Good day, and welcome to the Alpine Income Property Trust, Inc. First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would now like to turn the call over to Jenna McKinney, Director of Finance. Please go ahead.

Thank you. I would like to remind everyone that many of the 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-K, Form 10-Q, and other SEC filings. You can find our SEC report, 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. With that, I will turn the call over to John.

Thanks, Jenna. The first quarter was an excellent start to the year for Alpine Income Property Trust, Inc. across all areas of our business. Starting with earnings, we achieved AFFO of $0.44 per diluted share for the quarter, representing growth of approximately 5% compared to the first quarter of last year. As previously announced, this growth in earnings and free cash flow provides support for us to raise our common dividend to a new quarterly rate of $0.285 paid in the first quarter, continuing Alpine Income Property Trust, Inc.'s practice of increasing its annual dividend every year since its IPO. Further, Alpine Income Property Trust, Inc.'s dividend yield continues to be one of the highest in the sector. Driving our earnings growth was another successful quarter of investment activity. During the quarter, we acquired three properties for $39.7 million at a weighted average initial cap rate of 8.6%. We also originated two mortgages plus upsized existing ones for a combined total of $39.5 million with a weighted average initial yield of 9.5%. The company's total investment activity for the quarter, including both property acquisitions and structured finance investments, totaled $79.2 million at a weighted average initial yield of 9%. Our property acquisitions include Alamo Drafthouse Theater co-signed by its owner, Sony Pictures, with an investment-grade credit and Academy Sports and the headquarters and manufacturing facility for Germfree Labs. Our structured financings in the quarter included $6.2 million of seller financing for a property leased to At Home that was sold in the quarter, a new $15.5 million construction loan, and upsizing two existing construction loans, one for Wawa and the other for a public anchored center. During the quarter, we sold three properties for $11.7 million, including an O'Reilly's, a multi-tenant property including an At Home and a former Valero convenience store at a blended cap rate of 9.1%. Our transaction activity in the first quarter reflects our strategic approach to investing focused on buying a mix of high-credit tenants that provide consistent stable cash flows and lesser credits that offer growth and diversification. Continuing to augment and complement our property investments by selectively originating structured investments. Opportunistically selling properties that reduce portfolio risk and improve our industry and tenant concentrations and extending our WALT. Notably, this quarter's acquisitions had an average WALT of 14.3 years while the properties that we've sold had a WALT of 4.7 years. With this activity, our portfolio WALT is now nine years compared to 6.9 years just twelve months ago. Additionally, as Alpine Income Property Trust, Inc.'s common shares have been trading at a relative valuation, we have been opportunistically repurchasing shares as Phil will discuss. Finally, I want to provide some context relating to the recent tariff volatility and uncertainty. While there is little visibility into what the ultimate outcome of this extraordinary activity will be, I believe Alpine Income Property Trust, Inc. is well-positioned given its tenant mix and sector diversification. We will continue to monitor the situation as it evolves. But as for now, we see an attractive pipeline of opportunities across the tenant landscape and remain focused on executing our strategy to deliver growth and stability for Alpine Income Property Trust, Inc.'s investors. With that, I'll turn the call over to Phil.

Thanks, John. Beginning with financial results, total revenue was $14.2 million for the quarter, including lease income of $11.8 million and interest income from commercial loans of $2.3 million. FFO and AFFO for the quarter were both $0.44 per diluted share, representing growth of 7.3% and 4.8%, respectively, compared to the comparable quarter of the prior year. Driving earnings growth for the quarter was investment activity along with prudent and disciplined capital management. During the first quarter, we opportunistically repurchased approximately 274,000 common shares for $4.5 million at an average price of $16.33 per share. Further, since quarter-end, we have continued to repurchase shares as noted in our press release and Form 10-Q filed last evening. Additionally, in April, when interest rates temporarily dropped in connection with initial tariff announcements, we opportunistically executed a SOFR swap fixing SOFR for $50 million of principal at 3.43% through January 1, 2027. The swap is being applied to $50 million of borrowings, currently outstanding on our revolving credit facility, reducing the interest rate thereon from approximately 6% at quarter-end to approximately 5% based on our current leverage and applicable pricing tier. We ended the quarter with net debt to pro forma adjusted EBITDA of 7.9x. However, it is notable that we have no debt maturing until 2026 and thereafter, our debt maturities are well staggered. Additionally, at quarter-end, we had $65 million of liquidity consisting of approximately $8 million of cash available for use and $57 million available under our revolving credit facility. Further, with current in-place bank commitments, the availability under our revolving credit facility can expand by an additional $36 million as we acquire properties, providing total potential liquidity of approximately $100 million. John noted that during the first quarter, we increased our common dividend and paid a quarterly cash dividend of $0.285. Even with this increase, our dividend remains well covered, supported by free cash flow, with an approximate AFFO payout ratio of 65%. Finally, turning to guidance, we are increasing both our FFO and AFFO guidance for the full year of 2025 to a range of $1.74 to $1.77 per diluted share compared to our prior range of $1.70 to $1.73 per diluted share. Once again, our increase was driven by our successful investment activity to start the year and now assumes investment volume of $70 million to $100 million and dispositions of $50 million to $70 million. Specifically, with regards to dispositions, in April, we sold one Walgreens and expect to close the sale of another in May. This would reduce our Walgreens to eight properties and continue decreasing our ABR derived from Walgreens leases. With that, operator, please open the line for questions.

Thank you. If your question has been answered and you'd like to remove yourself from the queue, please press 11 again. Our first question comes from Michael Goldsmith with UBS. Your line is open.

Good morning. Thanks a lot for taking my questions. First question is just on the AFFO guidance raise. Can you walk through kind of you've been quite active during the periods can you kind of walk through the factors that drove your ability to raise your earnings guidance this quarter? Thanks.

Yeah, Michael. This is Phil. I mean, really, three things drove the increase almost equally. One is the stock buyback. If you look at the close in the queue, including purchases after the end of the quarter, we've purchased $7.6 million worth of stock at an average price now of about $16.15. So just, you know, lowering the denominator through buybacks would be opportunistic is one of the factors. Additionally, the swap that I spoke about in my prepared remarks for $50 million, which took effect early April, that was floating on the line at about 6%. It immediately drops to about 5%, so a hundred basis points to pick up. And then finally, on the investment, you know, it's a little bit of volume, a little bit of timing, a little bit of cap rates, so kind of all three factors. So it's almost equally those three things. They're each one, one and a half cents or so, and that's what drove the increase in the guidance.

That's helpful. And maybe just a clarification. You took the investment guidance up to $70 million to $100 million so up $20 million but it looks like you did $80 million in the quarter. Am I missing something there? Or yeah, just to reconcile those numbers.

I think it's probably just on the loans and funding. So for the quarter, we did almost $40 million in property acquisitions, and we funded close to $20 million in loans. We originated a higher amount, but we funded about $20 million. So combined for the quarter, we were about $60 million funded and out the door.

Thanks for that. And then just a question on the share repurchases. Right? Like, how are you thinking about this going forward? Is this, you know, and then just within the grand scheme of capital, you know, you've been doing more loans. You've been acquiring and now you're buying back stock. So can you just kind of walk through, like, you know, your priorities in terms of capital allocation? How you're thinking you were active in kind of all three in the first quarter. How do you think you'll be across the board kind of through the balance of the year?

Hey, Michael. It's John. Thanks for the question. Yeah. I mean, look, when the shares are trading at such a big discount to NAV and such a high dividend yield, certainly, we've had both the CTO and Alpine Income Property Trust, Inc. to take advantage of that dislocation. We're much better off selling assets and buying and accreting to NAV and accreting earnings by buying at such low prices. But, you know, we are coming closer to the end of our $10 million buyback. So, you know, we'll see kind of after, you know, the program kind of gets filled up where we sit. But given our free cash flow stance, we can always sell assets and do that, but obviously shrinking the company is not exactly the plan. But as we see, you know, loan opportunities and some of these loans are maturing here this year, that will come in and pay down debt and kind of get us in a good spot for acquisitions. As Phil mentioned in his prepared remarks, we got plenty of liquidity. So we're trying to take advantage of some good opportunities out there, and, you know, the pipeline looks good. So it's really a mixture of balancing between buybacks and acquisitions and investments.

Thanks, guys. Good luck in the second quarter.

Thank you.

Thank you. Our next question comes from Matthew Erdner with Jones Trading. Your line is open.

Hey, good morning, guys. Thanks for taking the questions. John, I kind of want to touch on the tariffs that you had talked a little bit earlier, when it comes to kind of just getting the deals done, you know, obviously, stores, think, are kind of sheltered from that. But could you kind of talk about the process? You know, as you're selling the At Home or as you kind of look to move on from some of these retail guys that might be affected? Just kind of the timing of the deals that it is taking now compared to what it was, you know, say, a year ago.

Yeah. I mean, you know, we're not seeing any sort of big dislocation with the tariff issues, surprisingly, I guess. You know, given our platform at CTO, that's more obviously leasing involved. We're not seeing some sort of disruption in tenant activity as far as opening new stores, committing to new stores, and so forth. So, you know, we're certainly not seeing any disruption at the Alpine Income Property Trust, Inc. platform as far as tenant issues. You know, restaurants are doing strong. You know, we picked up an Alamo Theater outside of Denver that's, you know, has Sony on the lease, and that's been super strong. And so those things are obviously insulated from tariff issues. So, you know, we're monitoring it, but so far so good in clear selling. But we certainly have an eye out for any issues that may happen.

Got it. That's helpful. I appreciate the color there. And then kind of as a follow-up, turning back to guidance, what's going to drive you to that higher range of investment guidance? You know, will that be kind of getting towards that $75 million at dispositions and just capital recycling?

Yeah. I mean, you know, just kind of a step back. You know, given that, you know, we do have the advantage of a small company, we can, you know, we have two assets, as you know, that currently right now are not contributing any income. That's a Party City in Long Island, New York, and a theater in Reno. And the theater in Reno, we have under contract to sell, and the Party City, we're actively marketing that and have indicative interest now, but we're trying to get better pricing. And so once we sell those assets, which we expect to do this year, you know, having that go to pay down leverage or reinvest is certainly going to be a catalyst for the upside of our earnings guidance. But, you know, even at the low side of our earnings guidance, you know, look at our multiples, like, you know, ridiculously low and a high dividend and lots of free cash flow. So if you take the, you know, dividend yield of roughly 7% and our free cash flow, you know, you add on those percentages, you're getting a nice total return just sitting here. But, you know, that's not what we're here to do. We're here to outperform. And I think we have an easy kind of roadmap to do that. So we'll try to keep performing for you.

Right. That's very helpful. I appreciate the time this morning. Thank you, guys.

Thanks.

Thank you. Our next question comes from Rob Stevenson with Janney Montgomery Scott. Your line is open.

John, so you sold $12 million at a little over nine cap rate in the guidance is now $50 million to $80 million of full year dispositions. Given the mix of assets that you're looking to sell over the remainder of year, what type of cap rate should we be expecting as reasonable to assume on the remaining, call it, $40 million to $70 million of dispositions? Is it something in that sort of high eights, low nines? Is it something substantially lower than that? Given the mix that you're looking to sell? How should we be thinking about that?

Yeah. I think given the, you know, mix of, you know, possibly having some properties with no income, that could be, you know, lower for the mix going forward. However, you know, we are taking the pain with some of the sales that we've just done at higher yields, as we talked about, you know, pruning the portfolio, you know, making it more fortified by selling some of the, you know, the Walgreens and so forth, which we've made some good progress. So it's going to be a mixture, but I would say going forward, it will tend to be lower than what it has been.

Okay. To that point on the Walgreens, so I think Phil said that you sold one here in April and have another under contract for May sale. What is the market today for Walgreens locations given that sort of weird lease that they have, typically? And then, you know, the Sycamore deal. Does Sycamore provide, you know, given where that stock was trading down, is Sycamore a benefit? Or is the private equity similar to what you saw with At Home where people are running away from private equity-backed sponsors with some of these?

No. I think it adds a little bit more stability in far as knowing that before Sycamore, you know, there was just an unknown what happens to the company. Are there no buyers? The company really going all the way down? That sort of thing. So I think it adds stability in a platform. And I think, you know, we're actually, you know, in talking with some of the merchant developers, some of them are starting to have programs to go after purchasing Walgreens to reformat into other uses given the sites are generally very strong at corner locations and drive-throughs and so forth. So I think you're starting to see in the private market people becoming more aggressive in acquiring these with, you know, a tale of lease with Walgreens and with the expectation they'll be able to get the site back and repurpose it for another use. So we're actually, I would say, net-net, you know, within the last sixty days is a more positive view than before.

Okay. That's very helpful. And then can you remind us how many of the Family Dollar, Dollar Tree locations you have currently in the portfolio and whether or not they are predominantly Family Dollars or Dollar Trees?

Yeah. I'm going to introduce you to Steven Greathouse, our chief investment officer. I'm out of the office in different locations. So, Steven, you want to give Rob a little bit of color on that?

Sure. Hey, Rob. We're I think we have about 31 total between Dollar Tree and Family Dollar. And on the spin when they go out, Sorry. 25 and 31 dollar general, I guess. But 25 Dollar Tree and then, you know, when they spin, we're all kind of waiting to happen when it's going to happen with the dual branded ones, but about half of those have Dollar Tree credit. That will stay on with the spend.

So I think, you know, we're well positioned on those. And they were all relatively new, so they've got eight plus years of term left on them.

Okay. So 31 total, 25 of those are Dollar Tree, so six are Family Dollars. And three of those Family Dollars keep the Dollar Tree credit. And the other three will have the brigade Mycelium or whatever it is, credit on it? Is that I got that correct?

No. It was $20.25 Family Dollars, and about half of those have the Dollar Tree credit on them.

Okay. So it was 6 Dollar Trees, 25 Family Dollars, and half of those 25 or so have the Dollar Tree credit, and the other half have the private equity credit.

That's helpful. Thanks, guys. Appreciate the time this morning.

Thanks, Rob.

Thank you. Our next question comes from Wesley Golladay with Baird. Your line is open.

Hey. Good morning, everyone. For the seller financing, for the At Home, was that to a developer?

It was. It would be we're kind of investor developer.

Okay. And then when you're looking to sell the theater, does that actually have a negative NOI right now? And then will you provide seller financing if the deal goes through?

It does have a negative NOI. And, yes, we would offer up seller financing on that in the deal that we're negotiating with now. They don't want our financing; they're all cash.

Okay. And then maybe can you talk about the germ free? Will you see more deals like that? Is that, like, a one-off type deal for you?

We hope so. But, you know, right now, it's of a one-off. We don't see anything, you know, in the future, but it's super unique. It's really one where we had a competitive advantage given that we are local to this investment opportunity. You know, Germ Free has been around over fifty years. A private equity group bought them. They have no leverage. Using part of the proceeds to invest in the facility. It's a headquarter and manufacturing facility for unique lab mobile lab development for hospitals, and they have a worldwide footprint. So if you have a nasty virus like COVID, you're going to buy one of their mobile labs if you're a hospital because you don't want to be dealing with a virus within a hospital where it could escape and be bad news, so you want to have it out in the parking lot or in the back in a mobile lab.

Okay. One last one for me. You had two loans that were upsized on the construction side. What is driving that?

You know, basically, you know, a little bit of construction costs or, you know, you could have a situation where the developer has another pad site user that has come on and that, you know, they're not needing site development work for that. But mainly, it was probably an escalation of development costs.

Okay. Thank you.

Yep. Thanks, Wes.

Thank you. Our next question comes from Gaurav Mehta with Alliance Global Partners. Your line is open.

Yeah. Thank you. Good morning. I wanted to ask you on the provision for impairment charge that you had in the first quarter. Can you provide some details on that?

Yeah. This is Phil. On the impairment charge for the first quarter, there wasn't anything that we sold in the quarter. It's more related to properties that we anticipate selling in the short term. Such as, like, the Walgreens that I mentioned that we have one under contract and one sold. So it's more related to upcoming dispositions, and we were just, you know, given we know where they're going to trade, just it was cleaning up and getting our bases in line with that.

Okay. And then second on the loan side, can you provide some color on the timing of funding the unfunded commitments within your portfolio?

What was the question?

The funding, the unfunded within the loan portfolio?

Just the timing of funding on the loan portfolio? Yeah. Yeah. So currently, the word currently stands, it should be consistent like that for the first half of the year. We do have, call it, in the third quarter one of the larger loans maturing. But there'll be new funding that will fill in. So in May, assuming we don't do any additional ones, it'll be pretty even, maybe a little less towards the end of the year. But, you know, we're hopeful that maybe we'll do some additional loans, and the funding amount will stay very similar over the year.

Okay. Thank you. That's all I had.

Thank you.

Our next question comes from R. J. Milligan with Raymond James. Your line is open.

Just a couple of follow-ups. Guess we'll start with the capital allocation questioning that started the call. But just curious how you think leverage is going to trend ticked up here in the first quarter. I know you guys have some loan payoffs and some dispositions coming. And I'm just curious where think you might end up the year on the leverage side.

Yeah. I'll take kind of the general on that and then Phil can dive deeper. Thanks RJ for the question. You know, given that we have this active share buyback program and given that we had a very active investment quarter. Certainly, the leverage ticked up. But as Phil mentioned in prepared remarks, we still have a lot of liquidity. But given that we have some of our loans will be paying down and paying off this year, you know, and we as I mentioned, expect to sell our vacant properties this year. I don't anticipate at the end of the year having more leverage than we are now and maybe less.

Okay. And then my second question is, you know, obviously, we can look at the top tenant list and get an understanding of, you know, who's on the credit watch list. But I'm just curious, looking at the structured investment portfolio, is there anybody there that you would classify as sort of on the tenant watch list because it's obviously a lot more difficult to underwrite from our perspective.

Yeah. No. The structured investment program has basically been geared towards loans on very high quality credits that we wouldn't be able to purchase on our own because of where they trade on a very low cap rate. It's, you know, talk about Publix, you know, grocer or Wawas. So, you know, there's no tenant issues from our perspective on the structured investment program. So super strong assets, and we'd love to own them if we could.

Great. And then my last question is, for Phil. Just thinking about run rate of NOI from the first quarter forward? Is there anything there that we should be thinking about for the next three quarters?

No. Just that's probably the only item I'd note, RJ, is Party Cities. If you remember when we gave our initial guidance, we said there was about an 8¢ head related to the theater. Which put a payment towards the end of twenty-four and then also Party City. And that was spread almost equally between the $2.04 cents and 4¢. Theater did exit right at end of last year, so current quarter had nothing in it from them. But Party City did pay as we anticipated for the entire first quarter, and now they will, you know, no longer pay the rest of the year. So the Party City will go away, call it, a couple hundred grand a quarter going forward starting in the second quarter. But other than that, it would just be acquisition and disposition volume.

Okay. Great. That's it for me. Thanks, guys.

RJ. Thank you. Our next question comes from John Massocca with B. Riley Securities. Your line is open.

Good morning. Good morning. Good morning. Me just clarify around that on the guidance front. Does guidance include any resolution around the Reno, Cedar and Party City assets? Either at the high end or midpoint or is that just kind of totally there's zeros for the rest of the year in terms of guides?

Yes. In terms of rent, they're zeros for the rest of the year. You know, if we sell them, you know, they would obviously we would get some cash to pay down debt, and there'd be some interest savings. They're going to be incrementally favorable, but they're not going to be huge movers to our earnings for this year. Okay. I mean, but they could are they in guidance as, like, the high end and maybe dispositions is, like, making sales? Yeah. Like, it the our disposition volume. Yeah. If you want to include them in there in the high end.

Okay. And at home, I know you've talked about it a little bit already, but what was kind of the amount of financing relative to your kind of basis in the property? And I guess does the current percentage exposure in the deck to At Home reflect the interest income from the seller financing? Or is that just the remaining At Homes you have in your portfolio?

That's just the remaining we have in our portfolio. And it was the seller financing was around 65% LTV.

Okay. And then maybe just kind of big picture on the Germ Free Labs property. I guess kind of what you can't believe it about the tenant and why they're attractive, but maybe the asset itself. I mean, what kind of fungible is that property if something were to ever happen in the future and just maybe some more details on what the asset actually is and could be repurposed for, etcetera?

Yeah. Yeah. Good question. Yeah. It's very fungible in your terms. You know, it's a manufacturing facility with very high ceilings and they've just basically made this into, you know, kind of their headquarters, both a small amount of office and manufacturing. But this would be in high demand as far as industrial use. If they weren't there. And it's a very low per square foot basis. We bought a $25 a square foot. So, big land footprint. Lots of parking. And, you know, very, very usable in this industrial market.

And geographically in the Central Florida area, or is that just where the company's based?

Yeah. Central Florida, closer to our day office. And, again, this company has been around over fifty years. So, you know, it's well suited for them, and they're basically expanding their manufacturing operations. They're using part of the proceeds to go into the property.

Okay. I appreciate the color. That's it for me.

Thank you.

There are no further questions at this time. This does conclude the question and answer session. Thank you for your participation. You may now disconnect. Everyone, have a great day.