Good day, and thank you for standing by. Welcome to the Alpine Income Property Trust, Inc. Q4 Year End 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. 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 speaker today, CFO, Philip Mays. Please proceed.

Thank you. 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. 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-Ks, 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.alpinereit.com. With that, I will turn the call over to John.

Thanks, Phil. The fourth quarter was a strong finish to an excellent 2024 for Alpine Income Property Trust, Inc., as we executed successfully on all areas of the business plan. Starting with earnings, we achieved AFFO of $0.74 per diluted share for the year, representing growth of 17%. 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 $0.285, effective the first quarter of 2025. This new annualized dividend of $1.14 continues Alpine Income Property Trust, Inc.'s 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. Driving our earnings growth is a successful quarter and a year of investment activity. During the fourth quarter, we acquired six properties for $50.5 million at a weighted average cash cap rate of 7.6%. This brings our full-year acquisition activity to twelve at a weighted average cash cap rate of 8.2%. Our 2024 acquisitions included investment-grade rated Best Buy, Dick's Sporting Goods, and Lowe's, along with three beachfront restaurants, increasing our Walt to 8.7 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 of 10.7%. Taking loan originations and property acquisitions together, we successfully completed $134.7 million total investments during 2024 at an average yield of 8.7%. Additionally, during the year, we successfully pruned our portfolio by selling $62 million of property at an average cap rate of 6.9%. These dispositions reflected a strategic effort to improve the diversity and reduce risk and included three Walgreens, moving Walgreens from our largest in terms of ABR to our fourth largest tenant. Notably, triple B rated DICK'S Sporting Goods and triple B plus rated Lowe's are now our two largest tenants, each representing 10% of ABR. Additionally, we were able to reinvest net proceeds from these dispositions into new acquisitions at a positive yield spread. As we look to 2025, we continue our investment strategy, employing a barbell approach concerning property acquisitions. On one side, we will invest in investment-grade rated tenants to provide consistent and stable cash flows, while on the other side, we will seek higher-yielding opportunities to provide growth and diversification. Additionally, we will continue to augment and complement our property investments by selectively originating commercial loans. Phil will discuss 2025 earnings guidance, but I do want to make note of a couple related items. First, as you are aware, Party City filed for bankruptcy. Alpine Income Property Trust, Inc. does have one Party City lease in its portfolio. This lease is for a property located in Oceanside, 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 2024, Cinemark did not renew its lease for our theater in Reno. We are anticipating that this and had this property under contract to be sold. However, the buyer had an unanticipated event that prevented closing. Accordingly, we're now focused on selling this asset and redeploying the capital. These two matters will be short-term earnings headwinds until leased or sold and the proceeds redeployed. As we look ahead, we see an active and attractive pipeline of opportunities across the tenant landscape and remain focused on executing our strategy to deliver for clients and investors. With that, I'll turn the call over to Phil.

Thank you, John. Beginning with financial results, total revenue was $13.8 million for the quarter, including lease income of $11.5 million and interest income from commercial loans of $2.2 million. FFO and AFFO for the quarter were both $0.44 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. FFO for the year was $1.73 per diluted share, representing 18% growth over the prior year, and AFFO was $1.74 per diluted share, representing 17% growth over the prior year. Driving this earnings growth for the quarter and the year was the investment activity John discussed, along with prudent and disciplined capital management. During the fourth quarter, we issued approximately 436,000 common shares under our ATM program at a weighted average price of $17.98 per share, generating $7.7 million in net proceeds. 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 $18.04, generating $18.8 million in net proceeds. Notably, and of equal importance, during 2023 and into the first quarter of 2024, the company opportunistically repurchased 0.9 million common shares for $15.4 million at an average price of $16.26, which is $1.78 below our weighted average issuance price in 2024. Our 2024 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 7.4 times compared to 7.7 times at the beginning of the year. As a reminder, we have no debt maturing until 2026, after which our debt maturities are well staggered. We have utilized several rate swaps to fix the interest rate over 80% of our debt, resulting in a weighted average interest rate of 4.1% at year-end. Further, we had $95 million of liquidity consisting of approximately $5 million of available cash and $90 million available under our revolving credit facility. Additionally, 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. During the fourth quarter, we paid a quarterly cash dividend of $0.28 per common share to our stockholders of record on December 12, 2024. This represents a healthy AFFO payout ratio of 64%. As discussed earlier, our Board of Directors recently approved increasing our quarterly dividend to $0.285, effective in the first quarter of 2025. After this increase, our dividend remains well covered and supported by free cash flow. Finally, turning to guidance for 2025. Initial earnings guidance for the full year of 2025 is a range per diluted share of $1.70 to $1.73 for both FFO and AFFO. Key assumptions reflected in our initial guidance include investment volume of $50 million to $80 million, dispositions of $20 million to $30 million, and weighted average shares outstanding of 16 million to 16.5 million. With regards to the Party City bankruptcy and the vacant theater in Reno, our guidance at this time assumes they will impact 2025 FFO and AFFO per share by approximately $0.08. However, if there is an assumption of the Party City lease, and we 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 the 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 one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question is going to come from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.

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 this tenant type, and in general, what is the comfortable level of exposure for you there?

Yeah. Thanks. Yeah. We have another one kind of in the pipeline negotiations, but we're really kind of trying to time it with acquisitions. These properties are, you know, even though it's a challenge sort of credit and story, there is a market for these, so we're trying to pair them up with acquisitions. But probably another one, you know, coming out possibly in the quarter.

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 more constructive on one lever versus the other in 2025?

Yeah. So as I've talked before in the past, we really like some of the loan opportunities we see because you're really getting an enhanced credit, you know, for instance, you know, the public anchored sort of out parcel developments with a, you know, buffer of equity beneath you as a developer, has 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 owning them. So we really like the opportunity as the capital markets are still constrained for developers. And I would say that we are seeing a very active pipeline on both the loan side, as well as the acquisitions, the acquisitions, the more of the core acquisition side. So we're seeing robust sort of opportunities on both sides. So I could see it's gonna be fifty-fifty on that sort of investment program.

Got it. Thanks so much.

Thank you.

Thank you. One moment as we move on to our next question. Our next question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open. Please go ahead.

Yeah. Thank you. Good morning. I wanted to follow up on the commercial loan opportunity. You have four commercial loans maturing in 2025, and I wanted to ask you what you expect.

Yes. So we do have four maturing. I think one will actually probably pay off, three will probably extend. And we don't think there'll be any problem, as John talked about, with our robust pipeline of loans here replacing the one that will likely pay off. And they'll likely pay off midyear, and we're pretty confident we'll replace that. So don't expect the balance to come down. Expect it to kind of stay where it's at and maybe grow towards the latter part of the year.

Okay. And then second question on the acquisition disposition guidance. Can you provide some color on the expected timing on when you guys are planning to sell and acquire properties in the year?

On equity. So I think, you know, the pipeline is probably the strongest we've seen this time of year in the five years we've been doing this. And so we're pretty optimistic. But as you know, you know, the deals could fall through. But I would expect sort of, you know, more of the activity to happen at the end of the first quarter.

Okay. Thank you.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Your line is open. Please go ahead.

Good morning, guys. John, are the beachside group assets back to their full capacity after the storm damage? And is their revenue back to where you guys underwrote it at the initial deal?

Yeah. So we were actually out there last week, and they are all open and performing. And some are performing better than pre-hurricane. With new equipment, more efficient kitchens as they had the opportunity to reconfigure where they wanted to. You know, I would say that the Sandbar isn't at max capacity yet as they're, you know, it's really a lot they do a lot of weddings and so forth, but we're just now getting into season. But everything's trending to either the same or better than pre-hurricane, unfortunately. For the market, you know, some of the competition has not come back online, so they are kind of the only game in town. So anyway, it looks they're pretty excited kind of about their positioning.

Alright. And they had insurance business interruption insurance to be able to pay you for anything that was missing at this point, right?

Correct.

Okay. And then you and Phil talked about the Party City and the Cinemark. Beyond those two assets, is there any other locations that you expect to be vacant at some point in 2025 or early 2026?

At this point? No. And we're being proactive on things that, you know, kind of the watch list sort of tenants, for instance, at home, we're very how you know, selling a couple of those. So you know, the theater deal, obviously, last fall, we had it under contract, and, unfortunately, there's a health issue with the buyer. So that really kind of messed up our plans, that that should have been sold last year. And so we had to restart with that. So we do have active offers on both the Party City and the theater. We're trying to be, you know, trying to get the best price possible, but we certainly will see the benefits if we decide to sell it earlier and have that capital put into production by either, you know, paying down the debt or making an acquisition or investment. And so we clearly see the benefits of monetizing those sooner rather than later, and so we may do that.

Okay. And then you mentioned at 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 you'll look to match any dispositions there to acquisitions as well?

Yeah. I mean, we'll go ahead and we won't sort of because they are a little bit lumpier, we won't match it up with acquisitions. We'll the buyer ready to buy it, then we'll move through the process with them. And the reason there's, you know, more activity on them than you may think because of the size, as you mentioned, is that remember, you know, these are on large parcels with a lot of parking and a large configuration. At a very low basis and you just can't find that anymore. I mean, you know, redevelopment of any of this sort of product is, you know, so these are unique opportunities for investors, developers, tenants, and people understand that.

Okay. And then I guess one last question for Phil. You know, you gave guidance in terms of the numbers and the investments and dispositions. But in terms of the income statement, anything in 2025 looking to be either abnormally high line items, abnormally high or low, excluding revenue and interest expense depending on what you guys do from a buy and sell and financing standpoint. Anything in G&A or anything that's gonna wind up being otherwise lumpy or extraordinary that you're anticipating in 2025?

No. I imagine most things will be a pretty even run rate. Quarterly, you know, over the year. Not nothing lumpy in G&A as I noted. Yeah. Our management fee, given the fact to all the equity went out the door in the fourth quarter, is now four and a half on an annual basis. That assumes we don't issue any more equity, but that's the current run rate. But I think most things will be, you know, generally an even run rate over the year. And just, you know, absent, you know, the timing of acquisitions and dispositions, but no unusual one-time fees or kind of lumpy things that you need to worry about.

Okay. Thanks, guys. Have a great weekend.

Thanks. You too.

Thank you. And one moment for our next question. Our next question is going to come from the line of Matthew Erdner with Jones Trading. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. I'd like to talk about rates a little bit, you know, and kind of where pricing is there right now given, you know, the higher for longer outlook. You know, it seems like pricing has held pretty steady, you know, over the past couple of quarters. But, you know, when you strip out the loans, know, what is your going in cap rate, you know, on these acquisitions for kind of the past couple of quarters?

So it's basically averaging out close to the 8% cap rate range. You know, as you saw, that's in the last in the fourth quarter. We did dive down for quality where we, you know, picked up a Lowe's to really show the market that, you know, we're the only net lease REIT with a DICK'S or Lowe's in the top five. Maybe even the top ten credit. So trying to show the market that if you want sort of a 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, you know, diving down and picking up a quality Lowe's, with a long duration, you know, we're kind of trending to the 8 cap range.

Gotcha. That's helpful. And then, you know, because you guys didn't provide any guidance. So should we expect kind of the same plan in 2025, you know, strong credit and then the loans obviously, to boost the yield there.

Yeah. Absolutely. I think I think you hopefully, some of these deals happen, and I think you'll be impressed with the quality. And the yield.

Awesome. Great. Thank you, guys.

Thank you.

Thank you. And one moment for our next question. Our next question comes from the line of Alex Segan with Baird. Your line is open. Please go ahead.

Hi. Good morning, and thank you for taking my question. So you've already mentioned with the Party City and the Cinemark that you have offers potentially. Are you planning on selling them or releasing them and did you potentially talk about the impact on valuation?

Yeah. So we have leasing opportunity as well, and certainly, the best execution would be to lease and then sale. But that would take, you know, the whole year really to have that execution. And realizing how, you know, finicky the investor market is as far as stock investors, I feel like having the money and redeploying earlier is probably gonna be more prudent and pay off for our shareholders. And so that's kind of so we do have optionality on both whether we lease and hold or sell, but we're tending to gravitate towards the monetization.

And with the buyer that pulls out because of health issues, was there any sort of termination income or one-time income that we should expect from that?

Oh, we got a little bit, but we really we could have taken more, but we obviously felt bad about the circumstances and released some escrow back that we didn't need to. But given the extreme nature of the health issue, we did that.

Alright. Thank you.

Thank you. And one moment as we move on to our next question. Our next question comes from the line of John Massocca with B. Riley Securities. Your line is open. Please go ahead.

Good morning. Maybe digging in a little bit more on the acquisition guidance. I mean, how much of that is stuff you kind of visibly see in the pipeline today or is under kind of LOI and how much is theoretical? And I'm just kind of asking that in the context of, you know, $80 million at the top end of the range is, you know, 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.

Yeah. No. It's a good point. So because these investments are fairly long, we are negotiating with, you know, a fair amount of the pipeline. But you just never know what's gonna happen. And then on the theoretical is 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. And so I would say it's what we have that we're negotiating where terms have been agreed upon is a fair amount of the guidance.

That's helpful. And then in terms of yields on those investments, I mean, is it gonna be comparative to last year? I mean, has the cap rate market moved at all given some of the volatility in interest rates or macro uncertainty?

I would say that the yields on the, you know, structured finance investments have maybe come down slightly. And then the yields on the acquisitions have either been steady from what you've seen in the past or maybe even come up a little bit as far as higher yield.

Okay. And then, you know, on guidance again, any credit loss kind of baked into that number beyond, you know, the two vacancies you called out specifically?

Yeah. I mean, we always keep, you know, a small general reserve in the forecast. But, you know, we don't see anything large that's looming right now.

Okay. And then last kind of detailed one for you, Phil. You know, real estate expense kicked up a little bit quarter over quarter. Was that just for reflecting the situation in Reno or was there something else going on there?

Yep. The Reno lease expired in November, and it kind of kicked up primarily due to that.

Okay. That's it for me. Thank you very much.

Thank you. And one moment for our next question. Our next question is gonna come from the line of Craig Kucera with Lucid Capital Markets. Your line is open. Please go ahead.

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?

So yeah. So it's about $100 million outstanding on the revolver. You know, as you mentioned, half is swapped and $50 million is not swapped. We might consider, you know, if the balance starts to get up a little higher, you know, just to kind of depends how the timing of acquisitions and dispositions lay out. You know, we won't always have some flexibility there, Craig, to be able to pay down the line. Right? And when it's swapped, then you're just sitting on the cash earning nothing. So you know, 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's a dip in rates, we might consider doing it a little earlier.

Got it. 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 acquisitions and dispositions, is that still anticipated this year, or does the fact that some of the assets you're looking to sell, you know, might need to be leased up to kind of maximize the value?

Yeah. I mean, there's definitely gonna be some assets, like, Walgreens and maybe at homes that will be at yields that are the same or higher than what we're acquiring. So you won't see that accretive recycling. But, you know, with regards to Party City and the theater. I mean, those are, you know, fairly chunky amount of money for our small company that's obviously earning negative that once we get that redeployed, we'll be, you know, very accretive.

Okay. Great. Thanks.

Thank you.

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.