2021 were $5.9 million, a 41% increase over Q1 2020, and our general and administrative expenses, which include our management fee to CTO, decreased by 300 basis points from Q4 2020, and more than 1,300 basis points when compared year-over-year to Q1 2020, reflecting our quickly improving scale. For Q1 2021, funds from operations were $3.7 million or $0.42 per share, and adjusted funds from operations were $3.9 million or $0.44 per share.

Matt Partridge: Total revenues for Q1 2021 were $5.9 million, a 41% increase over Q1 2020, and our general and administrative expenses, which include our management fee to CTO, decreased by 300 basis points from Q4 2020, and more than 1,300 basis points when compared year-over-year to Q1 2020, reflecting our quickly improving scale. For Q1 2021, funds from operations were $3.7 million or $0.42 per share, and adjusted funds from operations were $3.9 million or $0.44 per share.

<unk> are quickly improving scale for.

The first quarter of 2021 funds from operations were $3 7 million or <unk> 42 per share and adjusted funds from operations for $3 $9 million of 44 per share <unk> <unk> per share growth in the first quarter of 2021 was 91% and 120% respectively when compared to the first quarter of 2020.

Matthew Partridge: FFO and AFFO per share growth in Q1 2021 was 91% and 120% respectively when compared to Q1 2020, again reflecting an increasing scale of the platform. Our AFFO in Q1 2021 was positively impacted by approximately $271,000 from the repayment of deferrals related to the previously mentioned rent deferral agreements. We do expect to experience a continued positive impact to our AFFO in future periods of 2021 related to the scheduled repayments of previously deferred rent. Although Q1 2021 represents the largest quarter of repayments. For Q1 2021, the company paid a cash dividend of $0.24 per share on 31 March to stockholders of record on 22 March.

Matt Partridge: FFO and AFFO per share growth in Q1 2021 was 91% and 120% respectively when compared to Q1 2020, again reflecting an increasing scale of the platform. Our AFFO in Q1 2021 was positively impacted by approximately $271,000 from the repayment of deferrals related to the previously mentioned rent deferral agreements. We do expect to experience a continued positive impact to our AFFO in future periods of 2021 related to the scheduled repayments of previously deferred rent. Although Q1 2021 represents the largest quarter of repayments. For Q1 2021, the company paid a cash dividend of $0.24 per share on 31 March to stockholders of record on 22 March.

Again, reflecting an increasing scale of the platform.

Our <unk> in the first quarter was positively impacted by approximately $271000 from the repayment of deferrals related to the previously mentioned rent deferral agreements. We do expect to experience. The continued positive impact to our <unk> in future periods of 2021 related to the scheduled repayments of previously deferred rent although.

The first quarter of 2021 represents the largest quarter of repayments for.

For the first quarter of 2021 of the company paid a cash dividend of <unk> 24 per share on March 31 of the stockholders of record on March 22nd.

This represented a quarterly payout ratio of 57% of <unk> <unk> per share and 55% of <unk> <unk> per share and more than a 9% increase of our fourth quarter 2020 quarterly dividend as we highlighted in yesterday's press release of our board of Directors has approved and the company has declared a second quarter cash dividend of <unk> 25 per share to be paid on June 30.

Matthew Partridge: This represented a quarterly payout ratio of 57% of FFO per share and 55% of AFFO per share, and more than a 9% increase over our Q4 2020 quarterly dividend. As we highlighted in yesterday's press release, our board of directors has approved, and the company has declared a Q2 cash dividend of $0.25 per share to be paid on 30 June 2021 to stockholders of record as of the close of business on 21 June 2021. Our Q2 cash dividend represents a 4.2% increase over the company's Q1 dividend and a year-over-year increase of 25% when compared to the Q2 of 2020.

Matt Partridge: This represented a quarterly payout ratio of 57% of FFO per share and 55% of AFFO per share, and more than a 9% increase over our Q4 2020 quarterly dividend. As we highlighted in yesterday's press release, our board of directors has approved, and the company has declared a Q2 cash dividend of $0.25 per share to be paid on 30 June 2021 to stockholders of record as of the close of business on 21 June 2021. Our Q2 cash dividend represents a 4.2% increase over the company's Q1 dividend and a year-over-year increase of 25% when compared to the Q2 of 2020.

2021 to stockholders of record as of the close of business on June 21 2021.

Our second quarter cash dividend represents a four 2% increase over the company's first quarter dividend and of year over year increase of 25% when compared to the second quarter of 2020.

The second quarter 2021 cash dividend represents an annualized yield of approximately five 4% and was set by the board in consideration of our previously communicated policy of providing a consistent and reliable cash dividend to our shareholders.

Matthew Partridge: The Q2 2021 cash dividend represents an annualized yield of approximately 5.4% and was set by the board in consideration of our previously communicated policy of providing a consistent and reliable cash dividend to our shareholders. Our 2021 full year FFO and AFFO guidance, which we reaffirmed in yesterday's release, includes a number of significant assumptions, including but not limited to acquisition and disposition volume, associated yields, outside capital, and continued improvement in the broader economy and timing related to a number of these items. For the full year of 2021, our FFO guidance remains $1.50 to $1.70 per diluted share, and AFFO guidance continues to be $1.45 to $1.65 per diluted share. Turning to the balance sheet.

Matt Partridge: The Q2 2021 cash dividend represents an annualized yield of approximately 5.4% and was set by the board in consideration of our previously communicated policy of providing a consistent and reliable cash dividend to our shareholders. Our 2021 full year FFO and AFFO guidance, which we reaffirmed in yesterday's release, includes a number of significant assumptions, including but not limited to acquisition and disposition volume, associated yields, outside capital, and continued improvement in the broader economy and timing related to a number of these items. For the full year of 2021, our FFO guidance remains $1.50 to $1.70 per diluted share, and AFFO guidance continues to be $1.45 to $1.65 per diluted share. Turning to the balance sheet.

Our 2021 full year <unk> guidance, which we reaffirmed in yesterday's release includes the number of significant assumptions, including but not limited to acquisition of disposition volume associated yield outside capital and continued improvement in the broader economy and timing related to a number of these items for the full year of 2000.

'twenty one our <unk> guidance remains $1 50 to $1 70 per diluted share in the <unk> guidance continues to be $1 45 to $1 65 per diluted share.

Turning to the balance sheet total debt outstanding as of March 31, 2021 was $119 3 million and total cash on hand was $1 5 million net debt to total enterprise value at quarter end was approximately 43% and while our net debt to recurring EBITDA was approximately seven times.

Matthew Partridge: Total debt outstanding as of 31 March 2021 was $119.3 million, and total cash on hand was $1.5 million. Net debt to total enterprise value at quarter end was approximately 43%, and our net debt to recurring EBITDA was approximately 7x. As we previously noted, the 6-property portfolio we're acquiring from CTO is subject to a $30 million CMBS loan assumption, and we're currently working through the special servicer process to have Alpine assume the loan. Our current estimate is that the loan assumption process and the acquisition of the 6-property portfolio will occur in July, but we do expect the Burlington transaction to move at a much faster pace, likely closing in the next week or two.

Matt Partridge: Total debt outstanding as of 31 March 2021 was $119.3 million, and total cash on hand was $1.5 million. Net debt to total enterprise value at quarter end was approximately 43%, and our net debt to recurring EBITDA was approximately 7x. As we previously noted, the 6-property portfolio we're acquiring from CTO is subject to a $30 million CMBS loan assumption, and we're currently working through the special servicer process to have Alpine assume the loan. Our current estimate is that the loan assumption process and the acquisition of the 6-property portfolio will occur in July, but we do expect the Burlington transaction to move at a much faster pace, likely closing in the next week or two.

As we previously noted the six property portfolio. We are acquiring from CTO is subject to of $30 million CBS loan assumption from are currently working through the special servicer process to the alpine of sitting alone.

Current estimate is that the loan assumption process from the acquisition of the six property portfolio will occur in July, but we do expect the Burlington transaction to move at a much faster pace likely closing of the next week or two and.

And finally, the first quarter represented the first time, we were active on our aftermarket or ATM equity program because of growing company. Our ATM program gives us another tool in our capital markets toolbox that can improve our access to capital potentially increase the liquidity of the stock and serve as an efficient way to match fund our transactions in the first quarter of 2021, we issued 400.

Matthew Partridge: Finally, Q1 represented the first time we were active on our at-the-market or ATM equity program. As a growing company, our ATM program gives us another tool in our capital markets toolbox that can improve our access to capital, potentially increase liquidity of the stock, and serve as an efficient way to match fund our transactions. In Q1 of 2021, we issued 434,000 shares of common stock for total net proceeds of $7.8 million. These proceeds were used to fund a portion of our acquisitions in the quarter. I'll now turn the call back over to John for his closing remarks.

Matt Partridge: Finally, Q1 represented the first time we were active on our at-the-market or ATM equity program. As a growing company, our ATM program gives us another tool in our capital markets toolbox that can improve our access to capital, potentially increase liquidity of the stock, and serve as an efficient way to match fund our transactions. In Q1 of 2021, we issued 434,000 shares of common stock for total net proceeds of $7.8 million. These proceeds were used to fund a portion of our acquisitions in the quarter. I'll now turn the call back over to John for his closing remarks.

34000 shares of common stock for total net proceeds of $7 8 million. These proceeds were used to fund a portion of the <unk> acquisitions in the quarter I'll now turn the call back over to John for his closing remarks. Thanks, Matt. We're very excited about the momentum we have coming out of the first quarter, where we delivered triple digit <unk> growth.

John Albright: Thanks, Matt. We're very excited about the momentum we have coming out of Q1, where we delivered triple digit AFFO growth, our third consecutive increase to our quarterly dividend, demonstrated expanded access to the capital markets, and have a strong pipeline that will continue to diversify our high-quality portfolio. I want to thank our shareholders for their continued support and congratulate our team on all of their accomplishments. At this time, we'll open it up for questions. Operator?

Our third consecutive increase of our quarterly dividend demonstrating expanded access in the capital markets and have a strong pipeline that will continue to diversify our high quality portfolio.

Want to thank our shareholders for their continued support and congratulate our team on all of their accomplishments at this time, we will open it up for questions operator.

We will now begin the question and answer session to ask a question you May Press Star then one on your touch 10 fan. If you were using the speaker phone. Please pickup your handset before pressing the keys if at anytime. Your question has been addressed and you'd like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Operator 2: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Michael Gorman with BTIG. Please go ahead.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Michael Gorman with BTIG. Please go ahead.

Okay.

Our first question will come from Michael Gorman with BTG. Please go ahead.

Yes, thanks, good morning, guys.

Michael Gorman: Yeah, thanks. Good morning, guys.

Good morning, Doug.

John Albright: Good morning.

Michael Gorman: John, I wonder if you could just spend another minute talking about the office portfolio and, you know, what caused the change there as you think about the assets, whether it's just you're seeing better opportunities on the retail side, if you saw inbound interest in the assets, kind of what brought on the discussion about the office portfolio?

John I Wonder if you could just spend another minute talking about the the office portfolio and.

What caused the change there as you think about the assets, whether its just youre seeing better opportunities on the retail side. If you saw inbound.

Interest in the assets kind of what brought on the discussion about the office portfolio.

Sure.

John Albright: Sure. You know, I think as you know, during the pandemic, the office assets you know did terrific and was strong portfolio contribution. You know it's become very apparent that investors you know view the office as a bit of a distraction. We get a lot of questions about the office and even though we're very comfortable with them, we think that you know selling them and using the capital to expand in the retail and becoming a hundred percent retail should be a very you know a good contribution to the company. We should kind of help us out to narrow that multiple discount against the hundred percent retail peers in the net lease space.

I think as you know during the pandemic the office assets did.

Terrific.

Was strong.

The portfolio of contribution but it's.

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Become very apparent at investors day.

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Office is a bit of of distraction.

We get a lot of questions about the office in the.

Even though we're very comfortable with them, we think that.

Selling them and using the capital to to expand in the retail and becoming a 100% of retail.

It should be a very good contribution to the company and we should.

Kind of help us out to the narrow that multiple discount against the 100% retail peers in the net lease space. So even though we are comfortable with them and they've done very well.

John Albright: Even though we're comfortable with them and they've done very well, you know, we want to really kind of become pure retail platform. You know, that'd become less of a distraction to investors.

Want to really kind of become pure retail platform.

And that become less of the distraction to to investors.

Great that makes sense.

Michael Gorman: No, great. That makes sense. You know, you all have been very disciplined with your capital raising. I noticed that your discussion of the sale process, maybe over the summer, sort of lines up with one of the CTO transactions. Should we assume that you're gonna run these in parallel, where you're gonna try to match fund the acquisition pipeline with the office sales, or should we expect any kind of potential short-term dilution from the sale process?

You all have been very disciplined with your capital raising and I noticed that your discussion of the sale process, maybe over the summer of sort of lines up with one of the CTO transactions.

Should we assume that.

Youre going to run these in parallel where youre going to try to match fund the.

The acquisition pipeline with the office sales or should we expect any kind of.

Potential short term dilution from from the sales process.

No I think look we'd love things work out perfectly but were.

John Albright: I mean, I think, look, we'd love things to work out perfectly, but we're not gonna, you know, try to match everything up to be perfect. There may be some sort of lag between a sale and acquisitions. Given the robust pipeline, I assume they'll be fairly streamlined as far as a disposition and then acquisitions quickly thereafter.

Not going to try to match everything up.

It's the perfect. So there may be some sort of lag between the sale and.

<unk>, but given the the robust pipeline I assume there'll be a fairly streamlined as far as of disposition and then acquisitions quickly thereafter.

Great and then one last one for me on the retail side.

Michael Gorman: Great. And then one last one from me on the retail side. You know, now that we're more than a year into it, obviously the portfolio is in great shape. As you're looking at either potential acquisitions or just industries in general, are you seeing any conversations about longer term effects in some of the tenant categories from the pandemic that may change the way you think about those retail categories as a potential target going forward?

Now that we're more than a year into it obviously the portfolio is in great shape as youre looking at either potential acquisitions are just industries. In general are you seeing any conversations about longer term effects and some of the tenant categories from the pandemic that may change. The way you think about those retail categories as the potential target going for.

Forward.

Yeah. So it's obviously quite interesting what the pandemic has done across the across the board, but all the.

John Albright: I mean, it's obviously quite interesting what the pandemic has done across the board. You know, most of our credits have actually gotten better. If you look at our latest acquisition on At Home or Dollar General, you know, I wish we bought At Home stock and not the real estate. You know, At Home is just on fire as a category. You know, Dollar General, we're lucky we were able to buy what we could buy because, you know, the cap rates have compressed quite dramatically in the last couple of months. I mean, for the most part, all of our categories have been strengthened during the pandemic and balance sheets are better and so forth.

Most of our credits of actually gotten better.

So if you look at our latest acquisition on at home our dollar generals.

I wish we bought at home stock and not the real estate.

At home is just on fire as a category.

The.

Dollar General is we're lucky we were able to buy what we could buy because.

Of the cap rates of compressed quite dramatically. The last couple of months. So so all of them for the most part all of our categories of Ben then strengthened during the pandemic and balance sheets are better and so forth.

Great. Thanks, guys I appreciate it.

Michael Gorman: Great. Thanks, guys. I appreciate it.

Thank you.

John Albright: Thank you.

Our next question will come from Rob Stevenson with Janney. Please go ahead.

Operator 2: Our next question will come from Rob Stevenson with Janney. Please go ahead.

Operator: Our next question will come from Rob Stevenson with Janney. Please go ahead.

Good morning, guys.

Rob Stevenson: Good morning, guys. John, what's the rough book value of the office assets from the IPO?

What's the rough book value of the office assets from the the.

Of the IPO.

I'll, let Matt Matt handle that one.

John Albright: I'll let Matt handle that one.

Matthew Partridge: Yeah. Rob, the book value is pretty attractive. It's in the $60 million range. I don't have the exact numbers in front of me, but it's pretty attractive in terms of where we think market is today versus book value.

Matt Partridge: Yeah. Rob, the book value is pretty attractive. It's in the $60 million range. I don't have the exact numbers in front of me, but it's pretty attractive in terms of where we think market is today versus book value.

The book value is pretty attractive it's in the.

$60 million range I don't have the exact numbers in front of me, but.

It's pretty attractive in terms of where market is where we think market is today versus book value.

Okay, just trying to figure out what type of obviously the market proceeds if you were to sell would wind up being in excess of that so just trying to figure out what are the source of funds would be and then if you exit the office space within Pine does that open additional opportunities for CTO to acquire Triple net office or is that within that.

Rob Stevenson: Okay. Just trying to figure out what type of. Obviously, the market proceeds, if you were to sell, would wind up being in excess of that. Just trying to figure out what a source of funds would be. Then if you exit the office space within PINE, does that open additional opportunities for CTO to acquire triple net office, or is that within that company still not an asset class that you're gonna move forward with?

Still not an asset class that youre going to move forward Westwood with yes, we wouldnt we wouldnt.

John Albright: Yeah, we wouldn't, you know, basically be targeting CTO, you know, net lease office, you know, just kind of keep clear, defined lines.

Basically be targeting the CTO.

Net lease office as much.

Just kind of keep clear define lines.

Okay, and then after the transaction that you've announced how many assets are there left at the CTO that pine would have a natural fit for strong interest in acquiring wiring.

Rob Stevenson: Okay. After the transaction that you've announced, how many assets are there left at CTO that Pine would have a natural fit for or strong interest in acquiring?

Well the ones, we've announced are definitely the low hanging fruit.

John Albright: Well, the ones we announced are definitely the low-hanging fruit for Alpine. There are a couple of others at CTO, but you know, they may be below kind of the investment threshold as far as cap rates for Alpine. I wouldn't think of it as having a lot of a shadow pipeline at CTO, but there are a couple.

For Alpine there are a couple of others at CTO.

But the.

They may be below kind of the investment threshold as far as cap rates for alpine. So I wouldn't I wouldn't think I wouldn't think of it adds of having a lot of the shadow pipeline at CTO, but there are a couple.

Okay, and then how are you feeling about movie theaters going forward, presumably as the big movie start to rollout. The vaccinations continue the operators will get back closer to normal operations level do you buy well located assets at a discount to prepay pandemic prices over the next six months into that do you look to sell.

Rob Stevenson: Okay. How are you feeling about movie theaters going forward? Presumably, as the big movies start to roll out and vaccinations continue, the operators will get back closer to a normal operations level. Do you buy well-located assets at a discount to prepaid pandemic prices over the next six months into that? Do you look to sell what you own when the prices recover? Do you hold tight and maybe make a decision, you know, in a year or so when things really return to normal? How are you guys thinking about, you know, not only the movie theaters that you have, but also whether or not your appetite for acquiring or disposing of them in the future?

What you own when the prices recover do you hold tight and maybe make a decision a year or so when things really returned to normal how are you guys thinking about.

Not only the movie theaters that you have but also whether or not your your appetite for acquiring or disposing of them in the future future. Yes, we're not looking for new acquisitions in the theater space I think the only thing that I could see us doing that maybe you're seeing the opportunity to buy a ground lease under.

John Albright: Yeah, we're not looking for new acquisitions in the theater space. I think the only thing that I could see us doing is maybe seeing an opportunity to buy a ground lease under well located, where you're talking about 15 acres that could be redeveloped. That may be something that we would see, but we haven't seen anything like that lately. With regards to what we have, obviously, we're comfortable with what we have, but probably would exit when the opportunity comes about. That's kind of how we're viewing the world.

Well, located where youre talking about 15 acres that could be redeveloped.

That may be something that that we would see but new Amazon anything like that lately with regards to what we have obviously, we're comfortable with what we have the probably would exit when the opportunity comes about.

So that's kind of how we're viewing the world.

Okay, Okay, Alright, and then.

Rob Stevenson: Okay. All right. You know, from the standpoint, Matt, of maintaining the guidance, you know, if you just basically do, you know, this quarter's level going forward, hold all things static or whatever, you know, the number is basically almost at the top end of your guidance range. I mean, how much of a dilution are you thinking might wind up happening in the near term from, you know, trading out of office assets into the retail assets, or the capital raise? What's the conservatism why guidance, you know, didn't move up, given the strong Q1 results?

From the standpoint, Matt of the maintaining the guidance if you just basically do.

This quarter's level going forward hold all of things static or whatever.

The the number or is it basically almost at the top end of your guidance range.

How much of.

Of the dilution are you thinking might wind up happening in the near term from trading out of office assets into the retail assets.

Or is the capital raised.

What's the conservatism why guidance.

It didn't move up.

The strong for first quarter results of the results.

Sure.

Matthew Partridge: It's a good question. Obviously, like we talked about on the last call, there's a lot of assumptions that go into the guidance. It's somewhat of a fluid set of assumptions, especially given the size. I can't speak exactly to what the dilution would be on the office assets because we're pretty early in the process in terms of pricing, and timing obviously has a material impact to that. We also have some capital assumptions in our model that went into guidance. The timing of all of those, the price of where we raise capital, all has a pretty significant influence in how

It's a good question. So obviously like we talked about in the last call. There is a lot of assumptions that go into the guidance.

Matt Partridge: It's a good question. Obviously, like we talked about on the last call, there's a lot of assumptions that go into the guidance. It's somewhat of a fluid set of assumptions, especially given the size. I can't speak exactly to what the dilution would be on the office assets because we're pretty early in the process in terms of pricing, and timing obviously has a material impact to that. We also have some capital assumptions in our model that went into guidance. The timing of all of those, the price of where we raise capital, all has a pretty significant influence in how

Somewhat of a fluid.

Set of assumptions, especially given the size so.

I can't speak exactly to what the dilution would be on the office assets because we're pretty early in the process in terms of pricing and timing, obviously has a material impact of that we also have some capital assumptions in our model that went into guidance. So the timing of all of those the price of of.

Where we raised capital all has a pretty significant influence and how.

Guidance is impacted which is why we chose to keep it where.

Matthew Partridge: Guidance is impacted, which is why we chose to keep it where it was set last quarter, given the strength of the Q1.

Matt Partridge: Guidance is impacted, which is why we chose to keep it where it was set last quarter, given the strength of the Q1.

Where we're at with set last quarter, given the strength of the first quarter.

Okay. Thanks, guys I appreciate it appreciate it thanks. Thank you.

Rob Stevenson: Okay. Thanks, guys. Appreciate it.

Matthew Partridge: Thanks, Rob.

Matt Partridge: Thanks, Rob.

Our next question will come from Wes Golladay with Baird. Please go ahead.

John Albright: Thank you.

Operator 2: Our next question will come from Wes Golladay with Baird. Please go ahead.

Operator: Our next question will come from Wes Golladay with Baird. Please go ahead.

Good morning, guys I just wanted to look at the potential office sales is there anything you can do ahead of time, such as extend leases to enhance the value.

Wes Golladay: Hey, good morning, guys. I just wanna look at the potential office sales. Is there anything you can do ahead of time, such as extend leases to enhance the value?

We could but I mean, it to be in reality the leases are long enough, where that's not where the tennis head is right now.

John Albright: We could, but I mean, in reality, the leases are long enough where that's not where the tenant's head is right now. You know, so we haven't taken that approach. We've made the tenants aware, obviously, of the process, so that could come about. That's not something just because there's enough length on the leases that, you know, really that's not in the queue for the tenants to really consider at this point as they really deal with more near-term lease issues in their portfolio.

So.

So the we haven't haven't taken that approach we've made the tenants aware obviously of the process. So that could come about but that's not something we're just because of there is enough of length on the leases that really that's that's not in the queue for the tenants to really consider it.

This point is a really deal with more near term lease issues in their portfolio.

Got it and the.

Wes Golladay: Got it. You know, for this quarter's acquisition that you cap rate north of 8%, can you talk about, you know, what drove that cap rate above 8% and, you know, how much competition you faced for the assets?

For this quarter's acquisition that your cap rate north of an 8% and can you talk about what drove that cap rate above 8% and how much competition you're face for the assets.

Yes, I think.

John Albright: Yeah, I think, you know, look, we're very happy to find the assets we found and at the pricing. Some of the assets we followed even pre-pandemic, and when we saw, you know, how well, like for instance, Sportsman's Warehouse did during the pandemic and came out a whole lot stronger and now being merged into Cabela's/Bass Pro Shops, you know, and it's right next to Costco. So we're, you know, very fast to kind of go back and pursue that acquisition. We followed the At Home very well, and when we saw that opportunity, we're just quick to pounce on it. We hope to see more. We, you know, do have a strong pipeline where we're seeing, you know, good activity.

Look we're very happy to find the the assets.

Found in at the pricing.

Some of the assets, we've followed even pre pandemic.

And when we saw how well like for instance, sportsman did during the pandemic and came out a whole lot stronger and now being merged into Cabela's bass pro.

And it's right next to the Cosco. So we are very fast to kind of go back and pursue that acquisition the ad.

Hello.

Okay very well.

And when we saw that opportunity, we're just quick too.

Pounce on it.

And we hope to see more.

Do you have a strong portfolio.

Pipeline, where we're seeing good.

The good activity.

And I guess, if we were to look at that end of that pipeline right. Now is it more of the this similar cap rates for more like last year's cap rates around the 7% range.

Wes Golladay: I guess if we were to look into that pipeline right now, is it more of the similar cap rates or more like last year's cap rates around the 7% range?

Yes more of like last year I mean.

John Albright: Yeah, more like last year. I mean, you know, so I wouldn't expect, you know, a lot of 8%s, but I hope to find some more.

No.

So I went in line.

Expect a lot of 8%.

To find some more.

Got it thanks for taking the questions.

Wes Golladay: Got it. Thanks for taking the questions.

Our next question. Our next question will come from RJ Milligan with Raymond James. Please go ahead.

Operator 2: Our next question will come from RJ Milligan with Raymond James. Please go ahead.

Operator: Our next question will come from RJ Milligan with Raymond James. Please go ahead.

Hey, Good morning, guys just curious for the office assets in terms of what Youre thinking in terms of pricing on a cap rate basis, and whether or not you expect to be able to recycle that capital accretively.

RJ Milligan: Hey, good morning, guys. Just curious for the office assets in terms of what you're thinking in terms of pricing on a cap rate basis and whether or not you expect to be able to recycle that capital creatively.

Yes, I think it's a little too early to kind of give that sort of guidance.

John Albright: Yeah, I think it's a little too early to kind of give that sort of guidance. You know, we're comfortable where we expect the properties to transition. As Matt said, you know, it looks very favorable definitely on a book value basis to the shareholders. You know, I would say that if there is any kind of cap rate dilution, if you will, I'm sure we'll pick it up on lease length and being in pure retail. You know, anyway, we'll kind of give a little bit further guidance when we're a little bit further down the road.

We're comfortable where we expect.

The properties transition and as Matt said you know.

Look very favorable definitely on the book value basis to the shareholders.

And.

I would say that.

If there is the kind of cap rate dilution. If you will I am sure will pick it up on lease length and being in pure retail.

So.

Anyway, So we'll kind of get a little bit further guidance when when or the.

Little bit further down the road.

Okay that was all I had thanks guys.

RJ Milligan: Okay, that was all I had. Thanks, guys.

Thanks Sarah.

John Albright: Thanks, RJ.

Again, if you have a question. Please press Star then one our next question will come from Craig Sarah with B Riley. Please go ahead.

Operator 2: Again, if you have a question, please press star then one. Our next question will come from Craig Kucera with B. Riley. Please go ahead.

Operator: Again, if you have a question, please press star then one. Our next question will come from Craig Kucera with B. Riley. Please go ahead.

Hey, good morning, guys I may have missed this but what was the size of the acquisition pipeline you are looking at outside of the assets coming over from CTO of in the next quarter or so.

Craig Kucera: Hey, good morning, guys. I may have missed this, but what was the size of the acquisition pipeline you're looking at outside of the assets coming over from CTO over the next quarter or so?

Look we have call. It 100, the $200 million in the in the pipeline of things that we're actively pursuing.

John Albright: You know, look, we have, you know, call it $100 to 200 million in the pipeline of things that we're actively pursuing. I know that's kind of a wide range, but, you know, some of them are closer as far as discussions and some are more, you know, kind of more of a in the competition mode.

I know the kind of a wide range, but some of them are closer as for.

Far as discussions and some are more.

Kind of more of the in the competition.

Good.

Okay got it.

Craig Kucera: Okay, got it. I feel like last quarter, you had a renegotiation with Old Time Pottery in Jacksonville and got an out parcel back and were gonna try to either sell that or maybe get a ground lease. Is there any update on that?

And I feel like last quarter.

A renegotiation with old time pottery and Jacksonville and.

Got an out parcel back and we're going to try to either sell that or maybe get a ground lease is there any update on that.

Yes, I wish I had about 100 of those because we were having a high class problem as far as.

John Albright: Yeah. I wish I had about 100 of those because we're having a high-class problem as far as you know the dialogue with regards to that property. Just hang tight and hopefully next quarter we'll have some news.

The the dialogue with regards to that property. So just hang tight and hopefully next quarter, we'll have some news.

Okay. Thanks, that's it for me.

Craig Kucera: Okay. Thanks. That's it for me.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to John Albright for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to John Albright for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to John Albright for any closing remarks.

Thank you for participating on the call and we look forward to talking to you a net.

John Albright: Thank you for participating on the call, and we look forward to talking to you, in the next couple weeks.

Couple of weeks.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator 2: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Q1 2021 Alpine Income Property Trust Inc Earnings Call

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