Q1 2026 Alpine Income Property Trust Inc Earnings Call

April 24, 2026

Operator: Good day, and thank you for standing by. Welcome to the Alpine Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jenna McKinney, Director of Finance. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker #1: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jenna McKinney, Director of Finance.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Joining me in participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; and other members of the Executive Team, who will be available to answer questions during the call.

Jenna McKinney: Thank you. Joining me in participating on the call this morning are John Albright, President and Chief Executive Officer, Philip Mays, Chief Financial Officer, and other members of the executive team who will be available to answer questions during the call. As a reminder, many of our comments today are 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. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, and most recent investor presentation, which contain reconciliations of the non-GAAP financial measures we use, on our website at www.alpinereit.com.

Speaker #2: As a reminder, many of our comments today are 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 #2: Factors and risks that could 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.

Speaker #2: You can find our SEC reports, earnings release, and most recent investor presentation which contain reconciliations of the non-GAAP financial measures we use on our website at www.alpinereat.com.

Speaker #2: With that, I will turn the call over to John.

Jenna McKinney: With that, I will turn the call over to John.

Speaker #3: Thank you, Jenna, and good morning, everyone. We are pleased to report a strong first quarter in 2026, building on a record level of investment activity we achieved in 2025.

John Albright: Thank you, Jenna, and good morning, everyone. We are pleased to report a strong Q1 2026, building on a record level of investment activity we achieved in 2025. We continue to execute our investment strategy by seeking to assemble a high-quality portfolio of single-tenant net lease properties leased to investment grade rated tenants, in addition to originating commercial loans with attractive risk-adjusted returns secured by high-quality real estate with strong, experienced sponsors. During the quarter, we acquired a retail property in downtown Aspen, Colorado, for $10 million. This acquisition was structured as a 50-year absolute triple net master lease at an initial cap rate of 8.5% with 1.25% annual rent escalators.

Speaker #3: We continue to execute our investment strategy by seeking to assemble a high-quality portfolio of single-tenant net lease properties leased to investment-grade rated tenants, in addition to originating commercial loans with attractive risk-adjusted returns.

Speaker #3: Secured by high-quality real estate with strong experience sponsors. During the quarter, we acquired a retail property in downtown Aspen, Colorado, for $10 million. This acquisition was structured as a 50-year absolute triple net master lease and initial cap rate of 8.5% with one and a quarter percent annual rent escalators.

Speaker #3: With regards to the property dispositions, we continue to selectively prune our portfolio, selling three non-investment-grade rated lease properties for $5.8 million at a weighted average exit cap of 7.4%.

John Albright: With regards to the property dispositions. We continue to selectively prune our portfolio, selling three non-investment grade rated lease properties for $5.8 million at a weighted average exit cap of 7.4%. As a result of our combined Q1 property transactions, our property portfolio consists of 125 properties totaling 4.3 million sq ft across 31 states, with a 99.5% occupancy and a WALT of 9.3 years. 50% of our ABR is generated from investment grade rated tenants with Lowe's, Dick's Sporting Goods, Walmart, and Best Buy representing four of our top five tenants. Additionally, during the quarter, we originated a $32 million first mortgage loan, of which $8.6 million was funded at close. The loan carries a 24-month term with an initial interest rate of 13%, inclusive of a 1.5% paid in kind interest, stepping down to an 11.5% current pay rate upon the borrower meeting certain conditions.

Speaker #3: As a result of our combined first-quarter property transactions, our property portfolio consists of 125 properties totaling 4.3 million square feet, across 31 states, with 99.5% occupancy and a WALT of 9.3 years.

Speaker #3: 50% of our ABR is generated from investment-grade rated tenants with Lowe's, Dick's Sporting Goods, Walmart, and Best Buy, representing four of our top five tenants.

Speaker #3: Additionally, during the quarter, we originated a $32 million first mortgage loan, of which $8.6 million was funded at close. The loan carries a 24-month term with an initial interest rate of 13%.

Speaker #3: Inclusive of a one and a half percent paid-in-kind interest. Stepping down to an 11 and a half percent current pay rate upon the borrower meeting certain conditions.

Speaker #3: The loan will fund the development of a 101,000 square foot retail center with national investment-grade rated tenants and three out parcels. The retail center is located in the Atlanta MSA, is shadow anchored by a 128,000 500 square foot target currently in development and is adjacent to an existing Publix.

John Albright: The loan will fund the development of 101,000-sq-ft retail center with national investment grade rated tenants, and three out parcels. The retail center is located in the Atlanta MSA, is shadow anchored by 128,500-sq-ft Target, currently in development, and is adjacent to an existing Publix, creating a strong and varied merchandising mix. Further, with regards to our commercial loan portfolio, we closed and funded the $31.8 million phase two of our first mortgage loan investment secured by a luxury residential development located in Austin, Texas metropolitan area. The A-1 participation that was previously announced contributed an additional $10.8 million towards this funding. Accordingly, net of the A-1 participation, our combined investment in phase one, and phase two of this loan was $40 million at quarter end.

Speaker #3: Creating a strong and varied merchandising mix. Further, with regards to our commercial loan portfolio, we closed and funded the $31.8 million phase two of our first mortgage loan investment secured by a luxury residential development located in the Austin, Texas metropolitan area.

Speaker #3: The A1 participation that was previously announced contributed an additional $10.8 million towards this funding. Accordingly, net of the A1 participation, our combined investment in phase one and phase two of this loan was $40 million at quarter end.

Speaker #3: Reflecting this quarter's loan activity, including two loan repayments totaling $7.2 million in January, our commercial loan portfolio totaled $160.4 million, with a weighted average current yield, including PIC interest, of 13.5% at quarter end.

John Albright: Reflecting this quarter's loan activity, including two loan repayments totaling $7.2 million in January, our commercial loan portfolio totaled $160.4 million with a weighted average current yield, including PIK interest of 13.5% at quarter end. We have sought to originate loan investments that complement our property portfolio and increase the overall yield earned on our total assets. Notably, our loan portfolio has now grown to our targeted level of approximately 20% of our total undepreciated asset value. However, as noted previously, timing of funding and repayments of loan investments may cause the relative size of loan portfolio to vary quarter to quarter. Looking forward, we have a highly attractive pipeline of investment opportunities, including high-quality properties, net lease investment grade tenants, and attractive loan opportunities.

Speaker #3: We have sought to originate loan investments that complement our property portfolio and increase the overall yield earned on our total assets. Notably, our loan portfolio has now grown to our targeted level of approximately 20% of our total undepreciated asset value.

Speaker #3: However, as noted previously, timing of funding and repayments of loan investments may cause a relative size of loan portfolio to vary quarter to quarter.

Speaker #3: Looking forward, we have a highly attractive pipeline of investment opportunities including a high-quality properties net lease to investment-grade tenants and an attractive loan opportunities.

Speaker #3: Given this robust pipeline and our recently completed investment activity, we utilized both our common and preferred ATM programs this quarter, raising a combined $36.2 million of equity.

John Albright: Given this robust pipeline and our recently completed investment activity, we utilized both our common and preferred ATM programs this quarter, raising a combined $36.2 million of equity. Furthermore, we are raising our 2026 outlook for investment volume by $100 million and increasing guidance for FFO and AFFO per diluted share to new ranges that imply approximately 12% growth at the midpoints. With that, I'll turn the call over to Phil.

Speaker #3: Furthermore, we are raising our 2026 outlook for investment volume by $100 million and increasing guidance for FFO and AFFO per diluted share to new ranges that imply approximately 12% growth at the midpoints.

Speaker #3: And with that, I'll turn the call over to Phil.

Speaker #4: Thanks, John. Beginning with financial results. For the quarter, total revenue was $18.4 million, including lease income of $12.6 million, and interest income from commercial loan investments of $5.8 million.

Philip Mays: Thanks, John. Beginning with financial results. For the quarter, total revenue was $18.4 million, including lease income of $12.6 million, and interest income from commercial loan investments of $5.8 million. FFO and AFFO for the quarter were both $0.53 per diluted share, representing 20% growth over the prior year period. Earnings growth for the quarter was driven by investment activity, in particular, our commercial loan investments, as we grew the loan portfolio to approximately 20% of our total undepreciated asset value. Moving to the balance sheet. During Q1, we amended and restated our unsecured credit facility. Our new facility includes a $250 million revolver due February 2030 with two six-month extension options, a $100 million term loan maturing in 2029, and a $100 million term loan maturing in 2031.

Speaker #4: FFO and AFFO for the quarter were both 53 cents per diluted share, representing 20% growth over the prior year period. Earnings growth for the quarter was driven by investment activity, in particular, our commercial loan investments as we grew the loan portfolio to approximately 20% of our total undepreciated asset value.

Speaker #4: Moving to the balance sheet. During the first quarter, we amended and restated our unsecured credit facility. Our new facility includes a $250 million revolver due February 2030 with two six-month extension options, a $100 million term loan maturing in 2029, and a $100 million term loan maturing in 2031.

Speaker #4: At closing, we applied existing SOFR swaps locking in initial fixed interest rates for both term loans at approximately 3.5% and for $100 million of the outstanding balance under the revolving facility at approximately 4.8%.

Philip Mays: At closing, we applied existing SOFR swaps, locking in initial fixed interest rates for both term loans at approximately 3.5% and for $100 million of the outstanding balance under the revolving facility at approximately 4.8%. As the existing swap agreements mature, we have entered into four swap agreements, which will result in changes to the current interest rates. I refer you to our prior press release announcing the amended credit facility, which discusses the timing and impact of those changes. Notably, with the closing of this facility, we now have no debt maturing for almost three years. During the quarter, we were also active on both our common and preferred ATM programs. Under our common ATM, we issued approximately 1.7 million shares at a weighted average gross price of $19.31 per share for net proceeds of $31.6 million.

Speaker #4: As the existing swap agreements mature, we have entered into four swap agreements which result in changes to the current interest rates. I refer you to our prior press release announcing the amended credit facility which discusses the timing and impact of those changes.

Speaker #4: Notably, with the closing of this facility, we now have no debt maturing for almost three years. During the quarter, we were also active on both our common and preferred ATM programs.

Speaker #4: Under our common ATM, we issued approximately 1.7 million shares at a weighted average gross price of $19.31 per share, for net proceeds of $31.6 million.

Speaker #4: And under our preferred ATM, we issued approximately $186,000 shares at a weighted average gross price of $25.17 per share, for net proceeds of $4.6 million.

Philip Mays: Under our preferred ATM, we issued approximately 186,000 shares at a weighted average gross price of $25.17 per share for net proceeds of $4.6 million. Reflecting our investment activity and equity issuance, we ended the quarter with net debt to pro forma adjusted EBITDA of 6.6x and approximately $90 million of liquidity. John provided an update on our property portfolio. As previously noted, our property portfolio includes properties acquired through sale-leaseback transactions, and at quarter end, approximately 11% of our ABR or $5 million is generated from these properties, which include the Aspen property acquired this quarter and three previously acquired restaurants. Although these sale-leaseback properties constitute real estate for both tax and legal purposes, GAAP requires them to be accounted for as financings. Accordingly, current annual cash payments from these properties of approximately $3.7 million are reflected as interest income rather than lease income.

Speaker #4: Reflecting our investment activity and equity issuance, we ended the quarter with net debt to pro forma adjusted EBITDA of 6.6 times and approximately $90 million of liquidity.

Speaker #4: John provided an update on our property portfolio as previously noted, our property portfolio includes properties acquired through sales lease back transactions and at quarter end, approximately 11% of our ABR or $5 million is generated from these properties.

Speaker #4: Which includes the asset and property acquired this quarter and three previously acquired restaurants. Although these sale-leaseback properties constitute real estate for both tax and legal purposes, GAAP requires them to be accounted for as financings.

Speaker #4: Accordingly, current annual cash payments from these properties of approximately $3.7 million are reflected as interest income rather than lease income. Also, as a reminder, our quarterly earnings press release includes a supplemental table that provides details for both our commercial loan portfolio and related interest earnings.

Philip Mays: Also, as a reminder, our quarterly earnings press release includes a supplemental table that provides the details for both our commercial loan portfolio and related interest earnings. With respect to our common dividend, as previously announced in February, the board increased our quarterly common dividend by 5.3% from 28 and a half cents per share to 30 cents per share beginning this quarter. This new quarterly common dividend rate represents just a 57% AFFO payout ratio for the quarter. Now turning to guidance. For the full year 2026, we are increasing our FFO outlook to a new range of $2.09 to $2.13 per diluted share, and our AFFO outlook to a new range of $2.11 to $2.15 per diluted share. Further, as John discussed, we are increasing our investment activity by $100 million to a new range of $170 million to 200 million.

Speaker #4: With respect to our common dividend, as previously announced in February, the Board increased our quarterly common dividend by 5.3%, from $0.285 per share to $0.30 per share, beginning this quarter.

Speaker #4: This new quarterly common dividend rate represents just a 57% AFFO payout ratio for the quarter. Now, turning to guidance. For the full year 2026, we are increasing our FFO outlook to a new range of $2.09 to $2.13 per diluted share, and our AFFO outlook to a new range of $2.11 to $2.15 per diluted share.

Speaker #4: Further, as John discussed, we are increasing our investment activity by $100 million to a new range of $170 million to $200 million. With that operator, please open the call to questions.

Philip Mays: With that, operator, please open the call to questions.

Operator: Certainly. As a reminder, to ask a question, please press star one one on your touchtone telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Michael Goldsmith of UBS. Your line is open, Michael.

Speaker #5: Certainly. As a reminder, to ask a question, please press star 11 on your touch-tone telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker #5: Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Michael Goldsmith of UBS. Your line is open, Michael.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. First question, guys. You've talked about the strategy of high-quality net lease in combination with the commercial loans. Can you just talk a little bit about your acquisitions, your activity in the quarter, and then what's in the pipeline and how that fits with that overall strategy?

Speaker #6: Good morning. Thanks a lot for taking my question. First question, guys: you've talked about the strategy of high-quality net lease in combination with the commercial loan.

Speaker #6: So, can you just talk a little bit about your acquisitions—your activity in the quarter, and then what's in the pipeline, and how that fits with that overall strategy?

Speaker #7: Yeah. I mean, I think pretty straightforward. We have a fair amount of activity in the pipeline right now that we're really trying to bring in some additional investment-grade credits higher up in our credit profile.

John Albright: Yeah. I think it's pretty straightforward. We have a fair amount of activity in the pipeline right now that we're really trying to bring in some additional investment-grade credits higher up in our credit profile. We're finding some good opportunities. We're actually very optimistic on what we can do in this coming quarter. Then on the loan side, there are a couple loans still in the pipeline. As we have some lower-yielding loans burn off, pay off in the upcoming months, that will be a nice recycle into higher yielding and high-quality loans. It's kind of a little bit more of the same. Everything looks pretty good from our perspective right now.

Speaker #7: And we're finding some good opportunities. So we're actually very optimistic on what we can do in this coming quarter. And then on the loan side, there are a couple of loans still in the pipeline.

Speaker #7: And as we have some lower-yielding loans burned off, pay off, in the upcoming months, that will be a nice recycle into higher yielding and high-quality loans.

Speaker #7: So it's kind of a little bit more of the same, so everything looks pretty good from our perspective right now.

Speaker #6: Thanks for that. And to follow up on your last point, I presume you're referring to this July 2026 loan. And is that just like—is that only—I guess you have one more kind of near-term loan expiring off of 2026, in 2026.

Michael Goldsmith: Thanks for that. To follow up on your last point, I presume you're referring to this July 2026 loan. Is that only, I guess, you have one more kind of near-term loan expiring off in 2026. I guess as you commented in the call how that could add some volatility to the earnings, but you feel good about the opportunities to redeploy and limit some of that volatility in the near to intermediate term?

Speaker #6: I guess you commented in the call how that could add some volatility to kind of like to the earnings. But you feel good about the opportunities to redeploy and limit some of that volatility in the near to intermediate term?

Speaker #7: Yeah. We feel very confident on kind of as we've expanded the loan program and done multiple loans with these developers, they are getting very used to kind of our the way we do business and the bespoke way we can kind of tailor these loans with their development needs.

John Albright: Yeah. We feel very confident on kind of as we've expanded the loan program and done multiple loans with these developers, they are getting very used to the way we do business and the bespoke way we can kind of tailor these loans with their development needs. As these loans pay off, there's something else in the pipeline that they need to accommodate. The pipeline's very strong and very high quality, and the sponsors are high quality as well. Yeah, feeling good that these lower yielding loans that are going to be paying off, and some of them are going to be paying off, we think, early. We'll have good opportunities to reinvest.

Speaker #7: And so, as these loans pay off, there's something else in the pipeline that they need to accommodate. So the pipeline's very strong and very high quality.

Speaker #7: And the sponsors are high quality as well. So, yeah, feeling good that these lower-yielding loans that are going to be paying off—and some are going to be paying off, we think, early—will have good opportunities to reinvest.

Speaker #6: Thank you very much. Good luck in the second quarter.

Michael Goldsmith: Thank you very much. Good luck in Q2.

Speaker #7: Thanks. Appreciate it.

John Albright: Thanks. Appreciate it.

Speaker #5: Yeah. And our next question will be coming from the line of Jay Kornreich of VP. Your line is open.

Operator: Our next question will be coming from the line of Jay Cornwright, VP. Your line is open.

Speaker #8: Hey, good morning. At the end of your comments, you referenced the loan portfolio nearly at the cap of 20% of total assets. So, should we expect kind of a shift in strategy from here, where the bulk of investments are coming more so from more traditional net lease real estate instead of loans?

Jay Cornwright: Hey, good morning. At the end of your comments, you referenced the loan portfolio nearly at the cap of 20% of total assets. Should we expect kind of a shift in strategy from here, where the bulk of new investments are coming more so from more traditional net lease real estate instead of the loans? If so, I guess, how do you view your cost of capital and deal spreads you could achieve on those types of new investments?

Jay Kornreich: Hey, good morning. At the end of your comments, you referenced the loan portfolio nearly at the cap of 20% of total assets. Should we expect kind of a shift in strategy from here, where the bulk of new investments are coming more so from more traditional net lease real estate instead of the loans? If so, I guess, how do you view your cost of capital and deal spreads you could achieve on those types of new investments?

Speaker #8: And if so, I guess, how do you view your cost of capital and the deal spreads you could achieve on those types of new investments?

Speaker #7: Yeah, so we do have a larger amount in the pipeline of traditional net lease investments. And as far as some of the additional loans in the pipeline, as I mentioned, those will probably be fulfilling a need that we have with the lower-yielding loans paying off.

John Albright: Yeah. We do have a larger amount in the pipeline of traditional net lease investments. As far as some of the additional loans in the pipeline, as I mentioned, those will probably be fulfilling a need that we have with the lower yielding loans paying off. With regards to kind of our cost of capital, as you know, in our five plus years, we've always been kind of cost of capital, kind of constrained. We do move out some properties at lower cap rates and recycle, but the yields that we have in front of us on the net lease acquisition side work well with sort of our capital structure right now. Phil, do you want to chime in on that sort of end?

Speaker #7: And so with regards to kind of our cost of capital as you know in our five-plus years, we've always been kind of cost of capital kind of constrained.

Speaker #7: So we do move out some property at lower cap rates and recycle. But the yields that we have in front of us on the net lease acquisition side work well with sort of our capital structure right now.

Speaker #7: But Phil, do you want to chime in on that sort of end?

Speaker #9: Yeah. I think that's right. And then if you just think about it going forward, Jay, kind of we are near that 20% cap kind of an 80/20 blend, 80% properties, 20% loans.

Philip Mays: Yeah, I think that's right. If you just think about it going forward, Jay, kind of we are near that 20% cap, kind of an 80/20 blend, 80% properties, 20% loans. You look at the yields we've done in both of those buckets. I think our cost of capital works nicely with that.

Speaker #9: And you look at the yields we've done in both of those buckets, I think our cost of capital works nicely with that.

Speaker #8: Okay, appreciate that commentary. And then I guess just maybe on the disposition side—you guys have done a significant amount of work over the past 18 or so months, just with rightsizing ten exposures, shrinking exposure to Walgreens and Dollar Stores, while I guess also buying higher credit in Walmart.

Steven Greathouse: Okay. Appreciate that commentary. I guess just maybe on the disposition side, you guys have done a significant amount of work over the past 18 or so months just with right-sizing tenant exposures, shrinking exposure to Walgreens and dollar stores, while I guess also buying higher credit in Walmart. Are there any other specific exposures you're kind of focused on right-sizing at this point?

Jay Kornreich: Okay. Appreciate that commentary. I guess just maybe on the disposition side, you guys have done a significant amount of work over the past 18 or so months just with right-sizing tenant exposures, shrinking exposure to Walgreens and dollar stores, while I guess also buying higher credit in Walmart. Are there any other specific exposures you're kind of focused on right-sizing at this point?

Speaker #8: Are there any other specific exposures you're kind of focused on right-sizing at this point?

Speaker #7: No, not really. I mean, even though I think in the past we've gotten asked about at-home and so forth, the at-homes that we have are very high-performing.

John Albright: No, not really. Even though, I think in the past we've gotten asked about At Home and so forth, but the At Homes that we have are very high performing. We've had interest from other tenants that want to buy the At Home and bring in their concept, and At Home is not interested in moving. We're in a good spot where we've gotten a high yielding asset in a great location in Charlotte, and we're pretty confident they're going to be renewing because they're declining people that want to give them a check. Even though you may see some credits that don't fit, it's all about the quality of the real estate.

Speaker #7: And we've had interest from other tenants that want to buy the At Home and bring in their concept. And At Home is not interested in moving.

Speaker #7: So we've gotten a high-yielding asset in a great location in Charlotte, and we're in a good spot. We're pretty confident they're going to be renewing because they're declining people that want to give them a check.

Speaker #7: So even though you might may see some credits that don't fit, it's all about the quality of the real estate. And we're there's actually one that we're working on right now that you would say would be a very low-quality tenant, but we have an investment-grade tenant that wants to take over that space.

John Albright: There's actually one that we're working on right now that you would say would be a very low-quality tenant, but we have an investment-grade tenant that wants to take over that space, and it looks like we'll be able to negotiate a buyout. We're always looking to prune and upgrade. It's all about the locations that we kind of really specialize in trying to buy that we know that if these tenants leave, there's going to be a nice replacement opportunity.

Speaker #7: And it looks like we'll be able to negotiate a buyout. So we're always looking to prune and upgrade but it's, again, it's all about the locations that we kind of really specialize in trying to buy that we know that if these tenants leave, there's going to be a nice replacement opportunity.

Speaker #8: Okay. Appreciate that color. That's it for me.

Steven Greathouse: Okay. Appreciate that color. That's it for me.

Jay Kornreich: Okay. Appreciate that color. That's it for me.

Speaker #7: Great.

John Albright: Great.

Speaker #5: And our next question will come from the line of Matthew Erdner of Jones Trading. Your line is open.

Operator: Our next question will come from the line of Matthew Erdner of Jones Trading. Your line is open.

Speaker #10: Hey, good morning, guys. Thanks for taking the questions. Sticking with the loan portfolio for a little bit, do you guys have any loan-to-own options that you see yourselves capitalizing on, or is it just going to be kind of recycled back into new loans?

Matthew Erdner: Hey, good morning, guys. Thanks for taking the questions. Sticking with the one portfolio for a little bit, do you guys have any loan-to-own options that you see yourselves capitalizing on, or is it just going to be kind of recycled back into new ones?

Speaker #7: Yeah. The cap rates that they'll be able to sell these assets will not work with sort of our investment program. So most likely, none of these will turn into ownership positions.

John Albright: Yeah. The cap rates that they'll be able to sell these assets will not work with sort of our investment program. Most likely, none of these will turn into ownership positions. Certainly, as the developers build these tenants out and look to sell them, they give us a right or really just come to us and say, "Do you want to buy it? And we'll save a real estate commission." The cap rates are very strong for these assets, so unfortunately, they just really won't fit. Hopefully down the road, we'll find somewhere we can actually fit those into. If we have a 1031 need, that could be more where that opportunity comes in.

Speaker #7: But certainly, as the developers build these tenants out and look to sell them, they give us a right or really just come to us and say, "Do you want to buy it?" And we'll save a real estate commission.

Speaker #7: But the cap rates are very strong for these assets. So unfortunately, they just really won't fit. But hopefully, down the road, we'll find some where we can actually fit those into.

Speaker #7: And if we have a 1031 need, that could be more where that opportunity comes in.

Matthew Erdner: Got it. That's helpful. Looking out a little bit into 2027, 2028, it looks like 20% of the leases are rolling over. Could you just kind of walk through the process and if you've started discussions with some of those tenants and just how you envision those discussions going?

Speaker #10: Got it. That's helpful. And then looking out a little bit into 2027, 2028, it looks like 20% of the leases are rolling over. Could you just kind of walk through the process?

Speaker #10: And if you've started discussions with some of those tenants, just how do you envision those discussions going?

John Albright: Yeah. I think that everything that we have coming up, we've been in discussions with these tenants over time. If we had issues, we would probably be dealing with them early. Feel very strong that these are going to be renewal candidates. As you know, that's one of the opportunities where we like to buy with the shorter term leases with the high chance of renewal. A lot of these things are below market, and so that's why you're going to probably see a lot of natural renewals happen and usually get a bump on the leases as well.

Speaker #7: Yeah. I mean, I think that everything that we have coming up, we've been in discussions with these tenants over time. And if we had issues we would probably be dealing with them early.

Speaker #7: So, we feel very strongly that these are going to be renewal candidates. And, as you know, that's one of the opportunities where we like to buy with a shorter-term lease—with the high chance of renewal.

Speaker #7: And a lot of these things are below market. And so that's why we're you're going to probably see a lot of natural renewals happen and usually get a bump on the leases as well.

Matthew Erdner: Got it. That's great color. That's all for me. Congrats on the quarter.

Speaker #10: Got it. That's great color. That's all for me. Congrats on the quarter.

John Albright: Thanks. Appreciate it.

Speaker #7: Thanks. Appreciate it.

Operator: Our next question will come from the line of Gaurav Mehta of AGP, Alliance Global Partners. Your line is open.

Speaker #5: And our next question will come from the line of Garav Mehta. Of AGP, Alliance Global Partners, your line is open.

Gaurav Mehta: Yeah, thank you. Good morning. I wanted to ask you on your investment-grade exposure and the lease term. As you look to acquire more properties, should we expect that you would look to increase that exposure and increase the lease term further?

Speaker #11: Yeah. Thank you. Good morning. I wanted to ask you on your investment-grade exposure and the lease term. As you look to acquire more properties, should we expect that you would look to increase that exposure and increase the lease term further?

John Albright: Yeah. Look, that's always the goal. There's a little bit of a mix. There's some properties in the acquisition pipeline that are shorter duration. There's definitely an opportunity to go in there and do an extend blend. Again, as I just mentioned, a lot of the lease rates are so low that we don't really want to give up that bump because we want higher lease duration. What we have here in the pipeline is accretive to our lease duration as far as getting it longer term. That'll look pretty good for us. Again, we're not in a hurry to kind of just have a higher lease duration and give up economics to our shareholders.

Speaker #7: Yeah. Look, that's always the goal. And there's a little bit of a mix. There's some properties that we in the acquisition pipeline that are shorter duration.

Speaker #7: And so, there's definitely an opportunity to go in there and do an extend-blend. But again, as I just mentioned, a lot of the lease rates are so low that we don't really want to give up that bump, because we want higher lease duration.

Speaker #7: But what we have here in the pipeline is accretive to our lease duration as far as getting that longer term, and so that'll look pretty good for us.

Speaker #7: But again, we're not in a hurry to kind of just have a higher lease duration and give up economics or shareholders.

Gaurav Mehta: Thanks for that color. Second question on the investment guidance, just to clarify the $170 to $200 million, is that what you're deploying or is that on the loan side that includes what you're funding or it's just originations?

Speaker #11: Thanks for that color. Second question—on the investment guidance, just to clarify: the $170 to $200 million, is that what you're deploying, or is that on the loan side? Does that include what you're funding, or is it just originations?

Steven Greathouse: Yeah. Generally both funding and deploying, or if you want to look at the loans on an origination basis, both will fall in that range. I would say probably the funding is going to be just looking at the pipeline. It's a little hard to estimate the future loans and what funds are closing. Right now, I'd say the funding's probably $20 million less than the

Philip Mays: Yeah. Generally both funding and deploying, or if you want to look at the loans on an origination basis, both will fall in that range. I would say probably the funding is going to be just looking at the pipeline. It's a little hard to estimate the future loans and what funds are closing. Right now, I'd say the funding's probably $20 million less than the The deployment, including full origination values, but both will fall within that range.

Speaker #7: Yeah, so generally, both funding and deploying—or if you want to look at the loans on an origination basis—both will fall in that range.

Speaker #7: I would say probably the funding is going to be just looking at the pipeline. It's a little hard to estimate with future loans and what funds it closing.

Speaker #7: But right now, I'd say the funding's probably $20 million less than the deployment, including full origination values. But both will fall within that range.

Philip Mays: The deployment, including full origination values, but both will fall within that range.

Gaurav Mehta: All right. Thanks for taking my question.

Speaker #11: All right. Thanks for taking my question.

Operator: Our next question will be coming from the line of Wesley Golladay of Baird. Your line is open, Wesley.

Speaker #5: And our next question will be coming from the line of Wesley Gallaudet. Of Baird, your line is open, Wesley.

Wesley Golladay: Hey. Yeah. Good morning, everyone. I just want to go back to the question about the lease renewals. Do a lot of those tenants with the below-market leases, do they have options, or can you just mark those to market?

Speaker #12: Hey, yeah. Good morning, everyone. I just want to go back to the question about the lease renewals. Do a lot of those tenants for the below-market leases—do they have options?

Speaker #12: Can you just mark those to market?

John Albright: They have options. Unfortunately, it's going to be a set bump based on the renewal options.

Speaker #7: They have options. So unfortunately, it's going to be a set bump based on the renewal options.

Wesley Golladay: Okay. A quick one on the accounting side. There's a lot of restricted cash, around $24 million. Is that mainly tied to the more senior loans that you sold? Does that restricted cash get released throughout the year?

Speaker #12: Okay, then a quick one on the accounting side. There's a lot of restricted cash—around $24 million. Is that mainly tied to the, I guess, the more senior loans that you sold?

Speaker #12: And does that restrict your cash get year?

Philip Mays: Hey, Wes, it's Phil. Yeah, most of that restricted cash at the end of the quarter is related to loan reserves. We take pretty healthy reserves up front as part of our loan process in closing. A lot of that restricted cash is related to loan reserves.

Speaker #7: Hey, Wes, it's Phil. Yeah. Most of the restricted cash at the end of the quarter is related to loan reserves. We take pretty healthy reserves upfront as part of our loan process and closing.

Speaker #7: So, a lot of that restricted cash is related to loan reserves.

Wesley Golladay: Okay. Thank you very much.

Speaker #12: Okay. Thank you very much.

Operator: Next question will come from the line of RJ Milligan of Raymond James. Your line is open.

Speaker #5: Next question will come from the line of RJ Milligan of Raymond James. Your line is open.

RJ Milligan: Hey. Good morning, guys. Maybe to follow up on that loan reserves comment, Phil. Obviously, with net lease, we can go down the top tenant list and look for people that are on the watch list. We don't have a lot of visibility on the loan book. I'm just curious if there's anything that you guys have on the watch list in terms of the loan book. Obviously, the PIK is a pretty big component. Is there anything that gives you any concern about collecting that as those loans mature?

Speaker #13: Hey, good morning, guys. So maybe to follow up on that loan reserves comment, Phil, obviously, with net lease, we can go down the top tenant list and look for people that are on the watchlist.

Speaker #13: We don't have a lot of visibility on the loan book. I'm just curious if there's anything that you guys have on the watchlist in terms of the loan book?

Speaker #13: Obviously, the PIC is a pretty big component. Is there anything that gives you any concern about collecting that as those loans mature?

Philip Mays: Yeah. Let me be clear about the loan reserves. We'll take reserves related to real estate taxes or a certain period of interest up front. It's just part of our underwriting, and Steven or John can chime in and provide more details on that. We don't really have any credit concerns about any of the loans. None of those reserves are credit-related. It is just part of our underwriting, conservative underwriting, and making sure we get nice cash deposits up front, related to like a year of debt service or something like that.

Speaker #7: Yeah. So let me be clear about the loan reserves. So we'll take reserves related to real estate taxes or a certain period of interest upfront.

Speaker #7: And it's just part of our underwriting. And Stephen or John can chime in and provide more details on that. We don't really have any credit concerns about any of the loans.

Speaker #7: And none of those reserves are credit-related. It is just part of our conservative underwriting and making sure we get nice cash deposits upfront—related to a year of debt service or something like that.

John Albright: Yeah. RJ, we basically want to really have these loans structured pretty tightly. We force the reserve, so we don't have to worry about real estate taxes, interest, and so forth. Out of our loan book, there are no concerns right now. The PIK is really done to accommodate the timing of how long it takes to develop. You have less cash burn while you're developing. The book is very healthy right now.

Speaker #7: Yeah, so RJ, we basically want to really have these loans structured pretty tightly, so we force the reserves, so we don't have to worry about real estate taxes, interest, and so forth.

Speaker #7: And so, out of our loan book, there are no concerns right now. The PIC is really done to accommodate the timing of how long it takes to develop.

Speaker #7: So you have less cash burn while you're developing. So but the book is very healthy right now.

RJ Milligan: Great. That's helpful. Phil, maybe just on the capital-raising side. You guys did a little preferred and some equity this year. How do you think about the more attractive capital sources going forward as we move through the year?

Speaker #13: Great. That's helpful. And then Phil, maybe just on the capital raising side, you guys did a little preferred and some equity this year. How do you think about the more attractive capital sources going forward as we move through the year?

Philip Mays: Yeah, we ended the quarter with about $90 million of liquidity. At this point, we're generating probably close to $15 million of cash flow on an annual run rate, so that's obviously a great use for us on the free cash flow. John spoke earlier about dispositions at a lower cap rate, so that would be another use. After that, RJ, we could look to be opportunistic on common or preferred, if it's trading at a good level.

Speaker #7: Yeah. I mean, just as far so we ended the quarter with about 90 million of liquidity. At this point, we're generating probably close to 15 million of cash flow on an annual run rate.

Speaker #7: So that's obviously a great use for us on the free cash flow. Then John spoke earlier about dispositions at a lower cap rate, so that would be another use.

Speaker #7: And then after that, RJ, we could look to be opportunistic on common or preferred if it's trading at a good level.

RJ Milligan: Okay. That's helpful. Thanks, guys.

Speaker #13: Okay. That's helpful. Thanks, guys.

John Albright: Thank you.

Speaker #7: Thank you.

Operator: Our next question comes from the line of John Massocca of B. Riley Securities. Your line is open.

Speaker #5: And our next question comes from the line of John Masaka of B. Riley Securities. Your line is open.

John Massocca: Hello. I know we've talked a lot about the loan book over the call, but maybe kind of going to the one new loan originated in Q1. There's a step-down in there if they meet certain conditions. What are maybe some color around the conditions that they would need to hit to get down to that 11.5%?

Speaker #14: I know we've talked a lot about the loan book over the call, but maybe kind of going to the one new loan originated in one queue.

Speaker #14: There's a step down in there if they meet certain conditions. What are kind of maybe some color around the conditions that they would need to hit to get down to that 11 and a half percent?

John Albright: Yeah. Basically, they've been negotiating leases and waiting for tenants to go through their signing process. If some of the leases hadn't been signed by the time we closed it, so we said the rate needs to be higher until you kind of get those finalized. It should be relatively short duration, unfortunately. That's what that's about.

Speaker #7: Yeah. So basically, they've been negotiating leases and waiting for tenants to go through their signing process. And so if some of the leases hadn't been signed by the time we closed it, so he said, "The rate needs to be higher until you kind of get those finalized." So it should be relatively short duration, unfortunately.

Speaker #7: But that's what that's about.

John Massocca: Okay. I know the Austin loan was kind of contingent on them selling some of the homes in that piece of property. How is that progressing? I guess how does that impact maybe interest income from that particularly large loan investment you've made?

Speaker #14: Okay. And then I know the Austin loan was kind of contingent on them kind of selling some of the homes in that piece of property.

Speaker #14: So, I mean, how is that progressing? I guess, how does that impact, maybe, interest income from that particularly large loan investment you've made?

John Albright: Yeah. I'll answer kind of the cadence on the lot sale. They're selling lots. As you know, as the lots are sold, it goes to our A-1 participant first. Given that it's obviously late spring, the activity is stronger. The asset has a large amenity that won't be open until the fall. We expect that in the fall is really where the lot sales are going to pick up as people kind of are going to get a lot more excited about it when it's closer to having the large amenity open.

Speaker #7: Yeah, so I'll answer kind of the cadence on the lot sales. So they're selling lots. As you know, as the lots are sold, it goes to our A1 participant first.

Speaker #7: And given that it's obviously late spring, the activity is stronger, but the asset has a large amenity that won't be open until the fall.

Speaker #7: So we expect that in the fall is really where the lot sales are going to pick up as people kind of are going to get a lot more excited about it when it's closer to having the large amenity open.

John Massocca: Okay. I guess maybe the anticipation there is that your portion of the loan won't start getting paid down until towards the end of the year.

Speaker #14: Okay. I mean, I guess maybe the anticipation there is that your portion of the loan won't start getting paid down until towards the end of the year?

John Albright: Correct.

Speaker #7: Correct. Correct.

John Massocca: Last one, Phil, maybe on guidance. In terms of G&A assumptions in the guidance, are you assuming any incentive fee payout to CTO at this point?

Speaker #14: And then, last one, Phil, maybe on guidance. In terms of G&A assumptions in the guidance, are you assuming any incentive fee payout to CTO at this point?

John Massocca: I know it's kind of early in the year, but just thoughts around how that could maybe impact your guidance outlook?

Speaker #14: I know it's kind of early in the year, but just kind of thoughts around how that could maybe impact your guidance outlook.

Philip Mays: Yeah. The guidance doesn't assume any incentive fee. What is in there, right, is a little bit higher of a management fee run rate given the equity that we issued. For the quarter, the management fee was about $1.25 million, just based on the equity that was issued during the quarter. The go-forward run rate's about $100,000 higher a quarter, so $1.35 million, assuming no additional equity. Other than adjusting the management fee for our expectations, there's no incentive fee in the guidance.

Speaker #7: Yeah. So the guidance doesn't assume any incentive fee. What is in there, right, is a little bit higher of a management fee run rate given the equity that we issued.

Speaker #7: So for the quarter, the management fee was about a million 250 just based on the equity that was issued during the quarter. The go-forward run rate's about 100 grand higher a quarter, so a million 350 assuming no additional equity.

Speaker #7: But other than adjusting the management fee for our expectations, there's no incentive fee in the guidance.

John Massocca: Okay. I appreciate that. That's it for me. Thank you.

Speaker #14: Okay. I appreciate that. That's it for me. Thank you.

Philip Mays: Great. Thanks.

Speaker #5: And.

Speaker #7: All right. Thanks.

Operator: Our next question will come from the line of Craig Kucera of Lucid Capital Markets. Your line is open, Craig.

Speaker #5: Our next question will come from the line of Craig Casera of Lucid Capital Markets. Your line is open, Craig.

Craig Kucera: Hey, good morning, guys. We've been hearing from some of your competitors that there are an increasing number of portfolios coming to the market, basically from family offices that got into the space in 2021 and issued five-year debt at rock bottom rates. Maybe they don't want to refinance. Are you seeing any small portfolios that might be attractive as acquisition candidates?

Speaker #15: Hey, good morning, guys. We've been hearing from some of your competitors that they're in increasing number of portfolios coming to the market basically from family offices that got into the space in 2021 and issued five-year debt at rock bottom rates.

Speaker #15: Maybe they don't want to refinance. Are you seeing any small portfolios that might be attractive as acquisition candidates?

John Albright: We're seeing a little bit of owners of assets that are coming up on a duration, or they want to lower their exposure in a larger portfolio. We're not seeing bigger portfolio sort of opportunities. The ones that we're looking at are really nice size for us, and luckily, being a small-cap company is that these assets can really move the needle, versus the very large companies that really need to do those portfolio acquisitions. We'll let the large tankers take on those, and as we just add these one and twos, they all add up very nicely for us. We're not really chasing any sort of portfolio opportunities.

Speaker #7: We're seeing a little bit of owners of assets that are coming up on a duration or they want to lower their exposure in a larger portfolio.

Speaker #7: But we're not seeing bigger, portfolio sort of opportunities. The ones that we're looking at are really nice size for us, and luckily, being a small-cap company, these assets can really move the needle versus the very large companies that really need to do those portfolio acquisitions.

Speaker #7: So, we'll let the large tankers take on those, and as we just add these one and twos, they all add up very nicely for us.

Speaker #7: But we're not really chasing any sort of portfolio opportunities.

Craig Kucera: Okay, got it. Just one more for me. I think you were buying at about a 7.4 cash cap rate last year. This quarter you closed at 8.5. Just curious to hear your overall viewpoint on the acquisition environment. Has there been any move in pricing, or should we expect something closer to, call it, 7.5% this year?

Speaker #15: Okay. Got it. Just one more for me. I think you were buying in about a seven-four cash cap rate last year. This quarter, you closed at eight and a half.

Speaker #15: Just curious to hear your overall viewpoint on the acquisition environment. Has there been any move in pricing or should we expect something closer to, call it, 7.5% this year?

John Albright: Yeah, you're going to be closer to 7.5% this coming quarter at least. Maybe might see some opportunities in a quarter or two that are higher.

Speaker #7: Yeah, you're going to be closer to 7.5% this coming quarter at least, and maybe might see some opportunities in a quarter or two that are higher.

Craig Kucera: Okay. All right, thanks. That's it for me.

Speaker #15: Okay. All right. Thanks. That's it for me.

John Albright: Great. Thank you.

Speaker #7: Great. Thank you.

Operator: I'm showing no further questions. This concludes today's program. Thank you for participating. You may now disconnect.

Q1 2026 Alpine Income Property Trust Inc Earnings Call

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