Q4 2024 Alpine Income Property Trust Inc Earnings Call
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Speaker Change: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today CFO Philip My Mays. Please proceed.
Speaker Change: Thank you and I would 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.
Speaker Change: 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 contains reconciliations of the non-GAAP financial measures we use.
On our website at Www Alpine <unk> dot com with that I'll turn the call over to John.
John: Thanks, Phil for the fourth quarter was a strong finish to an excellent 2024 for fine as we executed successfully on all areas of the business plan.
John: Starting with earnings we achieved <unk> dollars 74 per diluted share for the year representing growth of 17%.
John: This robust growth in earnings along with free cash flow permitted us to once again raise our common dividend to a new quarterly rate of <unk> 28, and a half cents.
John: Effective the first quarter of 2025.
John: This new annualized dividend of $1 14 continues pines achievement of increasing its annual dividend each year since its IPO in November of 2019, while continuing to provide shareholders an attractive well covered dividend yield.
John: Driving our earnings growth, a successful quarter and a year of investment activity during the fourth quarter, we acquired six properties for $55 million at a weighted average cash cap rate of seven 6%.
John: This brings our full year acquisition activity to 12 properties for $103 $6 million and a weighted average cash cap rate of eight 2%.
John: Our 2024 acquisitions included investment grade rated the best buy Dick's sporting goods and Lowe's, along with three beachfront restaurants, increasing our walls to $8 seven years from seven years at the beginning of the year.
John: Further we ended the year with 51% of our ABR attributable to investment grade rated tenants supplementing our 2024 property acquisitions, we originated three commercial loans during the year for $31 $1 million at a weighted average yield of 10, 7%.
John: Taking loan originations and property acquisitions together, we successfully completed a $134 $7 million of the total investments during 2024 at an average yield of eight 7%.
John: Additionally, during the year, we successfully pruned our portfolio selling $62 million of property at an average cap rate of six 9%. These dispositions reflected our strategic effort to improve the diversification of our cash flow and reduce risk and included three Walgreens moving Walgreens from our largest tenant in terms of ABR.
John: Two our fourth largest tenant.
John: Notably Triple B rated Dick's sporting goods and Triple B plus rated loads are now our two largest tenants each representing 10% of ABR.
John: Additionally, we were able to reinvest net proceeds from these dispositions into new acquisitions at a positive yield spread.
John: As we look to 2025, we continue our investment strategy employing a barbell approach with regards to property acquisitions on one side, we will invest in investment grade rated tenants to provide consistent stable cash flows while on the other side, we will seek higher yielding opportunities to provide growth and diversification.
John: Additionally, we will continue to augment and complement our property investments by selectively originating commercial loans filled.
John: Phil will discuss 2025 earnings guidance, but I do want to make note of a couple of related items first as you are aware party city filed for bankruptcy.
John: Spine does have one party city lease in its portfolio.
John: This lease is for a property located in Ocean side, New York on long island, the densely populated and desirable location of this property will provide us with multiple alternatives to release or sell it.
Second in late 2020 for Cinemark did not renew its lease for our theatre in Reno.
John: We are anticipating this and had this property under contract to be sold however of the buyer had an unanticipated event that prevented closing accordingly, we are now focused on selling this asset and redeploy the capital.
John: These two matters will be short term earnings headwinds until leased or sold and the proceeds redeployed.
John: As we look ahead, we see an active and attractive pipeline of opportunities across the tenant landscape remained focused on executing our strategy to deliver for pine investors with that I will turn the call over to Phil.
Phil: Thanks, John beginning with financial results total revenue was $13 8 million for the quarter.
Phil: <unk> lease income 11, 5 million in interest income from commercial loans of $2 2 million.
Phil: <unk> and <unk> for the quarter were both <unk> 44 per diluted share representing growth of 19% and 16% respectively over the comparable quarter of the prior year for.
Phil: For the full year total revenue was $52 $2 million, including lease income of $46 million in interest income from commercial loans of $5 8 million.
Phil: For the year with $1 73 per diluted share representing 18% growth over the prior year and <unk> was $1 74 per diluted share representing 17% growth over the prior year.
Phil: Driving this earnings growth for the quarter and a year, where the investment activity John discussed along with prudent and disciplined capital management.
Phil: During the fourth quarter, we issued approximately 436000 common shares under our ATM program at a weighted average price of $17 98 per share generating $7 7 million in net proceeds for.
Phil: For the full year of 2024, we issued $1 1 million common shares under our ATM program at a weighted average price per share of $18 <unk>.
Phil: Generating $18 8 million in net proceeds.
Phil: Notably and of equal importance during 2023 and into the first quarter of 2024, the company Opportunistically repurchase.
Phil: 9 million common shares for $15 4 million and an average price of $16 26.
Phil: Which is $1 78 below our weighted average issuance price in 2024.
Phil: Our 2020 for ATM activity and net issuance of over 1 million shares allowed us to both grow and reduce leverage specifically we ended the year with net debt to EBITDA of seven four times compared to seven seven times at the beginning of the year.
Phil: As a reminder, we have no debt maturing until 2026, after which our debt maturities are well staggered and we have utilized over rate swaps to fixed interest rate on over 80% of our debt, resulting in a weighted average interest rate of four 1% at year end.
Phil: Further we had $95 million of liquidity consisting of approximately $5 million of available cash.
Phil: And $90 million available under our revolving credit facility and.
Phil: In addition, with current in place commitments the available capacity of our revolving credit facility can expand an additional $50 million as we acquire properties, providing total potential liquidity of approximately $150 million.
Phil: During the fourth quarter, we paid a quarterly cash dividend of <unk> 28 per common share to our stockholders of record on December 12 2024.
Phil: Represents healthy <unk> payout ratio of 64%.
Phil: As discussed earlier, our board of directors recently approved increasing our quarterly dividend to <unk> $28.05.
Phil: Effective in the first quarter of 2025.
Phil: After this increase our dividend remains well covered and supported by free cash flow.
Phil: Finally, turning to guidance for 2025, our initial earnings guidance for the full year of 2025 as a range per diluted share of $1 70.
Phil: $10 73 for both <unk> and <unk>.
Phil: Key assumptions reflected in our initial guidance include investment volume up $50 million to $80 million.
Phil: Physicians are 20 million to $30 million.
<unk> remains well covered and supported by free cash flow.
Phil: And weighted average shares outstanding of 16 million to $16 5 million.
Finally, turning to guidance for 2025, our initial earnings guidance for the full year of 2025 as a range per diluted share of $1 70.
Phil: With regards to party city bankruptcy and the vacant theater in Reno or guidance at this time, assuming they will impact 2025, <unk> and <unk> per share by approximately <unk>.
$10 73 for both <unk> and <unk>.
Phil: However, if there is an assumption of the party city lease and with timely execute on planned property acquisitions and loan originations, we could be on the high end of our range or exceed it.
Key assumptions reflected in our initial guidance included investment volume up $50 million to $80 million.
Physicians are 20 million to $30 million and.
And weighted average shares outstanding of 16 million to $16 5 million.
Phil: One last note the annual run rate for our external management fee is now $4 $5 million, reflecting the full impact of the $7 7 million of net equity proceeds raised in the fourth quarter.
With regards to the party city bankruptcy and a vacant theater in Reno or guidance at this time, assuming they will impact 2025, <unk> and <unk> per share by approximately <unk> <unk>.
With that operator, please open the line for questions.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.
However, there is an assumption of the party city lease and with timely execute on planned property acquisitions and loan originations, we could be on the high end of our range or exceed it.
One last note the annual run rate for our external management fee is now $4 $5 million, reflecting the full impact of the $7 7 million of net equity proceeds raised in the fourth quarter with that operator. Please open the line for questions.
Speaker Change: And our first question is going to come from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.
Speaker Change: Great. This is Katherine Griffin on for Michael Goldsmith. Thank you for taking my question.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.
Speaker Change: First is you decreased your Walgreens exposure in the quarter can we expect a further paring down of the tenant type in general with a comfortable level of exposure for you there.
Speaker Change: Yes. Thanks.
Speaker Change: We have another one kind of in the in the pipeline to sell as far as.
Michael Goldsmith: And our first question is going to come from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.
Speaker Change: Negotiations.
Speaker Change: But we're really kind of trying to time, it with acquisitions and so.
Michael Goldsmith: Great. This is Catherine graves on for Michael Goldsmith. Thank you for taking my question. My first is you decreased your Walgreens exposure in the quarter should we expect a further paring down of the tenant type in general with a comfortable level of exposure for you there.
Speaker Change: These properties are even though it's a challenge sort of credit and the story. There is a market for these or trying to pair them up with acquisitions, but theyre, probably another one coming out.
Speaker Change: Possibly in the quarter.
Speaker Change: Yes. Thanks.
Speaker Change: We have another one kind of in the pipeline to sell as far as the.
Speaker Change: Got it. Thank you and then my second question.
Speaker Change: Within your investment outlook for 2025 can you provide any color on maybe your appetite for acquisitions versus construction loans and what would make you more.
Speaker Change: Negotiations.
Speaker Change: But we're really kind of trying to time, it with acquisitions and so.
Speaker Change: These properties are even though it's a challenge to sort of credit and the story. There is a market for these or trying to pair them up with acquisitions, but theyre, probably another one coming out.
Speaker Change: More constructive on one lever versus the other one in 2025.
Yes so.
Speaker Change: We've talked about before in the past so we really like some of the loan opportunities, we see because youre really getting an enhanced credit for instance, the publix anchored sort of.
Speaker Change: Possibly in the quarter.
Speaker Change: Got it. Thank you and then my second question within your investment outlook for 2025 can you provide any color on maybe your appetite for acquisitions versus construction loans and what would make you.
Speaker Change: Out parcel development with.
Speaker Change: Buffer of equity beneath you as a developer.
Speaker Change: A lot of equity in the projects and the Ltvs are certainly obviously lower than if you went out and bought these assets and of course, the yields are higher than than owning them. So so we really like the opportunity is.
Speaker Change: More constructive on one lever versus the other in 2025.
Speaker Change: Yes so.
Speaker Change: I've talked about before in the past so we really like some of the loan opportunities, we see because of the year, you're really getting an enhanced credit for instance, the publix anchored sort of.
Speaker Change: The capital markets are still constrained for developers and I would say that we are seeing a very active pipeline on both.
Speaker Change: Out parcel development with a buffer of equity beneath you as a developer.
Speaker Change: The loan side.
As well as the act with the acquisition.
Speaker Change: A lot of equity in the projects and the Ltvs are certainly obviously lower than if you went out and bought these assets and of course, the yields are higher than than owning them. So so we really like the opportunity is.
Speaker Change: Or are the core acquisition side, so we're seeing.
Speaker Change: Robust sort of opportunities on both sides. So I guess I could say is going to be $50 50 on on that sort of investment program.
Speaker Change: Got it thanks, so much thank.
Speaker Change: As the capital markets are still constrained for developers and I would say that we are seeing a very active pipeline on both.
Speaker Change: Thank you.
Speaker Change: Thank you one moment as we move on to our next question.
Speaker Change: Our next question comes from the line of <unk> Mehta with Alliance Global Partners. Your line is open. Please go ahead, yes. Thank you. Good morning, I'm wondering if you follow follow up on the commercial loan opportunity.
Speaker Change: The loan side.
Speaker Change: As well as the acquisition the acquisition.
Speaker Change: More of the core acquisition side, so we're seeing.
Speaker Change: Robust sort of opportunities on both sides. So I could see us going to be 50, 50 on on that sort of investment program.
Speaker Change: You have four commercial loans maturing in 2025 and I wanted to ask you what your expectations are.
Speaker Change: Got it thanks, so much thank.
Speaker Change: Thank you.
Speaker Change: Thank you one moment as we move on to our next question.
Speaker Change: Yes, so we do have some more maturing.
Speaker Change: I think one will actually probably pay off three will probably extend.
Speaker Change: Our next question comes from the line of <unk> Mehta with Alliance Global Partners. Your line is open. Please go ahead.
Speaker Change: And we don't think there'll be any problem as John talked about with our robust pipeline of loans here, replacing the one one of them that will likely pay off.
Mehta: Thank you good morning, I wanted to follow a follow up on the commercial loan opportunity.
Speaker Change: We pay off mid year, and we're pretty confident we will replace that so don't expect the balance to come down expected to kind of stay where it's at and maybe grow towards the latter part of the year.
Speaker Change: You have four commercial loans maturing in 2025 and I wanted to ask you what your expectations are.
Speaker Change: Yes, so we do have four maturing.
Speaker Change: Okay and then.
Speaker Change: I think one will actually probably pay off three will probably extend.
Speaker Change: Second question on the acquisition disposition guidance can you provide some color on the expected timing on when you guys are planning to certain acquired properties in the year.
Speaker Change: And we don't think there'll be any problem as John talked about with our robust pipeline of loans here, replacing the one one of them that will likely pay off.
Speaker Change: So.
Speaker Change: Which property.
Speaker Change: The pay off mid year, and we're pretty confident we'll replace that so don't expect the balance to come down expected to kind of stay where it's at and maybe grow towards the latter part of the year.
Speaker Change: So I think the pipeline is probably the strongest.
Speaker Change: We've seen this time of year.
Speaker Change: And the five years.
Speaker Change: Okay and then.
Speaker Change: We've been doing this and so.
Speaker Change: Second question on that acquisition.
Speaker Change: So we're pretty optimistic about as you know the deals could fall through but I would expect sort of more of the activity to happen at the at the end of the first quarter.
Speaker Change: Disposition guidance can you provide some color on the expected timing on when you guys are planning to certain acquired properties in the year.
Speaker Change: So selling which property.
Speaker Change: Okay. Thank you.
Speaker Change: So I think the pipeline is probably the strongest.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: We've seen this time of year.
Speaker Change: And our next question is going to come from the line of Rob Stevenson with Janney Montgomery Scott. Your line is open. Please go ahead.
Speaker Change: And the five years.
Speaker Change: We've been doing this and so.
Speaker Change: So we're pretty optimistic about as you know the deals could fall through but I would expect sort of more of the activity to happen at the at the end of the first quarter.
Rob Stevenson: Good morning, guys.
Speaker Change: John.
Speaker Change: Are the beachside group assets back to their full capacity after the storm damage and is there revenue back to where you guys underwrote it at the initial deal.
Speaker Change: Okay. Thank you.
Speaker Change: Yes, so we were actually out there last week and they are they are all open and performing and some are performing better than than pre hurricane.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Okay.
Rob Stevenson: And our next question is going to come from the line of Rob Stevenson with Janney Montgomery Scott. Your line is open. Please go ahead.
With new equipment and more efficient kitchens as they had the opportunity to reconfigure where they wanted to.
Rob Stevenson: Good morning, guys John.
Rob Stevenson: The beach side group assets back to their full capacity after the storm damage and is there revenue back to where you guys underwrote it at the <unk>.
Speaker Change: I would say the sandbar isn't at Max capacity, yet is there.
Speaker Change: Initial deal.
Speaker Change: It's really a lot of they do a lot of weddings and so forth, but so we're just now getting into the season, but everything's trending to either the same or better than pre hurricane Unfortunately for the market.
Speaker Change: Yes, so we were actually out there last week and they are they are all open and performing and some are performing better than than pre hurricane.
Speaker Change: With new equipment and more efficient kitchens as they had the opportunity to reconfigure where they wanted to.
Speaker Change: Some of the competition is has not come back online. So they are kind of the only game in town. So.
Speaker Change: I would say the sandbar isn't at Max capacity, yet is there.
Speaker Change: Anyway it looks.
Speaker Change: Pretty excited kind of about their positioning.
Speaker Change: And they had insurance business interruption insurance to be able to pay you for anything that is missing at this point right correct. Okay.
Speaker Change: It's really a lot of they do a lot of weddings and so forth, but so we're just now getting into the season, but everything's trending to either the same or better than pre hurricane Unfortunately for the market.
Speaker Change: And then.
You would feel talked about the party city the cinemark beyond those two assets is there any other locations that you would expect.
Speaker Change: Some of the competition has not come back online. So they are kind of the only game in town. So.
Speaker Change: Be vacant at some point in 2025 early 'twenty six.
No.
Speaker Change: Anyway it looks.
Speaker Change: Pretty excited kind of about their positioning.
Speaker Change: We're being proactive on things that.
Speaker Change: And they had insurance business interruption insurance to be able to pay you for anything that is missing at this point right correct. Okay.
Speaker Change: Kind of a watch list sort of.
Speaker Change: China is for instance at home, we're very active in discussing about.
Speaker Change: Selling.
Speaker Change: And then.
Speaker Change: A couple of those so.
Speaker Change: You'd Phil talked about the party city and the Cinemark beyond those two assets is there any other locations that you expect.
Speaker Change: The theater deal obviously last fall, we had it under contract and Unfortunately, there is a health issue with the buyer so that really kind of mess up our plans that should have been sold last year. So we had to restart with that and so we're we.
Speaker Change: Be vacant at some point in 2025 early 'twenty six.
Speaker Change: No.
Speaker Change: We're being proactive on things that.
Speaker Change: Kind of a watch list sort of.
Speaker Change: We do have active offers on both the party city in the theater.
Speaker Change: China is for instance at home, we're very active in discussing about.
We're trying to be.
Speaker Change: Selling.
Speaker Change: Trying to get the best price possible, but we.
Speaker Change: Couple of those so.
Speaker Change: We certainly will see the benefits if we decide to sell it earlier and have that capital put into production by either paying down the debt or making an acquisition or investment.
Speaker Change: The theater deal obviously last fall, we had it under contract and Unfortunately, there is a health issue with the buyer so that really kind of mess up our plans that should have been sold last year. So we had to restart with that and so we're we.
Speaker Change: So we clearly see the benefits.
Speaker Change: Monetizing those sooner rather later and so we may do that okay.
Speaker Change: We do have active offers on both the party city in the theater.
Speaker Change: Okay, and then you mentioned that home that was my last question you talked earlier about there being a market for Walgreens today is there really a market for at home assets. These days given their size and their credit rating and is that something that youll look to match any dispositions there two acquisitions.
Speaker Change: We're trying to be.
Speaker Change: Trying to get the best price possible, but we will.
Speaker Change: We certainly will see the benefits if we decide to sell it earlier and have that capital put into production by either paying down the debt or making an acquisition or investment.
Speaker Change: Acquisitions as well.
Speaker Change: We'll go ahead, and we want to sort of because they are a little bit lumpier, we won't match it up with acquisitions will.
Speaker Change: So we clearly see the benefits of of monetizing those sooner rather later and so we may do that.
Speaker Change: Okay, and then you mentioned that home that was my last question you talked earlier about there being a market for Walgreens today is there really a market for at home assets. These days given their size and their credit rating and is that something that youll look to match any dispositions there to act.
Speaker Change: Buyer ready to buy it then we will move through the process with them.
Speaker Change: And the real.
Speaker Change: The reason there is more activity on them. Then you may may think because of the size. As you mentioned is that remember these are on large parcels with a lot of parking.
Speaker Change: Acquisitions as well.
Speaker Change: And a large.
Speaker Change: We'll go ahead, and we want to sort of because they are a little bit lumpier, we won't match it up with the acquisitions will.
Speaker Change: Invigoration.
Speaker Change: At a very low basis and you just you just can't find that a more I mean.
Speaker Change: Redevelopment of any of this sort of product is closer to $300 a square, but these days with land. So so these are unique opportunities for investors developers tenants and people understand that.
Speaker Change: Byron ready to buy it then we'll move through the process with them.
And the reason there is more activity on them. Then you may may think because of the size. As you mentioned is that remember these are on large parcels with a lot of parking and a large <unk>.
Phil: And then I guess, one last question for Phil.
Phil: You gave guidance in terms of the numbers and the investments of dispositions, but in terms of the income statement anything in 2025 looking to be.
Speaker Change: <unk>.
Speaker Change: At a very low basis and you just you just can't find that a more I mean.
Speaker Change: Redevelopment of any of this sort of product is closer to $300 a square foot. These days with land. So so these are unique opportunities for investors developers tenants and people understand that.
Phil: Either abnormally high line items abnormally higher low X, excluding revenue and interest expense, depending on what you guys do from a buying.
Phil: Buy and sell and financing standpoint, anything in G&A or anything thats going to wind up being otherwise lumpy or extraordinary that youre anticipating in 2025.
Speaker Change: Okay, and then I guess, one last question for Phil.
Speaker Change: You gave guidance in terms of the numbers.
Phil: No I imagine most things will be a pretty even run rate quarterly over the year.
Speaker Change: What's the dispositions, but in terms of the income statement anything in 2025 looking to be.
Phil: Nothing lumpy in G&A as I noted.
Speaker Change: Either abnormally high line items abnormally higher low X, excluding revenue and interest expense, depending on what you guys do from a buyer.
Phil: Our management fee given effect to all the equity that went out the door in the fourth quarter is now four and a half on an annual basis and that assumes we don't issue any more equity, but thats. The current run rate, but I think most things will be generally and even run rate over the year.
Speaker Change: Buy and sell and financing standpoint, anything in G&A or anything thats going to wind up being otherwise lumpy or extraordinary that youre anticipating in 2025.
Phil: Okay excellent.
Phil: Are acquisitions and dispositions, but no unusual one time fees or kind of lumpy things that you need to worry about.
Speaker Change: No I imagine most things will be a pretty even run rate quarterly over the year.
Speaker Change: Nothing lumpy in G&A as I noted.
Phil: Okay. Thanks, guys have a great weekend, thanks, you too.
Speaker Change: Our management fee given effect to all the equity that went out the door in the fourth quarter is now four five on an annual basis and that assumes we don't issue any more equity, but thats. The current run rate, but I think most things will be generally and even run rate over the year and just.
Phil: Thank you and one moment for our next question.
Speaker Change: Our next question comes from the line of Matthew <unk> with Jones trading. Your line is open. Please go ahead.
Matthew: Hey, good morning, guys. Thanks for taking the question I'd like to talk about cap rates, a little bit and kind of where pricing is there right now given the higher for longer outlook.
Speaker Change: Absent the timing of acquisitions and dispositions, but no unusual one time fees or kind of lumpy things that you need to worry about.
Speaker Change: It seems like pricing has held pretty steady over the past couple of quarters, but when you strip out the loans what is your going in cap rate on these acquisitions for kind of the past couple of quarters.
Speaker Change: Okay. Thanks, guys have a great weekend, thanks, you too.
Speaker Change: One moment for our next question.
Our next question comes from the line of Matthew <unk> with Jones trading. Your line is open. Please go ahead.
Speaker Change: So, it's basically averaging out close to the 8% cap rate range.
Speaker Change: Hey, good morning, guys. Thanks for taking the question I'd like to talk about cap rates, a little bit and kind of where pricing is there right now given the higher for longer outlook.
Speaker Change: As you saw in the last in the fourth quarter, we did dive down for a quality, where we picked up a lows too.
Speaker Change: To really show the market that we're the only net lease REIT with a dicks.
Speaker Change: It seems like pricing has held pretty steady over the past couple of quarters, but when you strip out the loans what is your going in cap rate on these acquisitions for kind of the past couple of quarters.
Speaker Change: Our lowes in the top five.
Speaker Change: Maybe in the top 10 credit so trying to show the market that if you want sort of a diversification of investment.
Speaker Change: So it's basically averaging now close to the 8% cap rate range.
Speaker Change: We're really the only sort of net lease REIT that you can kind of get exposure to different credits everyone else seems to have the same sort of credit profiles and so really striving to get that story told so but in general besides diving down and picking up a quality lows with a long.
Speaker Change: As you saw in the last in the fourth quarter, we did dive down for a quality, where we picked up a lowe's to to really show the market that we're the only net lease REIT with a dicks.
Speaker Change: Lowe's in the top five maybe even top 10 credit so trying to show the market that if you want sort of a diversification of investment.
Speaker Change: Ration.
Speaker Change: We're kind of trending to eight cap range.
Speaker Change: Got you that's helpful and then.
Speaker Change: We're really the only sort of net lease REIT that you can kind of get exposure to different credits everyone else seems to have the same sort of credit profiles.
Speaker Change: It didn't provide any guidance. So should we expect kind of the same plan in 2025 strong credit and then the loans obviously to boost the yield there.
Speaker Change: Yes, absolutely I think.
Speaker Change: So really striving to get that story told so but in general besides diving down and picking up a quality lows with a long duration.
Speaker Change: Hopefully some of these deals happen and I think youll be.
Speaker Change: Impressed with the quality.
Speaker Change: Awesome.
Speaker Change: Thank you guys. Thank you. Thank you and one moment for our next question.
We're kind of trending to the eight cap range.
Got you that's helpful. And then because you guys didn't provide any guidance there should we expect kind of the same plan in 2025.
Speaker Change: And our next question comes from the line of Alex <unk> with Baird. Your line is open. Please go ahead.
Speaker Change: <unk> credit and then the loans, obviously to boost the yield there.
Speaker Change: Hi, Good morning, and thank you for taking my question. So you've already mentioned with the party city and the sign Mark.
Speaker Change: Yes, absolutely I think.
Speaker Change: Hopefully some of these deals happen and I think you'll be.
Speaker Change: That you have offered potentially or are you planning on selling them or releasing them and did.
Speaker Change: Impressed with the quality.
Speaker Change: And the yield.
Speaker Change: Thank you guys. Thank you. Thank you and one moment for our next question.
Speaker Change: Could you potentially talk about the impact on valuation.
Speaker Change: So we have a leasing opportunity as well and certainly the best best execution would be to lease and then sale but.
Speaker Change: And our next question comes from the line of Alex <unk> with Baird. Your line is open. Please go ahead.
Alex: Hi, Good morning, and thank you for taking my question. So you've already mentioned with the party city and the sign Mark that.
Speaker Change: That would take.
Speaker Change: For the whole year really.
Speaker Change: Have that execution and realizing how finicky the investor market is as far as stock investors feel like having the money and put it redeploying earlier is probably going to be more prudent in and pay off for our shareholders and so thats kind of so we do have optionality on both weather.
Alex: You have offers potentially or are you planning on selling them or releasing them and did.
Alex: Could you potentially talk about the impact on valuation.
Alex: So we have a leasing opportunity as well and certainly the best best execution would be to lease and then sell but that would take.
Speaker Change: <unk> and hold our ourselves, but were tending to gravitate towards the monetization.
Alex: For the whole year really.
Speaker Change: Okay.
Alex: Have that execution and realizing how finicky, the investor market is as far as <unk>.
Speaker Change: And with the buyers that pulled out because of health issues was there any sort of termination income or one time income that we should expect from that.
Alex: <unk> investors feel like having the money and put it in redeploying earlier, it's probably going to be more prudent in and pay off for our shareholders and so thats kind of so we do have optionality on both whether we lease and hold our ourselves but were tending to gravitate towards the monetization.
Speaker Change: So we've got it we got to know a little bit, but we really.
Speaker Change: We could've taken more but.
Speaker Change: Obviously felt.
Speaker Change: I felt bad about the circumstances in and really some escrow back that we didn't need to but.
Speaker Change: Given the extreme nature of the health issue, we did that.
Alex: Okay.
Alex: And with the buyer that pulled out because of health issues was there any sort of termination income or one time income that we should expect from that.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. Thank you and one moment as we move on to our next question.
Speaker Change: And our next question comes from the line of John <unk> with B Riley Securities. Your line is open. Please go ahead.
Alex: Got it got it.
Alex: A little bit, but we really.
Alex: We could've taken more but.
Alex: Obviously felt.
John: Good morning, maybe digging in a little bit more on the acquisition guidance I mean, how much of that is stuff you kind of see in the pipeline today or is under kind of LOI and how much is theoretical.
Alex: <unk> felt bad about the circumstances in and really some escrow back that we didn't need to but.
Alex: Given the extreme nature of the health issue, we did that.
Alex: Alright, thank you.
Speaker Change: Just kind of asking that in the context of.
Alex: Thank you. Thank you and one moment as we move on to our next question.
Speaker Change: $80 million at the top end of the range is significantly less than you did last year, but you kind of were saying you felt the pipeline was stronger than it had been at any other point. During this time of the year. So just kind of trying to circle that square if you will.
Speaker Change: And our next question comes from the line of John <unk> with B Riley Securities. Your line is open. Please go ahead.
John: Good morning, maybe digging in a little bit more on the acquisition guidance I mean, how much of that is stuff you kind of see in the pipeline today or is under a kind of LOI and how much is theoretical in them.
Speaker Change: No. That's a good point so because of these investments are fairly lumpy.
Speaker Change: We are negotiating.
Speaker Change: With.
Speaker Change: A fair amount of the pipeline, but you just never know what's going to what's going to happen and then on the theoretical.
Speaker Change: Kind of asking that in the context of.
Speaker Change: $80 million at the top end of the range is significantly less than you did last year, but you kind of were seeing you felt the pipeline was stronger than it had been at any other point. During this time of the year. So just kind of trying to circle that square if you will.
Speaker Change: It's more we have identified assets that we're pursuing but we don't know whether we'll win them at the yields that work for us.
Speaker Change: No. It's a good point so because of these investments are fairly lumpy.
Speaker Change: So I would say it.
What we have that we're negotiating where terms have been have been really agreed upon is a fair amount of the.
Speaker Change: We are negotiating.
Speaker Change: With.
Speaker Change: A fair amount of the pipeline.
Speaker Change: Guidance.
Speaker Change: Okay. That's helpful. And then in terms of yields on those investments I mean going to be comparative to last year. I mean is the cap rate market moved at all given some of the volatility in interest rates are.
Speaker Change: But you just never know what's going to what's going to happen and then on the theoretical.
Speaker Change: It's more we have identified assets that we're pursuing but we don't know whether we'll win them that the yields that work for us.
Speaker Change: Macro uncertainty.
Speaker Change: So I would say it.
Speaker Change: I would say that the.
Speaker Change: The yields on the structured finance investments maybe.
Speaker Change: What we have that we're negotiating where terms have been have been really agreed upon is a fair amount of the guidance.
Speaker Change: Come down slightly and then the yields on the acquisitions have have either been steady from what you've seen in the past.
Speaker Change: Okay. That's helpful. And then in terms of yields on those investments I mean, it's going to be comparative to last year. I mean is the cap rate market moved at all given some of the volatility in interest rates are.
Or maybe even come up a little bit as far as higher yield.
Speaker Change: Okay and then.
Speaker Change: On guidance again.
Speaker Change: Any credit loss kind of baked into that number beyond the two vacancies you called out specifically.
Speaker Change: Macro uncertainty.
Speaker Change: I would say that the.
Speaker Change: Yields on the structured finance investments have maybe.
Yes, I mean, we always keep a small general reserve in the forecast.
Come down slightly.
Speaker Change: Then the yields on the acquisitions have has either been steady from what you've seen in the past.
But we don't see anything large.
Speaker Change: <unk> right now.
Speaker Change: Okay.
Speaker Change: Or maybe even come up a little bit as far as higher yield.
Speaker Change: And then last kind of detailed one for you Phil real estate expense ticked up a little bit quarter over quarter was that just reflecting the situation in Reno or.
Speaker Change: Okay and then.
Speaker Change: On guidance again.
Speaker Change: Any credit loss kind of baked into that number beyond the two vacancies you called out specifically.
Speaker Change: Was there something else going on there.
Speaker Change: Yes.
Speaker Change: The arena lease expired in November and it kind of kicked up primarily due to that.
Speaker Change: Yes, I mean, we always keep a small general reserve in the forecast.
Speaker Change: Okay.
Speaker Change: That's it for me thank you very much.
Speaker Change: But we don't see anything large.
Thank you. Thank you and one moment as we move on to our next question.
Speaker Change: Roaming right now.
Speaker Change: Okay.
Speaker Change: And then last kind of detailed one for you Phil real estate expense ticked up a little bit quarter over quarter was that just reflecting the situation in Reno or.
Craig Kucera: And our next question is going to come from the line of Craig Kucera with Lucid capital markets. Your line is open. Please go ahead.
Craig Kucera: Yeah. Thanks, Good morning, guys, Phil about half of the revolver balance now is floating are you contemplating any swaps there or are you likely to keep that floating.
Speaker Change: Was there something else going on there.
Speaker Change: Yes.
Speaker Change: The arena lease expired in November and it kind of kicked up primarily due to that.
Speaker Change: Okay.
Craig Kucera: So yes, so it's about $100 million outstanding on the revolver.
Speaker Change: That's it for me thank you very much.
Speaker Change: Thank you. Thank you and one moment as we move on to our next question.
Craig Kucera: As you mentioned have flopped $50 million is not swapped.
Speaker Change: And our next question is going to come from the line of Craig Kucera with.
Craig Kucera: We might consider the balance starts to get up a little higher just to kind of depends on how the timing of acquisitions and dispositions lay out.
Speaker Change: <unk> capital markets. Your line is open. Please go ahead.
Craig Kucera: Yes, thanks, good morning, guys.
Craig Kucera: You always have some flexibility there craig to be able to pay down the line rates and when its swap then you're just sitting on the cash earning nothing.
Speaker Change: About half of the revolver balance now is floating are you contemplating any swaps there or are you likely to keep that floating.
Craig Kucera: So yes.
Speaker Change: Let's see yes, so its about $100 million outstanding on the revolver as you mentioned have flopped $50 million of not swapped.
Craig Kucera: If it gets if it continues to get up a little higher we'll probably look at swap in or we may opportunistically do it right. If there is a dip in rates, we might might consider doing it a little earlier.
Speaker Change: We might consider the balance starts to get up a little higher just kind of depends on how the timing of acquisitions and dispositions lay out.
Craig Kucera: Got it.
Craig Kucera: Just one more for me I guess you guys have had a really good track record of getting a positive cap rate spread on your.
Craig Kucera: You always have some flexibility there craig to be able to pay down the line rates and when its swap then you're just sitting on the cash earning nothing.
Speaker Change: Acquisitions and dispositions is that still anticipated this year or does the fact that some of the assets youre looking to sell might.
Craig Kucera: It needs to be leased up to kind of maximize the value.
Speaker Change: So.
Craig Kucera: Yes.
Speaker Change: Even if it gets if it continues to get up a little higher we'll probably look at swap in or we may opportunistically do it right. If there is a dip in rates, we might might consider doing it a little earlier.
Craig Kucera: Definitely going to be some assets like Walgreens and maybe at homes that will be it.
Yields that are the same or higher than what we're acquiring so you won't see that accretive recycling.
Speaker Change: Got it.
Speaker Change: Just one more for me I guess you guys have had a really good track record of getting a positive cap rate spread on your.
Craig Kucera: But.
Speaker Change: Acquisitions and dispositions is that still anticipated this year or does the fact that some of the assets youre looking to sell might need to be leased up to kind of maximize the value.
Craig Kucera: With regards to party city and.
Craig Kucera: And as a theater I mean those are.
Craig Kucera: Fairly chunky amount of money for our small company, that's obviously, earning negative that once we get that redeployed will be very accretive.
Speaker Change: Yes.
Speaker Change: Definitely going to be some assets like.
Speaker Change: Walgreens and maybe at home so it will be it.
Craig Kucera: Okay, great. Thanks.
Craig Kucera: Thank you.
Speaker Change: Yields that are the same or higher than what we're acquiring so you won't see that accretive recycling.
Speaker Change: Thank you and this is going to conclude our question and answer session. Ladies and gentlemen. This is also going to conclude today's conference call. Thank you for participating and you may now disconnect everyone have a great day.
Speaker Change: But.
Speaker Change: With regards to party city and <unk>.
Speaker Change: And as a theater I mean, those are fairly chunky amount of money for a small company. That's obviously, earning negative that once we get that redeployed will be very accretive.
Speaker Change: Okay, great. Thanks.
Speaker Change: Thank you.
Speaker Change: Thank you and this is going to conclude our question and answer session. Ladies and gentlemen. This is also going to conclude today's conference call. Thank you for participating and you may now disconnect everyone have a great day.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: <unk>.
Speaker Change: [music].
Speaker Change: [music].
Good day and thank you for standing by welcome to the Alpine Q4 year end 2024 earnings conference 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 this session you will need a press star one on your telephone.
Speaker Change: And here an automated message advising you. Your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today CFO Philip My Mays. Please proceed.
Speaker Change: Thank you I would like to remind everyone that many of our comments today are considered forward looking statements under federal Securities law.
Speaker Change: Actual future results may differ significantly from the matters discussed in these forward looking statements and we undertake no duty to update these statements.
Speaker Change: There is an area 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.
Speaker Change: This recent investor presentation, which contains reconciliations of the non-GAAP financial measures, we use on our website at www Alpine REIT dot com with that I will turn the call over to John.
John: Thanks, Bill for the fourth quarter with a strong finish to an excellent 2024 for fine as we executed successfully on all areas of the business plan.
John: With earnings we achieved <unk> dollars 74 per diluted share for the year representing growth of 17%.
John: This robust growth in earnings along with free cash flow permitted us to once again raise our common dividend to a new quarterly rate of <unk> 28, and a half.
John: Effective the first quarter of 2025.
John: This new annualized dividend of $1 14 continues pines achievement of increasing annual dividend each year since its IPO in November of 2019, while continuing to provide shareholders an attractive well covered dividend yield.
John: Driving our earnings growth, a successful quarter and a year of investment activity during the fourth quarter, we acquired six properties for $55 million at a weighted average cash cap rate of seven 6%.
John: This brings our full year acquisition activity to 12 properties for $103 $6 million and a weighted average cash cap rate of eight 2%. Our 2024 acquisitions included investment grade rated the best buy Dick's sporting goods and loads along with three beachfront restaurants, increasing.
John: Our walls to $8 seven years from seven years at the beginning of the year. Further we ended the year with 51% of our ABR attributable to investment grade rated tenants supplementing our 2024 property acquisitions, we originated three commercial loans during the year for $31 $1 million at a weighted average yield.
John: At 10, 7% taking.
John: Taking loan originations and property acquisitions together, we successfully completed a $134 $7 million of total investments during 2024 at an average yield of eight 7%.
John: Initially during the year, we successfully pruned our portfolio selling $62 million of property at an average cap rate of six 9%.
John: Physicians reflected our strategic effort to improve the diversification of our cash flow and reduce risk and included three Walgreens moving Walgreens from our largest tenant in terms of ABR to our fourth largest tenant.
John: Notably Triple B rated Dick's sporting goods and Triple B plus rated loads are now our two largest tenants each representing 10% of ABR.
John: Additionally, we were able to reinvest net proceeds from these dispositions into new acquisitions at a positive yield spread.
John: As we look to 2025, we continue our investment strategy employing a barbell approach with regards to property acquisitions.
John: One side, we will invest in investment grade rated tenants to provide consistent stable cash flows while on the other side, we will see higher yielding opportunities to provide growth and diversification adil.
John: Additionally, we will continue to augment and complement our property investments by selectively originating commercial loans Phil.
John: Phil will discuss 2025 earnings guidance, but I do want to make note of a couple of related items. Firstly as you are aware party city filed for bankruptcy.
John: <unk> does have one party city lease in its portfolio.
This lease is for a property located in Ocean side, New York on long island, the densely populated and desirable location of this property will provide us with multiple alternatives to release or sell it.
John: Second in late 2020 for Cinemark did not renew its lease for our theatre in Reno.
John: We are anticipating this and had this property under contract to be sold however of the buyer had an unanticipated event that prevent closing accordingly, we are now focused on selling those assets and redeploying the capital.
John: Two matters will be short term earnings headwinds until leased or sold and the proceeds redeployed.
Phil: As we look ahead, we see an active and attractive pipeline of opportunities across the tenant landscape. We remain focused on executing our strategy to deliver for pine investors with that I will turn the call over to Phil.
Phil: Thanks, John beginning with financial results total revenue was $13 $8 million for the quarter, including lease income 11 $5 million in interest income from commercial loans of $2 2 million.
Phil: <unk> and <unk> for the quarter were both 44 per diluted share representing growth of 19% and 16% respectively over the comparable quarter of the prior year.
For the full year total revenue was $52 $2 million, including lease income of $46 million and interest income from commercial loans of $5 8 million.
Phil: <unk> for the year was $1 73 per diluted share representing 18% growth over the prior year and <unk> was $1 74 per diluted share representing 17% growth over the prior year.
Phil: Driving this earnings growth for the quarter and the year was the investment activity John discussed along with prudent and disciplined capital management.
Phil: During the fourth quarter, we issued approximately 436000 common shares under our ATM program at a weighted average price of $17 98 per share generating $7 7 million in net proceeds for.
Phil: For the full year of 2024, we issued $1 1 million common shares under our ATM program at a weighted average price per share of $18 <unk> generating $18 8 million in net proceeds.
Phil: Notably and of equal importance during 2023 and ended the first quarter of 2024, the company Opportunistically repurchased 9 million common shares for $15 4 million and an average price of $16 26.
Phil: Which is a $1 78 below our weighted average issuance price in 2024.
Phil: Our 2020 for ATM activity and net issuance of over 1 million shares allowed us to both grow and reduce leverage.
Phil: Specifically, we ended the year with net debt to EBITDA of seven four times compared to seven seven times at the beginning of the year.
Phil: As a reminder, we have no debt maturing until 2026, after which our debt maturities are well staggered and we have utilized over rate swaps to fix the interest rate on over 80% of our debt, resulting in a weighted average interest rate of four 1% at year end.
Phil: Further we had $95 million of liquidity consisting of approximately $5 million of available cash.
And $90 million available under our revolving credit facility and.
Phil: In addition, with current in place commitments the available capacity of our revolving credit facility can expand an additional $50 million as we acquire properties, providing total potential liquidity of approximately $150 million.
Phil: During the fourth quarter, we paid a quarterly cash dividend of <unk> 28 per common share to our stockholders of record on December 12 2024.
Phil: This represents a healthy <unk> payout ratio of 64%.
Phil: As discussed earlier, our board of directors recently approved increasing our quarterly dividend to <unk> 28, 5%.
Phil: Effective in the first quarter of 2025. After this increase our dividend remains well covered and supported by free cash flow.
Phil: Finally, turning to guidance for 2025, our initial earnings guidance for the full year of 2025 as a range per diluted share of $1 72.
Phil: $10 73 for both <unk> and key.
Phil: <unk> reflected in our initial guidance included investment volume of $50 million to $80 million.
Phil: Physicians are 20 million to $30 million and.
Phil: And weighted average shares outstanding of 16 million to $16 5 million.
Phil: With regards to the party city bankruptcy and a vacant theater in Reno or guidance at this time, assuming they will impact 2025, <unk> and <unk> per share by approximately eight.
Phil: However that there is an assumption of the party city lease and timely execute on planned property acquisitions and loan originations, we could be on the high end of our range or exceed it.
Phil: One last note the annual run rate for our external management fee is now $4 5 million, reflecting the full impact of the $7 7 million of net equity proceeds raised in the fourth quarter with that operator. Please open the line for questions.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.
Phil: Okay.
Michael Goldsmith: And our first question is going to come from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.
Speaker Change: Great. This is Catherine Ghraib answer Michael Goldsmith. Thank you for taking my question. My first is you decreased your Walgreens exposure in the quarter should we expect a further paring Donovan tenant type in general with a comfortable level of exposure for you there.
Michael Goldsmith: Yes. Thanks.
Speaker Change: We have another one kind of in the.
Speaker Change: In the pipeline to sell as far as.
Speaker Change: Negotiations, but we're really kind of trying to time it with acquisitions.
Speaker Change: These properties are even though it is a challenge sort of credit and story. There is a market for these so we're trying to pair them up with acquisitions, but theyre, probably another one coming out.
Speaker Change: Possibly in the quarter.
Speaker Change: Got it. Thank you and then my second question within.
Speaker Change: Within your investment outlook for 2025 can you provide any color on maybe your appetite for acquisitions versus construction loans and what would make you more constructive on one lever versus the other in 2025.
Speaker Change: Yes so.
Speaker Change: I've talked about that before in the past so we really like some of the loan opportunities, we see because youre really getting an enhanced credit for instance, the publix anchored sort of.
Speaker Change: Our parcel developments with <unk>.
Speaker Change: Buffer of equity beneath you as a developer.
Speaker Change: There's a lot of equity in the projects.
Speaker Change: And the Ltvs are certainly obviously lower than if you went out and bought these assets and of course, the yields are higher than our in them. So so we really like the opportunity.
Speaker Change: As the capital markets are still constrained for developers.
Speaker Change: And I would say that we are seeing a very active pipeline on both.
Speaker Change: The loan side.
Speaker Change: As well as the act with the acquisition the more of the core acquisition side. So we are seeing.
Speaker Change: Robust sort of opportunities on both sides. So I could see us going to be 50, 50 on on that sort of investment program.
Speaker Change: Got it thanks, so much.
Speaker Change: Thank you.
Speaker Change: Thank you one moment as we move on to our next question.
Speaker Change: Our next question comes from the line of <unk> Mehta with Alliance Global Partners. Your line is open. Please go ahead.
Mehta: Yes. Thank you good morning, I Wonder if you follow follow up on the commercial loan opportunity.
Mehta: Do you have for commercial loans maturing in 2025, and I wanted to ask you what your expectations are.
Mehta: Yes.
Mehta: Yes, so we do have four maturing.
Mehta: I think one will actually probably pay off three will probably extend.
Mehta: And we don't think there'll be any problem as John talked about with our robust pipeline of loans here, replacing the one one of them that will likely pay off.
Mehta: The pay off mid year, and we're pretty confident we'll replace that so don't expect the balance to come down expected to kind of stay where it's at and maybe grow towards the latter part of the year.
Mehta: Okay and then.
Mehta: Second question on the acquisition disposition guidance can you provide some color on the expected timing on when you guys are planning to certain acquired properties in the year.
Mehta: So selling which property.
Mehta: Yes.
Mehta: So I think the pipeline is probably the strongest.
Mehta: We've seen this time of year.
Mehta: And the five years, we've been doing this and so.
Mehta: So we're pretty optimistic about as you know.
Mehta: The deals could fall through but I would expect sort of.
Mehta: More of the activity to happen at the at the end of the first quarter.
Mehta: Okay. Thank you.
Mehta: Thank you.
Mehta: Thank you one moment for our next question.
Rob Stevenson: And our next question is going to come from the line of Rob Stevenson with Janney Montgomery Scott. Your line is open. Please go ahead.
Speaker Change: Good morning, guys, John or the Beach side group assets back to their full capacity. After the storm damage and is there revenue back to where you guys underwrote it at the at the initial deal.
Speaker Change: Yes, so we were actually out there last week and they are they are all open and performing in <unk>.
Speaker Change: Some are performing better than than pre hurricane.
Speaker Change: With new equipment and more efficient kitchens as they had the opportunity to reconfigure where they wanted to.
Speaker Change: I would say the sandbar isn't at Max capacity, yet is there.
Speaker Change: It's really a lot of they do a lot of weddings and so forth, but so we're just now getting into the season, but everything's trending to either the same or better than pre hurricane Unfortunately for the market.
Speaker Change: Some of the competition is has not come back online. So they are kind of the only game in town. So.
Anyway.
Speaker Change: They are pretty excited kind of about their positioning.
Speaker Change: Alright, and they had insurance business interruption insurance to be able to pay you for anything that is missing at this point right correct, Okay and then.
Speaker Change: <unk> talked about the party city the cinemark beyond those two assets is there any other locations that you would expect.
Speaker Change: Be vacant at some point in 2025 early 'twenty six at this point.
Speaker Change: Yes.
Speaker Change: Proactive on things that.
Speaker Change: Kind of a watch list sort of.
Speaker Change: China is for instance at home, we're very active in discussing about.
Speaker Change: Selling.
Speaker Change: A couple of those so.
Speaker Change: The theater deal obviously last fall, we had it under contract and Unfortunately, there is a health issue with the buyer so that really kind of mess up our plans that should have been sold last year. So we had to restart with that and so were we.
Speaker Change: We do have active offers on both the party city in the theater.
Speaker Change: Trying to be.
Speaker Change: I'm trying to get the best price possible, but we.
Speaker Change: We certainly will see the benefits if we decide to sell it earlier and have that capital put into production by either paying down the debt or making an acquisition or investment.
So we clearly see the benefits of.
Speaker Change: Of monetizing those sooner rather later and so we may do that.
Speaker Change: Okay, and then you mentioned that home that was my last question you talked earlier about there being a market for Walgreens today is there really a market for at home assets. These days given their size and their credit rating and is that something that youll look to match any dispositions there to.
Speaker Change: Acquisitions as well.
Speaker Change: We'll go ahead, and we want to sort of because they are a little bit lumpier, we won't match it up with the acquisitions will.
Speaker Change: Buyer ready to buy it then we'll move through the process with them.
Speaker Change: And the reason there is more activity on them. Then you may may think because of the size. As you mentioned is that remember these are on large parcels with a lot of parking.
Speaker Change: And a large.
Speaker Change: <unk>.
Speaker Change: At a very low basis and you just you just can't find at a more I mean.
Speaker Change: Redevelopment of any of this sort of product is closer to $300 a square foot. These days with land. So so these are unique opportunities for investors developers tennis and people understand that okay.
Speaker Change: And then I guess, one last question for Phil.
Speaker Change: You gave guidance in terms of the numbers and the investments of dispositions, but in terms of the income statement anything in 2025 looking to be.
Speaker Change: Either abnormally high line items abnormally higher low X, excluding revenue and interest expense, depending on what you guys do from a buying.
Speaker Change: Buy and sell and financing standpoint, anything in G&A or anything thats going to wind up being otherwise lumpy or extraordinary that participating in 2025.
Speaker Change: I imagine most things will be a pretty even run rate quarterly over the year.
Nothing lumpy in G&A as I noted our.
Speaker Change: Our management fee given effect to all the equity that went out the door in the fourth quarter is now four five on an annual basis and that assumes we don't issue any more equity, but thats. The current run rate, but I think most things will be generally and even run rate over the year and just accent.
Speaker Change: Are acquisitions and dispositions, but no unusual one time fees or kind of lumpy things that you need to worry about.
Speaker Change: Okay. Thanks, guys have a great weekend, thanks, you too.
Speaker Change: Thank you and one moment for our next question.
Speaker Change: Our next question comes from the line of Matthew <unk> with Jones trading. Your line is open. Please go ahead.
Speaker Change: Hey, good morning, guys. Thanks for taking the question I'd like to talk about cap rates, a little bit and kind of where pricing is there right now given the higher for longer outlook.
Speaker Change: It seems like pricing has held pretty steady over the past couple of quarters, but when you strip out the loans what is your going in cap rate on these acquisitions for kind of the past couple of quarters.
Speaker Change: So, it's basically averaging out close to the 8% cap rate range.
Speaker Change: As you saw in the last in the <unk>.
Speaker Change: Fourth quarter, we did dive down for a quality, where we picked up a lows too.
Speaker Change: To really show the market that we're the only net lease REIT with a dicks.
Speaker Change: Our lowes in the top five.
Maybe one of the top 10 credit so trying to show the market that if you want sort of diversification of investment.
We're really the only sort of net lease REIT that you can kind of get exposure to different credits everyone else seems to have the same sort of credit profiles and so really striving to get that story told so but in general besides diving down and picking up a quality lows with a long day.
Speaker Change: Our Asian.
Speaker Change: We're kind of trending to eight cap range.
Speaker Change: Got you that's helpful and then could you.
Speaker Change: You guys didn't provide any guidance so should we expect kind of the same.
Speaker Change: And in 2025 strong credit and then the loans, obviously to boost the yield there.
Speaker Change: Yes, absolutely I think.
Speaker Change: Hopefully some of these deals happen and I think youll be.
Speaker Change: So impressed with the quality.
Speaker Change: Awesome.
Speaker Change: Thank you guys. Thank you. Thank you and one moment for our next question.
Speaker Change: And our next question comes from the line of Alex <unk> with Baird. Your line is open. Please go ahead.
Speaker Change: Hi, Good morning, and thank you for taking my question. So you've already mentioned with the party city and the sign Mark that.
Speaker Change: That you have offered potentially or are you planning on selling them or releasing them and did.
Speaker Change: Could you potentially talk about the impact on valuation.
Speaker Change: So we have a leasing opportunity as well and certainly the best best execution would be to lease and then sell.
Speaker Change: That would take.
Speaker Change: For the whole year really have that.
Speaker Change: Execution, and realizing how finicky, the investor market is as far as stock investors feel like having the money and put it in redeploying earlier is probably going to be more prudent in and pay off for our shareholders and so thats kind of so we do have optionality on both whether we lease and hold.
Speaker Change: Our ourselves, but were tending to gravitate towards the monetization.
Speaker Change: Yes.
Speaker Change: And with the buyer that pulled out because of health issues was there any sort of termination income or one time income that we should expect from that.
Speaker Change: We got a little bit, but we really.
Speaker Change: Could have taken more.
Speaker Change: Obviously.
Speaker Change: Felt bad about the circumstances in really some escrow back that we didn't need to but.
Speaker Change: Given the extreme nature of the health issue, we did that.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. Thank you and one moment as we move on to our next question.
Speaker Change: And our next question comes from the line of John <unk> with B Riley Securities. Your line is open. Please go ahead.
John <unk>: Good morning, maybe digging in a little bit more on the acquisition guidance I mean, how much of that is stuff you kind of see in the pipeline today or is under kind of LOI and how much is theoretical.
Speaker Change: Just kind of asking that in the context of.
Speaker Change: $80 million at the top end of the range is significantly less than you did last year, but you kind of were saying you felt the pipeline was stronger than it had been at any other point. During this time of the year. So just kind of trying to circle that square if you will.
Speaker Change: No. That's a good point so because of these investments are fairly lumpy.
Speaker Change: We are negotiating.
Speaker Change: With.
Speaker Change: A fair amount of the pipeline, but you just never know what's going to what's going to happen and then on the theoretical.
Speaker Change: It's more we have identified assets that we're pursuing but we don't know whether we'll win then that the yields that work for us.
Speaker Change: So I would say it.
Speaker Change: What we have that we're negotiating where terms have been have been really agreed upon is a fair amount of the guidance.
Speaker Change: Okay. That's helpful. And then in terms of yields on those investments I mean, it's going to be comparative to last year. I mean is the cap rate market moved at all given some of the volatility in interest rates are.
Speaker Change: Macro uncertainty.
Speaker Change: I would say that the <unk>.
Speaker Change: Yields on the structured finance investments have maybe come down slightly and then the yields on the acquisitions have been steady from what you've seen in the past.
Speaker Change: Or maybe even come up a little bit as far as higher yield.
Speaker Change: Okay and then.
Speaker Change: On guidance again.
Speaker Change: Credit loss kind of baked into that number beyond the two vacancies you called out specifically.
Speaker Change: Yes, I mean, we always keep a small general reserve in the forecast.
Speaker Change: But we don't see anything large.
Speaker Change: Blooming right now.
Speaker Change: Okay.
And then last kind of detailed one for you Phil real estate expense ticked up a little bit quarter over quarter was that just reflecting the situation in Reno or.
Speaker Change: Was there something else going on there.
Speaker Change: Yes.
Speaker Change: The arena lease expired in November and it kind of kicked up primarily due to that.
Speaker Change: Okay.
Speaker Change: That's it for me thank you very much.
Speaker Change: Thank you. Thank you and one moment as we move on to our next question.
Speaker Change: And our next question is going to come from the line of Craig Kucera with Lucid capital markets. Your line is open. Please go ahead.
Craig Kucera: Yes, thanks, good morning, guys.
Craig Kucera: About half of the revolver balance now is floating are you contemplating any swaps there or are you likely to keep that floating.
Craig Kucera: So yes, it was about $100 million outstanding on the revolver as you mentioned have flopped and $50 million and not swapped.
Craig Kucera: We might consider the balance starts to get up a little higher just kind of depends on how the timing of acquisitions and dispositions lay out.
Craig Kucera: You always have some flexibility there craig to be able to pay down the line rates and when its swap then you're just sitting on the cash earning nothing.
Craig Kucera: So even if it gets if it continues to get up a little higher we'll probably look at swapping or we may opportunistically do it right. If there is a dip in rates, we might might consider doing it a little earlier.
Craig Kucera: Got it and.
Speaker Change: And just one more for me I guess you guys just had a really good track record of getting a positive cap rate spread on your.
Speaker Change: Acquisitions and dispositions is that still anticipated this year or does the fact that some of the assets youre looking to sell might need to be leased up to kind of maximize the value.
Speaker Change: Yes, I mean, there is definitely going to be some assets like Walgreens and maybe at homes that will be it.
Speaker Change: At yields that are the same or higher than what we're acquiring so you won't see that accretive recycling.
Speaker Change: Budd.
Speaker Change: With regards to party city and.
Speaker Change: And as a theater I mean those are.
Speaker Change: Fairly chunky amount of money for our small company, that's obviously, earning negative that once we get that redeployed will be very accretive.
Speaker Change: Okay, great. Thanks.
Speaker Change: Thank you.
Speaker Change: Thank you and this is going to conclude our question and answer session. Ladies and gentlemen. This is also going to conclude today's conference call. Thank you for participating and you may now disconnect everyone have a great day.