Q4 2023 Alpine Income Property Trust Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the Alpine Income Property Trust fourth-quarter earnings conference call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by and welcome to the Alpine income property Trust fourth quarter earnings Conference call.

Time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising you. Your hand is right to withdraw your question. Please press star one again.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Partridge, Chief Financial Officer. Please go ahead.

Please be advised today's conference is being recorded I would now like to hand, the conference over to your speaker today, Matt Partridge, Chief Financial Officer. Please go ahead.

Matt Partridge: Morning, everyone, and thank you for joining us today for the Alpine Income Property Trust fourth quarter and full year 2023 operating results conference call. With me today is our CEO and President, John Albright. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal security 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.

Good morning, everyone and thank you for joining us today for the Alpine income property Trust fourth quarter and full year 2023 operating results conference call with me today is our CEO and President John Albright.

Before we begin I'd like to remind everyone that many of our comments today are considered forward looking statements under federal Securities Law Company.

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.

Matt Partridge: 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, earnings release, and most recent investor presentation, which contain reconciliations of our non-GAAP financial measures we use, on our website at alpineread.com. I'll now turn the call over to John for his prepared remarks. Thanks, Matt. And good morning, everyone.

You can find our SEC reports earnings release, our most recent investor presentation, which contain reconciliations of our non-GAAP financial measures, we use on our website at alpine <unk> Dot com.

Now I'll turn the call over to John for his prepared remarks.

Matt and good morning, everyone.

John Albright: As we look back at our execution in 2023, we continue to emphasize the value-focused asset recycling program we implemented nearly two years ago. This program has allowed us to reposition our portfolio into higher quality credits that de-risk our cash flows and provide the liquidity needed for our opportunistic share repurchases and strong yielding first mortgage investments. In the fourth quarter, the majority of our investment activity was concentrated in first mortgage investments and share repurchases, and we believe these investment opportunities provide attractive risk-adjusted returns compared to other opportunities available in the market. During the quarter, we originated nearly $31 million of first mortgage loan investments and acquired two single-tenant net lease properties for $3 million. The initial yield on our loan investments was 9.2%, and the cash for cap rate of our property acquisitions was 7.3%. Our largest investment was a low-leveraged $24 million first mortgage secured by 41 retail properties.

As we look back at our execution in 2023, we continue to emphasize the value focus asset recycling program, we implemented nearly two years ago.

This program has allowed us to reposition our portfolio into higher quality credits that derisk, our cash flows and provided the liquidity needed for our opportunistic share repurchases and strong yielding first mortgage investments.

Within the fourth quarter. The majority of our investment activity was concentrated in the first mortgage investments and share repurchases and we believe these investment opportunities provide attractive risk adjusted returns compared to other opportunities available in the market.

During the quarter, we originated nearly $31 million of first mortgage loan investments and acquired two single tenant net lease properties for $3 million.

Initial yield on our loan investments was nine 2% and the gastric cap rate of our property acquisitions was seven 3% our largest investment with a low leverage $24 million first mortgage secured by 41 retail properties in conjunction with a loan we entered into a fee sharing agreement with CTO royalty growth are.

John Albright: In conjunction with the loan, we entered into a fee-sharing agreement with CTO Realty Growth, our external manager. This fee-sharing agreement allows us to receive a share of the asset management, disposition, and leasing fees related to CTO's management. The other loan investment we made during the quarter was a first mortgage to provide $6.8 million of funding towards the purchase and development of a five-acre project anchored by Wawa and McDonald's in a growing sub-market of Nashville, Tennessee. While we intend for our loan investments to remain a relatively small component of our overall asset base and strategy, they do provide future purchase options for our acquisition pipeline and serve as catalysts for our future partnership opportunities with sponsors, and we believe they offer compelling risk-adjusted yields supported by strong tenant credits and well-capitalized sponsors.

External manager this fee sharing agreement allows us to receive a share of the asset management disposition and leasing fees related to Cts management.

The other loan investments, we made during the quarter, where the first mortgage to provide $6 $8 million in funding towards the purchase and development of our five acre project anchored by Wawa, and Mcdonald's and a growing submarket of Nashville, Tennessee, while we intend for our loan investments to remain a relatively small component of our overall asset.

Base strategy, they do provide future purchase options for our acquisition pipeline and serve as catalysts for our future partnership opportunities with sponsors and we believe they offer compelling risk adjusted yield supported by strong tenant credits and well capitalized sponsors.

John Albright: On the acquisition front, we acquired two newly built properties leased to Dollar Tree Family Dollar as we saw fewer attractive core investment opportunities due to reluctant sellers. And finally, as it relates to our common stock buybacks, we repurchased $9.5 million of our common stock at an average price of just over $16 per share during the fourth quarter. The implied cap rate of these repurchases was above 8%, which is significantly above the cap rate for comparable fee-simple property investments available in the market.

On the acquisition front, we acquired two newly built properties leased to dollar tree family dollar as we saw fewer attractive core investment opportunities due to reluctant sellers.

And finally as it relates to our common stock buybacks, we repurchased $9 $5 million of our common stock at an average price of just over $16 per share during the fourth quarter.

The implied cap rate of these repurchases was above 8%, which is significantly above the cap rates for comparable fee simple property investments available in that market, especially considering 65% of our annualized base rent comes from tenants with an investment grade credit rating and our stock pays.

John Albright: Especially considering 65% of our annualized base rent comes from tenants with an investment grade credit rating and our stock pays nearly a 6.9% dividend yield at $16 per share. For the full year of 2023, we acquired 14 net lease properties for $83 million at a 7.4% cash cap rate and originated three first mortgage investments totaling just under $39 million of funding commitments at an initial yield of 9.1%. Over 66% of the acquired base rents from the property acquisitions in 2023 come from tenants with investment grade credit ratings. On the disposition side of things, during the full year 2023, we sold 24 properties for $108 million that had a weighted average exit cap rate of 6.3%, generating gains of $9.3 million. Overall for the year, our net investment spread, which is the difference between our investment yields and decision yields, averaged 159 basis points.

Nearly a six 9% dividend yield at $16 per share.

For the full year of 2023, we acquired 14 net lease properties for $83 million.

Seven 4% cash cap rate and originated three first mortgage investments totaling just under $39 million of funding commitments at the initial yield of nine 1%.

Over 66% of the acquired base rents for the property acquisitions in 2023 come from tenants with investment grade credit rating.

On the disposition side of things during the full year 2023, we sold 24 properties for $108 million at a weighted average.

Projected cap rate of six 3% generating gains of $9 3 million.

Overall for the year, our net investment spread which is the difference between our investment yields and especially yields average 159 basis points.

John Albright: So even with limited access to the capital markets and the increase in interest rates over the past 18 months, we're still driving positive increases in cash flow through our asset recycling strategy. From a portfolio make-up perspective, Matt will outline more of the specifics in his prepared remarks, but given we are coming up on our five-year anniversary later this year, I wanted to take a moment to highlight the progress we've made in transitioning our portfolio through our asset recycling strategy. Since the inception of the company, we've recycled nearly $600 million of capital as we've accretively sold off primarily office assets and properties occupied by non-credit tenants and reinvested the proceeds at positive net investment spreads. As a result, we've taken our office exposure from 43% to 0%, increased our exposure to investment grade rated tenants from 36 percent to 65 percent, increased our per share quarterly dividend by more than 37 percent, and our top tenant list, which includes the likes of industry leaders such as Walgreens, Lowe's, Dick's Sporting Goods, Dollar Tree, Family Dollar, Dollar General, Walmart, Best Buy, Hobby Lobby, and Home From a valuation perspective, we're currently trading well above an implied 8% cap rate on our real estate portfolio and at a significant discount to our book value of $18.36 per share. Additionally, we have strong AFFO per share growth projected for 2024, and our loan investments provide a natural deleveraging opportunity over the next 24 months.

So even with limited access to the capital markets and the increase in interest rates over the past 18 months, we're still driving positive increases in cash flow through our asset recycling strategy.

From our portfolio makeup perspective, Matt will outline more of the specifics with his prepared remarks, but given we're coming up on our five year anniversary. Later this year I wanted to take a moment to highlight the progress we've made in transitioning our portfolio through our asset recycling strategy.

Since inception of the company, we've recycled nearly $600 million of capital as we've Accretively sold off primarily office assets and properties occupied not by non credit tenants and reinvested. The proceeds of positive net investment spreads as a result, we've taken our opex exposure.

For 43% to zero percent increase our exposure to investment grade rate attached from 36% to 65% increase per share quarterly dividend by more than 37% and our top tenant list, which includes the likes of industry leaders such as Walgreens Lowe's Dick's.

Sporting good dollar tree family dollar dollar General Walmart best buy hobby lobby and home depot now compares favorably to many of our peers that trade at significantly better valuations.

From a valuation perspective, we're currently trading well above an implied 8% cap rate on our real estate portfolio.

At significant discount to our book value of $18 36 per share. Additionally, we have strong <unk> per share growth projected for 2024, and our low loan investments provide a natural deleveraging opportunity over the next 24 months to put it bluntly, we're a great value today, and we look forward to <unk>.

Matt Partridge: To put it bluntly, we're a great value today, and we look forward to maximizing that value for our shareholders. Now, I'll turn the call over to Matt to discuss our Portfolio Makeup Quarterly Results Balance Sheet in 2024 Guidelines. Thanks, John.

<unk> that value for our shareholders now.

Now I'll turn the call over to Matt to discuss our portfolio makeup quarterly results balance sheet and 2024 guidance. Thanks.

Matt Partridge: As of the end of the year, our portfolio consisted of 138 properties totaling 3.8 million square feet with tenants operating in 23 sectors within 35 states. And, as John mentioned, 65% of our annualized base rent, or ABR, now comes from tenants or the parent of tenants who have an investment grade credit rating. The portfolio continues to be 99% occupied, and our top tenants remain largely unchanged.

Thanks, John as of the end of the year. Our portfolio consisted of 138 properties totaling $3 8 million square feet with tenants operating in 23 sectors within 35 States and as John mentioned, 65% of our annualized base rent or ABR now comes from tenants or the parent of tenants, who have an investment grade credit rating.

The portfolio continues to be 99% occupied and our top tenants remained largely unchanged. However, we do anticipate occupancy increasing over the coming months.

Matt Partridge: However, we do anticipate occupancy increasing over the coming months as we have signed or are in the process of signing multiple leases related to the vacant property. Fourth quarter 2023 FFO was $0.37 per share, unchanged when compared to the fourth quarter of 2022. And fourth quarter 2023 AFFO was $0.38 per share, representing a 7.3% decrease over the fourth quarter of 2022. Our quarterly results were most notably impacted by one-time expenses related to tenant credit loss and bankruptcy, primarily attributable to the Sutton Valero-branded Mountain Express properties that we discussed during our third quarter conference call, as well as the timing of investments and dispositions. These items were partially offset by regular rent increases within the owned portfolio, attractive net investment spreads from the asset recycling program, increased interest income from cash and restricted cash on the balance sheet, and lower interest expense driven by the year-over-year effects of previously completed interest rate hedging. Our general and administrative expenses for the quarter totaled $1.5 million, which included the $1.1 million management fee to our external managers.

We have signed or in the process of signing multiple leases related to the vacant properties.

Fourth quarter 2023, <unk> was 37 per share unchanged when compared to the fourth quarter of 2022 and fourth quarter 2023, <unk> 38 per share representing a seven 3% decrease over the fourth quarter of 2022.

Our quarterly results were most notably impacted by onetime expenses related to tenant credit loss in bankruptcy, primarily attributable to the southern Valero branded Mountain Express properties that we discussed during our third quarter conference call.

As well as the timing of investments and dispositions.

These items were partially offset by regular rent increases within the owned portfolio attractive net investment spreads from asset recycling program increased interest income from cash from restricted cash on balance sheet and lower interest expense driven by year over year effects of previously completed interest rate hedges.

Our general and administrative expenses for the quarter totaled $1 $5 million, which includes the $1 $1 million management fee to our external manager our G&A increased four 5% year over year, largely a result of higher state and local taxes and increases to the management fee driven buyer in that equity capital markets activities over the past 12 months.

Matt Partridge: Our G&A increased 4.5% year-over-year, largely as a result of higher state and local taxes and increases to the management fee driven by our net equity capital markets activities over the past 12 months. The current annual run rate for our management fee before any assumed new equity issuances or repurchases is $4.2 million. For the full year, FFO is $1.47 per share, and AFFO is $1.49 per share, representing year-over-year per share decreases of 15% and 16%, respectively, when compared to the full year of 2022. As previously announced, the company paid a fourth quarter cash dividend of 27.5 cents per share, representing a current annualized yield of more than 7%, and our fourth quarter FFO and AFFO payout ratio We anticipate announcing our regular quarterly cash common stock dividend for the first quarter of 2024 towards the end of February.

Current annual run rate for our management fee before any assume new equity issuances or repurchases is $4 2 million.

For the full year <unk> was $1 47 per share and <unk> was $1 49 per share representing year over year per share decreases of 15% and 16% respectively when compared to the full year of 2022.

As previously announced the company paid a fourth quarter cash dividend of <unk> 27, five per share representing a current annualized yield of more than 7% and our fourth quarter <unk> payout ratios remained fairly consistent at 74%, 72% respectively. We.

We anticipate announcing a regular quarterly cash common stock dividend for the first quarter of 2024 towards the end of February.

Matt Partridge: From an equity capital markets perspective, we continue to be active during the quarter on our board-approved $15 million share repurchase program. We are purchasing nearly 595,000 shares of our common stock for a total cost of $9.5 million at an average price of $16.01 per share. In 2023, we repurchased nearly 900,000 shares of our common stock for a total cost of $14.6 million at an average price of $16.23 per share, and in January, we did complete the remainder of the $15 million share repurchase program. We ended the quarter with net debt to total enterprise value of 51%, net debt to pro forma EBITDA of 7.7 times, and our fixed charge coverage ratio is a healthy 3.5 times.

From an equity capital market perspective, we continue to be active during the quarter on our board approved $50 million share repurchase program repurchasing nearly 595000 shares of our common stock for a total cost of $9 5 million at an average price of $16 one per share in 2023, we repurchased nearly 900000 shares of our common stock.

For total cost for a total cost of $14 6 million at.

At an average price of $16 23 per share and in January we did complete the remainder of the $15 million share repurchase program.

We ended the quarter with net debt to total enterprise value of 51% net debt to pro forma EBITDA of $7 seven times and our fixed charge coverage ratio was a healthy three five times.

Matt Partridge: The balance sheet is well stabilized with no debt maturities until 2026, and total liquidity at quarter end through cash, restricted cash, and undrawn revolver commitments was more than $187 million. In our press release last night, our initial guidance for 2024 reflects our confidence in the portfolio's quality, the year-over-year benefits from the asset recycling John referenced, increased fee revenue from our fee-sharing agreement with CTO, and what we believe is a reasonably cautious stance regarding our current access to capital, expected activity in the transactions market, and broader economic environment. We begin 2024 with portfolio-wide in-place annualized straight-line-based rent and in-place annualized cash-based rent of $38.8 million and a run rate annualized interest income from loan investments of $3.2 million. Our full year 2024 FFO guidance range is $1.51 to $1.56 per share.

The balance sheet is well stabilized with no debt maturities until 2026, and total liquidity at quarter end through cash restricted cash and undrawn revolver commitments was more than $187 million.

In our press release last night initial guidance for 2024 reflects our confidence in the portfolio as quality the year over year benefits from the asset recycling Jon referenced increased fee revenue from our fee sharing agreement with CTO and what we believe is a reasonably cautious stance regarding our current access to capital expected activity in the transactions market and broader.

Economic environment.

We began 2024 with portfolio wide in place annualized straight line base rent and in place annualized cash base rent of $38 8 million.

And our run rate annualized interest income from loan investments of $3 2 million.

Our full year 2024, <unk> guidance range is $1 51.

To $1 56 per share and our full year 2024, <unk> guidance range is $1 53 to $1 58 per share our.

Operator: And our full year 2024 AFFO guidance range is $1.53 to $1.58 per share. The 2024 Guidance for Investment Activity is $50 million to $80 million of investments contingent on reasonable market conditions, and our investment guidance does include the potential for additional loan investments. Our 2024 disposition guidance is to sell between $50 million and $80 million of properties, and we are currently assuming approximately 75 to 100 basis points of net investment spread between our investment yields and our dispositions. Finally, we are forecasting our weighted average share count for 2024 to be approximately 14.9 million shares, and this does incorporate the effects of completing the remaining portion of the $15 million share repurchase program I referenced earlier. We appreciate everyone joining the call today, and we'll now open it up for questions. Operator?

Our 2024 guidance for investment activity is 50 million to $80 million of investments contingent on reasonable market conditions and our investment guidance does include the potential for additional loan investments.

Our 2024 dispositions guidance is to sell between $50 million $80 million of properties and we are currently assuming approximately 75 to 100 basis points net investment spread between our investment yields at our disposition yield.

And finally, we are forecasting our weighted average share count for 2024 to be approximately $14 9 million shares and this does incorporate the effects of completing the remaining portion of the $15 million.

Share repurchase program I referenced earlier, we appreciate everyone joining the call today and we'll now open it up for questions operator.

Thank you.

Reminder, if you would like to ask a question. Please press star one on your telephone and wait for your name to be announced you withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.

And our first question is going to come from the line of Rob Stevenson with Janney Montgomery Scott. Your line is open. Please go ahead.

Operator: Thank you. And as a reminder, if you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Guys, Matt just to follow up on one of your latter comment is the <unk> guidance range is that just acquisition or dispositions that slide between there or is there something else notable that would push you down to the $1 51 are up to the $1 56, or Conversely, DSO range.

Operator: One moment while we compile our Q&A roster. And our first question is going to come from the line of Rob Stevenson with Jamie Montgomery-Scott. Your line is open. Please go ahead.

Rob Stevenson: Good morning, guys. Matt, just to follow up on one of your latter comments, is the 5-cent guidance range just acquisition and dispositions that slide between there? Is there something else notable that would push you down to the 151 or up to the 156 or, conversely, the AFO range? Yes, morning, Rob.

Yes, good morning, Rob part of it is the acquisition and disposition timing and then the other component that could move that around a little bit, it's whether or not we get loan repayments.

Specifically for the $24 million loan where that is intended to be a.

Liquidated.

Matt Partridge: Part of it is the acquisition and disposition timing. And then the other component that could move that around a little bit is whether or not we get loan repayments. Most specifically, for the 24 million dollar loan where that is intended to be a liquidated Portfolio, and so that could cause interest income to be reduced over the period of the year. Okay. And what is the, you know, latest in terms of the Mountain Express stuff?

Portfolio, and so that could that could cause interest income to be reduced over the period of the year.

Okay and what is the.

The latest in terms of the.

Mountain Express stuff is that going to wind up being some of the sales this year is that.

We're all going to be re tenanted some of it how are you guys looking at that at this point.

Yeah. So we're.

John Albright: Is that, you know, going to wind up being, you know, some of the sales this year? Is that, you know, all going to be re-tenanted, some of it? How are you guys looking at that at this point? Yeah, so we're in active discussions with a number of operators, we've got two leases signed on two of the locations, and we're working on three more. And then we're in preliminary discussions on the other two.

In active discussions with a number of operators.

We've got two leases signed on two of the locations. We are working on three more.

And then we're in preliminary discussions on the other two were still anticipating.

Anticipating selling them.

Given our focus on publicly traded or publicly rated tenants but.

We are in active discussions to have all of that least in the near to medium term.

And when.

When you take when you guys take a look at the portfolio.

John Albright: We're still anticipating selling them, just given our focus on publicly traded or publicly rated tenants. But, you know, we're in active discussions to have all of that leased in the near to medium term.

Much of it is likely disposition candidates at this point versus.

Only if you found something that was an extremely compelling buy I mean are you pretty much done with the recycling of the majority of the assets unless somebody comes and it makes a very strong offer or is there still the bottom 25% of the portfolio is likely to be sold.

John Albright: And how, you know, when you take, when you guys take a look at the portfolio, how much of it is likely disposition candidates at this point versus, you know, only if you find something that was an extremely compelling buy? I mean, are you pretty much done with the recycling of the majority of the assets unless somebody comes in and makes a very strong offer? Is there still, you know, the bottom 25% of the portfolios likely to be sold, you know, going forward? How are you guys thinking about where this portfolio is versus where you'd want it if you started with a clean sheet of paper? Yeah, I think it's a little bit of a barbell.

Going forward, how are you guys thinking about where this portfolio is versus where you'd wanted if you're starting with a clean sheet of paper.

Yes, I think it is.

Little bit of a bar Bell I mean, we still have some really low cap rate properties that we may decide to monetize and recycle.

In a higher cap rates and then.

Louis is continuing to upgrade the portfolio as a whole by selling off the bottom part of the portfolio like the mountain Express so well.

John Albright: We still have some really low cap rate properties that we may decide to monetize and recycle into higher cap rates. And then, you know, always continuing to upgrade the portfolio as a whole by selling off the bottom part of the portfolio, like the Mountain Express. So we'll, you know, work to basically continue to upgrade the portfolio even stronger. But so we have two levers there on the bottom, and some of the super high quality.

Work to basically continue to upgrade the portfolio, even stronger, but so we have two levers there on the bottom in some super high quality.

Okay and then how are you guys thinking obviously.

Can you size, adding even one new tenant or one new IND.

Industry moves the needle for you guys still but how are you guys thinking about tenant and industry concentrations going forward.

John Albright: Okay. And then how are you guys thinking, you know, obviously, given your size, adding even one new tenant or one new industry moves the needle for you guys still, but how are you guys thinking about tenant and industry concentrations going forward? And I'm, you know, is it? I think a lot of people ask questions about Walgreens at 12% and dollar stores, which you just added a couple of this quarter at 14. Do you keep acquiring dollar stores?

Is that I think a lot of people ask questions about Walgreens at 12% and dollar stores, which you just added a couple this quarter at 14 do you keep acquiring dollar stores is that not could you would you take that up to 20% in <unk>.

Walgreens is that a disposition candidate at some point the lower that down below 12% exposure. How are you guys thinking about that sort of concentrate. So good question. So we are definitely going to look to lower the walgreens exposure over time, we're not in a mad rush.

John Albright: Is that not, you know, can you, would you take that up to 20%? And, you know, Walgreens, is that a disposal candidate at some point to lower that down below 12% exposure? How are you guys thinking about that sort of concentration?

But also hunting for more Walmart slows at not at.

John Albright: Yeah, so good question. So we're definitely going to, you know, look to lower the Walgreens exposure over time. We're not in a mad rush, but we are hunting for more Walmarts, Lowe's, not at home, but Home Depots and, you know, upgrading the portfolio there and getting those credits higher up on the list. You know, but it's just like, it's difficult to find the right ones, but we'll continue to pursue them and upgrade the portfolio that way. And then What about dollar stores?

Home depots and.

<unk>.

Upgrading the portfolio, there and getting those credits higher up on the list.

But it shifts like it's difficult to find the right ones, but we will continue to pursue them in and upgrading the portfolio that way.

And then what about dollar stores, what's your appetite to continue taking that up.

Yes, we're not going to I don't think Youll see us active on a dollar store acquisition side.

And then just a couple of data ones.

Matt Partridge: What's your appetite to continue taking that up? Yeah, we're not going to. I don't think you'll see us active on the dollar store acquisition side. Okay. And then just a couple of data ones. What were the two assets that you guys sold during the quarter? Yeah, one was a convenience store branded as BP. And the other one was a two-tenant property. It was a Bomgar's, which used to be a truck, or I'm sorry. It was a Bomgar's, which is similar to a tractor supply, and then a, um, a, No, I got the, I've drawn a blank on the other one, Rob, sorry, but it was the minimalist piece of the overall puzzle.

What were the two assets that you guys sold during the quarter.

Yes.

Does a convenience store.

Branded as a BP.

And the other one.

With a two tenant property as a bomb guards, which used to be.

I'm sorry, it was bombed ours, which is similar to a tractor supply and then.

Hum.

Now I've got to BP.

I'm, drawing a blank on the other one or I'm sorry, but.

It was de Minimis piece of the overall puzzle.

And then last one for me data Wise did the board reauthorized, a new share repurchase plan. If so what was the size.

Matt Partridge: Okay, and then last one for me, data-wise. Did the board reauthorize the new share repurchase plan? If so, what was the size?

We would basically have that in our announcement if they had so we'll monitor what goes on there and.

Matt Partridge: We would basically have had that in our announcement if they had, so we'll monitor what goes on there and adjust if things change. Okay, thanks guys. Appreciate the time. Have a good weekend. Thanks Rob. Thank you, you too.

And kind of reflect.

Things change.

Okay. Thanks, guys appreciate the time and have a good weekend. Thanks.

Thanks Rajiv.

Okay.

Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Wesley Golladay with Baird. Your line is open. Please go ahead.

Thank you and one moment as we move on to our next question.

And our next question is going to come from the line of Wesley Golladay with Baird. Your line is open. Please go ahead.

Wes Golladay: Hey, good morning, guys. Just a question on the investment guidance. Does that include buybacks? And at $15 a share, would buybacks be the top priority for Visa Capital? So a good question last morning. No, it does not include any buyback activity.

Hey, Good morning, guys. Just a question on the investment guidance does that include the buybacks.

$10 a share buybacks would be the top priority for DC capital.

So good question last morning.

It does not include any buyback activity.

Matt Partridge: That would be in addition to the investment guidance. And I mean, at $15 a share, we're obviously well over an 8% implied cap rate. So I think that's certainly something that we'll have a discussion with the board about in terms of a potential new program. Okay, and then Matt, you talked about signing some leases, and just kind of curious, what do you have in guidance for assuming rent from the lease and other properties? We have the two that we've signed so far in that, OK. I guess we're trying to build the model and then build dispositions or a model, I guess, what is the total upside in rent?

That would be in addition to the investment guidance.

And.

I mean at $15 a share we're obviously well over an 8% implied cap rate so I think.

Certainly something that we will have a discussion with the board about in terms of a potential new program.

Okay, and then Matt you talked about signing some leases.

Kind of curious what do you have in guidance for assumed rent from the weak and other properties.

We have the two that we've signed so far and Thats it.

Okay.

I guess kind of to build the model and then to build dispositions of our model I guess what are the total upside in rent, obviously, you're going to sell them, but we need to get it in the model and exit the.

Matt Partridge: Obviously, you're going to sell them, but we need to get it in the model and then exit the monetizing assets. So how much, I guess, from the current run rate, how much upside do you have on the rent from releasing the assets? Yeah.

Monetize assets, so how much I guess from the current run rate and how much upside do you have on the retro really some yes, yes. So the current run rate includes the two we've side I would say for now assume nothing and then obviously as those come to fruition, we'll report them right.

Matt Partridge: So the current run rate includes the two we've signed. I would say for now, assume nothing. And then obviously, as those come to fruition, we'll report them. We're called two months away from doing this again.

We're call it two months away from from doing this again and so we'll provide another update then and update the numbers then.

Matt Partridge: And so we'll provide another update then and there. Okay, and then last one for me, what do you have for assumed leverage throughout the year and how does that impact your borrowing base based on looking at the spread? Yeah, so we're assuming there's some slight de-levering, and based on sort of the forecast and guidance, we should end the year closer to seven times that EBITDA, which should benefit the interest rate spread going into 2025. Thank you.

Okay, and then last one for me what do you have for assume leverage throughout the year and how does that impact your borrowing base based on the spread.

Yeah. So we're assuming there is some slight delevering will based on the forecast and guidance. We should end the year closer to seven times net debt to EBITDA, which should benefit the interest rate spread going into 2025.

Okay. Thanks.

Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Matthew Ertner with Jones Trading. Your line is open. Please go ahead.

Okay. Thank you and one moment as we move on to our next question.

And our next question is going to come from the line of Matthew Gardner with Jones trading. Your line is open. Please go ahead.

Matthew Ertner: Hey guys, good morning. Thanks for taking the time to answer the question. So the loans look like they provide some pretty solid risk-adjusted returns. Are you seeing these more than acquisition dispositions at the moment? And if so, is there a certain amount of capital that you guys would be comfortable allocating to this strategy? I know that you don't want to do this kind of thing right off the bat, but you know, I guess what you would be comfortable getting up to for this two-year period?

Hey, guys. Good morning, Thanks for taking the question.

Loans look like they provide some pretty solid risk adjusted returns are you seeing these more than acquisitions dispositions at the moment.

And if so is there a certain amount of capital that you guys would be comfortable allocating to the strategy I know that you don't want to do this kind of off the bat, but yes.

I guess, what would you be comfortable getting up to for this two year period.

John Albright: I mean, I think you're seeing us at the top level of kind of where we want to be on the loans. So what you'll see is really loans are either paying down, or we're, you know, selling off pieces of the loans to do new loans. So I don't think you're going to see the portfolio of loans get any larger. Gotcha. And then, you know, in terms of the transaction market, what do you think you need to see for it to kind of really get going again? Is it, you know, Fed rate cuts or some kind of money coming off of the sidelines? You know, what do you guys think in there?

I mean, I think youre seeing us on that.

On the top level of kind of where we want to be on the loans.

Youll see us really.

Loans, either paying down or sell.

Selling off pieces of the loan to to do new loans. So.

I think youre going to see.

The portfolio of loans get any.

Any larger.

Got you. Thank you.

And then in terms of the transaction market. What do you think you need to see great to kind of really get going again is that fed rate cuts are kind of money coming off the sidelines.

What are you guys thinking there.

John Albright: So I think you're starting to see, or we're starting to see a little bit more activity now. I think people have been hanging on for a rate cut on the higher interest costs as debt's rolling over. It's starting to bite a little bit more, and so people are just kind of making harder decisions now about selling assets that they don't really wanna sell, but it makes a lot of sense given high debt costs and so forth. So I'm pretty much of the optimistic camp that as rates seem to be further out, as far as rate cuts are concerned, you're seeing more activity on that transaction market. Awesome, thanks for taking the questions.

So I think you're starting to see we're starting to see a little bit more activity now I think people have been hanging on for Rick.

And the higher interest cost as deaths rolling over is starting to bite a little bit more and so people are just kind of making harder decisions now about selling assets at there don't really want to sell but it makes a lot of sense given given the high debt cost and so forth. So.

Pretty much.

Of the optimistic camp that as rates seem to.

The further out as far as rate cuts, you're seeing more activity on the transaction market.

Awesome, Thanks for taking the questions.

Operator: Thank you. Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of RJ Milligan with Raymond James. Your line is open. Please go ahead. Hey, good morning, guys. Most of my questions have been asked and answered.

Thank you.

Thank you and one moment as we move on to our next question.

And our next question is going to come from the line of RJ Milligan with Raymond James Your line is open. Please go ahead.

Hey, good morning, guys. Most of my questions have been asked and answered I'm just curious.

RJ Milligan: I'm just curious, John, on Walgreens. I think it's split rated in terms of credit rating. Just can you talk about how you feel about that specific credit and maybe exposure to pharmacies in general, given what we've been seeing in the industry? Yeah, I mean, look, clearly, you know, they're company in the headlines, you know, the properties we have are very good locations. And, you know, obviously, with new management at Walgreens and cutting the dividend and selling off some divisions, you know, they're going to become a healthier credit, obviously. And so, you know, the good news is our locations, even if you found another tenant, there's a lot of tenant demand out there for locations. I was with a developer two days ago, who's a prolific developer of, you know, all kinds of various retailers, and you can't build a box for less than 330 bucks these days.

John on Walgreens, I think it's a split rated in terms of credit rating.

Can you talk about how you feel about that specific credit and maybe exposure pharmacies in general given what we've been seeing in the industry.

Yes, I mean look.

Clearly their company in the headlines.

The properties, we have are very good locations.

And.

Obviously with new management at Walgreens, and pay the dividend and selling off.

Some divisions, they're going to become a healthier credit obviously.

And so.

The good news is our locations even if you found.

Another tenant there's a lot of tenant demand out there for locations I was with a developer two days ago, who is a prolific developer of all kinds of various retailers and you can't build a box for less than 330 Bucks. These days, so so youre going to see tenants being very active in.

John Albright: So, you're going to see tenants being very active and taking over other tenant spaces. So I think the backdrop is that, you know, there's a lot of tenant demand out there if you have some issues with particular boxes. So it's all about basis.

Taking over other tenant spaces. So I think the backdrop is that theres a lot of tenant demand out there. If you had some issues with particular boxes. So it's all about basis, and I think with our basis trading at $127 a square foot along the whole portfolio. We've got a lot of room there. So.

John Albright: And I think, you know, with our basis trading at $127 a square foot across the whole portfolio, we've got a lot of room there. So we're not, we're not kind of having sleepless nights over Walgreens, but we will be, you know, pruning the exposure for sure. Great. Thanks. That's it for me.

We're not kind of having sleepless nights over Walgreens, but we will be.

Pruning the exposure for sure.

Great. Thanks, that's it for me.

Operator: Great. Thanks, RJ. Thank you, and one moment as we move on to our next question. And our next question comes from the line of Anthony Hau with Truist Securities. Your line is open, please go ahead.

Great. Thanks RJ.

Thank you and one moment as we move on to our next question.

And our next question comes from the line of Anthony <unk> with <unk> Securities. Your line is open. Please go ahead.

Anthony Hau: Good morning, guys. Thanks for your question. So in 2023, you guys are doing all the right things, right? Completing numerous initiatives to close the valuation gap, but the market is not rewarding those actions, right? So what other levers can you pull to close the gap this year while reducing leverage? And like, how do you balance between leverage, buying back stock, and growing that equity float?

Good morning, guys. Thanks, Great question. So in 2008, Great you guys are doing all the right things right completed numerous initiatives to close the valuation gaps, but the market is not rewarding for those actions. So what other levers can you pull to closer the gap this year, while reducing leverage and like how do you balance between leverage and buying back stock.

Growing debt equity flows.

Yes, I mean look at this.

John Albright: Yeah, I mean, look, if the stock continues to trade at these massive discounts to NAV and high implied cap rates and high dividend yield, clearly, we'll look to buy more stock because, you know, we're going to be accreting NAV and really giving shareholders a strong total return, basically, you know, the synopsis. And so, you know, if you look at kind of where we're trading versus the comps, which, you know, you know it better than we do, you know, we're trying to kind of give a value proposition to shareholders and say, why would you take a higher basis risk and lower implied cap rate when you can have the same exposure to IG at a much higher cap rate, lower valuation, and higher dividend yield? So the value proposition is there.

Stock continues to trade at these massive discount to NAV and high implied cap rates and high dividend yield clearly, we'll look to buy more stock because.

We're going to be accretive NAV.

Really giving shareholders a strong total return.

Basically.

Synopsys.

So if you look at kind of where we're trading versus the comps, which you know are better than we do.

No.

What we're trying to kind of give a value proposition to shareholder to say why would you take a higher basis risk and lower implied cap rate. When you can have the same exposure to IAG at much higher cap rate lower valuation higher dividend yield.

The value proposition is there we will try our best to communicate it but the market has not taken it and then we will look to buyback more shares and.

John Albright: We'll try our best to communicate it, but if the market is not taking it, then we'll look to buy back more shares and sell down assets to keep the leverage neutral. So it's pretty easy. It's not, you know, not rocket science.

And sell down assets to keep the leverage neutral so it's pretty easy it's not rocket science, we've been through this.

John Albright: We've been through this many times and feel like we have good opportunities out there. And so we'll just kind of keep going. So I feel like that's like a catch 22, right?

Many times and.

Feel like we have good opportunities out there and so we'll just kind of keep.

Working through it.

So I feel like that's a good tax rate to right.

Anthony Hau: Because, you know, I think one of the main reasons why investors are not rewarding those actions is because the liquidity of a stock, it's free, you know, it's pretty limited, right compared to other triple nets. So how do you balance between like buying back stock and like keeping that liquidity for investment? Yeah, I mean, we can't really, you know, we can't basically give investors everything. I mean, investors obviously want everything. But look, you know, we're able to buy almost a million shares with our buyback. And as you know, buyback programs are very problematic. I mean, we have we can't, we can't basically buy back at certain times of days, we can't buy back with a certain percentage of volume in the way shares are trading.

Yeah.

I think one of the main reasons why investors are not rewarding those accidents, because the liquidity of our stock as it is.

It's pretty limited right compared to other triple nets. So how do you balance between like buying back stock and like keeping that liquidity for investors.

Yes, I mean, we can't be we can't really.

We can basically give investors everything I mean investors, obviously want everything but look we were able to buy what I almost 1 million shares with our buyback and as you know the buyback programs are very problematic.

We can't we can't basically buyback at certain times or days, we can't buyback with certain percentage of volume and the shares are trading and we certainly are price sensitive so even with all of those parameters, we're able to buy 1 million shares relatively.

Anthony Hau: And we certainly are price sensitive. So even with all those parameters, we're able to buy a million shares relatively easily. So investors can buy the shares; they just basically, you know, it just, they probably have a hard, fast rule that, hey, if you're trading below a certain amount of shares per day, we can't touch you kind of thing. So but you can buy the shares. I mean, we've demonstrated

Z.

So investors can buy the shares they just basically.

Just maybe just probably have a hard fast rule that hey, if you're trading below some certain amount of share report a we can't touch you kind of thing so but you can buy the shares we've demonstrated that so.

John Albright: So it's for, you know, more of the value investors seem to seem to kind of latch on to which, you know, more long-term holding sort of investors, you know, seem to understand the value proposition. Okay, thank you. Thank you. Thank you. And one moment as we move on to our next question. And our next question comes from the line of John Maseksa with B Reilly. Your line is open. Please go ahead.

For more of the value investors seem to seem to kind of latch on which more long term holding sort of investors.

Seem to understand the value proposition.

Okay. Thank you.

Thank you.

Thank you and one moment as we move on to our next question.

And our next question comes from the line of John <unk> with B Riley. Your line is open. Please go ahead.

Operator: Good morning. Morning. So quick question on the disposition guidance. I mean, should we assume that some repayment of some of these mortgage investments is in that guidance today and maybe just kind of, roughly, what are you kind of expecting to get repaid this year? Thanks for watching. Bye. Bye. Yeah, good question, John.

Good morning.

Good morning.

So quick question on the disposition guidance.

Should we assume that some repayment of some of these mortgage investments is in that guidance today, and maybe just kind of rough.

Roughly what are you kind of expecting to get repaid.

This year.

Yes, good question John.

<unk>.

Matt Partridge: There's a limited amount of repayment related to the $24 million loan that we were introduced in the fourth quarter, starting really in the third quarter. But we're talking about 10% over the balance of the back half of 2024. So not a meaningful amount.

There is a limited amount of repayment related to the $24 million loan that we originated in the fourth quarter, starting really in the third quarter.

But we're talking call it 10% over the balance of the back half of 2024, so not a meaningful amount, we think that will probably ramp up when we get into 2025.

Matt Partridge: We think that'll probably ramp up when we get into 2025 and, hopefully, into a different interest rate environment and a more efficient transaction environment. Okay. And I guess maybe what are some of the variables out in the external world that could change that kind of view or cause that to be different than guidance? I mean, essentially, as we think about kind of an uncertain rate world, does that impact that, or is it all just based on execution in terms of selling down, you know, the assets in that collateral pool? Yeah, I think it's both.

And hopefully into a different interest rate environment, and a more efficient transaction environment.

Okay, and I guess, maybe what are the kind of the variables out in the external world that could change that view.

View.

Cause that to be different than guidance essentially as we think about kind of an uncertain rate world does that impact that or is it all just based on execution in terms of selling down.

The assets in that collateral pool.

Yes, I think it's both I mean for that specific collateral pool.

Matt Partridge: I mean, for that specific collateral pool, I think it's a more active transaction environment with pricing that the borrower deems to be appropriate, but then on the other two loans, you know, those are development loans where once the tenant gets open and operating, I think it's either a refinancing opportunity for the borrower, so obviously the interest rate environment would have an influence on that, or it's, again, an efficient transaction market where And then maybe a bigger picture on the kind of guidance that the investments and dispositions at the midpoint obviously kind of balance each other out. Is there any expectation in your mind of a difference in timing between deploying capital and this kind of capital recycling? Of course, the year.

I think it's a more active transaction environment with pricing that the borrower deems to be appropriate, but then on the other two loans.

So those are those are development loans, where once the tenant gets open and operating I think it's either a refinancing opportunity for the borrower.

So obviously the interest rate environment would have an influence on that.

Or it's again.

Second transaction market, where they feel like they can sell it at the appropriate price.

And then maybe bigger picture on on kind of guidance that the investments and dispositions at the midpoint, obviously kind of balance each other out is there any expectation in your mind of a difference in timing between deploying capital and kind of capital recycling.

And of course of the year.

Matt Partridge: I mean certainly there will be, but we're assuming that everything sort of balances itself out over the years. Sometimes we sell ahead of buying, and sometimes we buy ahead of selling, but guidance assumes it's a relatively balanced approach. Okay, and on the balance sheet, you know, the revolvers are a little bit over the amount you have swapped, but it kind of seems like it matches the amount in the loan pool. Is it kind of fair to assume that's free floating, at least over the kind of intermediate term? Yeah, I think you can assume that that's going to float, and then as these loans get repaid, we'll evaluate what the redeployment options are in the market, and that evaluation will include potentially paying down that floating rate debt.

I mean, certainly there will be.

We're assuming that all sort of balances itself out over the year, sometimes we.

We sell ahead of buying and sometimes we buy ahead of selling.

Our guidance assumes relatively balanced approach.

Okay, and then on the balance sheet.

The revolver is a little bit over the amount you have swapped, but it kind of seems like it matches the.

The mountain the loan pool.

It kind of fair to assume Thats free floating.

At least over the kind of intermediate term.

Yeah, I think you can assume that that's going to flow and then as these loans get repaid we will it will evaluate what the redeployment options are in the market and that evaluation will include potentially paying down that floating rate debt.

John Maseksa: That's it for me. Thank you very much. Thanks, John. Thank you. This concludes today's question and answer session. This also concludes today's conference call. Thank you for participating. You may now disconnect. www.globalonenessproject.org. Thank you for watching!

Okay.

That's it for me thank you very much.

Thanks, Jeff.

Thank you. This concludes today's question and answer session. This also concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

Okay.

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