Q1 2024 Alpine Income Property Trust Inc Earnings Call
Okay.
Operator: Good day, and thank you for standing by. Welcome to the Alpine Q1 2024 earnings call. At this 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. 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. Speaker, Lisa Boricun, Chief Accounting Officer, please go ahead.
Speaker Change: Good day, and thank you for standing by and welcome to the Alpine Q1 2024 earnings call. At this time all participants are in a listen only mode.
Speaker Change: 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.
Speaker Change: We'll then hear an automated message advising that your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded.
Speaker Change: I'd now like to hand, the conference over to your Speaker Speaker, Lisa <unk> Chief Accounting Officer. Please go ahead.
Lisa Boricun: Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust First Quarter 2024 Operating Results Conference Call. With me today is our CEO and President, John Albright.
Lisa: Good morning, everyone and thank you for joining us today for the Alpine income property Trust first quarter 2024 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 them.
Lisa Boricun: Before we begin, 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.
Lisa: 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 any forward looking statements and we undertake no duty to update these statements.
Lisa: 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.
Lisa Boricun: You can find our SEC reports, earnings release, and most recent investor presentation, which contain reconciliations of the non-GAAP financial measures we use, on our website at alpineREITs.com. Now, I would like to turn the call over to John for his prepared remarks.
Lisa: You can find our SEC report earnings release, and most recent investor presentation, which contain reconciliations of the non-GAAP financial measure to use on our website at alpine REIT dotcom.
Lisa: Now I would like to turn the call over to John for his prepared remarks.
John P. Albright: Thanks, Lisa, and good morning, everyone. I'd like to start off by thanking our former CFO, Matt Partridge, for his many contributions to our company. We wish him well in his new opportunity. We have engaged national firms to search for a new CFO and have started interviewing candidates. Reviewing our first quarter investment activity, although the traditional acquisition market was quiet for us during the quarter, we did originate a $7.2 million first mortgage loan investment, of which $3.6 million was funded during the quarter.
John P. Albright: Thanks, Lisa and good morning, everyone I'd like to start off by thanking our former CFO, Matt Partridge for his many contributions to our company, we wish him well with his new opportunity.
John P. Albright: We have engaged a national firms a search for a new CFO and have started interviewing candidates.
John P. Albright: Reviewing our first quarter investment activity.
John P. Albright: Although the traditional acquisition market with quiet for us during the quarter. We did originate a $7 2 million first mortgage loan investment of which $3 6 million was funded during the quarter.
John P. Albright: We also acquired land under our CBS in Baton Rouge for $1 million. The initial yield on our loan investment was 11.3%, and the cash cap rate for our land acquisition was 7.3%. The loan investment made during the quarter was to provide $7.2 million in funding with a two-year term towards a six-pad retail development anchored by Chick-fil-A in a growing sub-market of Atlanta, Georgia. On the property acquisition front, we saw fewer attractive core investment opportunities due to the reluctant seller.
John P. Albright: We also acquired the land under our Cvs in Baton Rouge or $1 million.
John P. Albright: Initial yield on our loan investment was 11, 3% and the cash cap rate for our land acquisition of about seven 3%.
John P. Albright: The loan investment made during the quarter was to provide a $7 $2 million of funding with a two year term towards the six pad retail development anchored by Chick Fil a.
John P. Albright: Rowing Submarket of Atlanta, Georgia.
John P. Albright: The property acquisition front, we saw off your <unk>.
John P. Albright: Our active core investment opportunities due to the reluctant sellers. However.
John P. Albright: However, we anticipate that as the market further adjusts to higher for longer rates, the transaction market may become more productive for us. We are seeing additional high-yielding and better risk-adjusted loan opportunities, which we expect to pursue in the second quarter. As of the end of the quarter, our portfolio was 99% occupied and consisted of 138 properties totaling 3.8 million square feet with tenants operating in 23 sectors within 35 states. Our top tenants remain unchanged from our year-end earnings call in mid-February, with Walgreens, Lowe's, Dick's Sporting Goods, Family Dollar, Dollar Tree, and Dollar General as our top five tenants, all of whom carry investment-grade credit ratings.
John P. Albright: However, we anticipate that as the market further adjusts to higher for longer rates the transaction market may become more productive for us.
John P. Albright: We are seeing additional high yielding and better risk adjusted loan opportunities, which we expect to pursue in the second quarter.
John P. Albright: As of the end of the quarter, our portfolio was 99% occupied and consisted of 138 properties totaling $3 8 million square feet with tenants operating in 23 sectors within 35 states.
John P. Albright: Our top tenants remain unchanged from our year end earnings call in mid February with Walgreens, Lowe's Dick's Sporting goods family dollar dollar tree and dollar general as our top five tenants all of them carry investment grade credit ratings.
John P. Albright: We ended the quarter with 65% of our total annualized base rents coming from tenants with investment grade credit ratings, which is an increase of 700 basis points from this time last year. We have a strong balance sheet and no debt maturities until 2026, and this stability complements the strength of our high-quality portfolio. I also want to highlight the valuation discount, with our current stock price trading at approximately $15 a share, which is an implied cap rate of over 8.5% and a current dividend yield of over 7.25%.
John P. Albright: We ended the quarter with 65% of our total annualized base rents coming from tenants with an investment grade credit rating, which is an increase of 700 basis points from this time last year.
John P. Albright: We have a strong balance sheet and no debt maturities until 2026.
John P. Albright: <unk> compliments the strength of our high quality portfolio.
John P. Albright: I also want to highlight the valuation discount with our current stock price trading at approximately $15 a share which is an implied cap rate of over eight 5% and a current dividend yield of over 7% at quarter percent.
John P. Albright: Considering our book value is over $18 per share, and in the past year, we've repurchased almost a million shares, or over 6% of our company's capitalization at an average price of approximately $16.25 per share, we believe Alpine Stock provides an attractive value and yield investment, which we will work on better communicating with the investment community in the near future. On the disposition side, we're starting to see more activity on some of the assets we would like to sell and recycle into higher yielding opportunities.
John P. Albright: Considering our book value is over $18 per share and in the past year, we have repurchased almost 1 million shares or over 6% of our company's capitalization at an average price of approximately $16 25 per share. We believe alpine stock provides an attractive value and yield investment, which we will.
John P. Albright: On better communicating with the investment community in the near future.
John P. Albright: On the disposition side, we're starting to see more activity on some of the assets wed like to sell and recycle into higher yielding opportunities.
John P. Albright: This recycling of capital to organically grow earnings should be an active area for us this year. With that, I'll now turn it over to Lisa to talk about our first quarter performance, the balance sheet, capital markets, and guidance.
John P. Albright: This recycling of capital to organically grow earnings should be an active area for us this year.
John P. Albright: With that I'll now turn it over to Lisa to talk about our first quarter performance balance sheet capital markets and guidance.
Lisa Boricun: Thanks, John. Beginning with our financial results, first quarter 2024 FFO was $0.41 per share, a $0.05 per share, or 13.9% increase over the first quarter of 2023. First quarter 2024 AFFO was $0.42 per share, a $0.06 per share increase or 16.7% increase over the first quarter of 2023. Our results benefited from an 11.7% increase in total revenues, which was primarily driven by the interest income generated by our loan portfolio. While our seven former Mountain Express properties still created a negative impact on our lease income revenues as compared to the first quarter of 2023, rent on three leases with new operators commenced during the quarter, and we anticipate a fourth lease will commence during the second half of 2024. We are in active discussions for the potential lease or sale of the remaining three properties.
Lisa: Thanks, John.
Lisa: Getting with our financial results first quarter 2024, <unk> 41 per share of <unk> <unk> per share or 13, 9% increase over the first quarter of 2023.
Lisa: First quarter 2024, <unk> was <unk> 42 per share or six cent per share increase or 16, 7% increase over the first quarter of 2023.
Lisa: Our results benefited from an 11, 7% increase in total revenues, which was primarily driven by the interest income generated by our loan portfolio.
Lisa: While our seven former mountain express properties still created a negative impact on our lease income revenues as compared to the first quarter of 2023 rent on three leases with new operators commenced during the quarter and we anticipate a fourth lease will commence during the second half of 2024.
Lisa: We are in active discussions for the potential lease or sale of the remaining three property.
Lisa Boricun: GNA as a percentage of revenues in the first quarter was 12.4%, a year-over-year decrease of nearly 121 basis points. Our DNA also benefited from our reduced external management fee as a result of our recent share repurchase. For the first quarter of 2024, the company paid a cash dividend of 27.5 cents per share, representing a current annualized yield of over 7.25%. SFO and AFFO first quarter payout ratios were 67% and 65%, respectively, down from 76% in the first quarter of last year.
Lisa: G&A as a percentage of revenues in the first quarter was 12, 4% a year over year decrease of nearly 121 basis point or.
Lisa: Our G&A benefited from a reduced external management fee as a result of our recent share repurchases for.
Lisa: For the first quarter of 2024, the company paid a cash dividend of $27 five per share representing a current annualized yield of over seven 5%.
Lisa: <unk> first quarter payout ratios were 67% and 65% respectively down from 76% in the first quarter of last year.
Lisa Boricun: We anticipate announcing our regular quarterly cash dividend for the second quarter towards the end of May. We repurchased over 45,000 shares of common stock on the open market for a total cost of $800,000 at an average price of $16.90 per share, which completed the previously authorized $15 million share repurchase program. As we previously discussed, our balance sheet is well stabilized with no debt maturities until 2026, and total liquidity at quarter end was $185 million.
Lisa: We anticipate announcing a regular quarterly cash dividend for the second quarter towards the end of May.
Lisa: We repurchased over 45000 shares of common stock on the open market for a total cost of $800000 at an average price of $16 90 per share, which completed the previously authorized $50 million share repurchase program.
Lisa: As we previously discussed our balance sheet is well stabilized with no debt maturities until 2026 and total liquidity at quarter end was $185 million.
Lisa Boricun: We ended the quarter with net debt to total enterprise value of 54%, net debt to perform EBITDA of 7.4 times, and our fixed charge coverage ratio remains very healthy at 3.4 times. As we look forward to the balance of 2024, we begin the second quarter with portfolio-wide in-place annualized straight-line-based rent of $38.9 million, or $38.5 million of in-place annualized cash-based rent, as well as annualized interest income from loan investments of $3.6 million.
Lisa: We ended the quarter with net debt to total enterprise value of 54% net debt to pro forma EBITDA of seven four times and our fixed charge coverage ratio remained very healthy at three four times.
Lisa: We look forward to the balance of 2024, we began the second quarter with portfolio wide in place annualized straight line base rent of $38 9 million or $38 $5 million of in place annualized cash base rent as well as annualized interest income from loan investments of $3 6 million.
Lisa Boricun: We maintained our full-year FFO and ASFO guidance of $1.51 to $1.56 per share and $1.53 to $1.58 per share, respectively. Our investment guidance remains unchanged at a range of $50 million to $80 million of investment, contingent on reasonable market conditions, and includes the potential for additional loan investment. Our dispositions guidance also remains unchanged at a range of between $50 million and $80 million. With that, I'll now turn the call back over to John for his closing remarks.
Lisa: We maintained our full year <unk> guidance of $1 51.
Lisa: Two $1 56 per share and $1 53 to $1 58 per share respectively.
Lisa: Our investment guidance remains unchanged at a range of $50 million to $80 million of investment contingent on reasonable market conditions and includes the potential for additional loan investments.
Lisa: Our dispositions guidance also remains unchanged at a range of between $50 million and $80 million.
Lisa: With that I'll now turn the call back over to John for his closing remarks.
John P. Albright: Thanks, Nathan overall, we're confident our unique asset recycling strategy ample liquidity derisk balance sheet high quality portfolio as is well positioned to drive value over the long run and we look forward to executing on our 2020 for guidance and positioning us for future earnings growth in 2025.
John P. Albright: Thanks, Lisa. Overall, we're confident our unique asset recycling strategy, ample liquidity, de-risk balance sheet, and high-quality portfolio have us well positioned to drive value over the long run, and we look forward to executing on our 2024 guidance and positioning us for future earnings growth in 2025. I want to thank the team for their hard work and our shareholders and business partners for their continued support. With that, Operator, please open the line for questions. Certainly.
John P. Albright: I wanted to thank the team for their hard work and our shareholders and business partners for their continued support with that operator. Please open the line for questions.
John P. Albright: Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
John P. Albright: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
John P. Albright: One moment for your first question.
Operator: Certainly. As a reminder, 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 one. One again, please stand by while we compile the Q&A roster and one moment for our first question. Our first question will be from Gaurav Mehta of Alliance Global Partners. Your line is open.
John P. Albright: Our first question will be coming from Gaurav Mehta.
Gaurav Mehta: <unk> Alliance Global partners. Your line is open.
Gaurav Mehta: Yeah. Thanks, good morning.
Gaurav Mehta: I wanted to ask you on your system.
Gaurav Mehta: The acquisition guidance.
Gaurav Mehta: And your comments on on the traditional acquisition opportunities that youre seeing in the market I was wondering how much are you willing to grow your loan portfolio in the event you don't see attractive.
Gaurav Mehta: Yeah, thanks. Good morning. I wanted to ask you about your acquisition guidance and your comments on the traditional acquisition opportunities that you're seeing in the market. I was wondering how much you are willing to grow your loan portfolio in the event that you don't see attractive traditional acquisition opportunities?
Gaurav Mehta: Acquisition opportunities.
Speaker Change: Yes so.
Speaker Change: Good question, we are seeing a little bit more movement in the market. So we are optimistic that we'll be able to definitely hit our acquisition targets were.
Speaker Change: We're seeing a little bit more movement as well on some of the properties that wed like to sell.
John P. Albright: Yeah, so it's a good question. We are seeing a little bit more movement in the market. So we are optimistic that we'll definitely be able to hit our acquisition targets. We're seeing a little bit more movement as well on some of the properties that we'd like to sell. So we're optimistic that we'll be able to sell some non-IG credits and recycle them into IG credits. So we're pretty comfortable with what we're seeing in the market.
Speaker Change: So we're optimistic that we'll be able to sell some non credit and recycle and Iga credits.
Speaker Change: No.
Speaker Change: We're pretty comfortable what we're seeing in the market as now that rates are sticking with kind of a higher trajectory I think folks that have.
Speaker Change: Business plans that maybe they are open on a little better better rate environment are just going to go ahead and start.
Speaker Change: Moving with their business plans.
John P. Albright: Now that rates are sticking with kind of a higher trajectory, I think folks that have business plans that maybe they were hoping for a little better rate environment are just going to go ahead and start moving with their business plans.
Speaker Change: Okay.
Speaker Change: Second question I have is on the guidance maybe on the on the <unk> 41.
Speaker Change: Forward that you reported.
Gaurav Mehta: Okay, second question I have is on the guidance, maybe on the 1Q, 41 cents, the FFO that you reported. I was just wondering what are some of the assumptions for the remaining year that takes you from 41 cents, sort of a run rate, to $1.50, $1.56 guidance? Yeah, so look, we
Speaker Change: I was just wondering waterfront the assumptions for the remaining year that takes you from 41 cents.
Speaker Change: Sort of run rate to $1 $200 56 guidance.
Yes, So look we got a lot of questions on that.
Speaker Change: Appropriately so so a little bit of the earnings model is that we expect to sell assets and have a lag on the acquisitions. So you're kind of missing yes, we will be missing some revenue as we as we sell assets and they are in escrow as were waiting to acquire assets.
John P. Albright: Yeah, so look, we got a lot of questions on that appropriately. So a little bit of the earnings model is that we expect to sell assets and have a lag on the acquisitions. So we'll be missing some revenue as we sell assets and they're in escrow as we're waiting to acquire assets. And a little bit of it is really kind of on the loan side, on the Micromont loan. That loan is set up more as a short-term loan as the borrower would like to sell the assets.
Speaker Change: And a little bit.
Speaker Change: It is really kind of on the on the loan side on the micro loan that loan has set up more of the short term loan as the the borrower would like to sell the assets and as I sell the asset at hyper amortize as our loan and so if they become more active in selling assets will lose the <unk>.
John P. Albright: And as they sell the assets, it hyper- amortizes our loan. And so if they become more active in selling assets, we'll lose the income from that loan investment if we don't replace it. And a little bit on the G&A side with the higher audit and tax fees later in the year. But in general, we are being a little bit conservative. Obviously, Matt left at the end of March, and we were not looking to kind of do a lot of remodeling and so forth. So we're early in the year, and if it's appropriate, obviously, next quarter we'll revisit it. Okay, thank you.
Speaker Change: Come from that from that loan investment.
Speaker Change: We don't replace it and a little bit from the G&A side with.
Speaker Change: From the higher audit and tax fees later in the year, but in general we are being a little bit Conservative obviously, Matt left at.
Speaker Change: The end of March and we were not looking to kind of.
Speaker Change: Do a lot of remodeling and so forth. So we're early in the year and if its appropriate obviously next quarter, we'll we'll revisit it.
Speaker Change: Okay. Thank you.
Operator: in one moment for our next question, and our next question will be coming from Jason Weaver of Jones Trading. Jason, your line is open.
Speaker Change: Thank you.
Speaker Change: And one moment for our next question.
And our next question will be coming from Jason Weaver of Jones trading Jason Your line is open.
Jason Weaver: Hi, good morning. Can you give us any color about upcoming rental rate increases over the balance of the year and if you expect any lease turnovers during the same?
Jason Weaver: Hi, Good morning, I was hoping can you give us any color about upcoming rental rate increases over the balance of the year and if you expect any lease turnovers during the same.
John P. Albright: Yeah, I mean, we have very little lease turnover. This year, we have a theater in Reno at the end of November.
Speaker Change: Yes, I mean, we have very little lease turnover. This year, we have.
Speaker Change: Theater in Reno at the end of November so there will be only.
John P. Albright: So it'd be only, you know, one month of lag time there. But, you know, everything else is pretty much, you know, not a lot of lease turnover, if you will, for this this year. On basically the rent increase, obviously, we're roughly about a point a year as far as rent escalations go over the balance of the whole portfolio. As you kind of think about it, a lot of our leases, we do have some flat leases, and we have some, you know, leases that escalate every five years. And on kind of a, on an aggregate basis, it's usually a percent.
Speaker Change: One month of lag there.
Speaker Change: But everything else is pretty much.
Speaker Change: Not a lot of lease turnover, if you will for this year.
Speaker Change: On basically the rent the rent increase obviously, we're roughly about a point a year as far as.
Speaker Change: Rent escalations over the balance of the whole portfolio.
Speaker Change: As you kind of think about it in a lot of our we do have some flat leases and we have some leases escalate every five years and on on kind of a.
Speaker Change: On an aggregate basis, its usually a percent.
Jason Weaver: Got it. Thank you for that, Keller. And then the next one's a hypothetical. If we remain in this depressed sort of transaction environment for much longer, how do you look at the priority for capital deployment between acquiring new— New Retail Loans vs. Share Reporters. Yeah, so.
Speaker Change: Got it thank you for that color.
Speaker Change: And then the next one the hypothetical if we remain in this <unk>.
Speaker Change: <unk> sort of transaction environment for much longer how do you look at the priority for capital deployment between acquiring new.
Speaker Change: New retail loans versus share repurchase.
John P. Albright: Yeah, so obviously, we were very active in the share repurchases last year and a little bit in the quarter. We'll basically, you know, the board obviously discusses that on a quarterly basis, and we'll see how, you know, we start out this quarter and see how things go, but we are seeing some very, I would say, opportunistic loan opportunities that we'd like to execute where, you know, we're getting very high risk-adjusted yields.
Yes. So obviously, we were very active on the share repurchases last year and a little bit in the quarter.
Speaker Change: We'll basically board obviously discuss is that on a quarterly basis and we'll see how.
Speaker Change: We start out this this quarter and see how things go but we are seeing some very.
Speaker Change: I would say opportunistic loan opportunities that we'd like to execute where we are getting very high risk adjusted yield and so that's a good way to kind of deploy capital has some strong free cash flow as we see wait and see if there is some.
John P. Albright: And so that's a good way to kind of, you know, deploy capital, have some strong free cash flow as we wait and see if there are some opportunities on the core acquisition side. So, you know, we'll try to balance that; don't want to go, you know, incredibly into the share buyback side, but if the stock, you know, kind of presents itself. More opportunity, kind of like where it is now; we may revisit that for sure. All right, thank you for taking my question.
Speaker Change: Opportunities on the core acquisition side. So we will try to balance that don't want to go incredibly into the share buyback side, but.
Speaker Change: If the stock kind of presents more opportunity kind of like where it is now we may revisit that for sure.
Speaker Change: Alright, Thank you for taking my questions.
Operator: And one moment for our next question. Our next question will come from Rob Stevenson of Janney Montgomery Scott. Rob, your line is open.
Speaker Change: Sure.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will come from Rob Stevenson.
Robert Chapman Stevenson: Of Janney Montgomery, Scott Roberts Your line is open.
Robert Chapman Stevenson: Good morning, John. I guess with respect to the loans, is there any sort of upper boundary that you and the board have at this point, or is it case by case? How are you guys thinking about how big of a loan exposure you would want to have, you know, sitting here, over the next year or two?
Robert Chapman Stevenson: Hey, good morning, John I guess with respect to the loans is there any sort of upper boundary that you and the board have at this point or is it case by case. How are you guys thinking about how big of a loan exposure you would want to have sitting here over the next year or two.
John P. Albright: Yeah, so, you know, we're almost there. Given our credit facilities kind of limit us on how much of the loan activity we can do, so the upward bounds of that exposure are roughly $10 million from where we are now. Now, you know, we may be recycling some of the loans as we see opportunities, so, but the aggregate amount is, call it, you know, in the mid-50s.
Speaker Change: Yes so.
Speaker Change: They're given our credit facilities kind of limit us on how much of the loan activity. We can do so.
Speaker Change: Upward bounds of that exposure is roughly $10 million from where we are now.
Speaker Change: Now.
Speaker Change: We are weak.
Speaker Change: Maybe recycling some of the loans.
Speaker Change: As we see opportunities so, but the aggregate amount is call it in.
Robert Chapman Stevenson: Okay, that's helpful. And then at this point, given your comments about the reluctance of sellers, how are you feeling about the ability for buyers of your disposition assets to be able to fund that given where rates have moved to and sort of tighter purse strings by the banks, etc.? How robust is that market, and is that going to be a delaying factor for you guys in selling some of the assets this year?
The mid fifties.
Speaker Change: Okay. That's helpful.
Speaker Change: And then.
Speaker Change: At this point given your comments about the reluctance of sellers.
Speaker Change: How are you feeling about the ability for buyers of your disposition assets to be able to fund that given where rates have moved to and sort of tighter.
Speaker Change: Purse strings by the banks et cetera, how robust is that market and is that going to be a delaying factor for you guys in selling some of the assets this year.
John P. Albright: Yeah, I mean, we're seeing people with actually a fair amount of capital starting to become more productive on the acquisition side, as I think the view is they're sitting on capital, they're not seeing a lot of movement in the market, and they'd basically rather deploy now rather than see if another quarter goes by and if things change. So I think you are starting to see people step out of the sidelines and be more active.
Speaker Change: Yes.
Speaker Change: We're seeing people with.
Speaker Change: Actually a fair amount of capital.
Speaker Change: And they become more productive on the acquisition side.
Speaker Change: As I think the view is they are sitting on capital.
Speaker Change: They're not seeing a lot of movement in the market and they're basically would rather deploy now rather than <unk>.
Speaker Change: If another quarter goes by.
Speaker Change: <unk> change.
Speaker Change: I think you are starting to see people step out of the sidelines and be more active.
John P. Albright: On the 1031 side, you know, to my surprise, if you're, if you have something below 5 million, you're still seeing a very, you know, productive 1031 market. I was talking to a developer yesterday that if you're under 3 million, they have some restaurant pad sites that they're selling under five caps with a non-IG. So if you have, you know, properties below $3 million, you're really seeing a very efficient 1031 market still.
Speaker Change: On the 10 31 side to my surprise, if you're if you have something below $5 million you are still seeing a very.
Speaker Change: Product 10, 31 market I was talking to a developer yesterday that if you're under 3 million. They have some restaurant pad sites that they are selling sub five caps with non AG.
Speaker Change: So if you have properties below $3 million Youre really seeing a very efficient 10, 31 market still and then you're basically dealing with there was a little bit larger those are still kind of a five cap plus or minus so it's.
John P. Albright: And then if you're, you know, basically dealing with the wall being there a little bit larger, you know, those are still kind of five caps plus or minus. So it's amazing how sticky that sector has been.
It's amazing how sticky.
Robert Chapman Stevenson: All right, and then last one for me. Where is the 1% vacancy? Where's the vacant asset for you guys?
Speaker Change: That sector has been.
Speaker Change: Alright, and then last one for me.
Speaker Change: 1% vacancy, we're still vacant asset for you guys.
John P. Albright: Sure, so what that is really is a couple of our Mountain Express properties, when we re-leased them, they came back in, and then we talked about, I think on the last call, we evicted our Boston Market tenant, so that really makes up the delegation.
Speaker Change: Sure.
Speaker Change: What that is really is a couple of our mountain Express properties. When we release them day came back and then we talked about I think on the last call. We have looked at our Boston market.
Speaker Change: That really makes up the delta there.
John P. Albright: We're pretty far along on getting the Mountain Expresses released. Okay, so you'll see more activity in this quarter with regard to, you know, some of that revenue starting to come online. And then, as Lisa talked about in the Boston market, we have a nice backfill opportunity that's better credit and higher rent.
Speaker Change: And what's the and Rob we're already pretty far along on getting the Mountain Express is released.
Speaker Change: Okay.
Speaker Change: So youll see more kind of activity in the next this quarter with regards to some of that revenue sorry to.
Speaker Change: To come online and then as Lisa talked about on the Boston market, we have a nice backfill opportunity, that's better credit and higher ramp okay.
Robert Chapman Stevenson: Okay, that was gonna be my next question. Thank you guys. Appreciate the time and have a great weekend. Sure. Thank you.
Okay that was going to be my next question. Thank you guys. Appreciate the time and have a great weekend sure. Thank you I appreciate it.
Operator: One moment for our next question, and our next question will be coming from Wes Golladay of Baird. Your line is open, Wes.
Speaker Change: Our next question.
Speaker Change: And our next question will be coming from Wes Golladay of Baird. Your line is open west.
Wesley Keith Golladay: Good morning, everyone. A quick question on the income statement. There's a new line called other revenue. I think that's tied to the revenue sharing agreement. Is that something that amortizes, or is that just a one-time thing in the first quarter?
Wesley Keith Golladay: Hey, good morning, everyone. A quick question on the income statement. There is a new line called other revenue I think thats tied to the revenue sharing agreement is that something that amortizing or is that just a onetime thing in the first quarter.
John P. Albright: Yeah, so really what that is, you're going to see a consistent stream of revenue in that bucket from the revenue share for our $24 million portfolio that we're managing the assets on. Included in that number this quarter, though, is about $21,000 worth of one-time fees related to dispositions on sales under that loan. So you'll see that number be consistent, but probably call it between $60,000 and $75,000 a quarter.
unknown: Yes, so really what that is youre going to see a consistent stream of revenue in that bucket from the revenue share for $24 million portfolio that we're managing assets on.
unknown: Included in that number this quarter now is about $21000 worth of one time fees related to dispositions on sales under that loan.
unknown: So you can you'll see that number be consistent but probably call. It between 60 and 75000 a quarter.
Wesley Keith Golladay: Okay, thanks for that. And then, can you talk about the acquisition versus disposition spread? Is that pretty consistent with how you were thinking at the beginning of the year?
Speaker Change: Okay. Thanks for that and then can you talk about the acquisitions versus dispositions spread is that pretty consistent to how you were thinking at the beginning of the year.
John P. Albright: Yeah, well, I would say that, you know, some of the situations might be closer to flat because what we're looking to do is sell some non-IG and be able to buy IG at similar cap rates or higher. So there will be a little bit of positive spread, but not as much as you think as we're basically high-grading the portfolio at the same time. But if we were simply, you know, going to non-IG, there would be some, you know, some nice pick-up in spread.
Speaker Change: Yeah, well I would say that some of the situations might be closer to flat because what were looking to do is sell some non IAG and and be able to buy.
Speaker Change: At at similar cap rates are higher so there will be a little bit of positive spread but not as much as you think as we're basically hydrating the portfolio at the same time, but if we were simply.
Speaker Change: Going to non non AG there would be some.
Wesley Keith Golladay: Got it. And then, regarding the Boston market, do you have a sense of what the market is for that lease?
Speaker Change: Some nice pickup in spread.
Speaker Change: Got it and then regarding the Boston market tenant do you have a sense of what the mark to market is on that lease.
John P. Albright: You know, I would, I would say that, on that, it's, I would say 20% on a mark to market from where the next tenant's going.
Speaker Change: Okay.
Speaker Change: Say that on that.
Speaker Change: I would say, 20% on a on a.
Speaker Change: Mark to market from where the next tenants going.
Wesley Keith Golladay: Got it. Thanks for the time.
Speaker Change: Got it thanks, thanks for the time.
Operator: One moment for our next question, and our next question will be coming from John Massocca of B. Reilly Securities. Your line is open.
Speaker Change: Sure.
Speaker Change: One moment for our next question.
Speaker Change: And our next question will be coming from John Masako of B Riley Securities. Your line is open John.
John James Massocca: Good morning.
John James Massocca: Digging in on the acquisition side of things a little bit more, you know, how much of this more attractive acquisition environment is reflected in kind of the pipeline today, or is it mostly just kind of initial stage deals you're kind of seeing come across your desk. I'm just kind of thinking in terms of timing as to when we should kind of think about acquisition volumes. Yeah, I would be conservative on that because we're bidding on a lot, but we're bidding wide to see who has kind of loose hands, if you will, someone that really has the stress of some debt coming due or just cash flow issues, other places in the portfolio. So we don't feel like we need to be in a mad rush.
John James Massocca: But.
Just kind of digging in on the acquisition side of things a little bit more how much of this.
John James Massocca: And more attractive acquisition environment is reflected in kind of the pipeline today or is it mostly just kind of.
John James Massocca: Initial stage deals that you're kind of seeing come across your desk.
I think in terms of timing as to whether we should kind of think about your acquisition volumes.
John James Massocca: Yes.
John James Massocca: I'd be conservative on that because we are bidding on a lot, but we're bidding wise to see who has kind of loose hands. If you will so one that really has a stress of of some debt coming due or just cash flow issues.
John James Massocca: Their places in our portfolio. So we're not we don't feel like we need to be in a mad rush.
John P. Albright: So I would push it to the third and fourth quarters for sure. And then, with your Walgreens assets, just kind of in broad strokes, what's the remaining lease duration on those properties or that portfolio? I just know a lot of that came from that one big portfolio deal, so just trying to think about how much term is still left on those assets.
John James Massocca: So I would.
John James Massocca: Push it to the third and fourth quarter for sure.
John James Massocca: Okay.
John James Massocca: And then with your Walgreens assets.
Just kind of broad strokes, what's kind of the remaining lease duration on those properties or that portfolio I. Just know a lot of that came from that one big portfolio deal. So I'm just trying to think about.
John P. Albright: Yeah, it's been roughly eight years.
John James Massocca: How much term is still left on those assets.
Speaker Change: Yes, that's roughly eight years.
John James Massocca: Okay, very helpful. And then just one quick modeling question. Was there maybe a one time issue call out in the revenue line item number, or is that kind of a pretty steady run rate number?
Speaker Change: Okay very helpful. And then just one quick modeling question was there anything maybe one time ish.
Speaker Change: All out in the revenue line item number or is that kind of a pretty steady run rate number.
John P. Albright: Yeah, so apart from just a very small, you know, call it $20,000 or so that was in that other revenue line item, there's not very many one-time things.
Speaker Change: Yes, so apart from just a very small.
Speaker Change: 20000, or so there isn't that other revenue line item, there's not very many onetime gain.
John James Massocca: Okay, that's it for me. Thank you very much. One moment for our next question.
Speaker Change: Okay.
Speaker Change: That's it for me thank you very much.
Speaker Change: One moment for our next question.
Operator: And our next question will be coming from Michael Gorman of BTIG. Michael, your line is open. Yeah, thanks. Good morning. John, if I could just follow up on one of your comments just previous here.
And our next question will be coming from Michael Gorman of BT I G.
Michael Patrick Gorman: Michael Your line is open.
Michael Patrick Gorman: Yes. Thanks, Good morning, John if I could just follow up on one of your comments just previously here can you give us some more color on what's going on in the acquisitions market you mentioned bidding wide.
Michael Patrick Gorman: Yeah, thanks. Good morning.
Michael Patrick Gorman: John, could I just follow up on one of your comments just previous here? Can you give us some more color on what's going on in the acquisitions market? You mentioned bidding wide. So is this a function where the market, the pricing, hasn't adjusted? Is the flow of deals down as well? And for those deals where you are bidding wide, are those deals ultimately closing, or are they just staying on the market?
So is this a function where the market the pricing hasnt adjusted is the flow of deals.
Michael Patrick Gorman: And as well or.
And for those deals where you are bidding wide are those deals ultimately closing or are they just staying on the market.
John P. Albright: If any caller you could get there would be great.
Michael Patrick Gorman: Any color you could give there would be great.
Operator: and Ladies and gentlemen,
Michael Patrick Gorman: And ladies and gentlemen.
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