Alpine Income Property Trust, Inc. Q3 FY2025 earnings call

• Investment Activity: Acquired 2 Lowe's properties during the quarter at $21.1 million with a 6% cap rate and 11.6-year WALT. Sold 3 assets for $6.2 million. Post-quarter end, acquired a four-property portfolio for $3.8 million and went nonrefundable on a Walgreens sales contract for $5.5 million.
• Loan Investments: Continued to originate high-yielding loans, with the loan portfolio now ~$94 million at a weighted average interest rate of 11.5%. $21 million of loans mature in 2026.
• Financial Results: Q3 AFFO per share grew 4.5% y-o-y. YTD FFO and AFFO were $1.34 per share. Declared a quarterly cash dividend of $0.285, with an annualized yield of ~8.25% and AFFO payout ratio of 62% for Q3.
• Balance Sheet: Ended the quarter with net debt to pro forma adjusted EBITDA at 7.7x and $61 million of liquidity. Property portfolio had annualized base rent of $46.3 million.

Property Portfolio: As of quarter end, the portfolio consisted of 128 properties totaling 4.1 million square feet across 34 states with approximately 99.4% occupied. Year-to-date, property acquisition volume totaled $60.8 million at a weighted average initial cap rate of 7.7% and a WALT of 13.6 years. Disposition volumes through September 30 was $34.3 million, with $29 million (excluding vacant properties) sold at a weighted average exit cap rate of 8.4%. Loan Investments: During the quarter, originated 2 loans and 1 upsized loan totaling $28.6 million at a weighted average initial yield of 10.6%. Year-to-date, originated $74.8 million of commitments for loan investments at a weighted average initial cash yield of 9.9%. Post-quarter end, acquired a four-property portfolio for $3.8 million with a weighted average initial cap rate of 8.4% and had loan activity including a $29.5 million commitment for a luxury residential development loan.

• Increased FFO and AFFO outlook for 2025 to a range of $1.82 to $1.85 per diluted share from the previous range of $1.74 to $1.77 per diluted share due to recent elevated investment activity.

• Loan maturities and potential lumpiness in earnings as loans come due.
• Exposure to tenants like At Home and Walgreens, with potential credit rating drops affecting portfolio value.
• Market and interest rate risks impacting loan and property valuations.

Q: Michael Goldsmith asked about funding investment activity.

A: John Albright responded that it comes from asset sales, loan maturities, and net growth in anticipation of additional sales.

Q: R.J. Milligan asked about property types outside retail.

A: John Albright said they'll stay focused on retail but may take unique opportunities with strong sponsors.

Q: Alec Feygin asked about the Austin luxury residential loan.

A: John Albright discussed the stage of development and Phil Mays talked about vacant property expenses.

Q: Gaurav Mehta asked about At Home properties.

A: John Albright said one property could be sold soon and they're monitoring At Home with replacement tenants in mind.

Q: John Massocca asked about loan activity.

A: John Albright and Philip Mays discussed reasons for higher loan rates on certain loans related to short duration and flexibility.

Q: Craig Kucera asked about Austin loan LTV and selling tranches.

A: John Albright mentioned LTV in the 70s on a discount NPV basis and that holding the junior piece would have a higher yield.

Q: Barry Oxford asked about the dividend.

A: John Albright said dividend increases will be minimal to retain capital for asset allocation.

Q: Barry Oxford asked about credit rated tenants.

A: Philip Mays explained the decrease in credit rated tenants related to Walgreens and At Home.