Q2 2025 Alpine Income Property Trust Inc Earnings Call
Good day, and thank you for standing by. Welcome to the Alpine Q2 2025 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 to press star 1, 1 on your telephone. You will then hear an automated message. Advising you, your hand is raised to a draw your question. Please, press star. 1 1 again, please be advised. That today's conference is being recorded. I would now like to hand the conference over to your speaker today. Jenna McKinney, please go ahead.
Speaker Change: Thank you, joining me in participating on the call this morning are John Albright, president and CEO bill of maze, CFO and other members of the executive team that will be available to answer questions during the call.
Speaker Change: As a reminder, many of our comments there, considered forward-looking statements under Federal Securities laws.
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, 10K form, 10 q and other FCC filing.
Speaker Change: You can find our SEC reports, earnings release and most recent investor presentations, which contain reconciliations of, the non-gaap financial measures we use on our website at www.alpine.com.
John: With that, I will turn the call over to John.
John: Thank you, Jonathan. Thank you. Good morning everyone.
Jonathan: We are pleased to report to ffo for shared growth of 2.3% in the quarter and 4.8% year to date compared to the same period last year.
Jonathan: Discerning for us was driven by our investment activity. Over the last year, we remain focused on our barbell investment strategy, period higher yielding Acquisitions supported by quality, tenants and solid. Real estate fundamentals with select investment grade, tenants to maintain a diversified and balanced portfolio. That delivers favorable risk adjusted returns.
Jonathan: Maintaining discipline and a hearing to our underwriting criteria.
Jonathan: We did not complete any additional property Acquisitions. This quarter following a busy first quarter?
Jonathan: In which we closed 39.7 million in the property. Acquisitions had a weighted average, initial yield of 8.6%.
Jonathan: However, we are actively pursuing multiple interesting investment opportunities and anticipate some closing in the second half of the year.
Jonathan: Turning to property business positions. During the quarter, we sold 5, net. Lease properties for 16.5 million and weighted average, exit gap of 7.9%. These sales included 2 Walgreens, a Dollar Tree, Verizon and Old Time Pottery. We have now reduced our Walgreens exposure over the past year by 500 basis points to 7% of ABR, and have moved it from our largest tenant concentration, a year ago, to currently our fifth largest.
Jonathan: Further we continue to make progress on our recently, vacated properties, the theater and Merino is under contract to be sold and we are actively negotiating the potential sales of our Long Island Property previously leased by Party City.
Jonathan: On the commercial loan front this quarter we provided seller financing and conjunction with our all-time Pottery disposition and originated in 1 first mortgage loan.
Jonathan: Combined, these ones are all 6.6 million dollars and we're fully funded at closing with a weighted average, initial yield of 9.8%.
Jonathan: This brings our year to date loan closing to 46.2 million. With a weighted average initial yield of 9.1%.
The ability to originate select commercial loans, is another tool and our disposal to further diversify our income streams and deploy Capital like track the returns further. The linear relationships. We have cultivated are generating some unique loan investment opportunities.
Jonathan: We are actively underwriting, several High yielding loans backed by high-quality sponsored to a strong credit metrics and real estate fundamentals and expect 1 or 2 of these transactions to close in the back half of the year.
Jonathan: Our top 2, tenants are investment grade 6 sporting goods and Lowe's. That together represent 20% of the portfolio. ADR more broadly 51% of our portfolio. ADR is derived from investment grade rated tests.
Jonathan: Not only are weighted average remaining lease term. Now stands at 8.9 years up from 6.6 years just a year ago.
Jonathan: Lastly, a couple of specific tenant updates Mass Pro Shops completed as full renovation of the approximately 66,000 square foot building located on 9 acres in Minnesota this properly formerly least to Camping World was assigned to Bass Pro Shops. And we amended the lease to a new 20-year initial lease term which commits upon their opening in mid Bay. Additionally, at home file, for bankruptcy, in June. However, both of our properties leased at home paid. Rent in July and neither were on the initial closure list.
Phil: With that, I'll turn the call over to Phil.
Phil: Thanks John beginning with financial results.
Phil: For the quarter total revenue was 14.9 Million including lease income of 12 million dollars and interest income from commercial loans of 2.7 million.
Phil: Fmo and ammo for the quarter, for both 44 cents per delivery. This year representing 2.3% growth over the comparable quarter of the prior year.
Phil: Year. Today total revenue was 29.1 Million, including lease income of 23.8 million and interest income from commercial loans at 5 million.
Phil: At Buffalo. And if a flow year to date for both 88 cents per share, representing 4.8% and 3.5% growth respectively, over the comparable period of the prior year.
Phil: Consistent with the prior quarter, given the relative attract evaluation of time's common shares. We continue to opportunistically repurchase years
Phil: During this quarter, we repurchase the approximately 273,000 common shares for 4.3 billion dollars and average price of $15.81 per share and year to date. We have now repurchased the approximately 546,000 shares for 8.28 million, at an average price of $15.77 per share.
Phil: With regards to our common dividend as previously announced during the first quarter, we increased our quarterly cash dividend to 28 and a half cents per share and maintain that rate. In the second quarter, providing a current attractive dividend yield close to 8%.
Phil: Even with this increase our dividend remains, well, covered at approximately, a ASO pay out ratio of 65%.
Phil: Moving to the balance sheet, we ended the quarter with net debt, proforma adjusted Eva at 8.1 time, and 57 million of liquidity, consisting of approximately 9 million dollars of cash available for use and 48 million available under our revolving credit facility.
Phil: However, with input explain commitments, availability of our revolving credit facility can expand in additional 49 million as we acquire properties, providing total potential, liquidity of almost 100 million dollars.
Phil: A quick note on the 2.8 million dollars of non-cash, impairment charges record. This quarter
Phil: This amount includes non-cash impairment charges related to our 2, largest vacant properties. If the ore is located in Reno and a former party city is located on Long Island.
Phil: Giving the interesting investment opportunities we are seeing we have determined, it's more likely. We will definitely sell these properties and redeploy the proceeds as opposed to incurring. The income period costs and capital that would be required to retain and release them.
Phil: We ended the quarter with portfolio wide in place, annual based rent of 45.3 million on a straight line basis.
Phil: As a reminder this includes approximately 3.8 million of straight line. Rent related to 3, single tenant restaurant properties Accord, in 2024 to resell lease. Back transactions, under gaap, the specific sales lease back transactions are accounted for as financing accordingly. We are currently recognizing on an annual basis. Approximately 2.6 million of Gap interest income and our statement of operations as opposed to 3.8 million dollars of straight line, rent income from these properties.
Phil: Now, I'm trying to get, guys. We are referring both our up and flow and afo guidance range for $10.74 to $1.77 per diluted share for the full year of 2025.
Phil: The assumptions are allowing our guidance remain largely unchanged except for investment about it. Which we are increasing by 30 million dollars, to a new range of 100 million dollars to 130 million for the year.
Phil: Bounds of 25.5 million and deal with 9.5% with fully repaid accordingly, our interest income from commercial loans will decrease until either draws on existing loans and our new loans are funded.
Phil: With that operator, please open the call to questions.
Phil: Reminder to ask.
Phil: 1 on your telephone.
Phil: Announced.
Phil: just press star 1 1, again, 1 moment while we compile our Q&A roster,
Speaker Change: Our first question is going to come from the line of Matthew. Ednor with Jones trading, your line is open. Please go ahead.
Matthew Ednor: Hey, good morning guys. Thanks for taking the question. Um, you know, with the given increase to the investment guidance, um, and the opportunities that you guys kind of mentioned, um, within the loan book, you know, how should we kind of look at, um, you know, invest Investments for the remainder of the years. It's still kind of along those 50/50 lines between properties and Loans. Um, you know, any help there would be great. Thank you.
Matthew Ednor: I I is John sorry I'm not allowed loud airport but I'll take the the first part there. Um, you know, we're seeing right now pretty active on, um the both acquisition front and Loan front, but I would say that uh, more the structured loan investment activity. Uh, seems to be uh closer uh to
Matthew Ednor: Happening, then then the Acquisitions. So um you know we're we're hopeful that in the next 60 days. We're going to have some some activity here on the structured loan Investments that we're very excited about, um, the acquisition side, we're pursuing things but it's pretty competitive as you know. And so uh unless you're about the timing of uh those Investments
Matthew Ednor: Got it, that's helpful there. Um and then as a follow-up to that um you know with these loans as they kind of come in and pay off, I know that you don't have any maturities for the remainder of the year. Um you know, but if you were to experience any early payoffs, should we expect that those are going to go towards paying down the credit facility rather than um you know, reinvestment.
Speaker Change: Yeah, I mean uh just like um uh Phil had mentioned as far as on the Public's loan and and Charlotte, you know, that basically paid off and went to pay down the facility. Uh, we're, you know, working really hard to, uh, sell the Party City and the theater and, and Reno, and, of course, that would go to pay down the facility as well. But, uh, as we, uh, see these, um structure, Finance Investments. Uh, we'll make those and, um, if we need to, um, uh, we'll either sell off something or, um, or sell an asset and just keep the, uh, leverage, uh, reasonable.
Speaker Change: Got it. Thank you guys. I appreciate it.
Speaker Change: James, your line is open, please go ahead.
James: Hey, good morning, guys. Um, 2 questions for Phil. Um, just curious with the payoff, uh, the Public's payoff, uh, in July what, what should be the what's going to be the quarterly afo impact?
Speaker Change: On that.
Speaker Change: ERJ. So, with 25.5 million, it was yielding 9 and a half percent. It'll go ahead and pay down the line, the variable portion of the line, which is around 6.
So it's around 300 basis. Point a little more spread um, impact a couple hundred grand and a quarter, just the kind of full penny, a little bit more than a full penny, a quarter.
Speaker Change: Okay. And then Phil a second question is just in terms of uh we've seen quite a few of uh other reach to go out and issue debt or get term loans. And I'm curious where you think the market is today for for Pine, in terms of doing a Term Loan.
Yeah, so the time I'm going to go do a 5-year Term Loan now. Um, with the banks and swap, it would be around 5.
Speaker Change: All.
Speaker Change: In, okay, I think that's uh, that's it for me guys. Thanks,
Speaker Change: Thank you. And 1 moment for our next question.
Speaker Change: Our next question is going to come from the line of Michael Goldsmith with UBS. Your line is open, please go ahead.
Michael Goldsmith: Good morning. Thanks a lot for taking my questions. Uh,
Speaker Change: Just first on on Walgreens you continued to Pare down your exposure there. So can you just talk a little bit about what what the market is like for um, Walgreens as well as at home. You know who who are the potential buyers? Uh, what sort of cap rates? Are we looking at there and just the overall level of interest in boxes? From from those 2, tenants. Thanks.
Speaker Change: Yeah, so in general, you know, the the market is fairly active. So as we as we see, you know, reasonable pricing. We'll keep moving through the Walgreens and we're actually, you know, working on a couple more sales. Um, but you know, the pricing just obviously depends on location of course, and the, your lease term, but you know, the cap rates can be anywhere from, you know, High 7s to, you know, early 10s or 11s that are just depending on again location and and quality. Um and you know we're seeing, you know basically people that uh you know a lot of high, net worth people buying uh Walgreens and saying okay. I'm going to take um the rest of the term and get good yield and then it's a great location or a good location and I know another tenant is going to want it because these are corners and drive-throughs so they're not really worried about uh knowing exactly who's going to backfill it just knowing that on a macro sense. It's a
Speaker Change: Good investment. Um, so they're fairly active Market on on the Walgreens side on like at homes. Uh, you know, you're seeing users that want to get these big box positions. Um and as you know, most of that homes are are low rent payers. So um, you know, a lot of these are in the money as far as Market rates versus what at homes paying. And so it's really, you know, as as big boxes have become um less available. There's you know, there's a fair amount of people uh,
You know, again if it's a good location, good Market, uh, that you know, people are interested in uh, taking those down and either redeveloping them or their their users, that will take the the Box are split up.
Speaker Change: Hope that's, I hope that's helpful. No. John that that that was that was particularly uh helpful. Thanks for that and just as a follow-up, right? Like you you you got the loan repaid. You know, it was a bit of a slower uh you know, deployment of capital quarter after a busy first quarter and I so just and then you were also a share repurchaser. So just as you think about, you know, how how you want to allocate your Capital going forward, it sounds like act was the pipeline this building and and the Acquisitions uh, will be and Loans will be, uh, focused going forward. Which is, can you talk about just the balance between all all the different options as well as you know, reducing leverage and and just how you're thinking through all of that? Thank you. Yeah, sure. Uh, you know, look, you know, we are seeing more uh opportunities, very interesting opportunities, good sponsors and you do, unfortunately.
Speaker Change: The deals are taking a little bit longer, so we didn't get 1 in in the quarter 1. We were very hopeful to get in a quarter but uh, they're actually, um, you know, discussing with the tenant about expanding. And it's going to take a little while for them to go through a real estate committee and all that kind of stuff. So so unfortunately that didn't happen in the quarter but hopefully, uh, this quarter will, uh, but you know, and we'll keep keep on selling through some of the credits that, uh, we, we don't like going forward and, uh, you know, maybe a little bit, you know, of, you know, selling assets and paying down debt, which as, as, um, you know, Phil mentioned on the loan repayment, you know, there's obviously a little bit of hit to earnings, but, you know, given that, you know, we're such a low multiple, um, stock, we're not, you know, worried about kind of managing that we just want to do the right thing. And and we are very optimistic about, you know, the Acquisitions and and Loan investments in front of us, which uh, we think will be very accretive to the
Speaker Change: Company and, you know, will be eventually reflected in the stock price we hope. But you know, I think we'll be fairly active this quarter. So we're pretty excited about what by the opportunities that we see.
Thanks for that Don. Uh, good luck in the back half and safe travels.
Speaker Change: Thanks, appreciate it.
Speaker Change: For our next question.
And our next question is going to come from the line of Westlake holiday with Barrett. Your line is open, please go ahead.
Speaker Change: Hey, good morning guys uh can we look at the atoms? Uh the ones that you have currently operating with those be you know better predict productivity sites for them. Do you have any insight into that?
Speaker Change: Yeah, so they are, uh, so we don't expect them to reject uh, these whatsoever. Um, uh they're you know, they're have good operations. Uh so you know, good, good locations. So uh, don't don't see uh that and actually we, we have, you know, people that are more interested in them being gone than being there. So um, you know, so we'll we'll monitor it but uh, so far so good.
Speaker Change: Going forward after at home.
Uh, after at home. I mean, it's not, you know, we've been as, you know, very proactive in the last couple of years of of pruning through, um, you know, different credits. And, you know, it's just really not, not very deep. Uh, you know, we've kind of Taken taken the hits so you know, where, you know, it it's happened. So we're, you know, there's not really anything that kind of keeps us up at night if you will.
Speaker Change: Okay. And then you mentioned though, looking to sell the 2 for sale bucket and any insight into how much uh I guess probably have a little bit of negative in a away from those assets. What would the drag be?
Speaker Change: Sure, I'll let Phil um, talk about the accounting event.
Speaker Change: Yeah. So these are some of our classified as well for sale. I was just on the call you know kind of giving you a heads up that we're kind of more likely I think at this point to just avoid the carry cost and move on with the interesting investment opportunities. We're seeing
Speaker Change: um,
Speaker Change: there's not a big negative drag on those. Um, you know, it's just kind of the
Speaker Change: And then you got real estate taxes and insurance Property Management so it's not it's not huge, but it's definitely not fun. So once once those are so old, you know and you're paying down your your leverage its quickly, a creative
Speaker Change: Yeah. Okay. Thanks guys.
Speaker Change: On our next question is going to come from the line of gurov Mecca with Alliance Global Partners. Your line is open, please go ahead.
Gurov Mecca: Thank you. Good morning. I I wanted to go back to your, the acquisition market and wanted to get some more color on. What kind of properties you're targeting? Are you looking for investment grade, uh, properties with longer lease terms, or are you, are you kind of open to what you're seeing in the market?
Gurov Mecca: Yeah. I mean, we're definitely, you know, doing the barbell approach as we mentioned in in the call that, uh, you know, we're looking for investment grade, uh, longer duration, leases, or at least a good locations where we think we can do an extended and blend after acquiring a property. And then and, you know, basically a coupling that with the kind of a higher, um, return, uh, yielding, you know, sort of Investments. So, uh, we're pursuing, um, on both sides. And, you know, we feel like, uh, we'll we'll get something done here for sure this quarter. Uh, but you know that's that in general is like we're going for a higher quality on the, on the acquisition side, a couple.
Within loan investment side.
Speaker Change: Okay, and then uh, second question on the balance sheet, your leverage was 8.1 times. Uh,
Speaker Change: As of 22, uh, can you provide some more color on how you think about the leverage and where you guys are targeting that number?
Yeah, I mean uh, as we're, you know, selling assets that will come down and and it would have uh, come down in the quarter if uh, the loan payoff happened in the quarter, but it happened a day after. Uh, so, you know, we can easily manage that, uh, on The Leverage side and obviously, buying back stock at creatively, creatively on earnings, and creatively on nav. Um, you know, drives up the leverage a little bit. But the right thing to do and we have, you know, nice free cash flow. So we use that to pay and keep keep keep leveraging check as well. But, uh, you know, looking for the opportunities to make investments, you know, that would basically tick up the leverage a little bit but then quickly uh, sell through the Walgreens to bring it back down. So you know, just appropriately managing the balancing
Speaker Change: Okay, and then maybe lastly on the Walgreens, you know, uh, you obviously brought down the next 4 year. The biggest thing that that uh, that Target number is for you guys. As far as you know, how much ABR you're getting from Walgreens.
Speaker Change: Phil.
Speaker Change: Uh, at the end of the quarter, on you're asking about Walgreens, is it down to about 7? Um, I think it's actually just a little under, like 66 6.6 6.7% of AVR is where it currently stands.
Speaker Change: Uh, Target, I think we'd like to get it down below 5%.
Okay.
Speaker Change: Thank you. That's all I had.
Speaker Change: Great, thank you. Thank you, 1 moment, as we move on to our next question.
Speaker Change: Our next question is going to come from the line of Craig Kuser with Lucid Capital markets. Your line is open, please go ahead.
Speaker Change: Yeah, thanks. Good morning, guys. Um, John, I think earlier this year, you were seeing some compression on structured Financial yields versus last year. Um, is that still the situation today?
Sponsors with very high quality projects that said that the the banks are shrinking. Again at least for the activities that these uh folks are are taking on. And so we're seeing, you know, yields being as good or even maybe better on some certain certain situations. So so luckily we're back to a target-rich environment.
Got it. That that makes sense. Um, and Phil I just want to go back to the guidance, particularly as relates to the investment guidance.
Speaker Change: Increasing 30 million is that basically just saying, hey, we got back, you know, 27/28 million and we're going to redeploy that. Or are we have you? Are you lifting like the total amount or the net amount by 30 million versus the prior guide?
Speaker Change: yeah, so we did get the 25,00 back and I think this was the interesting opportunity as we're seeing in in particular on the loan side, we think later in the year, you know, we can get that redeployed and so um that was kind of the the real reason for the pickup
Okay, just wanted to double check there, uh, and just 1 more for me. Um, you've got the Bass Pro Shops lease, uh, taking occupancy here in the third quarter, was there any lift in that lease, uh, or any change?
Speaker Change: yeah, there was, um, the rent rolled up about 4 0 , 5, 0,
Speaker Change: Okay. And in, Additionally, the lease term that was remaining prior to, that assignment was less than 10 years, and now it's 20 years.
Got it.
Speaker Change: Thanks.
Thank you. And 1 moment for our next question.
Speaker Change: Our next question is going to come from the line of John Masa with the Riley security is your line is open. Please go ahead.
Speaker Change: Morning, everyone. Um, so if you're looking at the loan portfolio, again, I know it wasn't a particularly early prepayment, but do any of the other loans have kind of early repayment options? Um, could that be kind of a significant thing here? If interest rates were to decline, call it in the next 6 to 12 months.
Yeah, you're not going to see as much early repayments um, because, you know, it's really inefficient for the sponsors. You know, our loans are fairly short duration anyway. Uh, they're not going to go do a refi to save, you know, 200 300, uh, bips and spread. Uh it's it's really they're looking to sell these assets primarily. So, um, I if, if entry a drop, I wouldn't expect any sort of like, you know, Mass payoff, uh, early payoffs
Speaker Change: Okay, that that's understandable. And then, um, as you think about the timing of Investments, um, you know, given the increase to the investment volume guidance, should we expect maybe the Delta between what's kind of currently in guidance, and what was in guidance, you know, at the time of 1 Q earnings to to close
Speaker Change: Really late in the year. I'm just trying to kind of you know uh Circle the square, if you will of of the increase in investment volume guidance. And the fact that kind of afo guidance stayed flat,
Speaker Change: Yeah, I would say that go ahead and Phil know I would say yeah we would expect that to kind of get deployed later in the year.
Speaker Change: Um is there anything? You know, I think about guidance in 2 Q versus 1 Q. Anything baked in there in terms of maybe additional conservatism around at home, um, obviously I know the, the 2 assets you have the thus far retained but um,
Speaker Change: Are you kind of factoring in something? You know, as this kind of bankruptcy process is ongoing that, you know, um,
Speaker Change: Obviously, probably going to get paid here for the next couple months, but, um, that that could change, you know, in the back half of the year.
Speaker Change: Um, you'll both be at home, either with me, and we're on the list for closure, both of them page 11. And we generally expect to collect rent for the, you know, remainder of the year. Um,
So there's nothing specific in there but I mean it is 1 of the reasons I can give a range is because you know unexpected things can happen. But at this point in time we we fully expect to get paid on our atoms.
Speaker Change: Um, that's it for me. Thank you very much.
Speaker Change: Thank you. And 1 moment for our next question.
On our next question, comes from the line of Rob Stevenson with Jamie. Macgomery Scott. Your line is open, please go ahead.
Speaker Change: Phil the 50 to 70 million disposition guidance, that's just properties. That doesn't include loan repayments, does it?
Speaker Change: That's correct. That's just property in this position side.
Why not look to sell more assets, especially with the stock trading at roughly an implied, 10 cap rate and use those proceeds to both lower debt and buy back stock.
Speaker Change: Uh, you know, I I think, you know, that certainly could be a, a possibility. But, you know, we are seeing um,
Good Investments that are decreed a creative to the company rather than shrinking. The company. I think, you know, we're seeing some really good, you know, investment opportunities, which will make the Enterprise, uh, worth more. Uh, so, you know, I don't, you won't see us, you know, rapidly selling just to buy back stock. Um, you know, we're as we're selling assets, we're being patient about it and not some sort of fire sell. So it's a little bit, just kind of a, taking our time with it unless we unless we see a big, you know, acquisition happen and we really want to speed it up, which we would do that.
Speaker Change: okay, and then Phil other than the
Phil: I think you said it was a penny drag between the, um, yield on the Public's loan versus the repayment of debt associated with that. Um, anything other than that, that's a headwind in the back half of this year earnings wise, as we think about the quarterly progression and the Investments being back, half stacked.
Phil: Uh, no nothing, nothing really specific. Um, the repayment loan will be uh the only really identified drag there. Um other than that you know Rob is just going to depend on the timing of Acquisitions and dispositions and kind of you know which leads
Speaker Change: Okay, all right. Thanks, guys. Have a good weekend.
Thanks, you too.
Speaker Change: Thank you. This concludes today's question and answer session. This also concludes, today's conference call, thank you for participating and you may now disconnect everyone have a great day.